Ever wondered if there is anything stopping you from picking a loan for 50 Crores and buying a pentHouse in the most luxurious area in the town? We are very sorry to inform you the bad news but yes, there is. The thing that decides which Home you can and cannot buy is called Home Loan Qualifications.
Home Loan eligibility is the highest possible home loan amount borrowed that a lender is agree to pay you. Here, in this article, we will look at 2 key aspects that influence your Home loan eligibility. Use it to build information that will give you an edge while applying for a mortgage. The 2 aspects that will choose your Home loan eligibility and these are:
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- Your Ability to Repay
- Your Willingness to Repay
- Source of Income
Banks and other creditors have different eligibility criteria when it comes to a paid or a self-employed person or a salaried. Banks are of the opinion that person earning income from wage has a greater pay back potential than a self-employed individual because of stability in his earnings while creditors other than banks hold a contrary view. Therefore if a Bank charges 25 % from a salaried professional, it will charge 35 % from a self-employed individual for the equivalent loan.
- Sector of employment
Depending upon your employment sector, home loan also plays a major role. Banks classify different areas under different risk levels. Some areas may be more constant in comparison to others. From Bank to Bank, this list differs. So if you are working in an industry that has had hardships in the past, then he might be charged better pay of interest as in comparison to other people working in a different, more constant market.
This one is a no-brainer. A 28-year-old client who has her whole career in front of her has a greater payback potential than a 45-year-old expert with only 20 years left before retirement. At a lower age you have lower health hazards, expected wage bumps and you can take a mortgage with the highest possible tenure: 30 years. This is why eligibility is greater at a lower age.
- Credit history
The record of the credit score of the client also plays a part. Usually, creditors maintain a database of borrowers and verify the record of credit score to check for previous pay back defaults, even from other creditors.
- Personal profile
The individual information of a person is also essential. This includes aspects educational qualification, profession, a variety of dependents, assets owned, obligations owed, savings record etc. A greater variety of dependants or existing obligations implies lower payback potential.
If you are thinking of picking a loan in the future, then it is a wise idea to begin operating on improving eligibility from nowadays itself. The theme we learned in our childhood rings correct for home mortgages as well:
“The seeds that you plant now will decide the fruit you get tomorrow”