Investment in a residential property is best undertaken by availing a Home Loan. This is because these loans can be easily availed from reputed financial institutions and with proper planning, repayment of the same is also easy. Individuals who are looking for a feasible finance solution for investing in a property of their own will find several institutions like banks and Non-Banking Financial Companies (NBFCs). These banks and NBFCs have their own eligibility criteria and documentation requirements. When the applicant fulfills the eligibility criteria, he/she can avail the loan from a particular institution.
Eligibility for the Home Loan
Lenders always look at the applicant’s age, income, credit history, financial standing and existing debts. Ideally, a maximum of 45% of the monthly income should go towards repayment of all loans availed. There are tools such as online eligibility calculators that provide the maximum amount a person is eligible to borrow and EMI calculators that provide a tentative EMI to be paid each month against a particular loan amount, having a certain interest rate and tenure.
Lenders check the credit score of an applicant to get an idea of the past repayment behavior and applicants with a good score get preference.
Documentation for the Loan
For Home Loans, banks and NBFCs require a photo identity proof, an ID proof, address proof as well as age proof from salaried and self-employed applicants.
For salaried applicants, proof of employment (employment certificate, appointment letter from current job and experience certificate) and income proof (salary slips of last 3 months, bank statement of salary account and Form 16) are required.
Likewise, self-employed individuals will have to furnish proof of business, income proof, office address proof, and office ownership proof.
With some research on the lenders and the Home Loan schemes available, a potential homebuyer can find the right match, with respect to his/her needs.
You can learn more about Home Loans and their feasibility from this resource: