5 Mins Feb 2, 2022
Home loan interest rates are at historic lows. The pandemic has also underscored the need for a home that is spacious and has enough amenities for you to work in peace as well as spend time with your family. If you are one of them and are planning to apply for a home loan, here are some factors that could affect your home loan eligibility. Knowing them in advance can help you prepare and thereby ensure your application is approved faster.
Credit Score: The borrower's credit score is the first point lenders focus on. This tells them whether the borrower has a good track record of repaying her loans and is a reasonable credit risk. If you have availed of credit in the past—personal loans, car loans, or credit cards—and have repaid them on time, you will likely have a good credit score. But if your repayment record is tardy—missed or delayed payments—it is likely to have affected your credit score. Generally, lenders look for a credit score of about 750. It might make sense to apply to a credit bureau like CIBIL to see where you stand.
Income: If you are employed with a large public limited company, you will likely get a loan more quickly. If you are a self-employed professional or an entrepreneur, you will have to prove that your business provides you with a steady income. For salaried individuals, banks may want to look at salary slips for six months and, for business people, their Income Tax Returns for three years. Ensure that all of these are in order. Both may also have to provide bank statements for at least six months.
[Also Read: Applying for a home loan? Understand the process for a seamless experience]
Ability to service a loan: Your ability to service your loan obligation depends not just on your income but also on other existing financial commitments you may have, including EMIs for a personal loan and car loans, among other things. Generally, banks would like the total of all your EMIs to be no more than 40% of your monthly income.
Age: The borrower's age also plays a role in determining her ability to repay a loan. For example, if you take a home loan when you are, say, 30 years old, you are likely to have much longer to earn and repay the loan than if you were, say, 45.
Age of the property: When you take a home loan, it is secured by the house you are buying. Consequently, banks are far more likely to finance newer properties than old ones.
Co-Applicants: It will be far easier to get a home loan if a couple applies as co-applicants. This is because the bank would then total the incomes of both the partners while figuring out the ability to service the loan.
Axis Bank offers an array of affordable and flexible home loans designed to suit the requirements of all home buyers. You can explore Axis Bank's wide range of products for the most competitive Home Loan interest rates, extended loan tenures and other benefits like EMI waivers online.
You can use Axis Bank's Home Loan EMI calculator to give you an estimate of your EMI.
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