What are the eligibility criteria for home loans?
Buying a house through home loans has its own benefits, one of them being tax benefits. It helps in managing cash flow along with few reductions to taxes. It is up to the applicant to decide the type of loan that is required. However, the important thing for a borrower is to be aware of all conditions before applying for home loan.
A housing loan can be used for various purposes apart from buying your dream home. Some of them being the construction of a new house, renovation, purchasing a pre-owned house. Irrespective of your goal or occupation, it is advisable to check eligibility before approaching the banks.
Factors that decide applicant’s eligibility for home loans:
1) Employment stability:
Banks consider it as one of the crucial aspects while sanctioning a home loan. The loan is sanctioned if the applicant is salaried and employed for at least 2 years in the current profession or is self-employed with a minimum 5 years.
2) Age:
The probability of getting a loan is easier if the applicant is young. Most banks offer a housing loan for salaried employees only if they are between the age group of 20 to 60 years. However, for self-employed individuals, it changes to 24 to 65 years.
3) Credit rating:
For lenders, the individual credit rating is vital while granting a home loan. Good credit rating score will increase your chances of getting the loan with more flexibility on the amount, EMI, tenure and interest rates. Default payment records, fraudulent tracks, and outstanding dues will negatively impact your credit report, that could lead to the lender cancelling the loan request or can charge a high rate of interest.
4) Employer:
The credibility of applicant increases if he is working for a reputed company or a reliable employer. Being a part of impressive and high turnover organisations is an asset for the applicant especially when it comes to applying for home loan.
5) Financial stability:
Banks investigate the records of the applicant to understand the financial stability of the applicant. It holds a lot of value in deciding the eligibility for a home loan.
Documentation:
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For Salaried applicants:
· Bank Account Statement
· Latest Telephone Bill
· Latest Credit Card Bill
· Employers letter certifying current mailing address
· Valid passport — provided the address is the current one mentioned in the application form
· Government ID card with photo
· Form 16 / Income Tax Returns
· Existing registered house lease
Self-employed professionals:
· Application form with photograph duly signed
· Identity, residence and age proof
· Last 6 months bank statements
· Form 16 / Income Tax Returns
· Proof of business existence
· Last 3 years Income Tax Returns with the computation of Income
