Availing home loans can be tricky if you aren’t well aware of the technicalities and complexities of the process. As a salaried individual, you might think that the loan eligibility is purely dependent on the annual income and other factors aren’t important for the banks or NBFCs to consider. However, apart from the income, the concerned financial organization also takes a host of other factors into account, as a part of the eligibility review.
How Frequent Job Changes are related?
When it comes to sanctioning home loans, banks consider several aspects. For example, if you are a salaried person, it is necessary to submit the salary slips, employment details, bank statements, and other documents for the bank to review. In case you have a steady job with no untoward migrations for a considerable length of time, the bank or NBFC finds you eligible for a bigger loan.
As a matter of fact, a salaried person is often eligible to get a loan that amounts to almost 15 times the net annual income. However, the upper limit doesn’t always hold if you change jobs frequently and the employment details submitted with the application reveals the same. In that case, banks consider your income as erratic which automatically lowers your home loan eligibility metrics.
More about the Home Loan Eligibility Criteria
A financial institution sanctions loans depending on the willingness and the ability of the user to pay back the borrowed amount. An airtight professional history, therefore, validates the second criterion without much effort. While the willingness is determinable courtesy of the existing credit score and history, it is often a moot point, provided you haven’t taken a loan or credit before.
However, if you are a job hopper, the bank questions your ability to pay up courtesy of the varying payment details. Newer companies have different salary breakdown structures that might or might not be considered by the concerned bank. This is where government employees have it easy as the salary breakdown is then identified and acknowledged by every financial institution, across the country.
The ‘Bonus’ Conundrum
Banks and NBFCs often take the company bonus into account while determining the home loan rates, as a measure of eligibility. As a rule of thumb, a majority of banks take almost 50 percent of bonuses into account, to structure the criterion for you. However, this holds only if there haven’t been job changes as employment irregularities often take away the broader, employee bonus metric and leave you with the CTC to rely on.
Final Words
Approaching the home loan application requires a lot of intuition and intelligence. In case, you are planning to request finance for your dream home, try and stick to a particular company till the time the loan is sanctioned. Moreover, applying for a home loan is more of a time-intensive process and you must prep for the same, right at the start of your professional career. In case you have a settled and uniform CV to show for, it becomes easier to get a sizable loan and competitive choices when home loan rates are concerned.