Top 5 Key Criteria Banks and NBFCs Check Before Approving Your Home Loan

Availing of a home loan may appear daunting, but it is simpler if you realize what the lenders are looking for. Banks, as well as NBFCs stick to the same parameters to determine whether the candidate can be given a home loan or not. Knowing the home loan criteria beforehand not only increases your possibility of approval but also gets you ready financially to take on the liability.

1. Credit Score and Credit History

The first thing lenders want to find out is your credit score. A good score, typically over 680, equals a good credit background. It is an indication that you pay your loans on time and possess excellent money management skills. The greater the score, the more assurance lenders have over your repayment strength and can lend you at cheaper interest rates. A poor grade can result in imposing higher interest on you or refusing your loan application.

2. Income and Employment Status

Your income is a strong indicator of your repayment ability. Quantum as well as the frequency of your income are taken into consideration by lenders. Salaried people are often required to submit salary vouchers and bank statements, whereas self-employed people usually have to give income tax returns and business accounts. A constant and regular source of income ensures lenders that you can easily repay monthly EMIs.

3. Age and Loan Tenure

Age is a significant factor in loan tenure and EMI planning. Younger customers tend to get longer tenures, which enable them to pay smaller EMIs. The majority of institutions consider an eligible age group of 21 to 65 years. The idea is to make your repayment tenure as close as possible to your working years remaining, enabling lenders to manage risk better.

4. Property Valuation and Legal Status

Before extending a home loan, lenders do a correct estimation of the property. Legal penalties, the construction phase, and market value are engaged. The title of the property must be free and consistent with local development ordinances. Any litigation or anomaly may lead to a loan being denied, as the lenders prefer to have risk-free assets as security.

5. Existing Financial Obligations

Your existing liabilities also come into the picture. If you have other loans or credit card loans to settle, lenders check your debt-to-income ratio so that you don't over-extend yourself. Your total EMI outgo should be less than 50% of your monthly income. A higher ratio indicates that you're stretched thin and lowers the chances of approval.

Grihum Housing Finance: A Reliable Lending Partner

Grihum Housing Finance provides home loan products to various types of applicants, such as salaried and self-employed individuals and small business entrepreneurs. With easy eligibility and transparent documentation guidelines, Grihum provides a hassle-free application experience. They also offer a loan against property calculator to make the customers aware of their EMI obligations.

Conclusion

Understanding the most significant home loan eligibility parameters can be useful while applying. Maintain a good credit score, steady income, and low debts. Through personalized services and useful tools such as the loan against property calculator, Grihum Housing Finance eases the way to homeownership and makes it simpler.