Home loan

Factors That Affect Your Home Loan Eligibility

Although mortgage interest rates have increased recently, particularly in the last month, they remain attractive overall. For example, current rates are still relatively low compared to recent years.

Being eligible for a low interest home loan is easy but crucial, as lenders pay attention to the profile of the applicant before disbursing the loan amount. This article helps you fine-tune your eligibility to maximize your chances of being approved for your home loan guiding you through the factors that affect it.

Factors That Affect Home Loan Eligibility

Credit score

Your credit score is an important measure of your eligibility for a home loan that the lender will inspect before approving your home loan. A credit score is a three-digit number consolidating an individual’s financial profile, including income, monthly debts, debts, and repayment history, among others.

A score of 725 and above is considered reliable and is likely to secure more attractive home loan terms from the lender. Bajaj Housing Finance Limited offers home loans starting at 6.65%* per annum to salaried and professional applicants with a credit score of 800 and above, provided they meet the other eligibility criteria. A high credit score not only increases your chances of getting a low interest home loan, but it can also mean that you could get a large loan sum of Rs. 5 Crore* or more, depending on your eligibility.

Income stability

Being able to establish a steady stream of income is an important aspect of your home loan eligibility. It portrays you as a low-risk borrower, which says a lot about your ability to repay. Salaried and professional applicants such as doctors and chartered accountants have more to gain on their home loans if they meet the lender’s minimum income criteria with the requirement of work experience and income stability.

Salaried persons should demonstrate, preferably 3 years of work experience in a public or private sector office or multinational, while professional applicants should have a preferable work experience of at least 3 years in a registered establishment or a practice, to be taken into consideration for a mortgage at a reduced rate.

Preferred age

Lenders are more likely to offer competitive terms to applicants who fall within the desired age range of their home loan eligibility criteria. Older applicants may have a harder time getting low interest rates on home loans, as the maximum age for a home loan is 62 – which is considered when the loan matures. This could lead to higher interest rates, lower penalty amounts, or a shorter repayment term.

However, seniors can still increase their chances of lowering the interest rate on their home loan if they include a co-applicant with good credit or a guarantor in their application.

Property Profile

Your chosen home also plays a key role in determining your eligibility for a home loan. If your home is new construction in a popular locality with modern amenities, you are likely to get a home loan at a lower interest rate. However, the same may not apply if your property profile does not meet the lender’s eligibility mandate.

How to improve your eligibility for a mortgage?

You must meet the lender’s home loan eligibility criteria before applying for a home loan, as this will reduce the risk of being rejected.

It will also allow you to be more certain of your application and avoid multiple applications to different lenders. Here are some things you can do to improve your home loan eligibility.

  • Increase your credit score: If your credit score is below 725, we recommend that you do everything you can to bring it up to the lender’s benchmark level. This could mean settling your outstanding debts, disciplining your monthly outgoings, and paying your bills on time.
  • Prepare your repayment plan: With the help of Bajaj Housing Finance’s Home Loan EMI Calculator, you can prepare an interim repayment plan, tailored to your repayment capacity. The tool will help you plan a tentative EMI schedule, based on your income, desired loan amount, and preferred loan term. This will help you apply for an achievable loan amount with a repayment schedule that won’t stretch you too much.
  • Apply with a co-applicant: If your profile is just insufficient, you may consider having a co-applicant with strong eligibility to improve your chances of being approved by the lender.

Summary

A home loan is a big financial commitment that often stretches up to nearly 30 years, so being able to meet all eligibility demands is not only beneficial to the home loan interest rate you can get, but also important for you to get a home loan that suits your financial situation. The minimum documents and eligibility requirements of Bajaj Housing Finance Limited make it quite easy for applicants to get a home loan on favorable terms. Consider borrowing from the lender for a hassle-free borrowing experience and quick disbursement facilities.


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