Finance

Understanding Home Loan Eligibility Using a Home Loan Eligibility Calculator

Ever wondered what are the crucial factors that lenders consider for approving your housing loan application? Or simply how does the lender decide that you will not default on the home loan? Give this a read to find answers to your queries.

When it is about obtaining a home loan, every applicant is distinct and determined as per different parameters. These include –

  • Current age and working years left

Your age plays an essential role in deciding your home loan eligibility. And with maximum repayment tenure usually capped at 20 years or until the retirement age, any young individual with a good credit score and income can get a longer repayment tenure while a relatively older individual may avail a shorter tenure.

  • Financial position

Your loan repayment potential is viewed by considering your current and future income. Along with the quantum of income, the quality and stability of your income is even viewed.

  • Credit score and present and past credit history

Having a clean repayment record gives credence and confidence to lenders for considering your loan application. Moreover, a strong credit score indicates minimal loan default risk.

  • Other financial liabilities

Home loan lenders even examine your ongoing liabilities like credit card debt, car loan, personal loan, or any other loan to ensure your potential to bear incremental burden of excess loan.

  • Personal profile

Your thorough personal profile i.e., your educational qualification, background, etc., plays an important role in approving your home loan.

  • Traits of desired home or property

Lenders usually have certain specifications to which underlying home or property must stick to, like property’s age, its size etc. In case it does not adhere to the set specifications, the loan application may be rejected.

  • Guarantor to existing loan

Even if you are an existing loan guarantor or co-signer, the lender will consider you as a loan holder. This may massively impact your home loan eligibility. Lenders often check your credit history to evaluate your default record. In case of any default, lenders may not approve your home loan application. And if any of the lender agrees to approve your application request, it may be at a higher home loan interest rate owing to the involvement of higher credit risk.

How can you compute your home loan eligibility chances before applying for a home loan?

To calculate your home loan eligibility chances, you can use an online home loan eligibility calculator. Such a calculator calculates accurate results depending upon the 3 added information, namely estimated interest rate, preferred tenure, and required loan proceeds. Based on the entered details, the calculator will compute the results in seconds.

Read on to know a few essential reasons of computing your eligibility using the home loan eligibility calculator

  • Get accurate outcomes

With an online calculator, you can eliminate the requirement for any complicated calculation or guesswork to compute your home loan EMI. You just need to ensure you have placed in the required details to get accurate results according to your eligibility in the calculator. Also, the home loan eligibility calculator permits you to try out different variations by adding different home loan interest rates and repayment tenure to get an outcome as per your repayment capacity.

  • Quick manual calculation

An online home loan EMI calculator is very quick. You do not require making any kind of guesses or crunch numbers manually. To use the calculator, you just need to enter the required details and the home loan EMI will pop up instantaneously.

  • Easy to use

A home loan eligibility calculator is easy to use. There is no need to input any kind of complex formula. You just require adding the asked details on the calculator.

  • Assists to plan out your future finances

From a financial planning point of view, a home loan eligibility calculator is an important instrument. As the tool computes your expected EMI, you can begin apportioning your expenses and income, and plan out your investments and career decisions.

Ending note

A housing loan is a long-term commitment that might go up to 20 years. This makes it important for you to conduct your due diligence at the time of placing the home loan application. Submit the home loan application once you have calculated your borrowing cost and are aware about the implications it might have on your finances over the long term.

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