Everyone dreams of buying a house and staying in it. The joy of living in your own house is something you cannot explain. You have to experience it to understand the feeling. Not everyone can afford to buy their dream home with their savings alone. Not everyone is blessed to have ancestral property to dispose of, and fund their new home. Applying for Home Loan is the best option available to an overwhelming majority of Indians. Fortunately, banks and Non-Banking Financial Companies (NBFCs) have attractive Home Loan products. You get income tax concessions as you repay your Home Loan. It adds to your savings. How do you assess your Home Loan requirement? We shall help you to do so.
The first step towards assessing your Home Loan requirement is to know your Home Loan eligibility. Your eligibility depends on various factors:
Higher your income, higher will be your Home Loan eligibility.
You can add the name of your spouse, parents, or any closely related family member as a co-applicant. Banks consider their income also while assessing your eligibility.
Your repayment capacity depends on the fixed obligations you have on the date of your Home Loan application. The higher the FOIR (Fixed Obligation to Income Ratio), the lower will be your repaying capacity.
Banks usually stipulate a minimum take-home pay of 50% for loans. Some banks provide higher amounts considering the future salary increments. Banks account for the prospective loan Equated Monthly Instalment (EMI) while calculating the eligibility amount.
Once you have calculated the eligibility, you can proceed with determining your budget. Your budget depends on the following factors:
Banks approve Home Loan up to your eligibility level or cost of the house less margin, whichever is less. Accordingly, you have to make arrangements for the following:
Also, you have to make arrangements for the following expenses related to your loan:
Usually in the range of 0.50% to 1% plus GST @ 18%.
Most of the banks include the legal scrutiny fees in their processing fees. However, some banks require the applicant to pay for these charges separately.
Banks have to evaluate the house before arriving at your eligibility. If the value of the home is substantial, they go for a second opinion. Some PS banks charge separately for these expenses.
d) The charges for creating an equitable mortgage and registering it with the respective SRO. These expenses vary from state to state.
e) Some banks insist on payment of Pre EMI interest payments especially when you go for purchasing a house under construction, and banks give moratorium for a maximum of 18 months.
f) Any other emergency that can crop up from time to time.
Getting a co-applicant on board is the easiest way to increase your Home Loan eligibility. Banks today, insist borrowers to have a co-applicant. Submit the income particulars of the co-applicant to enhance your eligibility amount.
This information should suffice to help you calculate your home loan requirement.
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