Today, it is a common practice for homebuyers to apply for a home loan to arrange for the finances required to purchase their desired property. While it is true that there are numerous home loan plans out there to suit every individual of different financial standings, it is also very important to focus on one’s eligibility for a home loan. Lenders have certain factors that they evaluate based on which they decide whether to accept or reject a loan application.
For a borrower, it is quite essential to ensure that they satisfy the lender’s requirements to qualify for the loan amount that they need. In order to do that, they need to be aware of the following factors that affect their home loan eligibility:
- Applicant’s age
Applicants who are older in age might find it difficult to get competitive deals when it comes to home loans. This is because once they reach an age that is closer to retirement, they become a risk for a lender. This is why it is advisable to apply for a home loan as soon as possible in order to complete the loan’s tenure while still earning an active monthly income.
- Credit record
No matter what type of loan a borrower is applying for, financial institutions always check their credit record before approving their application. Since a credit record is an indication of their financial habits, lenders can decide whether the applicant can repay the loan or not. For a home loan, it is advisable to maintain a credit score of 750 or more.
- Employment record
It is natural for any lender to want borrowers that have the repayment capacity to clear their loans on time. A borrower that has an unsteady employment record or does not receive their monthly income on time becomes a risk for any financial institution. It is always preferable to be working for a well-known organisation with good tenure. This improves a borrower’s home loan eligibility. Not just this, such borrowers can also get improved deals on home loans, such as getting a lower home loan interest rate.
- Location of the property
The property that has been selected can also affect an applicant’s eligibility. If the property is in a good location with modern amenities, its value will naturally increase, and vice versa. Lenders prefer the properties to be in good locations with strong resale values. So, keep this in mind before speaking to a lender about applying for a home loan.
By keeping these factors in mind, one can effectively improve their home loan eligibility. Also, it is advisable to make use of a home loan eligibility calculator before applying for the loan. This is because this calculator will help in understanding the loan amount that a borrower can get. By using this calculator, a borrower can find out whether the loan amount would be suitable or not, thus reducing the chances of their application getting rejected by the lender.