Home Loan Eligibility – 5 Important Factors To Comply With
A number of aspects affect the home loan eligibility of any individual. Most banks have their own protocols and guidelines to verify the eligibility as well as the quantum of housing loan. Every first time home buyer loans should do well by understanding these factors.
Home loan eligibility factors
1) Verification
Applicants are required to provide their information in a registration form. The information entered in the application form is verified by the primary as well as secondary sources like interview, calling up the employer, checking the bank’s database and other means to verify the applicant’s identity. If the applicant fails to provide the right information, the application is subjected for rejection.
2) Repayment capability
An individual’s financial status is an essential consideration for the bank. The home loan eligibility and the repayment capability are based on the financial status of the borrower. The income level, net income as well as the liabilities tells the amount of loan a person is entitled for.
The conditions include a specified minimum income or a stable source of income. The borrower’s credit history has an important role as well. Lenders often keep records of the borrower and check the credit history to check their past repayment evasions from other lenders.
Home loan eligibility factors at personal level
3) Profile
The person’s personal profile is just as important for home loan eligibility. Banks get the personal profile of an individual, including educational attainment, occupation, assets owned, number of beneficiaries, liabilities owed, savings history etc. A large number of beneficiaries or present liabilities means lower repayment capability.
4) Age
It plays a great role in knowing how much a person earns. If a property is co-owned, the co-owner must not be a minor. The co-owner cannot be beyond the specified age bracket. The age limits are made to minimize ownership disagreements. Age limit affects the terms of HDFC home loan as well as EMIs.
The applicant’s retiring age is considered for home loan eligibility as well. For instance, if the applicant is 45 years old and is about to retire at 60, the maximum loan term available will be 15 years. In addition, in case the bank has a 75-year age limit for a co-applicant, and the applicant is only 40 while the co-applicant is 60, the VA home loans will be formal for a maximum time of 15 years only.
External home loan eligibility factors
5) Property’s location
Certain areas are specified as negative for home loan eligibility in some banks. If a person wants to purchase a home in that area, his loan will not be granted. Banks have certain standards with respect to minimum regions of the flat. This could be carpet area or urbanized area. The property’s age is also an important factor in case you purchase an existing property. Home loans on resale houses are approved only if they are less than 50 years old, at less restrictive rates than FHA loan rates.
Banks perform technical and legal evaluations of the property to determine if the title of the property is clear, no ownership arguments or free from any nuisances. If there are any protests in these appraisals, the home loan eligibility application is subjected for rejection.
Every bank holds a list of pre-approved constructors. Their records will be checked by the bank and as such loans are simply available for their home loan eligibility properties.