Eligibility

Eligibility with Existing Loan Who doesn’t want to build their dream home? However, it is quite a task. Building a house involves a massive investment. That is where a home loan comes to your rescue. It helps you fulfill your dreams without worrying about finances.

Several banks and NBFCs offer home loans these days. However, they have their home loan eligibility criteria that you must fulfill. The criteria vary according to the lender. But here are some common factors they might check.

  • Your monthly income
  • Credit score and credit history
  • Value of the property
  • Other existing loans

Home loans in India are very different to loans in other countries. This holds true for just about every financial product you can think of, such as personal loans and credit cards. 

In this article we will be taking a look at the process and eligibility of home loans in India.

Here, we will look into how your existing loans can impact your home loan eligibility.

Impact of Existing Loan on Home Loan Eligibility

If you have an existing loan, your lender will consider it while deciding your loan eligibility. It can determine the amount of money you can borrow.

The loan amount you can get depends on your monthly income. Your lender wants to make sure that you will be able to repay the loan. So, they keep the maximum loan amount such that the EMI does not exceed 50% of your monthly income.

Now, you might earn Rs 60,000 per month. But does that mean you can pay an EMI of Rs 30,000? You might have a lot of other expenses. And, there might also be existing loans. So, your lender will consider your in-hand salary after paying for your existing EMIs.

If you earn Rs 60,000 and spend Rs 10,000 on the EMI of your existing loan, the lender will consider Rs 50, 000 as your in-hand salary. And, they might offer you a loan where the maximum EMI would be 50% of Rs 50,000, i.e., Rs 25,000.

However, it is better to borrow an amount where your EMI does not exceed 35% of your in-hand salary or pay. That will keep space for financial emergencies. 

So, never take the maximum amount that the lender wishes to give you. Instead, take your other regular expenses into account while keeping space for unexpected expenses at the same time.

How Much Home Loan Can I Get?

How much home loan you can get will be determined by the lender and your income? The less income you have, the less loan you can get. 

A lower income can lead to a longer repayment schedule, which in turn lowers your monthly payment amount. 

You may choose to repay the loan faster which results in making more installments, but this also results in more interest paid over time.

You can calculate the home loan by using home loan eligibility calculator. It is a tool available on the sites of most lending institutions.

Your lender will calculate the maximum loan amount you can get based on your repayment capacity. And, you must also borrow an amount that you can pay back comfortably.

Final Word

Well, there are numerous loan eligibility calculators online. But it is your lender who will say the final word. Moreover, you must take care not to borrow beyond what you need. That will put excessive pressure on your finances.

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