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If you’re planning to buy a house and wish to opt for a home loan, remember that there are various parameters that could affect your eligibility. Lenders look at various factors such as age, financial health and liabilities before approving a loan application. These are ways through which lenders decide whether or not you will be able to repay the sanctioned amount within the stipulated time period.
Your current income and how much you’re likely to earn in the future has a huge impact on the amount your lender decides to disburse as loan.
If you have a regular source of income, it makes the lender confident about your repayment ability which makes you a low-risk applicant compared to an unemployed person or someone who doesn’t earn a fixed salary. Your employment records could also be scanned. Usually banks insist on the applicant having completed at least a year with his employer when applying for the loan. Further, pay slips, certificate indicating TDS and bank statements are things your lender could demand. If you are an entrepreneur or an independent professional, your bank statements and ITR documents could be scanned closely.
This is one of the most important factors because age indicates the tenure of your loan. Most banks and HFCs allow a maximum tenure of up to 30 years or until the age of retirement from the day of sanction. A younger applicant will have more time to repay a loan because he would have more number of years to generate income compared to a senior individual who will most likely cease to have a regular source of income post retirement. Banks usually limit the loan term to the applicant’s age of superannuation.
Lenders often ask for credit repayment history from independent credit information bureaus such as CIBIL to evaluate repayment patterns. A low credit score means you are a riskier borrower compared to someone with a credit score of 750 or above. Excessive use of credit cards and late payments could pull down your score, making it difficult for you to avail loans. Applicants with good credit score are preferred by banks because their chances of defaulting on repayments are lower.
This is yet another factor that could come in the way of availing a home loan. If you are an existing guarantor for someone who has availed a loan, most lenders would consider it as a loan that you hold and may not wish to process another loan in your name.
Also, in case the borrower (for whom you’re the guarantor) defaults on his payments, it will reflect on your creditworthiness. It is thus advisable to not become a guarantor if you are young and if you don’t know the person well.
It could get difficult for you to avail a home loan in case you have existing liabilities such as a car loan or huge credit card debt. Lenders are wary of disbursing loans to such individuals because it could lead to default from the borrower’s end in case he is unable to bear the burden of another loan.
Banks check your repayment ability before giving big-ticket loans.
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