Estimation of trends in 2019 suggested a growth of approximately 28% in home loan applications. It was further projected to reach near about 40% by 2025. While current circumstances have somewhat hindered this progress, government initiatives and borrower-friendly terms from financial institutions have been a significant motivator in this domain. Ranked as the 4th highest contributor to India’s GDP, housing initiatives can be expected to grow in these coming years.
Understandably, it is vital that borrowers are clear about their home loan requirements & the paperwork to make the best of this rising trend. Noting these requirements is essential to avoid loan applications disapprovals, which might even go on to harm a potential borrower’s CIBIL score. Beginning with eligibility criteria, while any Indian resident can apply for a loan, salaried and self-employed individuals have different criteria to fulfil.
Following home loan eligibility criteria must be fulfilled by salaried earners to have their applications approved.
- Applicants must be of 23 years of age during the time of their loan application. Additionally, they cannot be beyond 62 years of age.
- As a salaried employee, an applicant must have a minimum job experience of 3 years.
- Furthermore, depending on an applicant’s city of residence, there are some minimum salary requirements which must be fulfilled too.
Salaried borrowers should also note that they are eligible to a minimum of Rs.10 lakh, and a maximum of Rs.3.5 crore on their home loan applications. This amount depends on numerous factors like LTV, monthly salary, existing debts, etc.
For self-employed borrowers, the following home loan eligibility criteria listed below must be met.
- These applicants must have acquired a minimum age of 25 years; while on the other hand, they cannot be beyond 70 years of age.
- A self-employed applicant must also be engaged in their current business venture for a minimum of 5 years to be eligible for a home loan.
While self-employed applicants do not have salary requirements depending on their city of residence, their earnings, existing debts, etc. ratios are considered while approving a loan amount.
While knowing these vital criteria mentioned above, potential applicants should also note the various factors that can affect an individual’s home loan eligibility. Once all these necessary criteria are covered, applicants should also arrange these following documents for their loan application. Despite salaried and self-employed individuals having specific home loan documents required, the majority of them are common.
- KYC documents which include government-issued photo identity proof and residential details. If an applicant has a current address which is not the same as that of his/her permanent address, this current address must also be provided.
- Passport-sized coloured photographs.
- Financial account statements of an applicant for the last 6 months before their application.
- While knowing the documents required for home loan approval, salaried individuals also need to present their recent salary slips or Form 16. Contrastingly, self-employed individuals must provide documents providing proof of business existence for the last 5 years.
Among vital pointers related to home loans, potential borrowers should compare different loan offers before choosing one. This includes checking interest rates, additional charges, tenor options, etc. Borrowers should also use an online home loan installment calculator to check their total repayment amount on loan. Additionally, these calculators also display the EMI amounts a borrower has to pay every month, thereby allowing him/her to plan the repayment more efficiently.