What is the biggest dream of your life? All of your hard work, each waking moment’s thoughts…everything you do is geared towards providing financial security to your loved ones. You are aware of the tremendous responsibility of providing your family with every comfort. But to this end, your efforts are primarily aimed at creating a safe haven for your loved ones to live in.
You dream of buying a home where your family and you can live in complete peace and comfort. But as each day passes and you work harder and harder to make ends meet, this dream begins to drift into the realm of fantasy. You realise that you do not have the financial wherewithal to make an outright payment on any house you select, so you will eventually require a home loan. But you are unsure of how much loan you will get, and if you will need to raise some portion of the money privately as well.
Any person with a stable income can get a home loan, but before you start applying for it, it is prudent to check your home loan eligibility.
Most banks and financial institutions grant a home loan that accrues to about 60 times the applicant’s net income. Thus, a person earning Rs 50,000 a month has a home loan eligibility of about Rs 30,00,000.
However, the eligibility is not counted as a matter of simple mathematics. When the lending institution assesses your income records, the home loan amount is calculated on the net income after deducting such heads as Leave Travel Allowance (LTA) and Medical Allowance. These deductions are made because the monies paid towards them will not be available to repay the home loan. Thus, when calculating your eligibility, you must deduct these two heads and consider the rest of the income component. The resulting figure is the actual loan amount you will get. You can get a ballpark figure for your eligibility using online calculators provided by banks and financial institutions.
Your home loan eligibility is also affected by such factors as your other loans (borrowings for office property, vehicle loan, credit cards, etc.), the repayment ability basis the income, and your credit history. If the lending institution finds a history of payment defaults or a poor credit score, your loan application might get rejected.
If all your documents are in order – income statements, personal documents, property papers, etc. – the lending institution will process your application and sanction a loan amount that accrues to about 70% of the house’s value.
The lender will also examine the property documents of the house you wish to purchase. It may be possible that the house purchase is out of your reach at the moment, at which point you may have to reconsider the house you are looking at.