Understanding Home Loan Eligibility Criteria in Kerala

Many IT professionals who moved from small towns in Kerala settled in Kochi and Trivandrum, wherever their career took them. They lived in rental homes and once they are assured of their career stability, they settle down to start their families. This is a common life route for not just IT professionals, but for most working professionals. But then, the only way for most of them to buy their dream home is by taking a home loan. This blog is for first-time home buyers to know more about the home loan eligibility criteria in Kerala.

Let us start by understanding the eligibility criteria for home loans in Kerala.

Eligibility

Home buyers must know the eligibility criteria to get a home loan. The important clauses and rules are usually the same for most lenders, and if they are eligible for one then they are for the rest too. This is an important step of the home loan process as it lays the foundation. We discuss these below.

1. Credit Score

The credit score reveals the borrower’s capacity to repay the loan on time. A higher credit score is favorable as it gives the lender confidence in the borrower’s ability to repay. If either of them has a score of 750 and above their chances of getting the loan are high.

2. Income and Employment

Lenders look for borrowers with stable and sufficient income to repay the loan. A stable employment history is preferable as stability assures regular income and better career prospects. Loan applicants may have to share their employment records like salary pay slips and work experience certificates to prove their income sources.

3. Down Payment

All lenders expect a down payment of 10 to 20 % of the property value. If the borrower can make a higher down payment, they have the financial power to repay the loan which is a good sign by the lenders. Depending on their salary the borrowers can decide on the down payment amount.

Tips for improving home loan eligibility:

1. Improve Credit Score

The best way to improve the credit score is to repay any outstanding loans and pending credit card bills. The credit card bill should be less than 30% of its limit. Either of them can opt for pre-approved eligibility by meeting all the criteria in advance.

2. Income and Financial Stability

The borrower’s income should sufficiently exceed the EMI payouts. In case the income is lower, they can generate additional income through other sources. This will reflect a healthy income statement increasing their chances of getting the loan.

3. Save For Higher Down Payment

A higher down payment will reduce the loan amount and build credibility with the lender at the same time. The home buyers can achieve this by creating a long-term dedicated savings plan.

4. Co-applicant

The spouses or trustworthy relatives like siblings or close family members can become a co-applicant if they have a good credit score, increasing the chances for loan approval increase. Usually, lenders prefer the co-applicant to be the spouse or a family member.

This home loan guide will help first-time home buyers in being eligible so that the home loan is sanctioned quickly easing the home buying process.