Home loans in India have been quite successful in improving the standard of living of millions of individuals. They have facilitated the smooth relocation of numerous salaried and self-employed individuals from rented houses to self-owned homes. The sector, with its attractive home loan rates in India, boasts a compounded annual growth rate of 18%. Valued at Rs. 28 Lakh Crore, the growth line indicator of this sector shows no signs of slowing down in the foreseeable future.
Home loans have not only improved the standard of living of many individuals but have also had a quantifiable positive impact on the real estate sector as well. Currently valued upwards of $120 Billion, the real estate market in India is estimated to grow above $1 Trillion marks by the end of FY 2029-30.
Eligibility Criteria for Home Loans
Listed below are factors that determine your home loan eligibility to secure approval on your home loan application. You must understand these factors before applying. It will help you frame your application details in a way that ensures prompt approval by the lender.
- Age of Applicant: You must understand that eligibility depends a lot on the years of service you have left. For example, if you are 50 years old, you only have ten years of service left. Your loan has higher chances of being rejected when compared to an applicant who is younger than you. Lenders prefer people aged between 30 to 40 years as they are considered financially stable with higher years of service left. It is best to apply for a home loan when you are within the ideal age bracket.
- The Income of Applicant: Yourincome plays the biggest role in Higher your income, the higher will be the loan amount you can avail. Lenders also check whether your debt-to-income ratio exceeds 50%. You can use an EMI calculator to check the EMIs for different loan amounts and tenors and determine what’s ideal for you. Lenders generally take into account these factors that affect your approval and home loan rates in India.
- CIBIL Score: Another crucial factor on which the approval depends is your CIBIL score. Lenders generally look for a CIBIL score of 750 and above to approve an application. If you have a score below 750, you must learn how to improve your credit score.
- Value of Property: Lenders follow something called a loan to value (LTV) ratio. This ratio determines the correlation between the value of property and loan that can be availed. Typically, lenders approve 70-80% of the property value as credit. Therefore, you must ask for an amount according to the value of the property and other factors like location and re-sale value.
- Documents: You must be able to provide your identification and employment proofs along with property dossiers as and when asked for by your lender. If you have availed any Government housing schemes, you must present documents confirming the same.
Home loans are practical financial tools that have helped countless individuals fund their house purchase. Along with the ready availability of funds, home loan interest tax benefit is another reason why they are so popular.
Home Loans in India
The process of availing housing loans is easier than ever, with multiple financial institutions offering these credits. The Government of India has also initiated schemes that focus on providing cheap housing to every citizen of India.
One of the most popular housing schemes is the Pradhan Mantri Awas Yojana (PMAY) which is a credit-linked subsidy scheme. It aims at constructing 20 million affordable houses, especially for the urban poor by the year 2022.
Therefore, if you are planning to avail a home loan, you should also apply for PMAY after understanding the PMAY eligibility criteria. It will allow you subsidized home loan rates in India, thereby reducing interest obligations on your availed funds.