Eligibility for a Home Loan

(Disclosure: This post is sponsored by Credit Sudhaar)

Buying a home is one of the most important financial decisions of one’s life.

One needs to be adequately prepared in terms of getting the papers in order and arranging funds for the down payment. Apart from this, one also needs to ensure that the conditions are right so that the Home loan application and approval process goes on smoothly.One needs to make sure that one is not only eligible for the home loan but also get the best home loan interest rates.

For this one needs to understand the factors that affects ones eligibility and make sure that these are favourable. Though different banks have their own distinct criteria for eligibility, the basic factors remain the same.


Home loan providers have strict norms to evaluate your ability to pay off the loan in a certain period of time. The ability of a young person to pay back the loan will be far more than a retired person. A person between the age group of 25 to 45 years has more no. of working years ahead and hence considered more financially stable. Hence many financial institutions have a minimum and maximum age of the applicant that must be fulfilled.


Your academic credentials and current employment status has a major impact on the home loan eligibility criteria. The time period for which you have been employed, your current position in the company, growth prospects and stability are some factors that are reviewed by the lending institute before approving your home loan application. If you have switched too many jobs in the recent past, you may fail to impress the lenders. Lenders prefer people working in government jobs and traditional industries than new start-ups where the employment uncertainty is high.


A steady source of income is a prerequisite for home loan application approval. The banks lend only to people who they are sure will have a regular flow of income for the entire tenure of the home loan. You will need to bring your salary slips for income proof to show that you are earning enough to afford the monthly EMIs. Higher your income, higher will be the amount of home loan that you can get approved for. Self-employed people or people with commission based jobs may find it difficult to get approvals.

Credit history

Your CIBIL score gives a picture of how you have handled your past obligations. If you pay your EMIs and credit card bills diligently you tend to have a high score.

Banks have very stringent norms when it comes to evaluation of your CIBIL score. They do not approve loans if your score doesn’t satisfy the minimum criteria set by them.

In order to have a high CIBIL score you must pay attention to the aspects that affect your CIBIL score calculation. Payment history, credit utilization ratio and length of credit history are some of the most important factors that affect CIBIL score calculation.

One needs to have a very high score to obtain home loans at competitive interest rates. A higher score reduces the default risk that the bank is exposed to. In case you do not have an impressive credit history, you may look for a co-applicant who has a good credit score.

Alternatively you can apply for subprime loans which offer loans to people with low credit score at a high rate of interest.

No credit score

If you haven’t taken any loans in the past, and do not own credit cards, you may not have any credit history. In such a scenario, banks won’t have any past history to base their decisions of whether they consider you a reliable borrower. Even if you think that you have the ability to repay the loan, banks may not sanction you a home loan because of absence of past credit history. So if you do not have any CIBIL score then pay attention to the factors that affect CIBIL score calculation and work towards building a credit score.

Too much debt

If you have too many loans in your credit report, your debt to income ratio will be high. When a large portion of your income is already used up in servicing past loan EMIs, banks may consider you a risky candidate and reject your home loan application. Pay down some of your existing loans before applying for a home loan to increase your eligibility.

Down payment

Banks usually sanction only 80% of the property value and the rest amount needs to be paid by the borrower as down payment. If you pay a higher down payment, the chances of loan approval become high.

In order to ensure that you are eligible for a home loan, you will need to pay attention to all these above factors. It is not at all an easy job, but definitely possible.

Weaving technology with BFSI services for happy consumers

(Disclosure: This blog post is sponsored by Bajaj Finserv)

What do you do when you want to buy something? You probably surf around the internet and search for what you want. Well, similar is the case with Bajaj Finserv’s  website. The only difference is that they provide loan service to consumers instead of the consumable products.

Bajaj Finserv is one of the leading NBFC’s in the country focused on lending, wealth management, asset management and insurance. Bajaj Finserv has always been a research-centric company and provided best of solutions to their clients. As a result of their research, they felt a dire need to redesign their website to provide an improved and optimised consumer experience.

The new website has much better and handy interface, with multiple features like smart calculator, which makes it easier for consumers to find what they need. With easy to fill application forms and the upgraded search bar, consumers can access the information they are looking for without taking the trouble of searching every tab on the website.

Another thing that is impressive is the efforts taken by company to reduce the load time. We all know how annoying it is when a website buffers and imagine the same happening when you’re doing something which involves money. Therefore, buffer time is something that’s imperative to reduce and Bajaj Finserv has scored a 10/10 in it.

Further, Bajaj Finserv has published a plethora of content on their website to educate their audience about the diverse topics related to finance industry. Being a finance nerd myself, I couldn’t control my urge to go through their content to assess its quality. And, trust me when I say, Bajaj Finserv has published sublime content in the simplest way possible to educate their audience. Users can even subscribe to their weekly content, which is strategically send to the consumers with personalised changes.

Such dedication to improve buyer’s journey  and experience by a brand like Bajaj Finserv is a striking example, which proves that customer journey is what matters the most.

The short video below explains the website nicely:

Review: Edelweiss Tokio Life Wealth-Plus

Couple of days back, Edelweiss Tokio Life launched the Wealth Plus product.

This product is not only very low cost but the life insurance company actually adds to the premiums!

Since it is a very unique product, it can be a game changer in the industry.

Product Features:

  • Unit Linked Product
  • Very Low Cost
    • 0% premium allocation charges
    • 0% policy administration charges
    • 100% of your premium gets allocated
  • Additions
    • The company will provide additional allocation every year as follows:
      • Policy Year 1-5: 1%
      • Policy Year 6-10: 3%
      • Policy Year 11-15: 5%
      • Policy Year 16-20: 7%
    • Over a 20 year term, 80% of one year premium will be paid by the company!
  • Child Proposition
    • On death of parent, following benefits are paid:
      • Lump sum amount
      • All future premiums immediately credited so more compounding benefits
      • All future premiums waived off
      • Company will pay additional allocation every year
  • Investment Strategy
    • Flexibility to choose investment strategy
    • Funds available-Equity Large Cap, Equity Top 250 ,Equity Mid Cap Fund,
    • 0% Switching Costs
    • All Funds are in the top Decile as rated by Morningstar
  • Plan Benefits
    • Death Benefit: Higher of Sum Assured or Fund Value
    • Maturity Benefit: Fund Value

Do check out the product if interested in a top performing low cost ULIP

Why Internet Companies and Startups are not ready to face the stock markets

It has been observed that the internet companies and startups in India are not too keen to be part of stock markets and are not open to the investors of the country. Since the year 2006, the country has witnessed a giant leap in the number of start-ups or the internet companies. This has made India as the 3rd largest startup hub in the whole world. But out of these, only five companies have listed themselves on the stock exchanges.

These five companies are Infibeam Incorporation which was set up in the year 2007 and is listed both on NSE and BSE, Intellect Design Arena which was set up in the year 2011 and is listed on both NSE and BSE, Koovs which was set up in 2010 and is listed on LSE, 7Seas Entertainment Ltd which was set up in the year 2005 and is listed on BSE, and lastly Yatra Online Inc which was set up in the year 2006 and is listed on NASDAQ.

The experts believe that though there have been many discussions happening on this topic lately, but the share market is not expecting any other listing by any other internet start-up in the near future. They say that there is no upcoming IPO as of now as most of the start-ups are not ready and they need some more time and preparation to come up with IPO.

Though in the current scenario, we have been witnessing a magical increase in the number of IPO’s. While as many as 7 silicon valley companies have gone public in the initial three months of this year, but only a handful companies like e-commerce Shopclues and online furniture company Pepperfry have declared their plans.

One of the prime reasons cited is the inconsistent finances. Recently both Flipkart and Snapdeal have recorded major losses. Though there have been many private investors and world’s biggest investors like IDG and DST who have invested in the Indian startups in past, but raising funds from IPO is quite a challenge. The investors do not invest unless they see soaring revenues and profitability.

Another reason is the lack of innovating new business models. Many new start-ups go with the same age-old model or their competitor’s business models. The retail investors demand for the creativity from the start-ups so that they have better chances of getting success in the long-term. Sometimes, the investors are also found to be hesitant in investing in a high-risk young business that are first or new in the market.

Also, what leads to the failure of a startup IPOs in India is the negative regulations. The startups are measured on the same parameters as the established firms having a completely different business models and growth paths. Though in the last few years, the government of India and also the stock market regulator Securities and Exchange Board of India (SEBI) have tried making the situation less cumbersome for the start-ups.

For more business news, visit BloombergQuint.

Case Study : Repayment of default amount is not enough

(Disclosure: This blog post is sponsored by Credit Sudhaar)

Ashish is a 30 year old and he has been working for five years; he wanted to buy a house and for that he decided to apply for a housing loan. After carefully researching online and talking to a few of his friends and colleagues he decided to apply for a loan with SBI. Despite fulfilling the eligibility criteria and submitting the required documents his loan application was rejected. He could not understand the reason for it.

The SBI Home Loans representative told him that his credit score was low (for the bank) which led to the rejection of his loan application. Ashish was surprised as he had two credit cards which he used responsibly and always paid his dues on time. He decided to get his Credit Information Report so that he could figure out the reason for his low rating.

The CIR revealed that he had missed on repaying the last two installments of his education loan; he had moved cities and had failed to inform the bank. So any notices sent to him would not have reached him and now due to those defaults the asset has been classified as a “SUB” which denoted a sub-standard asset. Any asset which remains a NPA (Non Performing Asset) for more than a year is classified as a Sub Standard Loan. 

Now that Ashish knew what the problem was he decided to solve it. He contacted the bank from where he had taken the loan, checked what the total dues were (the pending EMIs plus the accumulated interest and fines. He paid the dues, got a NOC from the bank after a little follow and was relieved at having taken care of the problem. He waited for a few weeks to check his credit report.

He was disappointed, though the loan was no longer reflected as a “Sub” asset and his score did improve marginally but it still was not at a level at which the bank would sanction him a loan. Though he knew that there were lenders that offered loans for bad credit scorers too but he did not want to take that route as these loans were generally available at very steep rates.

Why Repaying the Dues is Not Enough?

Are you also confused like Ashish and wondering why the score did not improve drastically and why is it still difficult for him to get a home loan sanctioned? Well we have an explanation for you.

Repaying the loan meant that the overdue status of the loan was taken care of but the missed EMIs will continue to reflect in the CIR. The CIR carries the repayment record of last 36 months and two missed EMIs are sure to be cause concern for any prospective lender and lower the credit score. Repayment history is the most crucial factor in credit score and it has a 35% weightage in the score calculation. In Ashish’s case there were no other loans; his credit trail was not too deep so even a single missed payment would have a great impact on the overall credit rating.

If someone were to have multiple loans which have been running for a while and they default on a single payment then there would be an impact but it would be lesser than what was faced by Ashish. The education loan being the first loan does set a kind of tone for the credit trail so one needs to be very careful in repaying it. Two missed payments for a the first and only loan in the CIR does not present a healthy credit picture.

What Should Ashish do Now?

The older the default the lesser its importance is in the eyes of the future lenders. Ashish should continue to be a responsible credit card user, keep his credit utilization ratio less than 30%, he should remember to pay dues on time and should not make any further loan applications till he is sure about his credit score acceptance. Improving the score takes time and with time the score will become better.

There is no quick fix the credit score improvement, he has taken the step in the right direction by paying the complete dues and the results are sure to follow in time!