Home loans come to your rescue when you don’t have any other pecuniary corroborate to endorse your dream of owning a house or for buying a new property. There are many documents that will be required before you apply for a home loan. Along with this many backups will have to be considered.
The biggest concern is how much amount you will be able to get, as a home loan. There are many factors which the bank or financial institution considers before giving you a loan. It is always best to consider these factors for yourself before applying for a home loan.
How much home loan will you be able to get? Here are 10 factors that affect this
Following are the 10 factors affecting your home loan amount. Following factors along with loan amount also affect your eligibility for home loans:
- Type of home loan
There are various reasons for getting a home loan which distributes home loan into different types. The type of home loan you are opting for affects the amount of home loan. General types of home loan are:
(i) Loans for purchase house
(ii) Loan for purchasing a vacant plot or land
(iii) Loan for construction of home
(iv) Loan for home improvement or renovation
(v) Loan for home extension
(vi) NRI home loans
(vii) Top up home loans
As an applicant, your income source is determined by your profession and the profession of your co-applicant. The bank or respective institution needs a trustworthy source as your income. The type of profession affects your home loan in different ways. Assurance will be required that throughout the time of tenure you have a contract with your employer. If you are self-employed or business person, profit will decide for your monthly salary.
Income plays a big role in deciding how much amount you will be able to pay back regularly to the bank. Depending on which the maximum amount of your home loan will be decided.
- Work stability
The stability of your profession plays a very important role as well in calculating the maximum loan amount for you.
- Credit history
Maximum capacity of the amount you get will be determined after the bank goes through your credit history. Any late bills and unpaid or missed credit card payment could become a barrier to the amount you wish to borrow. It is advised to go through it and see your chances before going to the bank
Your lifestyle, in simpler terms your family’s lifestyle also determines the loan amount. The loan amount depends on the fact that after paying your regular bills like children’s school payment or hospital charges and the monthly EMI would you still be able to maintain the standard of life you currently maintain.
The amount of savings which could further go to your property deposits helps you gain the trust of your bank regarding your repayment capacity. It assures the institution of your saving skills and responsibilities
- Current assets
The bank would be very much interest in knowing what assets you currently own; it would affect their home loan amount decision and your eligibility.
- Value of property
One of the major factors is the value of the property for which you are opting for. The limit as the maximum lending amount would be determined on the basis of the value of the property.
- Locality and financial condition
Sometimes the lifestyle a family or a person lives does not match what their financial condition offers. The bank or any respective institution will see into your locality which would also play a part in determining your financial condition depending on which bank you will gain the lender’s trust.
Before opting for a home loan, first, go through above factors to get an idea of how much you can borrow and what to expect.