To give a home loan; bank needs to evaluate loan repayment potential of the applicant. And to assess this potential, every bank has set some eligibility criteria. The principal concern of a bank to set these criteria is to ensure if you can comfortably the home loan on time. No bank will grant a loan to a person unless it makes sure that he or she is able to repay the loan timely.
The repayment potential relies on your every month’s surplus or disposable income. More your monthly disposable income is, higher the loan amount you will be eligible for. It is assumed, by almost all banks, that around 55% of your disposable income is accessible to repay the home loan.
Regardless of your profession or occupation, there are some eligibility criteria that you need to check before applying for a home loan in banks. Read all eligibility criteria below.
- Employment stability- For salaried or employed applicant at least 2 years of work in their current profession is required and in case of a self-employed applicant, at least 5 years of work and their total earnings are considered by the bank.=
- Credit history- It is one of the most important eligibility criteria. The amount of loan, tenure, interest rate and EMI, all depends on your credit history. Credit history is a report on credit information through all loan transactions of an individual. This report is recorded by CIBIL (Credit Information Bureau Limited) India. This report is influenced by any fraudulent tracks, unsecured loan or an outstanding payment of their credit card. If there’s any such record, a bank can either charge a high rate of interest or cancel the applicant’s loan request.
- Age- The minimum age for getting a home loan is 21 years and the maximum age varies from 58 to 65 years. Maximum age is influenced by the income source or profession of the applicant. For salaried people, the age group is 20 to 60 years. And for self-employed people, the age group is 24 to 65 years. It is a fact well known that the younger an applicant is, there are more chances of getting the loan. Age also has an impact on the EMI of the loan and the tenure.
- Co-applicant- Having a co-applicant while applying for a home loan can strengthen your request and increase the possibilities of your request getting accepted. A co-applicant can be anyone, be it your spouse, or your sibling or a close nominated friend or relative.
- Property Attributes- If the applicant already owns a home then he or she will get up to 75% of the value of the property as a loan amount. Along with this, there are some other factors too that banks consider while checking a loan application. These criteria include a minimum area, the age of the property, its location and also the reputation of the property developer.
Different banks have different eligibility criteria. In the case of Non-Banking Financial company, applicants may expect higher eligibility.