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The Deciding Factors For A Home Loan

A home loan commonly serves as an essential component of property purchase, and you can avail of many benefits against a home loan and successfully facilitate the buying process. However, your home loan eligibility is dependent on a number of factors. These parameters play an important role in getting you the home loan that is best suited to your needs and preferences.

Here are the 5 important deciding factors for a home loan:

  1. Income of the applicant:
    The first and foremost criterion that influences your home loan eligibility is your monthly income. Typically, lenders consider 40-50 per cent of your monthly income as the amount that you can pay towards your home loan EMI. In case you are a self-employed professional, the lenders will look at your gross receipts before ascertaining the home loan amount.

  2. Credit score and existing loans:
    Your credit score is an important indictor of your ability to repay loans and it is based on your credit history. If there are any existing loans that you are currently repaying, then lenders will look at how they impact your credit score and your ability to repay this home loan.

  3. Age and earning potential:
    Home loans are typically sanctioned for a tenure of 15-20 years, so lenders will want to make sure that you have about those many years left in service to be able to repay the loan. The default retirement age for salaried professionals is 60, whereas for self-employed professionals it is taken to be 65.

  4. Availability of co-borrowers:
    You can apply for a home loan of a higher amount if you can bring on board a co-borrower with a good credit score and earning potential. The lender will factor in the total income of all the co-borrowers in order to assess your eligibility. Keep in mind that a co-borrower could be anyone you trust-it need not necessarily be a joint owner of the property.

  5. Tenure of the loan:
    The longer the tenure of the loan that you apply for, the higher your eligibility will be. Therefore, it’s advisable to apply for a longer home loan tenure and prepay it partially or fully, as and when you have surplus funds. This can help shorten the tenure of your loan, while offering you greater flexibility and boosting your eligibility.

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