It is quite natural for a financial institution to look into the general eligibility before granting a loan to an individual. Today an individual has various options amongst financial institutions and eligibility for an individual more or less remains the same; while the lending amount of the loan differs from one bank to another. Every financial institution funds 80- 85 % of the total cost of the house. There can be more than one applicant to the loan if the co-applicant is also a salaried class. The applicant as well as the co-applicant needs to submit his or her professional details as well.
The bank takes into account what profession you belong to so as to determine whether you will be able to pay the installments comfortably or not. In general, they are keener to provide the loan to people engaged in an organization over the business class.Banks do keep in mind the other existing loans if any and thus determine the value of the loan amount to be sanctioned. For example if the income of an individual is 40,000 and he spends around 13,000 as expenditure then the bank will consider that your repayment capacity as 27,000 and then determine equated installments. In general, an applicant has to pay thirty to forty percent of this monthly income as the installment.
The applicant’s repayment history: The track records of your previous repayment of home loans can play a crucial role while your loan is being sanctioned. Hence in this context these guidelines will help you better understand the eligibility criteria s for home loans.
- The home loan amount you are eligible for depends on your monthly income, the tenure and the rate of interest.
- The financial stability of an individual is the main criteria for any financial institution to grant a loan
- The financial stability would include assets, repayment of loan if any and some investment details of the applicant.
- The repayment capacity of the applicant can be considered as an important factor for any bank to grant a loan
- The tenure that you chose should be longer and this increases your loan eligibility.
- The repayment period that you seek should be chosen always and your age should be less than the age of the retirement.
- Home loans rate of interest is another important thing to be kept in mind ; one should always chose floating rate loans even though there is slight risk involved it is always better to opt floating than fixed.
Here are some documents that needs to be submitted with the home loan application and this may vary from one bank to another.
- Completed application form
- Passport size photograph
- Proof of Identity which can include PAN Card/ Voters ID/ Passport/ Driving License
- Proof of Residence which can include Recent Telephone Bill/ Electricity Bill/ Property tax receipt/ Passport/ Voters ID
- Proof of business address in respect of businessmen/ industrialists
- Sale Deed, Agreement for Sale, Letter of Allotment, Non encumbrance certificate, Land/ Building Tax paid receipt etc. (as applicable and subject to satisfaction report from bank’s empanelled lawyer)
- Copy of approved plan and approval from the Local Body
- Statement of Bank Account/ Pass Book for last 6 months