What are eligibility criteria for home loan approval?

Posted by rupesh on December 4th, 2018

It is every person’s dream to purchase a place that he or she could call their home. This is the sole reason why most of us are putting in those extra hours at our workplace. However, even after saving every penny and dime, most of us are still unable to buy a place of our own. This can be attributed to the fact that the cost of properties and plots have increased tremendously in the past few years. Thus, in these times, the middle-class working population has no other option but to look for lenders who shall provide them with capital assistance. There are two options in front of them- either to opt for a loan through a traditional financier or obtain a home loan through a bank or NBFC (non-banking financial company).

The housing loans provided by new-age financial institutions such as banks and NBFCs (non-banking financial companies) are way better than the ones provided by traditional financiers because they charge lower interest rates. However, even if you have decided to borrow a housing loan through a financial institution, the questions still remain- what is a housing loan? What are the eligibility criteria? And why is it important? Thus, today in this article, we will be discussing these questions and much more:

A home loans is given out by the financial institutions for you to purchase a new property or renovate any of your existing ones. You can even make use of it for home extension or transfer of balance from your previous lender. The banks and NBFCs (non-banking financial institutions) provide you with a principal amount and charge you with an interest rate. Later on, you will have to pay this sum amount in the form of an EMI (equated monthly installment). The financial institutions have also started providing EMI calculators on their online websites to ease your loan process. The repayments are made in flexible forms to help the consumers. These financial institutions also provide female applicants with a discount of 0.05% on their interest rates.

However, the reason why you must fulfill the eligibility criteria is to make use of these loans. And these eligibility criteria are as follows:

• You need to be an Indian citizen in the age group of 18 years to 65 years to make use of a home loan. This age limit is set by the financial institutions to ascertain that the working-class population will be able to repay the loan amount.
• The banks and NBFCs (non-banking financial companies) scrutinize your Credit history. This is done by the financial institutions to make sure that you will repay the loan amount- not default on any of your repayments. Credit history is the reflection of all your transactions with the lenders; thus, make sure that you make timely repayments on all of your previous and current debts.
• Your credit score also plays a determining factor for your loan approval. Thus, make sure that you have a good credit score before applying for a home loan. A good credit score is anything more than 700. This score is given out by CIBIL and is in the range of 300 to 900.
• The financial institutions also check your income source and history; thus, ensure that you have a stable job before applying for this loan. Also, check that you have all the documents with you.