ELIGIBLE FOR A HOME LOAN?

Here are some of the factors that have a bearing on an individual’s eligibility for a home loan
There are a number of factors that have a bearing on eligibility for a housing loan. The banks have their own criteria to determine the eligibility and quantum of housing loan. The banks have their own criteria to determine the eligibility and quantum of housing loan. It would do well for borrower to be aware of some such factors.
To begin with, it is the information on the application from. The information submitted in the application from by the individual is verified from various primary and secondary sources-through interviews, calling up the employer, verifying from the database. In case of wrong information or inconsistencies, the loan application is liable to be rejected.
The financial strength of an individual is an important determinant. The loan eligibility as well as the repayment capacity depends on the financial position of the borrower. His income level, net income, liabilities determine the amount of loan he is eligible for. The requirements include a particular minimum income or a fixed and certain source of borrower also plays an important role. Usually, the lenders maintain a database of borrowers and verify the credit history to check for previous repayment defaults, even from other lenders.
The personal profile of the individual I also important. These include factors like educational qualification, profession, number of dependents, assets owned, liabilities owed, savings history etc. A higher number of dependents or existing liabilities implies lower repayment capacity. The individual’s age plays a major role to determine earning life, and the life-cycle stage at which the individual is in. in case the property is co-owned; the co-owner cannot be a minor. Also, the coowner cannot be above a certain age limit. The age limits are set to minimize ownership disputes. The age limit also affects the tenure of the home loan and EMIs. The applicant’s retirement age is also considered. For example, if the applicant is 45 years of age and is set to retire at 60 years, the maximum loan tenure available will be 15 years. Also, in case the bank has a 75 year ge limit for a co-applicant, if the applicant is 40 years old and the co-applicant is 60 years old, then the home loan will be sanctioned for a maximum period of 15 years only.
The reputation of the builder also counts. Each bank has a list of pre-approved builders. Their credentials are already verified by the bank and as such loans are easily available for their properties.
Location of property also affects the eligibility. Bank have specific norms with respect to a minimum area of a flat too. This may be built-up area or carpet area. The age of the property is also an important consideration in case of purchase of existing properties. Home loans on resale properties are sanctioned only if they are less than 50 years old.
Banks conduct legal and technical appraisal of the property to see whether the title of the property is clear, there are no ownership disputes, the property is free from any encumbrances etc. in case there are any objection in these appraisals, and the loan application is bound to be turned down.
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Courtesy: ET REALITY dated March 14, 2008