Buying a home of your choice might be a distant dream for many. There could be ongoing expenses sprouting up every other day, keeping you away from the perfect home. A Home Loan is an excellent way that supports you in fulfilling such dreams and buying your dream home. Before applying for a Home Loan, you must check if you qualify for it using a Home Loan eligibility calculator. Financial institutions may even approve a more substantial loan amount or present more attractive offers to self-employed individuals if their income flow is stable and more than their requirement. This article aims to provide insight into the Home Loan eligibility calculator and how you can use it.
Calculation Process of Home Loan Eligibility
Various factors are considered to calculate the Home Loan eligibility of applicants. Some of the key factors are:
1) Credit Score – The credit score of applicants is the most important factor in determining creditworthiness. Lending institutions usually put a lower limit on credit scores. You must understand your current credit score because a high credit score could help you achieve a lower Home Loan interest rate.
2) Age – The age of the applicant is a key factor when granting a loan. Lending institutions might find you too young to be able to repay loan commitments, or you might be the right fit to take a loan for a long tenure at a lower EMI.
3) Income – Lending institutions give substantial weightage to the income of the loan applicant. An estimate of your cash inflows helps the financial institution decide if you can manage the repayments efficiently.
4) Existing Loan Commitments – The applicant’s existing loan commitments are carefully evaluated to understand future repayment capabilities before granting a new loan.
Lending institutions access applicants based on such details to identify if the loan should be approved. A review of these factors helps the financial institution better understand its creditworthiness. You need to understand these elements that define Home Loan eligibility and keep them under check.
Home Loan Eligibility Calculator – An Overview
A Home Loan eligibility calculator helps you understand whether you are eligible to receive a loan of this kind. A simple fix of the given data points in the calculator enables you to comprehend your eligibility status. It acts as a self-help tool that ensures your loan application does not get rejected, adversely affecting your credit score.
How Can Self-Employed Individuals Use A Home Loan Eligibility Calculator?
Self-employed individuals can use the Home Loan eligibility calculator to evaluate their profile before applying for a loan. The calculator is simple and requires a few data points, such as the applicant’s gross monthly income, repayment tenure and other EMIs.
How Can Self-Employed Individuals Enhance Their Home Loan Eligibility?
Adhering to the following factors can keep your eligibility in check
1) Co-applicant – You can add an earning family member as a co-applicant for the loan.
2) Increase Your Credit Score – The applicant’s credit score plays a vital role in determining loan eligibility. A higher credit score denotes a low risk to the financial institutions and strengthens your creditworthiness. Therefore, It is essential to maintain a healthy credit score to increase the chances of getting your loan approved.
3) Reay The Existing Loans – Existing loans can add to the weightage of your overall debt burden. Clearing such outstanding dues before applying for further credit enhances your eligibility.
4) Keep Your Credit Report In Check – You must thoroughly review your credit report and rectify any errors it might carry that could hamper your credit score.
5) Maintaining A Stable Stream Of Cash Inflows – As a self-employed individual, you must keep your cash inflows in check. Generating a stable income would help enhance your eligibility for a Home Loan. You may have multiple sources of income. You may present your combined income while applying for a Home Loan.
Conclusion
While you apply for home loan, it helps provide the required funds while maintaining your finances. Before applying for a loan, you must check your eligibility using a Home Loan eligibility calculator. The calculator is designed in a simple way that seeks to help applicants understand their eligibility so that they can avoid situations wherein their loan applications get rejected. Additionally, individuals must work toward maintaining their loan eligibility. Self-employed individuals should especially work toward maintaining a stable source of income to showcase their repaying ability to financial institutions. Among the various factors that decide loan eligibility, maintaining a healthy credit score is vital to enhancing eligibility for a Home Loan.
