Home Loan: Overview
How do I calculate the home loan amount I will be eligible for? What are the documents I will have to submit to the lender? What is the EMI I will need to pay to the lender? Which lender will offer me a better rate for my home loan? Should I go for fixed rate or floating rate home loan? Will it be beneficial for me to shift my existing home loan to a new lender or I should stay with my existing lender?
You can visit our home loan compare tool to know answer for all these questions you have on your home loan.
You can visit our home loan compare tool to know answer for all these questions you have on your home loan.
Home Loan EMI Calculator
Are you planning to buy a home in near future and confused how much you will need to pay for your home loan every month to the bank or you have finalised the property and want to know much EMI you will have to pay to the lender.
Our home loan EMI calculator will help you to calculate the EMI for you to service the loan. This EMI is payable to the lender every month towards the repayment of your home loan. Your EMI will depend up on the interest rate which the bank charges you for givng a loan to you, the tenure of the loan and the loan amount. You can also play around with the tenure and the interest rates and see how you can reduce the EMI or the tenure of loan.
This Calculator will enable you to plan better by giving a clear picture of your EMI payments.
Our home loan EMI calculator will help you to calculate the EMI for you to service the loan. This EMI is payable to the lender every month towards the repayment of your home loan. Your EMI will depend up on the interest rate which the bank charges you for givng a loan to you, the tenure of the loan and the loan amount. You can also play around with the tenure and the interest rates and see how you can reduce the EMI or the tenure of loan.
This Calculator will enable you to plan better by giving a clear picture of your EMI payments.
How to choose your home loan lender?
Buying a home is dream for everyone but most of us are not able to achieve the dream due to many reasons. The escalating real estate prices have made buying a property a dream for most of us. It may happen that you have been thinking for quite sometime to buy a property but your bank balance is not allowing you to do so. If that is the case, you can go ahead and take a home loan that you can pay over a period of time and also own your dream home.
The foremost thing to be kept in mind is that one should never finalize a lender on the basis of interest rates. Most of us choose home loan lender on the basis of interest rates, cheapest the best. But actually, there are various other things that should be kept in mind when you decide of taking a home loan.
Check your loan eligibility with various banks Various banks have their own methods ad standards for calculating eligibility. You should do some shopping to check which bank is offering you higher loan eligibility. Adding up your spouse income may also be a good option to increase your loan eligibility.
Fixed or Floating interest rate A fixed interest rate means that you will have to pay same EMI over a period of time (it may be fixed for entire tenure or it may be reset at fixed interval). Floating interest rates may change at any given point of time, which may result increase or decrease in either your EMI or your tenure.
Processing fees This fee is charged by the bank for processing the loan and is not refundable. In case you decide not to take the loan from the bank, then the entire amount you have paid towards processing fees is lost. This generally varies in the range of 0.5 to 1% of the total loan amount. Also payment of processing fees doesn't means that your loan is passed. It may happen that you pay the processing fees but still your loan is not sanctioned due to various other reasons. Thus before paying the processing fees, you should bargain on the same and get it confirmed from the bank in writing.
Prepayment fees Prepayment fees come in to picture in case one wants to prepay his home loan from various sources. It may be from his personal savings or if he is planning to switch the loan to a different lender. Few of the banks offer no prepayment charges in case the prepayment is done from own sources. But in case the person is shifting the loan to a different lender then most of the banks ask to pay a fee in the range of 1% to 2% of the outstanding loan amount.
All the charges should be always be taken down in written from the bank and the written document should be preserved in case the bank asks the person to pay up some different amount after sometime.
Once you are satisfied with the above clauses and the interest rate offered by the particular lender, you should go ahead and buy your dream home.
Along with that it is always said that you can get the best home loan deal only after your property is finalized. So before you start with your loan hunting, we would suggest you to finalize the property.
The foremost thing to be kept in mind is that one should never finalize a lender on the basis of interest rates. Most of us choose home loan lender on the basis of interest rates, cheapest the best. But actually, there are various other things that should be kept in mind when you decide of taking a home loan.
Check your loan eligibility with various banks Various banks have their own methods ad standards for calculating eligibility. You should do some shopping to check which bank is offering you higher loan eligibility. Adding up your spouse income may also be a good option to increase your loan eligibility.
Fixed or Floating interest rate A fixed interest rate means that you will have to pay same EMI over a period of time (it may be fixed for entire tenure or it may be reset at fixed interval). Floating interest rates may change at any given point of time, which may result increase or decrease in either your EMI or your tenure.
Processing fees This fee is charged by the bank for processing the loan and is not refundable. In case you decide not to take the loan from the bank, then the entire amount you have paid towards processing fees is lost. This generally varies in the range of 0.5 to 1% of the total loan amount. Also payment of processing fees doesn't means that your loan is passed. It may happen that you pay the processing fees but still your loan is not sanctioned due to various other reasons. Thus before paying the processing fees, you should bargain on the same and get it confirmed from the bank in writing.
Prepayment fees Prepayment fees come in to picture in case one wants to prepay his home loan from various sources. It may be from his personal savings or if he is planning to switch the loan to a different lender. Few of the banks offer no prepayment charges in case the prepayment is done from own sources. But in case the person is shifting the loan to a different lender then most of the banks ask to pay a fee in the range of 1% to 2% of the outstanding loan amount.
All the charges should be always be taken down in written from the bank and the written document should be preserved in case the bank asks the person to pay up some different amount after sometime.
Once you are satisfied with the above clauses and the interest rate offered by the particular lender, you should go ahead and buy your dream home.
Along with that it is always said that you can get the best home loan deal only after your property is finalized. So before you start with your loan hunting, we would suggest you to finalize the property.
Get Home Loan Offers
A maximum of 5 providers will compete to give you the best rates (May 2012)
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.
Home Loan: New customers
In case you have been planning to buy your dream home for very long and you are unable to do that because of the rising prices everywhere, here is some help for you. You can take a loan that will help you to buy your dream home. All you have to do is to save enough money to make the down payment of your home that is 20% of the home value. The remaining 80% of the home can be taken as a loan from a bank depending upon how much loan you are eligible for. The bank will decide how much loan you are eligible for depending upon your income and various other parameters. This home loan can be repaid to the bank every month as equated monthly installments or more popularly know as EMI over the entire tenure of the loan. A part of this EMI goes towards repaying the principal component of the loan and the other part goes towards paying the interest. The EMI is calculated on a reducing balance basis. A reducing balance home loan means that in the initial days of the loan, the interest component of the EMI is high as the loan amount is high. But gradually, when the principal amount starts becoming lesser and lesser as you keep on paying it through EMI, the interest component of the EMI goes down and the principal component increases.
Also, while you are going to take a home you need to decide, the type of interest rate you want to pay to the bank. The banks will offer you with an option of a fixed rate or a floating rate. A fixed interest rate for your home loan means that the interest rate is fixed for the entire tenure of the loan. But these days, most of these fixed interest rates come with a reset clause where the bank has an option to change the interest rate after a fixed period of time generally in a range of 3 to 5 years. There are also a few banks that give you a fixed interest rate for the entire term of the loan.
The other type is the floating interest rate home loan where, the rates will depend on the base rate of the bank. As and when the bank will change their base rate, the interest rate will change for the customers. The change can either be in terms of EMI or tenure. For example, if the bank increases their base rate, the EMI will increase if the customer chooses the option to increase the EMI. Or in case the bank decides to decrease their base rate then the EMI will reduce for the customer. Generally the floating interest rates are cheaper compared to the fixed rates.
Looking at the interest rate scenario, this is quite an appropriate time to buy the home you were always looking to buy. The interest rates are on a rising trend thus in case you can manage to get a home loan right now, you can expect to get a better interest compared to what you will get a few months down the line.
Also, while you are going to take a home you need to decide, the type of interest rate you want to pay to the bank. The banks will offer you with an option of a fixed rate or a floating rate. A fixed interest rate for your home loan means that the interest rate is fixed for the entire tenure of the loan. But these days, most of these fixed interest rates come with a reset clause where the bank has an option to change the interest rate after a fixed period of time generally in a range of 3 to 5 years. There are also a few banks that give you a fixed interest rate for the entire term of the loan.
The other type is the floating interest rate home loan where, the rates will depend on the base rate of the bank. As and when the bank will change their base rate, the interest rate will change for the customers. The change can either be in terms of EMI or tenure. For example, if the bank increases their base rate, the EMI will increase if the customer chooses the option to increase the EMI. Or in case the bank decides to decrease their base rate then the EMI will reduce for the customer. Generally the floating interest rates are cheaper compared to the fixed rates.
Looking at the interest rate scenario, this is quite an appropriate time to buy the home you were always looking to buy. The interest rates are on a rising trend thus in case you can manage to get a home loan right now, you can expect to get a better interest compared to what you will get a few months down the line.
Home Loan: Existing customers
In case you have already bought a property and you are paying a very high interest rate, then you should consider shifting your existing loan from existing home loan lender to a new home loan lender. This will decrease the monthly EMI you are paying towards your loan and will save money for you. You should consider shifting from the old BPLR system where the interest rate changes according to BPLR to the new base rate system. The base rate system is more transparent than the BPLR system. Thus the effort you put behind converting youre your old home from the BPLR to the base rate system will be worth devoting.
Also you should act now as the interest rates are increasing and you may miss the bus in case you wait for any longer.
Also you should act now as the interest rates are increasing and you may miss the bus in case you wait for any longer.
Home Loan: Eligibility
Home loan eligibility depends up on various factors. A few of them are listed below -
The lender will consider all these factors along with your credit history to determine how much loan you will be eligible for.
- Income - Your income determines the amount of loan you are eligible for. Banks generally keep the EMI to income ratio at 0.45 to 0.50.
- Tenure of the loan - The longer tenure you opt for, the more loan you are eligible for.
- Interest rate offered - If your interest rates are on a lower side, then the loan eligiblity will be higer and vice versa.
- Existing loans - In case you have any existing loans, then the loan eligiblity amount will come down to keep the EMI to income ratio around 0.50.
The lender will consider all these factors along with your credit history to determine how much loan you will be eligible for.