Sat. Sep 26th, 2020

Are You a Salaried Employee and Looking for a Housing Loan? Read This Guide

If you are a salaried individual, planning to buy or construct a house, or purchase

If you are a salaried individual, planning to buy or construct a house, or purchase a plot, a housing loan comes off as an effective means to finance this purchase. Financial institutions offer these term loans along with attractive features and benefits. However, you must have access to a few essential details before applying for the advance.

In India, several lenders offer home loans to salaried individuals as additional finance for the purchase of a residential property. Borrowers can thus avail these loans at fixed or floating interest rates as per their suitability. Here is everything you need to know about availing housing finance successfully as a salaried applicant.

Housing Loan Eligibility Criteria You Need to Meet

Every applicant has to fulfil specific home loan criteria to avail a housing loan in India. Basic criteria mandated by most lenders include –

  • Age between 23 and 62 years.
  • Indian citizens residing in India.
  • Minimum 3 years of work experience.
  • Gross salary above Rs.30,000 per month for Tier I cities like Delhi, Mumbai, Chennai, etc.
  • Gross salary above Rs.25,000 per month for Tier II and some Tier III cities subject to operational coverage of the lender.

Other Factors to Consider for Home Loan Eligibility

  • Credit score – One of the first things that a lender checks when assessing a housing loan application is the applicant’s credit score. It is a 3-digit number which attributes an applicant’s repayment habits and creditworthiness.

It is computed after accounting for several factors, which include – repayment history, credit history, credit utilisation ratio, credit mix availed, etc. It allows the financier to assess the risk associated with a borrower.

Henceforth, ensure to check that you hold a credit score above 750 when applying for housing finance. Additionally, your credit score determines your home loan EMIs. If you hold a high score, your loan EMIs might lower.

  • FOIR – FOIR or fixed-obligations to income ratio is an essential factor that financers consider when assessing your repayment capacity. It is the percentage of your income which goes towards paying fixed monthly obligations. Financers consider a FOIR within the range of 40% – 50% as ideal. It ensures them that you have sufficient monthly income to accommodate payments towards EMIs while continuing with your previous financial obligations.
  • Down payment – When you avail a loan for house purchase, the financer does not provide you with the entire amount required to complete the transaction as a loan. It advances only a percentage of the property value.

You need to pay the remaining percentage of the property value as a down payment. A higher down payment made improves your negotiating capacity to avail the housing finance at better terms.

However, you can also buy a home loan with a low down payment, subject to certain factors.

Documents Required for Home Loan

Lenders require you to submit a handful of essential documents, which also streamlines and hastens the application process for a housing loan. Some of the basic documents required are –

  • Passport-sized photograph.
  • Recent salary slips or Form 16.
  • ID and address proof.
  • Last 6 months’ bank statements.
  • KYC related documents.

A salaried individual who wants to get a home loan must compare offers from different financial organisations to avail the best and customised features and benefits.

Further, lenders like Bajaj Housing Finance Limited offer Home Loans at attractive rates of interest plus additional borrower-friendly features such as property dossier services, doorstep document collection, and more.

They also provide pre-approved offers that can help avail financing with ease and in less time by simplifying the loan application process. These offers are available on various financial products, including business loans, personal loans, etc. Check your pre-approved offer by providing only your name and phone number.

Salaried customers can also opt for a loan transfer facility for their existing housing finance. With this, borrowers can switch their loan account to a different lender to avail better benefits, primarily better interest rates for affordable repayment.

A housing loan is a long-term financial commitment. Henceforth, when proceeding with it, you should employ due consideration and planning to ascertain how you can efficiently continue with such an obligation without affecting your financial position.

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