Becoming a homeowner is almost every Indian’s dream. A home ensures you have a roof over your head, even when the going gets very tough. It not only provides social and financial security but it is also an asset the value of which increases over time. Further, the real estate sector has always delivered great return on investment and thus, most Indians see buying a home as a long-term investment.
Until a few years ago, most people stayed away from home loans. When it came to buying a house, the rules were simple — you saved through the years and bought a home when you had saved enough money already to cover the entire cost of the loan. However, over the last few years, the popularity of home loans has increased considerably and today.
Most people fund their home purchase through a home loan. This rising popularity is also since real estate prices have witnessed a major hike over the last few years and it is now nearly impossible for home buyers to pay for a home entirely through one’s savings.
Home loans are a type of secured loan. These loans are repaid in the form of EMIs. Each EMI is divided into two parts, one goes towards the repayment of the interest component and the other covers the principal component of the home loan. Home loans are big-ticket loans and therefore, carry high risk for the lender.
For this reason, all lenders have strict eligibility requirements that a borrower must meet to be eligible for a home loan. These eligibility requirements revolve around important factors, such as credit score, age, income, city of residence, etc. Borrowers who do not meet their lender’s eligibility requirements meet with rejection immediately.
Therefore, all borrowers must check their housing loan eligibility before beginning the home loan application process if they want to be approved quickly and avail of a loan on a low home loan interest rate. You can also check your home loan eligibility using a housing loan eligibility calculator.
What is a Housing Loan Eligibility Calculator?
A housing loan eligibility calculator is an online tool that tells a borrower the loan amount they are eligible to borrow based on their income, age, credit score, etc. Housing loan eligibility calculators are quite easily available these days.
All one has to do is search for these on the internet and one easily gets hundreds of different options to choose from. Housing loan eligibility calculators are easy to use and free. The question is how does a housing loan eligibility calculator work.
Most housing loan eligibility calculators will ask you to input the following information:
– Date of birth
– City of Residence
– Net Monthly Salary
– Loan repayment tenor, as chosen by you
– Additional sources of income, if any
– Your current monthly obligations
Once a borrower enters this information. The calculator gives them the home loan EMIs they can afford and the home loan amount they are eligible to borrow. If you meet all your lender’s eligibility requirements and apply for the home loan you are eligible.
You will easily be able to avail of a loan at the minimum home loan interest rate possible. Now that we know what a housing loan eligibility calculator is and how to use one, let us look at why borrowers must use this tool.
Benefits of a Home Loan Eligibility Calculator
– One of the biggest advantages of a home loan eligibility calculator is that it improves one’s chances of home loan approval. When you apply for a loan amount you are eligible for or something lower, getting approve for housing becomes a lot easier.
– The housing loan eligibility calculator also helps one avail a housing loan on the minimum interest rate possible. The calculator allows one to understand one’s eligibility. When a borrower drafts their application keeping their eligibility in mind, they have higher negotiating power over their lender.
In simple words, when you have a well-drafted loan application. Your lender will be more willing to offer you better loan terms and conditions, such as low home loan interest rates, higher loan sanction and longer repayment tenor.
– Using a home loan eligibility calculator, a borrower can develop a better understanding of what loan amount they can afford to easily repay. When a borrower borrows what they can easily repay, the chances of loan default go down considerably.
– One should use a home loan eligibility calculator because it is quick and accurate. Doing the same calculations manually would consume a lot of time and energy.
Final Words
If you are applying for a housing loan. The first thing you must do is do your research and find a lender. Who you can trust and who is willing to offer you a good home loan deal. Once you have finalised your lender, use a home loan eligibility calculator to figure out the loan amount. You are eligible for and apply for this amount only to increase your chances of home loan approval and availing of a loan at the minimum home loan interest rate possible.