What is Home Loan? - All you would like to understand About Housing Loan

A home/housing loan, also referred to as a mortgage, is an amount of cash borrowed by an individual, usually from banks and corporations that lend money. The borrower has got to pay back the loan amount with interest in Easy Monthly Instalments or EMI's over a period of your time which will vary between 10-30 years counting on the character of the loan.

Choose A Home Loan That Suits Your Needs:

There are different sorts of home loans options that are made to suit each unique situation. you'll bring home loans to shop for properties that are either commercial or personal in nature.
Here are a number of the various sorts of home loans you'll take.

1. Home Purchase Loan - You can buy any house or home that's within your budget
2. Construction Home Loan – You can use this loan to cover the prices of building a house
3. Land Purchase Loan - You can use this loan to shop for a bit of land
4. Home Improvement Loan – You can use this loan to renovate and improve your house
5. Home Repair Loan – Pay for the price of repair and restoration of your home
6. Home Extension Loan – Increase the amount of built-up space at your home using this loan

Important Factors to Think About When Applying for A Home Loan:

• Principal: This is the amount of cash you'll be borrowing from the bank or financial organization.
• Duration: How long you'll be return the loan. depending on the character of your expected income, you'll select a period that suits you.
• Interest: The bank or financial organization charges interest in exchange for its money lending services. the rate of interest depends on the amount of the principal and therefore the duration that you'll be repaying the loan.
• EMI Amount: You will be paying monthly instalments for the duration of your borrowing, until the end of the loan period. Each EMI may be a combination of principal + interest. With each EMI, you'll be paying back more of the principal and costs of interest will gradually reduce.

Factors to Your Home Loan Eligibility

• Clearing Existing Loans: Outstanding loans may dampen the chances of eligibility. it's advised that if you're taking a subsequent loan, you propose them accordingly to avoid any hassle.
• Variable Pay: It is important that you simply keep a track of the variable pay that comes together with your salary package to keep an eye on your eligibility.
• Rental Income: If you've got a house that's out of use, take the time to lease or rent it out. you'll show this as a further income while you apply for the loan.
• Increase in Tenure: Gauge how much you'll pay off together with your income and calculate your tenure. confirm EMIs don't interfere together with your lifestyle. you'll increase your tenure accordingly, but the downside of it's that the interest is proportional to the tenure.
• The income of the Spouse: In the case that your spouse has a regular source of income, it's highly advantageous because the chances of eligibility go quite high. you'll apply for a joint loan together because it could also be beneficial in bringing down the loan tenure also.
• Take the Time You Need: Before you apply for a loan, confirm you sit down and evaluate all factors like CIBIL, credit score, etc. and confirm you qualify all the eligibility criteria.

Factors that can Affect Your Home Loan Eligibility?

• Age- Age may be a major factor that affects loan eligibility. Professionals round the age of 25 can apply for an EMI tenure of 25 years. However, the difficult part is obtaining approval for borrowers over the age of 40 or 50 as loan tenures don't extend after retirement.
• Income- Salaried/individual- Employees who are working for a government or a private agency fall into this category. Before they apply for a loan, they're required to submit documents supporting their PF, salary statement, Form 16 and others.
• Independent professionals- Doctors, engineers, dentists, chartered accountants, etc. fall into this category. they might need to submit their bank statements and tax returns to urge their loan approved.
• Self-employed- Individuals that run their own business come under this category. they will show their bank statements and tax returns (duly audited) as proof of their income once they apply for the loan.
• Rate of interest- The rate of interest are often calculated quite easily. the upper the speed of interest, the lower the eligibility, and the other way around. Hence, they're inversely proportional.
• Loan Term- The loan term is subject to the convenience of the borrower. the increase of the loan tenure indicates higher eligibility, however, the main downside of this is able to be losing tons of cash in interests.
• Outstanding Loans- You may apply for an additional loan while you’re already within the midst of paying one, as Indian banks generally keep the EMI-Income Ratio from 50 to 60 percent. In some cases, though, outstanding loans maybe reduce the eligibility of you getting a loan.
• CIBIL Report- Credit Information Bureau India Limited keeps centralized data of all the credit history between the borrower and therefore the lender. A negative score on CIBIL can cause a big downfall within the eligibility.

List Of Banks and Their Interest Rates:

How to calculate loan EMI

• Online calculators: There are number of online calculators which will assist you easily calculate your home equity credit EMI. These are often found on aggregator portals and websites of lenders like banks, NBFCs and housing finance companies.
• Using MS Excel formula: If you want to do your own calculations on MS Excel, you can use the following formula to calculate the EMI:

EMI = [P x (R/100) x (1+R/100) ^n] / [(1+R/100)^ n-1]

Here, P= Principal loan amount, R= Rate of interest per month, n= Number of monthly instalments.

An example:

Assuming, P= Rs 30 lakh, R= 9 percent per annum= 9/12= .75 per cent per month, N= 180 months

EMI = ((300000*.75 /100*(1+.75 /100) ^180/((1+.75 /100)^180-1))) = Rs 30,428