There are various factors affecting the eligibility for a home loan. Banks have their own parameters and criteria to determine the eligibility and quantum of housing loan. It helps borrower if they are aware of a few of such factors.
Information furnished
To begin with, it is the information on the application form. The information submitted in the application form by the individual is verified from various primary and secondary sources. In case of wrong information or inconsistencies, the loan application is liable to be rejected.
Financial strength
This is an important determinant. The loan eligibility as well as repayment capacity depends on the financial position of the borrower. The financial position of the borrower, his income level, net income, liabilities etc determine the amount of loan he is eligible for. One should have a minimum income level or a fixed and certain source of income.
Credit history
The credit history of the borrower also plays an important role. Usually, lenders maintain a database of borrowers and verify the credit history to check for previous repayment defaults, even from other lenders.
Personal profile
The personal profile of an individual is also important. This includes factors like educational qualification, profession, number of dependents, assets owned, liabilities owed, savings history etc. A higher number of dependants or existing liabilities implies lower repayment capacity.
Age
It determines the earning years left for the individual. In case the property is co-owned, the co-owner cannot be a minor. Also, the co-owner cannot be above a certain age limit. The age limits are set to minimise ownership disputes. The age limit also affects the tenure of the home loan, and EMIs.
An applicant's retirement age is also considered. For example, if the applicant is 45 years of age and is set to retire at 60 years, the maximum loan tenure available will be 15 years. Also, in case a bank has a 75-year age limit for a co-applicant, if the applicant is 40
years old and the co-applicant is 60 years old, the home loan
will be sanctioned for a maximum period of 15 years only.
Attributes of property
Banks have specific norms with respect to the minimum area of a flat. This may be built-up area or carpet area. The age of the property is also important in case of purchase of an existing property. Banks conduct a legal and technical appraisal of the property to check whether the title is clear, if there are any ownership disputes, whether the property is free from encumbrances etc. In case there are any objections in this appraisal, the loan application is bound to be turned down.
