When most people hear “loan”, they conjure the thought of money borrowed at a ridiculously high interest rate. While some borrowers have been unlucky, there’s a way for you to avoid making erroneous decisions. All you have to do is see how well you match against a lender’s loan eligibility and based on your financial profile – you too can get a home that fits your budget.
To make it easier for you to take stock of your eligibility, there are many online eligibility calculators at your disposal. In this article, you will learn how to use a home loan eligibility calculator for a home loan application today.
What is a Home Loan Eligibility Calculator?
Lenders are likely to offer attractive home loans to the applicants they believe can repay the amount taken within a tenor.
A home loan eligibility calculator is an online tool that tells if you qualify for a home loan or not. It’s a simple tool that saves you the trouble of applying for a loan that doesn’t fit your financial standing.
A similar tool is the home loan equated monthly instalment (EMI) calculator. Both are available on the lender’s website.
How to Use the Home Loan Eligibility Calculator
To use this tool, supply the details to the following fields:
- Monthly income
- Tenor (in years)
- Interest rate (in percentage)
- If you have an active loan elsewhere, input the remaining EMIs.
The Role an Eligibility Calculator Plays in a Home Loan Balance Transfer
However, if you find that you no longer benefit from your existing Home Loan terms, you also have the option to transfer your home loan balance to a new lender, provided it makes financial sense and your eligibility and repayment capacity permits it.
This too can be determined using an Eligibility Calculator, that shows you where you stand on the financial spectrum, and what you have to do to be eligible for the best lending terms from your new lender, such as a lower interest rate and the option to refinance – going up as high as Rs. 1 Crore, or higher.
Two Factors that Affect Your Eligibility for a Home Loan
Some factors determine whether or not you qualify for a housing loan. Knowing them helps you to work on your shortcomings to increase the chances of approval. Below are two of them.
1. Credit Score and Report
Most lenders prefer applicants with a credit score of up to 725. Having a high score affirms that you can repay any amount within an agreed period.
Not having a decent score and an impressive debt history reduces your chances of getting approved. You can request a copy of the credit report at your credit information bureau.
2. Loan Tenor
If you’d like to enhance your eligibility for the desired amount, consider applying for a long-term home loan. While this means that you will pay less towards the principal amount, it also means that you will pay more interest.
As you prepare to take a home loan, we advise you to always use a home loan eligibility calculator. With it, you’re one step closer to getting an approval notice.