For many people, buying a house is a huge achievement that can be fulfilled by taking a home loan. However, before applying for any loan, it’s important to know your loan eligibility criteria and the monthly payments. This is where using a home loan eligibility calculator comes in handy. It can help you find our whether you meet the requirements for such loans. In addition, it helps in making informed decisions regarding one’s application for such loans. In this blog, you will understand how to use it and how to increase your eligibility.
How to Use a Home Loan Eligibility Calculator?
Home loans come with simple eligibility requirements and very few documents. One can use home loan eligibility calculators to easily evaluate if they qualify for a loan. To use this calculator, individuals must provide the following information.
Net Monthly Income
Net monthly income refers to the salary you receive after taxes and/or any other deductions. In the case of self-employment, net income is calculated by subtracting taxes and expenses from the gross earnings.
Monthly Obligations
The sum of your monthly liabilities like EMIs on other loans has to be included. This calculation does not include statutory deductions like PF, taxes, and investments.
Rate of Interest
The rate of interest which is relevant for the housing loan must be filled in. This can help you to find the best home loan interest rate.
Home Loan Tenure
Borrowers must note the term for a home loan and the interest. A maximum term of 30 years is possible for such a mortgage if you want more options.
Steps To Calculate Home Loan Eligibility
This useful tool that can help you calculate housing loan eligibility and plan your finances well while buying a home. So, here are some simple steps you need to follow to check your eligibility to take a loan:
Step 1: Provide your total earnings for each month.
Step 2: Enter all recurring expenses such as bills, insurance premiums, and existing loan repayments.
Step 3: Indicate the rate of interest charged on my housing loan.
Step 4: State the duration of the loan in years or months.
You can move these figures with the sliders or just write them in a calculator. Once you do this, it will tell you how much allowance can be borrowed at the maximum level with corresponding monthly payments against such borrowing. All this helps to analyse whether one is able to take loans and make sound financial decisions.
Factors Affecting House Loan Eligibility Criteria
Different factors are considered while assessing applicants’ home loan eligibility criteria, which usually vary among lenders. Important factors affecting home loan eligibility include the following.
Age
The age of the applicant is an aspect that is often evaluated by lenders as far as qualification for a loan is concerned. The younger one is, the more likely to secure larger loan amounts and also enjoy longer repayment durations.
Income
The income of the applicant is one of the main factors in determining if one qualifies for a home loan. This is because it gives an insight into their ability to make monthly payments. In most cases, it means that the higher the income, the higher the amount will be borrowed.
Type of Employment
The employment status and type of employment for the applicant may influence their ability to get a loan. A salaried person might not qualify for a loan using the same criteria that one applies to a self-employed individual. This is because there are varying requirements based on salaried individuals and people who run their own businesses.
Credit Score or Payment History
When assessing an applicant’s creditworthiness, lenders consider their credit score and payment history. If the person applying for the loan has a high credit rating of 750 or above it shows the individual has been handling previous debts well. This can make the process of obtaining a house loan quite simpler.
Qualification and Experience
The educational qualifications of the applicant and job experience are also part of the factors determining eligibility for home loans. The chances of securing a loan can be increased if you have significant work experience.
Conclusion
Using a home loan eligibility calculator helps determine if you can own a home without risking your finances. In this way, you can quickly assess if you can borrow and how much you would pay towards this amount through monthly fees. Such tools provide valuable insights and make the application process much easier when looking for the best home loan app. Furthermore, financial institutions like Tata Capital provide a highly intuitive application to facilitate your calculation process. Therefore, this tool makes it easy for an individual to make informed decisions by offering all the essential information and an excellent calculator.
