Home Loan eligibility or the amount of Home Loan you are eligible to apply for depends on various factors. Before making an application for a Home Loan, it is important to understand the impact of these factors on your eligibility.
Factors that can Affect your Home Loan Eligibility
- Age– Your age has a great impact on your Home Loan eligibility. If you apply for a loan at a young age, you have more working years to pay your loan. If you apply for a loan at an older age, you have less earning years and your eligibility gets automatically reduced. Age is a key element in deciding the tenor as well as the amount of your Home Loan.
- Income – Income is undoubtedly a factor that affects Home Loan eligibility. Your income decides your capacity to repay the loan. Money lenders have a criterion that people with higher income save more. More savings means more money available to repay the loan. As such, people with higher income have higher eligibility score than those with lower income.
- Professional Experience – Banks and financial institutions show a keen interest in borrowers with renowned industries or with good professional experience. They always check your salary slips, income tax returns, and bank statements to ensure that you have a good income background.
- Credit Score – Apart from your ability to pay, money lenders also check your willingness to pay. Your willingness to repay a loan is determined by your Credit Score. A Credit Score or CIBIL Score is assigned on the basis of credit history. A good credit score has a positive impact on your loan eligibility and vice-versa. Lenders consider a Credit Score of 750+ or more out of 900 as a good score.
- Age of Property – The attributes of the property for which you are taking a loan plays an important role here. If you are buying an old property, money lenders make their own evaluations considering factors like structural collapse, etc. Money lenders are reluctant in giving high amount loans for old properties. A new property has a higher eligibility than an old one. Hence, the age of the property also affects your loan eligibility.
- Availability of Co-borrower – If you have a co-borrower, his/her income is also added to your income while calculating your total income. So adding an earning co-borrower to the Home Loan application increases your loan eligibility. You can add a person as a co-borrower even if he is not a co-owner of the property.
- Dependents – Money lenders often relate your repayment capacity to the number of dependents you have. It is considered that your repayment capacity gets affected if you have more dependents. This creates an adverse impact on your Home Loan eligibility.
The Bottom Line
Now when you know the factors that affect your eligibility for a Home Loan, you can work on them to improve your eligibility.
To avoid confusion about the eligible amount of Home Loan, you can use a Home Loan eligibility calculator that can give you an estimate of your loan eligibility.