With the boom in the real estate market in recent years, buying a new home is a tough call but not an impossible one. The prices are touching the sky, and more and more people are moving toward housing loans. It is a fact that for a home loan these days, one needs to check the housing loan eligibility. While a home loan helps your dream come true, there are certain factors that you need to keep in mind that affect it.
Our country’s high real estate cost leaves a person with no other option than a home loan. That also applies to buying properties for sale in Melbourne where prices are also very high. In simple terms, it is a loan one takes to purchase a residential or commercial property.
What is home loan eligibility?
Home loan eligibility is a set of criteria basis where a financial institution assesses whether the customer is creditworthy or not to avail and repay a loan amount. The two prime factors of home loan eligibility are income and repayment capacity of the borrower. However, other factors include age, financial position, credit history, score, etc.
What is a home loan?
A home loan is a secured loan where you have to mortgage your property to your lender. Each month, you then have to pay a portion of the principal amount, along with interest, through equated monthly installments (EMIs). Also, remember that both the principal amount and interest qualify for a tax deduction. So, when you go for a home loan after adequately checking the housing loan eligibility, you gain complete ownership of the property at the end of the tenor.
What factors affect your housing loan?
There are certain factors that affect housing loan eligibility, and it is important to keep them in mind. From credit history to income, there are many factors.
If you don’t have any credit history, it can be a hurdle for individuals thinking about a home loan. Factually, with no credit history, the lender, on the other side, will have no reference point to use while analyzing the credit conduct of the desired borrower.
The prime factor affecting housing loan eligibility is income. As there is no collateral here, the financial institutions want to know that you have a good income from your job and other sources that allow monthly payments.
Not only income but employment status also plays an important role here. If you are employed with a reputed company or are a self-employed individual with a stable income, it makes you more reliable as a borrower than those with an unstable job or business.
The financial institutions are most likely to grant you a home loan if you are young. They look for borrowers who can repay the loan amount satisfactorily before the retirement age, which is generally 60 years. So, depending on your loan period and eligibility amount, age is an essential factor.
Which is the best home loan?
The best home loan for you is the one which suits your needs and requirements. But, of course, everyone wants the best, and after clearing the housing loan eligibility, the final decision is up to you.
However, keep in mind certain things before selecting your home loan
Rate of Interest
The interest rate is factored into the EMI along with the principal amount. It is charged on a reducing balance basis, which means the remaining principal comes down with each EMI payment.
Charges for processing the application and expenses incurred by the financial institution on assessing property value and verifying other details mentioned by the borrower.
(Tip – There is always scope for negotiation with your lender.)
Maximum Loan Amount
This factor is governed by two attributes: property value and income level. The financial institutions usually fund around 70-75% of the property’s value; some can go up to 80%.
Apart from these three things, there are other factors, such as Prepayment charges, Pre-approved loan quote, etc. Around six months ago, when I was planning to purchase a flat here in Gurgaon, we also planned to go for a home loan.
I got lucky here as one of my old associate is an Bajaj Finserv employee. He helped me get my housing loan eligibility instantly checked and offered a home loan at our suitable interest rate.