Some key factors lenders check to determine your repayment capacity:

• Income: Lenders consider your current and future projected income as an important factor in determining your creditworthiness. If you jointly apply with your spouse or parents then the income is pooled together for credit consideration. This is the reason why joint application increases the chance of obtaining a home loan. Often the EMI is set around 35% of pre-tax income (for joint application it is 30% of the combined pre-tax income).

• Past payment history: Regular monthly payment on other loans (e.g. car loan and credit card loan) in the past is essential for establishing a good credit history (which is a must for getting a home loan).

• Debt burden: High debt burden adversely affects your chance of being approved for a home loan.

• Value of the property: Lenders only finance part of the loan amount (usually less than 80%).If the house is too expensive then it is possible that lender may decide not to finance the loan (or only finance a small portion of it). On a different note, if you are approved for a loan amount higher than the property value, we suggest you use your judgment to decide whether it is wise to go for a more expensive property (see affordability section above to learn more).