Your Age and Income Flow Can Determine Your Home Loan Eligibility
In earlier days when the prices of properties were much more affordable, people were able to acquire multiple properties during their working life, which was not only a good investment avenue but also was a good source of income. Since last decade, the prices of residential properties have literally sky-rocketed, making it difficult for a large number of individuals to own even one residential property, leave aside the possibility of owning multiple properties. The rising real estate prices across all major Indian cities have left most of us with no choice but to apply for a Home Loan in order to be able to afford the residential property that we want for ourselves.
About Home Loans
Home Loans have become one of the most popular types of loans offered by financial institutions in India. This is partly due to the fact that most prospective home owners are young professionals, who have just started working but want to have their own house. As their savings are not yet substantial, they need to avail a Home Loan to be able to afford their own house. The repayment tenure for a Home Loan can go up to 30 years,and the rate of interest starts from 8.45%, making it easier for you to repay the EMIs (Equated Monthly Instalments) over your working life.
The amount you are eligible for depends on various factors such as age, income, credit score, the value of the property,and so on.In most cases, the lenders will be willing to finance up to 80% of the value of the property or 5-6 times the annual income of all the applicants. The property that is acquired through a Home Loan must be mortgaged with the bank, but you can use it for residential purposes without any problem. The amount that you avail as a Home Loan can be used to acquire residential property only and no other purpose.
With the rapid influx of technology in the financial services sector, you can now apply for a Home Loan as well as check your Home Loan eligibility through the online channels,i.e.,the website of the lenders and online finance marketplaces like MyMoneyMantra. You can use the online platforms like MyMoneyMantra to access information about Different Type of Home Loans Available in India, their terms and conditions, Home Loan eligibility criteria and various other parameters. This helps you identify the best option for you and then you can proceed to apply through the online platform. If your profile matches the lender’s requirement, their representatives will get back to you to take the process further.
Impact of Your Age on Home Loan Eligibility
There are various important factors that are taken into consideration by lenders while assessing your eligibility for a Home Loan. One of the most important factors is your age. You must understand that lenders want to make sure that you will be able to repay your housing loan during your working life only,i.e., before retirement. Therefore, lesser is your age; higher would be your loan eligibility as you have many more working years in front of you where you will be earning a steady income, with the periodic increase, over the years. This significantly reduces the chance of default.
Lenders offer Home Loan to individuals in the working phase and not retired people or students. In the case of self-employed individuals, the retirement age is considered to be 65 years while in case of salaried individuals the retirement age is considered 60 years. This age threshold might be extended if you are receiving a substantial amount as your pension or have a rental income, which has nothing to do with age.
Even if you have various valuable assets like properties, gold, investments,and so forth, the lenders will not compromise with the age factor because they are not interested in your wealth, they are more interested in timely repayment of their EMIs. The cost of litigation and legal action in case of default is too much,and lenders want to avoid that as much as possible.
Impact of Your Income on Home Loan Eligibility
A regular flow of income is another important factor taken into consideration by lenders while calculating your Home Loan eligibility. Lenders want to make sure that you have a steady flow of income over the years, which is increasing periodically. This ensures them that you will be able to repay your EMIs on time and the chances of default are significantly reduced. They do not want to offer you the amount, whose EMIs you cannot afford.The cost of recovery, follow-up and possible legal action is very high and time-consuming for lenders.
As the HomeLoan is a significant financial commitment, lenders want to be absolutely certain that you will be able to repay the entire amount with interest through EMIs. That is why to be on the safe side they only consider 60% of your income for repayments and offer around 6-7 times of your annual income as a HomeLoan. To assess your income, the lenders would require your Income Tax Returns along with Form 16 (if salaried) and bank statement for any rental income.
If your income flow is erratic over the last few years, your chances for getting a housing loan are significantly reduced.
Getting a Home Loan is one of the biggest financial decisions of an individual’s life, so make sure that you research thoroughly and apply only after satisfying yourself about all aspects of the Home Loan. Do not rush into any decision that you may have to regret later.
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