Setting a budget and arranging funds are two of the most important steps in property buying. While the first one depends on you as to what extent you can stretch, arranging funds to buy that dream house is not all that easy. To lend a helping hand in your home buying journey, most banks, financial institutions and non-financial banking institutions offer what is popularly called the home loan.
What is a home loan?
This is a loan that is secured to buy a property by keeping the property as a collateral. Home loan is given with reasonable interest and long tenure in which it has to be repaid. Repayment of a home loan is done through equated monthly installments or EMIs. However, there is a catch. Not everyone can apply for a home loan as it seeks eligibility. Only people who can fulfill the asked criteria will be able to avail the home loan service.
See also: Principal amount in home loan
Factors that impact home loan eligibility
- Indian citizen: Borrower must be a citizen of India.
- Property documents: One should be able to submit all the required legal property documents so that a home loan can be granted.
- Age: As mentioned above, a person is given the flexibility to repay the home loan in a long tenure. Thus, age of the borrower plays an important role as he should have sufficient time to repay the home loan. People between 21 to 60 years are the preferred lot to whom home loans are easily given.
- Credit score: The bank or the lending institution should understand that you are worthy of the loan and one of the ways this is proved is by the credit score. A credit score above 650 gets a home loan easily whereas for a person having credit score that is less than 650, it is doubtful.
- Income: The monthly or annual income plays a role in determining the amount of home loan that can be granted to you. This is true for both salaried and self-employed people. In fact, in case of the latter, the annual income is considered before dispersing the home loan.
- Financial health: Before the home loan is granted a thorough check is done to find out if the borrower is already struggling with the repayment of other home loans or not. People who have no loan liability will get a home loan faster as compared to others.
How can you qualify for a home loan?
- Improve your credit score
- Apply for a joint home loan with a co-borrower.
- Increase the amount of down payment to be paid for the property. In this way, the home loan needed will decrease and may easily be approved.
- Opt for a longer home loan tenure that will reduce the monthly amount or EMI to be paid.
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With 16+ years of experience in various sectors, of which more than ten years in real estate, Anuradha Ramamirtham excels in tracking property trends and simplifying housing-related topics such as Rera, housing lottery, etc. Her diverse background includes roles at Times Property, Tech Target India, Indiantelevision.com and ITNation. Anuradha holds a PG Diploma degree in Journalism from KC College and has done BSc (IT) from SIES. In her leisure time, she enjoys singing and travelling.
Email: [email protected]
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