Every bank that offers loan will look into many criteria prior to sanctioning it. Among the long list of factors, few important ones are:
Employment Stability
Most important aspect for home loan consideration. Unless the applicant is salaried and employed for at least 2 years in the current profession or if the applicant is self-employed with minimum 5 years of total earnings loan will not be processed.
Age Criteria
The younger the applicant is there is more probability of getting loan. Most banks offer home loan for salaried employees only if they are between the age group of 20 to 60 years. However, for self-employed this will change to 24 to 65 years.
Credit Rating
Apart from the applicant’s company’s performance, individual credit rating has a lot of importance. Good credit rating will increases the chance of getting the loan with more flexibility on loan amount, EMI, tenure and interest rates. Default payment records, fraudulent tracks, and outstanding loan, will reflect negatively on the applicant, this could lead to bank’s cancelling the loan request or will charge high rate of interest.
Employer
If the applicant is working with an employer who has high reputation and impressive turnover, the credibility of the applicant will respectively increase. Being a part of reputed and high turnover companies is an asset for the applicant especially when it comes to applying for home loan.
Financial Situation
For this factor, not just present status is considered, the past records of financial stability holds lot of value in deciding the eligibility for home loan. It is a key to success in all fields if you have good financial records, this can decide the interest rate percentage, loan amount and tenure when applying for loan.
Banks’ Methods of Calculating Home Loan Eligibility
Step 1: Bank will look into your salary slips and banks statements to calculate the income level
Step 2: It then calculates the amount that is saved, bank usually assumes 30% of your income
Step 3: : If there are existing loans EMIs it will be reduced from the income
Step 4: Banks do a backward calculation to understand how much loan amount can be offered according to the saving amount determined
1.Complete the application
Your lender will assist you to fill out a loan application. (The next screen provides more information.)
2.Get preapproved
After reviewing your completed loan application, the lender can give you a preapproval letter, a written letter that confirms the price of home you can purchase.
3.Processing
Your home mortgage specialist collects the necessary financial documents to process your loan. The property is appraised to determine its fair market value.
4.Receiving approval
The lender will review your application and financial information to make their lending decision. If your application is declined, they may recommend steps you can take in order to obtain financing.
5.Pre-closing
In this phase, sometimes referred to as “loan settlement,” your home mortgage consultant will work with you to secure any required title insurance and real estate documents to protect against other parties claiming ownership of the property.
6.Closing date
The day and time when all final mortgage documents are signed and all necessary payments are transferred to complete the purchase of a house. Also known as the settlement date.
7.Loan servicing
The steps taken to maintain a loan from the time it’s closed until it’s paid off, for example billing the borrower, collecting payments, and making contract changes. It’s not uncommon to have loan servicing transferred between many companies during the life of a loan.
