Qualifying For a Home Loan – Process, Eligibility and Documents Required

A home loan is taken from financial institutions (such as insurance companies, investment

banks, commercial banks and brokerage firm) for the purpose of buying a desired property. Home loan can be re-paid by EMIs (Equated monthly installments).

6.5% to 12.00% is the average home loan interest rates in India. The ratestypically vary from lenders to lenders, economic activities and many other factors.

The special prerogative is given to women, bank staff and senior citizens by banks by providing a 0.05% concession.

Home loans are of various types such as:

1. Home loan
2. Home construction loan
3. Home extension loan
4. Home improvement loan
5. Home loan balance transfer
6. Composite home loan

The person taking the home loan has to consider various factors such as:

• Loan Amount
• Loan Tenure
• Interest Rate
• Monthly EMIs

Qualifying For A Home Loan:

In order to qualify for a home loan every borrower need to meet the eligibility criteria. If a person fails to meet the criteria the loan application of that particular person will be rejected.

Eligibility for a home loan is as follows:

Age	18-70 years
Income	?25,000
Credit score	Above 750
Employment status	Employed or self employed
Loan Amount	Decided by lender
Residential status	Permanent resident or Non-ResidentIndian (NRI)
LTV Ratio	Upto 90%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Documents Required For A Home Loan:

Agriculturists	Salaried person	Businessman
Application for with photograph	Application form with photograph	Application form with photograph
Identity and residential status proof	Identity and residential status proof	Identity and residential status proof
Bank statement of last 6 months	Bank statement of last 6 months	Bank statement of last 6 months
Documents copies portraying land holding	Latest salary slip	Educational qualification certificate and proof of business
Processing fee cheque	Processing fee cheque	Processing fee cheque
Document copies depicting crop being cultivated	Form 16	Previous 3-year income tax returns And Balance sheet of previous 3 year

              

Process Of Applying For A Home Loan:

Applying for a home loan now is not a difficult task with the advent of technology. Person can either go to bank directly or he can apply online application.

1. Fill the application form and attach the necessary documents: - In applications form a person need to provide the lender with the basic detail which are as following:

• Personal details
• Residential address
• Educational information
• Monthly or yearly income
• Employment status
• Property details

Documents Required

• Identity proof
• Income proof
• Address proof
• Age proof
• Educational certificates
• Property details
• Bank Statemen

 

2. Documents Verification: -After the submission of application form and documents lender will verify the documents. He will also check you CIBIL score. Upon applying banks checks the documents, CIBIL score.

A CIBIL score is a consumer’s credit score. It is a three-digit number ranging between 300 to 900. A good CIBIL score ranges between 700-900. If a person visits the financial institutions for loan and there CIBIL score is fewer financial institutions may not grant him loan. It acts as a first impression for lenders the higher the score is, better are your chances of getting the loan approved. CIBIL score can be improved by paying the credit card bills on time, by not missing any EMIs.

1. Sanction Letter:- Sanction letter is received after the completion of above process which includes:

• Loan amount
• Rate of Interest
• Type of interest rate
• Loan tenure

    Sanction letter also contain terms and conditions and policies which you have to sign and send it to the lender.

1. Processing Of Technical Papers:- A lender will send the team last time for verifying the property so that you could not be distributed later.

2. Loan Agreement:- After lender has performed all their checks you will receive the final agreement.

How to increase the chances of qualifying for a home loan?

In order to improve your chances of qualifying for a home loan: -

• The most important thing is enhancing your credit score. The CIBIL score should range between 700-900 and should not be less than 700 in order to get your loan application approved.
• Make sure all the debts have been paid.
• Lender also plays am important role in getting qualified for a home loan. So, choosing a right lender is must.
• Do not panic or hurry in applying for home loan do your research properly before applying for home loan. You should consider you income, check you CIBIL score, compare loan options and estimate you budget etc.
• If a borrower is a salaried person and is planning to apply for a home loan, he should continue to work in the same organisation for at least 2 years as frequent job change affect the home loan eligibility amount.
• A borrower should pay higher down payment so that the rate of interest which the borrower has to pay is less. If a person will pay the lower down payment the loan tenure will increase and consequently the rate of interest will also increase.