Factors which decide Home Loan eligibility criteria :

A) The repayment capacity based on customer’s monthly disposable income or surplus income (which is based on certain factors such as total monthly income / surplus less monthly expenses) and other contributing factors such as your spouse’s income, assets, liabilities, stability of income and so on

B) Every Bank has its own set of eligibility criteria to assess customers repayment capacity like Monthly Income, Available Income, Other income like rentals, Other existing EMI, CIBIL Score, Property Attributes, Credit History, Age, Co-applicant income and others.

C) Normally Financial Institution assumes that about 50-60 % of your monthly disposable income is available for repayment of the home loan. There are exceptions in some condition where Financial Institution calculate the income available for EMI payments based on an individual’s gross income and not on the disposable income.

D) The loan amount depends on the loan tenure and the interest rate. Banks generally fix an upper age limit for home loan applicants.

E) Bank consider security part (property) also before granting home loan which includes minimum area requirements. Bank also considers age of the property in case of an existing property, the location of the property and also the reputation of the builders constructing the property. Thorough analysis and inspection of the property to check whether the title is clear or not is an additional check in addition to things like ownership disputes and so on.

F) Normally Financial Institution provided LVT (Loan to Value) up to a max. of 80% of market rate of your property . In Affordable Housing Loan few bank lend up to 90% loan where property cost is below INR 20 lakhs). Home loans are repaid using Equated Monthly Installments (EMIs) spread over a fixed tenure.

Processing Time: Processing Time to sanction Home Loans is approx. 7-10 days. And approx. 3-5 days for disbursement. The tenure granted is for maximum 15 years and up to the age of 65 years.

ROI for Home Loan : ROI of Home Loan varies from 8.35% to 12% according to customer profile and risk involved. The interest rate can be fixed or floating.

Rate of Interest : There are 2 Types of Rate offered by Bank :

A) Fixed ROI : Fixed ROI refers to repayment of home loans in fixed equal installments over the entire period of the loan. In this case, the interest rate doesn’t change with market volatility. Fixed ROI is ideal for those who are good at budgeting and want a fixed monthly repayment schedule. Fixed ROI is slightly (1%-2%) higher compare to Floating ROI.

B) Floating ROI : Floating ROI will vary with market conditions. Home loans on floating interest rates are tied to a base rate. So, if the base rate varies, the floating interest rate also varies. The interest rates will depend on the base rate of the bank. As and when the bank changes their base rate, the interest rate changes. The change can either be in terms of the EMI or the tenure. Floating ROI is cheaper. If Floating ROI is 8.5% while the fixed rate is 10%, you still save money if the floating interest rate rises by up to 1.5 percentage points.

Formula used by Bank/ Financial Institution to calculate loan eligibility are as below :

A) Home Loan Eligibility for Salaried customers:-
{(NTH – Obligation) * 60%} / EMI per Lac
Eg. – If customer Gross Income is Rs. 110000 per month and Net Take Home(NTH) salary is Rs. 100000/month and he has not taken any loan earlier So he will be eligibile for
Rs. 100000 – 0 =100000
100000*60% =Rs. 60000
If EMI per Lakh for 20 Years will be 1000 then
Rs. 60000/1000= 60
Thus customer will eligible for 60 Lakh Home Loan

B) Home Loan for Self Employed Customers:-
{(NTH – Obligation) * 65%} / EMI per Lac
Eg. If customer Net Take Home Income is Rs. 100000 per month and he is paying Rs. 20000 as Car loan EMI So he will be eligible for
Rs. 100000-20000= 80000
80000*65% =Rs. 52,000,
If EMI per Lakh for 20 Years will be 1000 then
Rs. 52,000/1000= 52
Thus customer will eligible for 52 Lakh Home Loan

Thumb rule to calculate loan eligibility by Financial Institution :

A) Loan to Value (LTV) –   Bank consider 50%-65% Market Value of Property for Loan eligibility.
B) Fix Obligation Income Ration (FOIR) –   Bank Consider Max. 60% of net income for loan eligibility rest other income considered to fulfill house hold expenses.

Value of the property or your income (whichever is lower) that loan amount will be given to borrower. Other Eligibility Criteria Revolves Around the Maximum Age of the person applying for Loan. 60 Years age is considered as Max. Age for salaried & 65 Years age considered for business man.

DOCUMENTS REQUIRED :

Team FinancialDistributor will be glad to offer you expert advice and guidance in order to help you choose the right bank/financial institution to get the cheapest rate of interest with maximum tenure along with maximum savings.