Why do You Need to Know About your Eligibility Before You Avail a Home Loan?

Every individual dream of owning a house one day or the other. However, given the current real estate market situation and the cost of the houses, it is wise to purchase your dream property now, before the prices rise further. It is difficult to sustain in the current market condition, where the prices of even the basic commodities are sky high. It is almost impossible to purchase a home based only on your savings. In such a situation, you can opt to take financial aid from the financial institutions in the form of a Home Loan.

Home Loan

A Home Loan is one of the most important decisions in an individual’s life as he needs to stick with it unless he pays off all his debts. While availing a loan might seem like a piece of cake that actually is not true.

Taking a Home Loan is a lengthy and tedious process. There are a lot of banks and Non-Banking Financial Companies (NBFCs) who might approve your loan application. The banks have a very stringent process that you have to follow before they approve your Home Loan application, whereas, the NBFCs are much more flexible. This makes the NBFCs a preferable choice when it comes to taking a Home Loan.

When you apply for a Home Loan, it is necessary that you fit into the eligibility criteria set by the banks and other financial institutions. If you do not fit into the eligibility criteria, your Home Loan application will get rejected by the financial institution.

With the help of Home Loan eligibility calculator, you can check your eligibility to avoid rejection. The following are the things that a financial institution checks before approving your Home Loan application:

Your credit score

This is the most important document during your entire Home Loan application procedure. A credit score or a CIBIL score is a score given to you by the Credit Information Bureau (India) Limited based on your financial history and your past debt repayments.

It is necessary that you have a good credit score. A good credit score can help you get your application processed faster, whereas a bad credit score will only delay the process.

A credit score is a way by which the financial institutions can determine your creditworthiness and your repayment capacity. The banks generally need a CIBIL score of 750 to approve your loan application.

They will reject your loan application if your score is below 750. On the other hand, the NBFCs are much more flexible and might approve your Home Loan application if all your other documents are in place.

Your current financial standing

Your Home Loan application will be processed faster if you have some funds in your account. This gives the financial institutions the confidence that you can repay your Home Loan debt without any problem. Your job stability is another factor that will be taken into consideration before your Home Loan will be approved.

Your age

This is another factor that will be taken into consideration before the financial institutions approve your home loan application. If you avail a Home Loan at a younger age, it will become easier for you to pay the loan and it will not affect your monthly financials as much.

But, if you avail a Home Loan when you are nearing your retirement, your Home Loan application might get rejected. Since you will be retiring soon, you will not have the appropriate income to pay off your debts.

The above-mentioned points are extremely important and you need to check them before you avail a Home Loan. If your Home Loan application gets rejected, it will affect your credit score negatively and will discourage the lenders from providing a loan in the future.

 

Tags: Credit score, financial institutions, home loan, Home Loan application

Category: Loans