Individuals from the salaried classes consider purchasing a home as one of the most significant accomplishments in their lives. But, buying a house requires a sizable outlay of cash. Due to the high cost of real estate in India, it can be really challenging to buy a home. Thanks to a Home Loan, it is easy to finance the desired property/house.
Fortunately, to help you realise your dream of home ownership, banks offer attractive and competitive interest rates on Housing Loans. Currently, the interest rate on Home Loans ranges anywhere between 8.30% to 9.00% per annum. As per your eligibility, you can avail the funding of up to 85% of your house/property value.
Use a Home Loan eligibility checker to determine whether you are eligible for a Home Loan. Read on to learn more about lenders’ requirements for a Home Loan.
Age
The minimum and maximum age requirements for salaried individuals to apply for a loan are 18 and 60, respectively. If you apply for a Home Loan when you are young, the bank will quickly approve the loan amount at a lower interest rate and adjustable loan term. In contrast, older borrowers might find it more challenging to qualify for low Home Loan interest rate. Also, they may qualify for a shorter repayment period and lower sanction amounts.
Source of Income
It demonstrates your capacity to pay back the loan. This is why the banks check whether you have a stable job.
The likelihood of being approved for a loan directly depends on your income. When a person’s salary rises, the interest rates decrease, and the chances of getting a loan rise. On the contrary, when salary decreases, interest rate increases, and the chances of getting a loan decrease.
LTV Ratio
The ratio of the approved loan amount to the overall value of the property is known as the loan-to-value, or LTV. The fraction ranges from 75% to 90% of the property’s value. You will have a higher LTV if the property’s value is high, resulting in a smaller down payment.
Lenders also consider your down payment. You might be able to get the desired loan if you made a 20% down payment on the house/property. Otherwise, it might be challenging to get approved, or the interest rate would be high.
Credit History
There are credit rating companies that gather and track all your credit-related transactions. They’ll get all your records of repayment and borrowing from your respective banks and credit card companies. Using these records, they generate a three-digit credit score ranging from 300 to 900.
You will be better positioned to secure a Home Loan if your credit score is 750 or more. The score directly impacts your interest rate; the higher the score, the lower the interest rate. Your payment history primarily determines your credit score, the number of loans and credit card balances that are past due, the kinds of debt you have previously racked up, and the regularity of missed payments. The lender will likely consider your application if your credit history appears promising.
Conclusive Note
To help you realise your dream of owning a dream home, banks and other financial institutions offer a variety of Home Loan programs with attractive interest rates and other benefits. However, to qualify for the benefits of these loans, you must meet some requirements.
These requirements cover credit history, income, age, LTV ratio, and debt status. Banks can determine your creditworthiness and repayment capacity by carefully examining these factors. Based on this data, they develop targeted Home Loan options with interest rates appropriate to your profile. You must therefore consider these factors before requesting Home Loans to gain maximum benefits.
