Buying your dream home depends on meeting the home loan eligibility norms set by the lender to do so. Of the norms, the ones related to your job matter immensely to lenders while taking a call in your case. How much you earn is just a preliminary enquiry, how the pattern has been, the job switches and how you have made those over the years, are important too. As home loans are a big-ticket loan, lenders like to be absolutely sure of you regarding all these. All that despite lenders can seize your home and sell it in case the EMIs remain due for around six months. So, don’t take comfort from your income only. Analyze other related factors with us and prepare yourself accordingly for your dream home.
Let’s Check Out the Job-related Factors for Home Loan Eligibility
Lenders check how much you have got post the payment of the proposed EMI, your salary components, cases of foul play, if any, regarding your income, etc. Let’s read all these below.
How Does Income Help Decide Your Home Loan Eligibility?
Lenders can assess your earnings differently from what you may think of. Lenders can consider either your gross or net income to calculate the home loan eligibility. So, check which of the two your lender uses to gauge your eligibility. For instance, SBI offers home loans based on the in-hand income, whereas HDFC Limited factors in your gross salary for the same. Some banks and financial institutions can consider EMI to monthly income ratio. Lenders want to ensure there’s enough left after repayment of the EMIs. Depending on the income, the ratio differs. Someone earning less can get the loan in a way that the EMI constitutes about 30-40% of their income. Whereas someone earning up to INR 75,000 per month can be allowed an EMI constituting up to 70% of the income.
Lenders Also Scan Your Salary Components
The salary you receive may have both fixed and variable components. Stuff, such as performance incentives and bonus, are variable payouts. The frequency of these payments can be monthly, quarterly, half-yearly or annually. Besides interval, the lender will also check the consistency at which one is getting all these variable payouts. The lender may not consider the whole variable amount for assessing your home loan eligibility.
Some companies also offer food coupons, gift vouchers, leave travel allowance, car operating option to their employees. They can get these on a reimbursement basis, which means the employees will need to spend first before the companies pay them back the same. Let’s be told that lenders don’t consider the same while evaluating your home loan eligibility.
Switching jobs can impact your home loan eligibility. Lenders feel confident disbursing when you’ve stayed in the organization for a year or two. If you’ve switched to a new job recently, the lender may tell you to wait for some time, unless you’re into top public and private companies. These companies tend to have robust finances and pay their employees a handsome amount on time. Lenders can thus trust these employees even if they have switched jobs frequently.
What About Contractual Employees?
Contractual workers, in literal terms, mean the non-permanent employees of the organization who do not get the privileges as their permanent counterparts. What’s more, the contractual workforce is only growing with time. In 2021, the Indian Government informed the parliament that contract workers in central government enterprises such as railways, ports, oil fields and mines have risen more than twice to 2.43 million over four years. Even private companies hire many on contract. So, the question that arises is whether these contractual employees can get a home loan. Those whose contracts get renewed regularly and have been working for a long time can get the same.
Lenders Can Investigate Astronomical Rise in Salary
Fraud cases exist in the employment space too where a few dishonest people make unauthorized changes to their salary slips to receive a steep hike from other companies. Lenders get cautious while lending these people. For example, if someone’s salary got raised to INR 1 lakh from INR 40,000 on joining, it implied a hike of 150%. Many companies don’t offer such a hike. Lenders investigate such cases thoroughly and can reject them if they find foul play.