Buying a house is one of the biggest decisions one can make in their life. Buying a house and building it into a home is something which most people look forward to in their lives. Watching your children and their children grow up in that house and receive proper care and upbringing there.
However, it is a long-term commitment and can put you in considerable financial strain. In a world with rising housing costs, it has become difficult for the youth of our country to purchase a home. This is why it is important to understand all of the details of getting a home loan when purchasing a house, including the eligibility criteria and factors that impact home loan interest rate.
What is a home loan?
A home loan is a secured loan which can be obtained when purchasing a property. This offers the property you purchase as security and high-value, long-term loans for manageable rates.
There are six types of home loans;
●General Home Loans
General home loans are the most common type of loan, which can be used to purchase a home which is either ready or under construction from a developer or a development authority.
●Home Construction Loan
If you already own a plot of land and wish to develop that land to construct a home, you can avail of this type of loan.
●House Renovation Loan
If you wish to renovate an already existing house, you can apply for this type of loan.
●Home Extension Loan
This type of loan can be used to expand your existing house and add additional features, like new floors, additional space, kitchen, bathroom, etc.
●Plot Loan
If you wish to purchase a plot on which you would like to construct your own home in the future.
●Balance Transfer Loan
Certain companies that offer housing loans can allow you to home loan transfer an already existing loan from one bank/lender to another. This might typically be done to avail of certain offers, better interest rates, etc.
How to check housing loan eligibility?
There are several factors that affect your eligibility to get a home loan, as well as your home loan interest rate. While these factors can differ based on the lender, these are a few of the main ones:
1.Age
Most lenders require the borrower to be at least 21 years old.
2.Income
Different lenders have different requirements for salaries for individuals, independent professionals, and self-employed.
3.Credit Score
Although the home loan is secured, having a good credit score can help you secure lower interest rates.
4.Loan tenure
Longer loan tenure can result in lower EMI payment rates and higher total interest payout to the lender.
5.Property Value
Property value is also a major factor for housing loan eligibility, as a higher-value property will require a higher down payment at the start of the loan tenure.
6.Debt-to-income ratio
A debt-to-income ratio is a percentage of how much money you spend on EMIs divided by your monthly income. It is a crucial factor for housing loan eligibility. A high debt-to-income ratio can be risky for the lender and result in a higher home loan interest rate.
7.Loan-to-value ratio
A loan-to-value ratio is the loan amount divided by the property’s appraised value. No company offers a 100% loan-to-value ratio, and different lenders have varying percentages of requirement for loan-to-value ratio. A high LTV ratio can result in higher interest rates as the risk to the lender is higher.
Which loan provider to get a home loan from?
A few years ago, when I was finally ready to purchase a house. We wanted to get it right and spent the next 3 months looking for the perfect house that we could call home. We landed on a 3-bedroom house in Gurugram which was listed for Rs 1.25 crores.
After saving up around 30 lakhs, to put up as a down payment. I decided to go with Bajaj Finserv as my partner due to its low-interest rates, long repayment tenure, and loan amounts of up to Rs 15 crore. I got my loan approved within 2 days and was able to purchase the house of our dreams.
Now, 2 years in, I am extremely happy that I chose Bajaj Finserv as my loan partner, and we can see our daughter grow up in a house of her own.
Conclusion
Now that you know the housing loan eligibility criteria and what factors affect home loan interest rates, you should be able to purchase a home loan quickly and easily.
With this buying your dream home will not just remain as a dream and one which can turn into a reality.
Singh is an experienced spiritual writer and the resident author at Guruvanee.com. With a deep passion for exploring the mystical aspects of life, Singh delves into various spiritual traditions, philosophies, and practices to inspire readers on their spiritual journeys.