JVM Spaces: These are the factors that impact how much home loan you will get

September, 2018

While an applicant’s income is the main factor for determining the amount of home loan that he can get, here are some other factors that one can leverage to increase this amount Besides checking an applicant’s eligibility for a home loan, lenders also have certain criteria to ascertain the quantum of home loan that they can grant to the person.

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Income of the applicant

While computing your home loan eligibility, the lender will subtract the EMI on your existing loan, from the amount available for servicing the home loan. Consequently, your home loan eligibility will be based on this reduced amount. Therefore, if you have an existing loan, where the outstanding amount is small, it makes sense for you to prepay the outstanding loan, as this could enhance your home loan eligibility substantially. The incremental home loan eligibility, will be much higher than the outstanding amount on the existing loan.

Age and remaining years of service of applicant

Home loans are generally available for tenures of up to 20 years. However, your age and remaining years of service, could restrict your loan amount. For example, if your age is more than 40 years and your remaining years of service is less than 20 years, your loan eligibility shall accordingly get reduced. For a salaried person, a retirement age of 60 years is taken into account, while for self-employed borrowers, the lenders consider a retirement age of 65 years, for determining the home loan’s tenure.

Availability of co-borrowers

The amount of home loan that you are eligible for will increase, if you are able to add someone, who is acceptable to the lender, as a co-borrower to the home loan application. The lender will pool the income of all the co-borrowers, to determine the amount available for paying the EMIs. Please note that all the joint owners of the property, have to be included as co-borrowers, irrespective of whether they have any separate income. However, a person can also become a co-borrower, even if he is not a co-owner of the property.

Tenure of the home loan

Your home loan eligibility is directly linked to the tenure that you opt for. With the same surplus income, a longer home loan tenure will give you a higher home loan eligibility. As there is no prepayment penalty on home loans and with lenders mostly offering loans under the floating rate of interest, it makes sense for you to choose a longer home loan tenure, so as to have higher eligibility and better flexibility. You can always prepay your home loan partly or fully at any time, in case you have surplus funds.

Also read: HOW TO BUY A HOME IN YOUR 20S...

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