In order for their housing loan application to be approved, banks have a set of eligibility conditions that applicants must meet. The borrower will be able to repay the loan and will not default if all of the qualifying conditions are met. If an applicant does not fulfil the eligibility conditions, the bank will reject their home loan application, which will have a negative influence on the user’s credit score.
Because of the eligibility conditions, different banks charge different interest rates on their home loans. Based on the applicant’s eligibility, banks decide the interest rate on a home loan application. Age, income, and CIBIL score all play a factor in evaluating whether or not an application will be approved for a house loan. The eligibility criteria for each bank are varied. The general eligibility conditions, on the other hand, are consistent across the country’s major banks. The elements affecting your home loan eligibility are listed below.
Home Loan Eligibility Criteria
Depending on their demands, different banks may have varying eligibility requirements. The essential eligibility conditions, on the other hand, are the same for all banks. You must meet the bank’s eligibility conditions in order to acquire a home loan. The basic requirements for obtaining a home loan from any major bank in the country are described above. The highest home loan limit for salaried employees is INR 3.5 crore, while the maximum housing loan limit for self-employed individuals is INR 5 crore. Below is a table that shows the common home loan eligibility criteria of various banks in the country.
|Age Limit (Salaried Individuals)||23 Years to 62 Years|
|Age Limit (Self-Employed)||25 Years to 70 Years|
|CIBIL score||750 or above|
|Work Experience for Salaried Individuals||Min. 3 Years of Work Experience|
|Business Continuity||Min. 5 Years of Stable Business Background|
|Salary||A Minimum Salary of INR 25,000|
How Do Banks Determine Home Loan Eligibility?
When the lender or bank receives all of your information, it calculates your eligibility using precise ratios. The following are the three most important ratios:
- The Debt-to-Income Ratio (Fixed)
All of your prior debts and how much you owe on them, as well as the house loan you’ve applied for, will be taken into account by the lender.
- Return on Investment (ROI)
If your monthly costs are nearly half of your income, the ratio tells the bank how much of your income you should set aside for loan repayment.
- Loan-to-Cost Ratio
This figure shows how much of the property is financed by the bank and how much is financed by you. It’s a way of figuring out how much equity you have in your home.
Tips To Improve Your Eligibility
Below are some of the tips that would help you in improving your home loan eligibility. You should always keep these tips in mind when applying for a home loan in order to avoid rejection. Some of those tips are as follows:
- Make a co-applicant for the loan a working family member, such as your spouse.
- To see if a structured repayment plan is available, contact your lender.
- Ascertain that you have a consistent source of income, as well as regular savings and investments.
- Give specifics on your regular alternative sources of income, such as rental income from a separate property, revenue from a different company than your current one, and so on.
- Keep track of variable pay components including bonuses, commissions, and overtime.
- Examine your CIBIL score and make any necessary changes to improve or correct any problems.
- Ascertain that all outstanding loans and short-term obligations are settled.
Moreover, it is advisable that you should always use a home loan eligibility calculator before applying for a home loan in any major bank to avoid rejection. Getting rejections on your loan applications might impact your overall credit score and make it difficult for you to secure any credit in the future. Therefore, it is better to check your eligibility before applying to avoid rejection on your loan application.
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