Buying a home could be one of the biggest achievements of a person's life. In most cases, it takes an entire lifespan to fulfil the dream of purchasing one's own home. Selecting the ideal property involves a lot of research and planning. Arranging funds is probably the toughest and the trickiest part of the process.
Most lenders get the property valued independently and provide loans based on their estimated value. It is important to remember, however, that frequently their valuation is significantly lower than the actual cost and hence the requirement of the borrowers goes up. Home loans in Indian Banks are provided up to maximum of 80% (90% for loan amount below INR 20 lakhs) of the value of the house. Home loans are repaid using Equated Monthly Installments (EMIs) spread over a fixed tenure.
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Every bank has its own set of eligibility criteria so as to properly assess your repayment capacity. The Repayment capacity per say is based on your monthly disposable income or surplus income, (which is based on 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.
The main concern from the bank’s perspective is to make sure that you can comfortably repay the home loan on time. The higher your disposable monthly income, the higher the amount you will be eligible for. A bank typically assumes that about 55-60 % of your monthly disposable income is available for repayment of the home loan. There are exceptions to this however where some banks calculate the income available for EMI payments based on an individual’s gross income and not on the disposable income.
As always, the loan amount depends on the loan tenure and the interest rate. Banks generally fix an upper age limit for home loan applicants.
Different banks have different eligibility criteria, however, we can broadly classify them into the following buckets:
Monthly Income – One of the most important considerations when a bank decides the maximum loan amount it can disburse, is your monthly income (if you are a salaried individual. if you are a self employed person, your yearly profit would identify your maximum loan amount)
The loan amount basically depends upon the net income of an individual and a bank usually provides home loans up to 60 times of an individuals net income. For e.g. if a person take home salary is Rs 30,000 he /she may be offered a home loan of around Rs 18 lacs. However, the finality of this decision is based on a few other criteria.
Other EMI – If you have any previous loans or EMIs pending, a bank will always consider the risk and the financial load you are taking on to decide to give you a home loan.
Available Income – The income that is left in your bank account after deductions of any EMIs is a very important consideration for giving out a home loan. The Home Loan Eligibility Calculator will be calculated after deduction of the EMI’s that you are paying monthly.
Property Attributes – If you are a home owner already, you should know that banks provide upto 75% of your home property value as a loan amount. So for example, if your home or property is worth 50 Lakhs, you can get upto 75% of that amount as the loan amount, which in this case works upto 37.5 Lakhs. Here, based on your income and property value banks decide your exact home loan eligibility.
Banks also have certain norms for the property before granting a loan. These are with respect to the minimum area requirements for a flat which may be carpet area or built up area. The bank also considers the 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.
Credit History – The credit history of an individual plays an important role in deciding the amount of the loan. Credit history is basically the credit report of an individual based on credit information recorded by CIBIL through all your loan transactions. Based on your credit score, a bank or any other financial institution decides whether an individual is eligible for a loan or not. The credit history is generally affected by outstanding credit card payments and any unsecured loans.
Age – Age plays a crucial role in determining your eligibility for a home loan. One has be atleast 21 years of age to apply for a home loan. The minimum age requirement may be different for different lending institutions. The maximum age may vary from 58 to 65 years depending on the income source of the individual. Age also determines the tenure and EMI of the loan. For e.g. if an individual is 35 years of age and retires at 60 then his/her loan tenure will be 60-35=25 years and the EMI will be calculated accordingly. The longer the tenure the lower will be the EMI’s. However the longer the tenure, the costlier the loan is as one ends up paying more interest.
Co-applicant – In order to enhance the eligibility for having a loan one can have a co-applicant such as a spouse or close nominated relative or friend. As a result of this the total eligible income for having a home loan increases and thus as a result the loan eligibility becomes higher. However banks permit only certain relationships to become the co-applicant.
As mentioned earlier, every bank has its own set of Eligibility Criteria. In case of NBFCs customers can expect higher eligibility.
Every customer has to satisfy the Know Your Customer (KYC) norms stipulated by RBI. You have to provide the documents relating to your KYC, employment, business, and income.
Financial Documents - Employment or Business Proof
Home loan offerings differ from different bank providers. Home loan interest rates vary depending on a number of factors such as:
Employment Type: Personal loan interest rates differ for salaried and non-salaried personnel, considering non salaried personnel can pose risky investment possibilities
Company Type: Companies are organised into Category A, B and C based on parameters like revenue, adherence to standards and so on
Salary: Your salary dictates how much your interest rate could be. Lower salaries usually warrant higher interest rates to mitigate the banks lending risk
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|Floating Interest rate||Per lac EMI||Processing Fee||Prepayment Charges|
|ICICI Bank||For Women – 10.10%||For Women: Rs.972||0.50% of loan amount upto Rs. 1 crore||N.A|
|For Others -10.15%||For Others: Rs. 975|
|HDFC Ltd||8.65%||Rs.909||0.5% or maximum 10,000 + Service Tax (12.36%)||No prepayment charges shall be payable for partial or full prepayments irrespective of the source|
|HSBC Bank||For Salaried: 10.15% – 10.35%||Salaried: Rs.974 – Rs.988||1% of the loan amount applied for, subject to a minimum of Rs 10000 plus service tax. This fee is payable on application and is not refundable||Nil|
|For Self Employed: 10.25% – 10.45%||Self Employed: Rs.981 – Rs.995|
|AXIS Bank||10.25%||Rs.982||Upto 1% of the loan amount subject to minimum of Rs.10,000/-||Nil|
|IDBI||10.25%||Rs.982||0.50% of loan amount + applicable tax subject to maximum of Rs. 50,000/- + applicable tax||If Balance Transfer then 2% Otherwise Nil|
|PNB Housing Finance Ltd.||10.50% – 11.25%||Rs.998 – Rs.1049||0.50%||NIL|
|ING Vysya||10.75% – 11.25%||Rs.1015 -Rs.1049||0.5% of the loan amount||NIL|
|Standard Chartered||10.26%||Rs.982||Rs.5500/- + Service tax||NIL|
|Citibank||Scheme I: 10.25%*(No Home Credit facility)||Scheme I: Rs.982 (No Home Credit facility)||For Salaried: 0.25%||NIL|
|Scheme II: 10.50%*(Home Credit facility available)||Scheme II: Rs.998 (Home Credit facility available)||For Self Employed: 0.5%|
|Deutsche Bank||10.50%||Rs.998||12000 + Service Tax||Nil|
|DHFL||For salaried: 9.35%||For salaried: Rs. 922||For salaried: 1%||NIL|
|For Self Employed: 9.45%||For Self Employed: Rs. 929||For Self Employed: 1.5%|
|India Bulls||Upto Rs. 25 Lakhs: 10.15%||Upto Rs. 30 Lakhs: Rs. 7500 + 12.36%||NIL|
|Above Rs. 25 Lakhs: 11%||Above Rs. 25 Lakhs: Rs. 1032||Above Rs. 30 Lakh: 0.5% of Loan Amount|
|Kotak Bank||10.25%||Rs.982||0.25% – 0.5%||2% on Balance transfer else NIL|
|PNB Housing Finance Ltd.||10.25%||Rs.982|
|First Blue Home Finance||For Salaried/Self-Employed: 10.25%||For Salaried: Rs. 982||Salaried (Up to 30 lakhs): Rs. 7300||Nil|
|For Salaried/Self Employed (Upto Rs 25 Lakhs): 10.75%||For Self Employed: Rs. 1015||Rs. 30 – 75 lakhs: Rs. 11800|
|For Salaried/Self Employed (Above Rs 25 Lakhs): 11.25%||Above Rs. 75 lakhs: Rs. 15,000 + Service Tax (12.36%)|
|Development Credit Bank||11.50%||Rs.1066||1% of Loan Amount||Nil|
|Tata capital Housing Finance ltd||For Salaried: 10.25% – 10.9%||For Salaried: Rs. 982 – 1025||0.5 to 1% Of Loan Amount||N.A|
|For Self Employed: 10.75% – 11.50%||For Self Employed: Rs. 1015 – 1066|