Factors Affecting Property Loan Eligibility
- Age Limit: It is the first and foremost factor a lender/ financier considers when one applies for a housing loan. Normally, financial institutions attempt to limit the house loan term to the primary applicant's age of superannuation. This means young professionals (20s and early 30s) can avail a loan with a term of up to 25 years with no trouble. But older applicants especially those beyond 40 can find it a tad tough to be eligible for an extended tenure. Many a time, single applicant aged 50 and above were denied home loans purely on this basis.
- Income: Let us categorise this into salaried, professional and self-employed. Whichever category the applicant falls into, a steady and regular source of income is must. Basically, there are fewer risks in loaning money if the applicant is an earning individual.
- Salaried Individual: If you are working for any government department or at any registered private company, you belong to this group. Most banks insist that the applicant should have completed at least one year in the present firm at the time of application. Pay slips, Form 16, bank statements and employer reference letter are the documents almost all lenders demand. Proofs for the same is needed for co-applicant and guarantor too (if applicable).
- Independent Professionals: Doctors, dentists, architects, engineers, management consultants, chartered accountants, freelance workers etc. belong to this category. Bank statements and ITR papers have to be submitted.
- Self Employed: Do you have your own company/ business? Or do you have other source of income like rented properties or hold shares? Then you belong to this category. If you have bank statements and tax-related papers to show, you can certainly apply for a home loan.
- Rate of Interest: Home finance eligibility is always inversely proportional to the rate of interest. If the rate is higher, eligibility will be less and vice versa.
- Loan Term: If you opt for a longer tenure, your eligibility will improve. EMIs too will be lesser and manageable. But the downside to this is, you will end up paying more interest.
- Outstanding Loan(s): Indian banks and financial institutions always recommend keeping the EMI to Income Ratio between 50 or 60 percent. This is to leave window for future loans or to pay off existing loans if any. But unsettled loans could be a great damper on your eligibility.
- CIBIL Score Report: Banks also scrutinise your credit repayment history from CIBIL (Credit Information Bureau India Limited), which is country's regulator and first credit information bureau. They keep detailed records of every info regarding credit history relation between you and lenders/ creditors. A negative entry can bring down your eligibility significantly.
