When it comes to taking significant steps in life, the first thing that strikes our mind is ‘how do you arrange for the finances’? Buying (or making) your dream home is one of the most significant financial investments for many, and it takes a huge investment. Most of the people delay the process of owning a home because they lack funds. But they can do so with the help of home loans.
Now, talking about the eligibility criteria for a home loan, there are some basic rules. The person has to be at least 23 years of age while applying. Other parameters include income, credit history, city of residence, etc.
This post will discuss the factors that affect home loan application eligibility.
- Margin Money or Down Payment
One needs to worry about not the principal and the interest component of the EMI. It is crucial to arrange funds for the margin money for the home loan. The lender will only fund 80% of the overall market price of the property.
It is known as (LTV) Loan-to-Value Ratio. The borrowers have to arrange 20% of the property price. The first down payment or the margin money you make has a significant impact on the overall eligibility of the home loan application.
- Existing Debt Obligations
Having numerous loans and debts is not a problem. But unpaid dues are always a matter of concern for the lenders. Along with that, lenders also pay additional attention to the overall repayment pattern. Missing EMIs at regular intervals of time, making EMI payments post the expiry of the due date and different unpaid dues are serious causes of concern for them. It is crucial to be disciplined when it comes to credit repayment.
This will also help in getting sanctions for a high amount on flexible terms and a nominal interest rate. Whether you are applying for a home loan or even a personal loan, your repayment pattern and credit history are very crucial for lenders. So, never deal with it lightly.
- Market Lending Rates
The strategies and market lending or interest rates of the Reserve Bank of India (RBI) have a significant impact on the debt as well as advances. Interest rates also regulate the worth of lending funds.
The higher the interest rate, the more the value of the home loan will be. In a nutshell, increasing lending rates will increase inflation and depress borrowing. This, in a way, makes savings more attractive. Deteriorating interest rates also make lending attractive.
- Property Profile
The home you have chosen also plays a crucial role in determining the overall eligibility of home loans. If you choose a new construction in a popular locality with modern amenities, you will more likely fetch a home loan at a lower interest rate. Although, this will not be applicable in case the profile of the property does not meet the eligibility mandate of the lender.
A home loan is indeed a huge financial commitment that stretches for up to 30 years. So, meeting all the aptness criteria is beneficial for a home loan but also helps you to get a home loan that suits your financial standing.
Make sure to get home loans from lenders with hassle-free borrowing experience and quick disbursal facilities. Share your insights or queries regarding the post below in the comment section.