Archive for October 2020

What Are The Factors That Can Affect Home Loan Eligibility?

A lot of people consider the possibility of taking a home loan as extremely daunting. While home loans are serious business, they are also quite easy to understand. If you have always wanted to have your own place and you are doing well financially, it might not be a bad idea to take out a home loan against your available assets and get the house of your dreams. Banks and other financial institutions have made it very easy for people to take out home loans. However, there are certain factors that can affect your eligibility for a home loan, since banks and other financial institutions need sufficient proof of your legitimacy before they hand over their money to you.

If you are thinking about taking out a home loan, you have come to the right place. Read on to know more about the factors that can affect your eligibility for a home loan.

  1. Your age.

This is the first factor that is taken into account by banks and other financial institutions, since it is an important factor in loan approval. If you are young and have a stable source of income, you are more likely to be sanctioned for a home loan than if you are much older and nearing retirement. This is because banks may doubt your potency to repay the loan in full.

  • Your job and income.

This is second on the list of considerations. Of course, unless you have a stable job with a steady income flow, you will simply not be sanctioned for a loan at all. Unconventional or risky jobs which do not always promise a stable future can hamper your plans to get a home loan. If you have a history of frequently changing your workplace, it might also affect your eligibility.

  • Your credit score.

This is the most important consideration when it comes to sanctioning home loans, since your credit score is basically a history of all your monetary transactions. It displays your repayment history, existing/outstanding loans, credit card dues and debt history. This is a measure of your financial credibility which the bank or lender will take into account while debating whether you are a good candidate for advancing a loan, since it will determine whether you will be able to pay the amount in due time.

  • Your property details.

A loan is always advanced against some sort of asset, and for home loans, this is usually the property that you are taking out the loan for. Your property is the security against your home loan. If you property is worth a lot, your home loan amount will automatically be more.

  • Your dependents.

The number of people who depend on you is taken into consideration before advancing a loan. This is because the more dependents you have, the more people you need to take care of and thus your ability to pay off the loan in time may get affected, as your disposable income will be lower. This can also affect your home loan eligibility.