It is vital to have financial flexibility as home loan rates rise. These are key points to remember before applying for a home loan.
Income eligibility
The loan tenor is the amount of EMIs required to repay the loan. The customer’s age determines at the time of loan application and the maximum age allowed according to bank policy. A five-year incremental term can significantly affect the customer’s loan eligibility and offer customers a lot of flexibility from a financial planning standpoint.
Co-applicant addition
Children and spouses can often be added to the loan application list as co-applicants. Loan tenors can also be extended based on their age. This is especially useful if the children or spouse are financially independent and are actively involved in the same profession or line of business. Some home loan lenders offer 6-10 years extensions for self-employed borrowers and borrowers with pensionable jobs. This policy could be an option if you want a loan from a bank.
EMI to Monthly Income Ratio
Banks will accept consistent incomes with a specific vintage, as evidenced by bank statements or income tax returns. This is the maximum ratio banks will allow. If this ratio causes a gap in the amount of your loan amount that you have requested, you can reduce your short-term obligations and pay off auto loans and personal loans.
Maximum loan amount equal to fair market value
It is calculated based on the property’s purchase price. Some nuances could affect the assessment of your financial institution and increase your down payment requirement. A 10% decrease in the bank’s valuation can result in a 30% increase in your down payment for property worth Rs 1.5 million.
Direct developer purchase
Every financial institution has guidelines regarding adding additional elements to the sale price. These fees can amount to 10-15% of the total cost of the property. A few examples are external/infrastructural development charges, club house charges, parking costs and lumpsum maintenance. Banks can either use the “Basic sale price” or the “Box price”, which is based on current market rates and includes all charges.
Today, customers have many options for getting a loan. These include banks and financial institutions. Understanding the loan evaluation process will help you select the lender that best suits your needs.
