The norms for home loan eligibility are similar in most aspects across every fintech institution. However, some differences make a particular lender better than others. This article will help you understand the requirements for eligibility for a home loan and ensure that your application process becomes smooth and efficient.
To begin with, you must fulfil the lender’s criteria for home loan eligibility. An online Home Loan eligibility calculator is a wise way to check your eligibility. These calculators are designed to address a loan applicant’s concerns regarding Equated Monthly Instalment (EMI) computations and provide clarity regarding their home loan eligibility. In addition, this online tool can help you make an informed decision on which NBFC offers the best home loan in terms of the loan amount, interest rate and repayment tenure.
The Home Loan eligibility calculator only requires a few simple inputs to determine your eligibility. The principal sum, repayment tenure, and house loan interest rate are the variables to be entered into the calculator. It also considers your monthly income and net obligations to check and calculate your eligibility. Once you enter all these things, the calculator automatically calculates the maximum loan amount you can borrow and the payable EMIs.
Strategies to Calculate the Best Home Loan EMI
The Home Loan EMI calculator is available on the websites of all top online NBFCs. To calculate the best Home Loan EMI, be sure to take into account the following considerations before using the calculator:
Analyse your monthly net income
The primary determinant of the loan size you are eligible for is your net monthly income. So, ensure you’ve considered your monthly income, including money from other sources, before entering the required loan amount details in the online home loan EMI calculator. By doing this, you’ll be able to get a larger home loan to pay for your new house.
Determine an appropriate repayment period
You can choose a shorter repayment period for your house loan because it would result in the best interest rate. However, picking aggressive repayment terms without enough backup may force you to skip payments on your house loan during times of unemployment or other financial hardship. Your credit score and, hereafter, your ability to secure credit in the future may suffer as a result.
Instead, choose a tenure that would allow you to comfortably repay your EMIs once you’ve taken your emergency fund and contributions toward other financial goals into account. Remember that since the majority of house loans have floating interest rates, you can always choose to pay back your loan if you have enormous surpluses without paying the penalty.
Determine your monthly obligations
Lenders typically consider your loan repayment ability when considering your request for a house loan. Your monthly debt payments, such as your new loan EMI, should be under 40% of your take-home earnings. Your chances of getting a loan get reduced if you go above this cap.
So, determine your current monthly EMI commitments before utilising a Home Loan EMI calculator to compute your EMI. It should not exceed 60% of your monthly income. If it isn’t, consider prepaying pending bills or foreclosing on some of them to reduce your overall debt. Additionally, you can make a larger down payment or request a longer repayment period.
Factors that Affect Eligibility for a Loan
Lenders take into account your age first and foremost. Financial institutions typically try to keep the length of a Home Loan to the primary applicant’s retirement age. This indicates that young professionals in their 20s and early 30s can easily obtain a loan for up to 25 years. However, it can be challenging for senior applicants to get a Home Loan for a long tenure.
Loan applicants must have a reliable source of income. In general, lending money to someone who is a salaried professional has fewer risks. So having a regular income source is essential to obtain a loan easily.
Most fintech institutions mandate that at the time of application, the applicant must have worked for at least one year in the current company. In addition, almost all lenders require salary slips, Form 16, and bank statements as income proof.
If you own a business or company or have additional income sources, such as shares or rental properties, you fall into this group. You should submit a loan application with supporting bank statements and tax-related documents.
Selecting a longer tenure will boost your eligibility – the EMIs will also be lower. The drawback, however, is that you’ll pay more interest.
Credit Score Report
Lenders carefully examine your credit reports and repayment history. They maintain thorough records of all information pertaining to your credit history and your hard enquiries with creditors and lenders. A negative entry may severely reduce your eligibility.
Once the factors mentioned in this article get considered, you may use the Home Loan Eligibility calculator to determine your EMI and overall interest expense. A reasonable estimate obtained by the calculator gives you a better idea of the price of financing your home. This enables you to consider your present and future financial circumstances when deciding whether to apply for a house loan.
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