Benefits of Applying Online
When Banks Compete, you win.
Apply for a Home Loan at ApnaPaisa and we will match your requirements with the best offers from our network of over 400 service providers. We will get a maximum of five providers to compete for your business. WHEN BANKS COMPETE YOU WIN. You can then decide which home loan is best for you based on:
- Lowest Interest Rate
- Lowest EMI
- No Pre-payment charges
- Lowest Processing Fees
- Maximum Eligible Loan Amount
- Mandatory Documents Required
- Lowest Processing Fees
Or any other factor that is important to you.
Negotiating Tips
1) If you have a good credit record and your income is sufficient to justify the loan you can negotiate on interest rates. You can also try and get Processing fees or legal or valuation fees reduced or completely waived.
2) If you go for a floating rate loan then pre-payment charges are not payable.
3) When interest rates are high and are expected to go down you should go in for a floating rate loan as it makes no sense to lock into high fixed rates or the so called Dual rate loans where rates remain fixed for a couple of years before shifting to regular floating rate loans. Please review this decision at least once every 6 months
4) Take term insurance and critical illness and accidental disability policy for the full loan amount to make sure you or your loved ones don't have to worry about loan repayment should you die or are disabled due to a critical illness or accident. You cannot be forced to buy this policy from the insurance company chosen by the lender - you should choose your own insurer.
Loan Amount Eligibility
Several factors besides your income will have an impact on the home loan amount you are eligible for.Apnaloan.com Research Bureau
10 Aug 2007
The loan amount sanctioned depends on a host of factors. Primarily, it depends on your income and repayment track records. But besides that, the cost of the property to be purchased is also a deciding factor. So, while you are looking for a home loan lender, simultaneously make concrete efforts to identify a property.
Your ability to repay your housing loan is based on your income and expenditure pattern. For instance, if your monthly income is Rs 10,000, and your monthly expense is Rs 8,000, you can certainly pay Rs 2,000 towards any potential home loan you take.
This amount can now be used as the installment amount and your eligibility can be reverse-calculated. This is easy. The following example will demonstrate the eligibility calculations.
At an interest rate of 9%, the monthly installment of a Rs 1 lakh, 20-year loan is Rs 900. Banks then calculate your eligibility using a simple formula:
Home loan eligibility in lakh is equal to the amount determined by the bank as available for loan repayment divided by loan installment per lakh for the selected tenure.
OR
Loan eligibility = Rs 2, 000/900 x 1 lakh = Rs 2.2 lakhs
Obviously, the larger your repayment capability, the higher will be your loan eligibility.
In the same example, if the bank also takes into account the amount of rental (say Rs 1,000) that you will save as a result of moving into your own house and thus calculates the amount available for loan repayment as Rs 3,000 (by adding Rs 1,000 to the Rs 2,000 you had earlier), then the eligibility will shoot up by 50% to 3.3 lakhs as follows:
Loan Eligibility in lakh = Rs 3, 000/900 x 1 lakh = Rs 3.33 lakh
In actual practice, however, it is difficult to estimate the monthly expenses of each borrower separately. Which is why banks use a pre-determined percentage of your income as being available for paying the loan installment, based on their past experience as well as available household expenditure data. For instance, a bank may assume that if your income is Rs 20,000 per month, 40 per cent of that (i.e. Rs 8000) will be available for repayment. Then, they calculate the loan eligibility accordingly.
This percentage also varies depending on your income on the assumption that those with higher incomes should be able to spare a higher percentage of their income for repayment. Hence, the bank could have slabs like:
For income up to:
Rs 9, 999: 35%
Rs 10, 000 to Rs. 14,999: 40%
Rs 15, 000 to Rs 19,999: 45%
Rs 20,000 and above: 50%
As per this formula, if your monthly income is Rs 10,000, the loan eligibility is:
Amount available for payment of loan installment = Rs 10,000 x 40% = Rs 4,000
Loan eligibility in lakhs = 4000/900= Rs 4.44 lakhs
If your income is Rs 20,000 your loan eligibility is calculated as follows:
Amount available for payment of loan installment = Rs 20,000 x 50% = Rs 10,000
Loan eligibility in lakhs = 10,000/900= Rs 11.11 lakhs
Thus, even though the income only doubles from Rs 10,000 to Rs 20,000, the loan eligibility could be 2 times as per this increasing percentage formula.
But whatever the norm, invariably, for the same income, the eligibility for a longer tenure loan will be much higher.
For instance, if your monthly income is Rs 15,000 and if, as per the bank's formula, they assume you can afford Rs 7,500 (50%) for monthly repayment of the home loan, your loan eligibility is calculated as follows:
At an interest rate of 9 per cent, the monthly installment for Rs 1 lakh for a tenure of 5, 10, 15 and 20 years will be Rs 2,076, Rs 1267, Rs 1,014 and Rs 900 respectively. In this case, you can use the simple formula above to calculate your eligibility:
| Tenure |
Loan Amount |
| For a 5 year loan |
7500/2076 x 1 lakh= Rs 3.61 lakhs |
| For a 10 year loan |
7500/1267 x 1 lakh= Rs 5.92 lakhs |
| For a 15 year loan |
7500/1014 x 1 lakh= Rs 7.4 lakhs |
| For a 20 year loan |
7500 /900 x 1 lakh= Rs 8.33 lakhs |
Thus, you can see that for the same income, the eligibility for loan is higher for longer tenure loans.
You can also check the 'advanced home loan eligibility calculator' to calculate the approximate loan amount if you have an existing loan.
Check the Home Loan Eligibility Calculator if you are salaried or the
Home Loan Eligibility Calculator for Self-Employed if you are self-employed.