You have made up your mind to buy a property or land but the only obstacle is “Home Loan”. This happens when you lack adequate information on its procedure, eligibility & criteria. Not to worry, this blog will answer your confusion & doubts regarding the various factors. We know you get stuck in the selection of banks as you do not have complete information on Loan Tenure & Home Loan Interest rates.
Major elements to apply a home loan in India require
- Monthly Income
- Loan Tenure
- Interest Rate
- Property Value
- Type of Property
- Cibil Score
In this blog, we will brief each element one by one to make you understand well. If you stand to all required factors then you can easily get the benefits of a loan while buying the property/Flats.
This is the foundation of the entire process whether you are self-employed or working for a company. You must have proof of your source income that ensures you’re earning and capable of repayment of the loan. To understand more clearly we will take a rough assumption of your fixed income.
There are two scenarios
For example, you are earning Rs. 40,000 per month which depicts your fixed income. Now, your entire income will be calculated by 50% in lakhs. The calculated amount will be considered in lakhs.
Fixed Income- 40,000
Calculate: 40,000 * 50/100 = 15, 00,000 Lakhs
It implies that you are eligible for 15 lakhs for the home loan. However, many other factors also benefit you in increasing the amount which will be described to you in this blog.
Your monthly income is Rs. 40,000 but also repaying the EMI for respective debts including personal loan, car loan, bike loan, or any other kind of debt.
Now, you need to deduct the EMI amount from your salary during calculating as the bank does the same.
Fixed Income- 40,000
Running EMI- 10,000
The remaining income will be calculated by 50% in lakhs which will result in 15,00,000. Though, the amount can fluctuate by 2-3 lakhs as it’s a rough assumption because the bank also sees other important factors to give you the loan.
2. Home Loan Tenure
The bank approves the loan after knowing your remaining years of service. As if, the bank permits the private sector’s employee till the age of 60. On the other hand, a government employee is allowed till the age of 65 because it depends on the servicing years.
For example, if you are 30 years old and working in the private sector then you will be provided the loan for 30 years because of your working tenure.
The same happens when you work in a government sector but the loan tenure will be increased as you will get retired at the age of 65.
3. Home Loan Interest Rate
Firstly, you need to understand that the interest rate may vary from one bank to another. Also, the location of the property is considered in the Home Loan Interest Rate. The lowest interest rate starts from 6.75% which goes by 11.75% and this can change the sanctioned loan amount. If the bank provides you the loan at a low-interest rate it means that the eligibility of getting the loan will increase.
4. Property Value
This is a precise fact that should be known and understood by you to calculate the loan eligibility. A bank gives you an 80-85% loan as per the total worth of your property. If you are buying an Ultra-Premium Flat worth Rs.20, 00, 000 then it does not mean the bank will provide you the estimated amount. Whereas the bank will calculate 80-85% of your property and according to it you will get the loan amount.
5. Cibil Score/Credit History
If you have not ever taken any loan or debt from a bank nevertheless you should be very much careful with the cibil score. Why is it important to maintain a good credit record with the respective bank? Yes, the right question to answer because it’s an on-record of repayment of the loan amount or EMI which you have taken from a bank. When you repay the debt on time the bank gives you a score according to that. On the behalf of your good credit history, you can apply for another loan. So, please check it before applying for another loan in India.
6. Age for Home Loan
A young person can apply for a home loan for the long-term. However, an aged person can’t access the same because of the age limit. Before providing the loan amount, a bank ensures the age of the recipient who will be responsible for paying it back. Unquestionably, a younger person has more years of his/her services whereas 50-60 years people don’t.
Yes, this is a plus point for those who are working in progressive fields. Such as Engineers, MBA, CA, and others too where your financial growth has the probability to be increased. With the help of your educational qualification, you are eligible to apply online loan or EMI at a low-interest rate.
After reading this informative blog regarding the eligibility & criteria of a person to apply for a loan will help you too.
The below-given video is here to explain the factors descriptively so that you can easily understand the procedure where each criterion has been exaggerated with great examples. We have covered all the broad aspects of this video to avoid the hassle when you struggle to apply for a home loan due to a lack of knowledge about it.