Are you planning to buy a property but do not have any idea about how much loan amount you’re eligible for? Let us help.
Here’s a question that we recently came across. The person wanted to buy a house and was wondering how much loan he is eligible for and how much should he actually borrow.
Q: I am a Mechanical Engineer. I work for a multinational company as Manager-Sales. My cost-to-company including all benefits is Rs. 6 lakh per annum and my monthly take home is approximately Rs. 30,000. I plan to buy a builder floor in Delhi NCR which costs Rs. 32 lakh (Rs. 30 lakh for the home and Rs. 2 lakh for registration). How much loan will I get and how much should I take? – Pushpam Kumar
‘How much Home Loan will I get?’ – This is the question that people often ask when they are looking to buy a house and need a loan to fund it. Well, there is no specific amount that we can mention since the amount you’ll be eligible for is based on various factors such as your job profile, income, credit history, Credit Score, age, etc. Let’s learn a little more, shall we?
(Before moving ahead, we’ve assumed Pushpam to be a 30-year old man with 5 years of work experience and no previous loans/debts.)
Well, as mentioned earlier, your loan eligibility depends on a variety of factors.
In the case of Pushpam, the maximum Home Loan amount he can get is up to Rs. 24 lakhs for a tenure of 30 years which is the maximum tenure offered by banks. The EMI for this amount would be between Rs. 13,000 and Rs. 15,000 per month at an interest rate of between 8.35% and 9.95%. Pushpam will have to arrange the down payment of Rs. 8 lakhs.
If you have a property at hand and would like to know how much loan you can get, check your eligibility here. It will just take a couple of minutes to get quotes from different banks and NBFCs.
Additional reading: Home Loan Handbook: All Questions Answered
Consider A Joint Home Loan
In case the Rs. 8 lakh down payment is too much for Pushpam, then he can consider taking a joint Home Loan, where you can combine a family member’s income to be eligible for a higher loan amount that would suit your fund requirements for the purchase.
The co-applicant can be your father, mother, spouse or children. The ownership of the property can be divided equally or it can be solely yours.
Let’s now assume that Pushpam applies for a loan with his spouse. His spouse is 28 years old, working for an MNC and earning Rs. 25,000 in a month. With his spouse as co-applicant, Pushpam can get a maximum loan of up to Rs. 29 lakhs. That means his down payment will reduce to just Rs. 3 lakh. So, if you’re aiming for a higher loan amount, then applying with a co-applicant makes sense.
Additional Reading: Increase Your Tax Savings With A Joint Home Loan
Although Pushpam is eligible for Rs. 24 lakhs with his profile, his credit history or previous track record for loan/Credit Card repayment can affect his loan eligibility. If his existing loans are in the process of being repaid, there are chances he can get the maximum loan amount. At such instances, a joint loan will really help you out to increase the amount of loan you can avail.
On the other hand, if your repayment history is impeccable and you have no liabilities you may be eligible for a higher loan amount and a lower interest rate as well!
Also remember, banks generally fund 80% to 85% of the cost of the property. For smaller loan amounts (less than 20 lakhs), a few banks provide up to 90% funding too. However, it is essential to have at least 20% of the cost of the property as down payment always.
As mentioned throughout, there are quite a few factors that banks take into consideration when it comes to Home Loan eligibility of individuals. Always keep in mind that the final loan amount will be the bank’s decision solely.
And if you’re wondering about how much you should borrow, it depends on how much money you have at your disposal. If you don’t have much to make a huge down payment, you can always apply with a family member and increase the total loan amount.
Additional Reading: 5 Unbelievably Simple Hacks For A Quick Home Loan Approval
Psst! If you’re looking for a Home Loan, you have come to the right place.