The low home loan interest rates of 2021 have certainly boosted the demand for the credits over the past few months. However, prospective borrowers must remember that the submission of a loan application doesn’t necessarily lead to approval.
Individuals applying for a home loan need to be aware of the eligibility and documentation requirements set by the chosen financial institution for instant approval.
Therefore, if you plan to avail a home loan to finance the purchase or construction of the real estate, make sure to meet the eligibility criteria set by lenders.
Home loan eligibility criteria
The criteria for home loan eligibility differ from one financial institution to another. Ensure you meet the following aspects to enjoy instant approval.
- Occupation: An individual’s occupation is one of the primary factors that lenders look into before approving the loan application. This is because job instability leads to financial strain, which can cause the borrower to default payment. It is ideal for the lender to be employed at a public or private sector company or an MNC with a certain income. Self-employed individuals with a steady income can also avail a home loan.
- Age: Loan applications are acceptable when the person applying is between 23 and 62 years of age if they are salaried and 25-70 years of age when they are self-employed. Individuals under this age group usually possess the income stability to pay off a home loan without hassle.
- Credit history: The financial institution you choose to avail the funds from will check your CIBIL score before deeming you eligible for the same. Your CIBIL is an indication of your creditworthiness as a borrower. Therefore, a poor CIBIL can lead to rejection. Make sure your CIBIL is higher than 750 to enjoy approval on your loan application.
Apart from these, an individual also needs to be a resident Indian to enjoy approval on the loan application.
While these are some of the factors to take note of to prove your home loan eligibility, it is also crucial to be informed about the instances that might lead to loan rejection. These include –
- Unpaid dues: When you apply for a loan, creditors check your credit history. If you have any payment dues or default, then it might affect your loan approval. Before taking on the home loan EMI payments, it is crucial to clear off and settle any unpaid dues.
- Income tax return filing: Always remember to file for income tax every financial year whether your employer provides you with Form 16 or not. Institutions check for income tax returns of the last two years before providing home loan approval.
- Suitable property as security: The property that you want to purchase with a home loan should have a resale value, stable price, and high demand. If the property is too old or further away from the city, lenders might be reluctant to approve the loan amount you have applied for.
Once an applicant fulfils these eligibility criteria, they can apply for a home loan with a flexible and longer repayment tenor.
Leading HFCs also provide pre-approved offers on these loans to help expedite the loan application process. These offers are available on financial products like home loans, loans against property, etc. Mention your name and contact details to check your pre-approved offer.
Taking note of these different eligibility criteria and reasons for rejection will certainly reduce the chances of home loan rejection. Nonetheless, it is always recommended to conduct a proper market survey and analysis before you avail a home loan.