Finance

Planning to Buy a House? Know the Home Loan Eligibility Criteria

According to a report, the home loan demand in India has risen by 10% YoY in May 2021. This growth led to the segment reaching values of Rs.14.62 lakh crore. The affordable interest rates make housing loans popular among individuals planning to buy a property. However, applicants are require to fulfil certain home loan eligibility criteria to access the required credit.

Lending institutions lay these parameters to scrutinise an applicant’s credibility and repayment capacity. Failing to succumb to the required criteria can lead to the cancellation of a loan application. As, home Loan eligibility is calculated after considering various factors including monthly income, fixed monthly obligation, current age, retirement age etc.

So, to avoid these issues, individuals should keep a tab on the updated home loan criteria and documentation because this would help them in streamlining the application process and other requirements.

What are the parameters for a home loan eligibility criteria?

Housing loan are in a way that is exact and clear precisely designed to support the financial requirement for buying a home for us. The parameters set against the loan availability are simple and minimal.

However, it can differ according to a chosen lending institution.

So, Some of the common home loan eligibility criteria are- 

For salaried individuals-

  • 1. The age limit for making an application is 23 to 62 years
  • 2. An individual should be an Indian resident
  • 3. They must have a minimum of three years of experience in the work field

For self-employed-

  • 1. An individual should fall in the age bracket of 25 to 70 years
  • 2. Applicants need to show papers proving a minimum of five years of business vintage 
  • 3. They should have Indian residency.

Apart from the mentioned parameters, lenders scrutinise a credit report and CIBIL scores before approving the application. These factors substantiate an individuals reliability in terms of timely repayments and financial capacity. 

Moreover, candidate who has around 750+ CIBIL score are select by lending institutions. They provide better service and lucrative terms to these borrowers.

Many HFCs also extend customised features like pre-approved offers that make the application process straightforward. Such offers are available on financial products like loans against property and home loans. You can check your pre-approved offers by entering a name and contact number.

So, it is imprtant that potential borrowers must know that simply fulfilling eligibility criteria won’t make loan processing faster. Every applicant needs to submit lender specific home loan documents to facilitate the loan processing.

Documents required against a home loan eligibility criteria?

So, Housing loan applicants have to submit the mentioned documents to substantiate their home loan eligibility criteria. These are-

  • KYC papers to prove their identity:
  • 1. Address proof
  • 2. Income tax return papers
  • 3. Documents that prove the continuity of a business for five years or more

It is imperative to know that individuals may have to submit additional documents as mentioned by the lending institution. In this regard, one can contact a lender and enquire about the eligibility and document requirements. 

However, if confusion prevails, one can utilise an online home loan eligibility calculator and determine the loan availability. These tools are free and evaluate results within minutes. Individuals who are unable to fulfil the eligibility parameters can implement ways for improvement.

Here are some various methods by which you can easily improve your home loan eligibility.

What are the ways to improve home loan eligibility criteria?

  • Try improving credibility

So, improving one’s CIBIL scores is the best way to improve the eligibility for a home loan. Lenders would feel assured that the applicant is reliable in terms of repayment. In addition, this would facilitate ways for better service and loan terms. To achieve the said goal, individuals can practice making timely repayment, prepayments, clearing dues and credit card bills, etc.

  • Opt for a joint home loan

In certain cases, failing to clear home loan eligibility can lead to loan cancellation. When facing such an issue, one opts for a joint application. Applying with co-applicant increases the chances of loan approval.

So, the lenders would be risk-free as there is a guarantor to take care of the repayments if concerns like defaulting arises. A joint home loan helps borrowers to initiate healthy savings as the loan burden is divided.

Also, by adding a female co-applicant with a 750+ CIBIL score increases the chances of receiving substantial credit. Moreover, a female house owner is obligated to receive better tax benefits.

  • Reduce debt to income ratio

As while, reducing the debt to income ratio to 40% increases an individuals home loan eligibility. Also, the DTI ratio indicates a borrower’s financial capacity and capability to manage disposable income.

Apart from the mentioned ways, disclosing additional income sources and opting for a longer tenor can also help in improving eligibility for the said credit.

Hence, individuals planning to invest in a dream residence need to keep a tab on the updates of lender specific home loan eligibility criteria. So, this would streamline the application process and make it hassle-free.

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