Home loans are approved for candidates only when certain criteria are met with and when the candidates successfully produce adequate documents which authenticate their eligibility. Though various financial institutions may feature distinct criteria and requirements of documents to decide their eligibility, the basic guidelines are largely similar.
Housing Loan Eligibility
Whenever a potential candidate makes a home loan application, the lender reviews the candidate as per their particular home loan eligibility criteria. Whether or not the candidate is granted a loan as well as the terms of the loans depends on the fulfilment of the laid down loan criteria. These rules differ for professionals, self-employed candidates, and salaried individuals.
Following are the factors which determine an individual’s loan eligibility:
A person’s employment status at the time of application plays a major role in determining his/her eligibility. The time period for which the person has been employed, and their position and growth in the current organisation, are some factors taken into consideration. After reviews from the employee’s organization, the lender uses a house loan calculator to gauge the financial plan that the individual can be comfortable with.
The financial advisor or the lender fixes the minimum and the maximum age of the applicant involved while applying for the loan and fulfilling the loan tenure respectively. This is determined by the rules of the financial institution and the employment status of the applicant. A housing loan EMI calculator helps the individual to determine a financial plan for his future, where he would set a financial goal to payback his home loan successfully each month.
Expenses and Earnings:
The bank takes a close look at the applicant’s loan history along with his/her monthly income to calculate whether the individual can survive another loan. They also keep a check on existing EMI burdens while considering the candidate.
The lender of the financial institution also considers the credit report or the credit score of the applicant to gauge his/her repayment behaviour history. This helps the institute to decide whether the candidate is a high risk or a low risk potential loan applicant. Today, most financial institutions have an online housing loan EMI calculator on their respective official websites, which lets applicants check their eligibility even before applying for a housing loan. A house loan calculator gives a clear picture to the individual without having to consult an advisor.
While your eligibility is being checked, you can keep your documents in place by collating the following important ones:
- KYC documents
- Recent salary slips, if on a payroll
- IT returns or Form 16
- For self-employed people: Educational certificates, Business proofs, IT returns for last 3 years, Audited balance sheets and profit & loss account statements
- Bank statements for the last 6 months
Though these are the vital requirements, various financial institutions may need additional documents to ensure that the loan eligibility criteria are met with.