Home Loans Eligibility
Opting for a home loan is as wise a decision as buying a home
Understanding the concept of home loans and eligibility criteria
- Essentially, home loans put homebuyers in possession of a large sum of money at a reasonable rate of interest. Moreover, eligible borrowers are permitted to pay back a home loan over a protracted time period that eases the repayment pressure. For example, a payment of as little as 20% of the cost of an apartment can turn a borrower into a homeowner, because the balance payment is taken care of by the home loan. Depending on the terms of the bank or housing finance company that lends the money, the loan amount (principal and interest) can be paid back over a period of 5 to 25 years. However, it helps to keep in mind the number of working years left and cash flow needs once earnings stop when deciding the tenure of a loan; such an approach helps to safeguard fund outflow post retirement.
Banks and housing finance companies apply several criteria to assess the applicant's loan eligibility
- An applicant must be either a resident Indian, non-resident Indian, or a Person of Indian Origin to qualify as a legitimate borrower
- Applicants must be at least 21 years of age at the start of the loan and not more than 65 years on maturity of the loan
- Loans for buying properties located in India are only given to salaried, professional, and self-employed persons
- The borrower's repayment capacity is the primary criterion of a lending institution (banks and housing finance companies)
- Other criteria include applicant's income, age, qualifications, number of dependents, spouse's income, assets, liabilities, stability and continuity of occupation, and savings history
- Based on the applicant's repayment capacity, lending institutions process and disburse loans even before the applicant has identified a property (with a clear idea about resources available, the borrower has the freedom to draw up plans in advance)
- Although lending institutions do not sanctions home loans in excess 80/85%, including the income of other members of the borrower's family can help to enhance the borrower's loan amount eligibility
Understanding the concept of home loans and eligibility criteria
The above checklist is indicative; requirements vary from one lending institution to another; it is advisable to always confirm the details with the lending institution representative
The above checklist does not cover documents required to be submitted when income is received in cash; the list of documents to be submitted for income received in cash must be obtained separately from the lending institution
