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BASICS OF HOME LOAN ELIGIBILITY
At times, you may have thought about shopping
for home loans to cherish spending a decent life in home sweet
home. The idea seems fanciful but determining the home
loan eligibility has seldom been easy for some.
Or one may say that the eligibility criterion is hardly represented
in an understandable form. This article will make readers
acquaint with the evaluation of eligibility for home loan
along with providing the necessary reasons for the same.
Outlined below is the chart that will add to your understanding:
Salary available for making EMI payments
|
Monthly Salary Slab(Rs) |
Percentage
of monthly salary considered for making EMI payments(%)
|
8000- 10,000 |
45 |
10,000-20,000 |
50 |
20,000-35,000 |
55 |
Above 35,000 |
60 |
Most finance institutions will consider
some percentage of net monthly income of borrower as being
available for EMI payments i.e. Resident
home loan Re-payment . Let's make the things
easier with an example. If an individual is drawing a net
salary of Rs 25,000 pm, then Rs 13,750 (i.e. 55% of 25,000,
Refer the table) will be considered as a part of EMI payments.
Likewise, the amount will vary according to the individual's
income. This however clears a fact: The higher the salary,
the higher will be the percentage. For that reason, the amount
for making EMI payments shares a direct proportional relationship
with the salary.
Understanding your loan eligibility
|
Monthly
Income(Rs) |
30,000 |
(Assumed) Income available for
EMI payments(i.e. 55% of 30,000)(Rs) |
16,500 |
Rate of Interest(%) |
8.00 |
Tenure(yrs) |
20 |
EMI per lakh(Rs) |
836 |
Home Loan Eligibility (Rs) |
1,973,000 |
All Home finance companies refer to their
own EMI table when calculating the EMI payments. This table
lists the monthly EMIs per lakh, for different tenures and
rate of interests. Therefore, the EMI per lakh and the individual's
income available to make those payments are the two leading
factors in deciding about the home loan eligibility for the
individual.
The things are of course not as easy as it seems to as not
all the home finance companies use the same method of determining
the home loan eligibility. However, the basic nature of calculations
remains common. For instance, some companies give weightage
to an individual's gross salary to evaluate the "income
available for EMI payments". The calculations will also
be different in case of self employed individuals.
Following are other factors helping
in evaluation of home loan eligibility:
- Nature of Job of Individual: Nature of Job of the Individual:
Most home financing companies carry a list of 'negative' professions.
This can cause a lot of hassles for the individual coming
from such professions before being finally getting the loan
amount.
- Location of the Property: Likewise, they may consult another
list known to carry 'negative areas'. Any individual applying
for the loan to get a home in such areas may not be granted
the loan by home finance companies. The same is the case with
the property falling within the geographical limits as defined
by the home financing institutions.
- Personal Details of individual: Personal details of the individual
are another factor that is taken into account by home finance
companies. It may or may not contain credit history of the
individual as per the formalities to be filled with the concerned
institution. All these factors help the lenders in deciding
the individual's home loan eligibility.
It is important for everyone interested to take a home loan
to know about the basics of home loan calculations. Apart
from helping in evaluating the part of their income being
available for EMI payments, it turns to be useful in zeroing
in on a home finance company as per the requirements.
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