How Eligibility Calculators help in availing home loans?

Eligibility calculation is one of the important aspects of home loan processing. Banks calculate home loan eligibility of each and every customer who applied for a home loan by taking applicant and co-applicants income into consideration before giving a sanction letter to the customer. A little idea on how this eligibility is calculated will make much difference in the process of home loan.

The process of eligibility calculation varies from customer to customer depending on the income source. If the customer is a salaried customer then the sum of regular components of salary is taken into consideration along with 50% of the variable pay for the calculation of eligibility. If the co-applicant income is also considered then the same principle will be applicable to the co-applicant also. After arriving at a component both the applicant incomes is added and take a maximum of 60% of the salary for the contribution of home loan EMI. If any liabilities are there then the component of their EMI will be deducted from this amount and on the remaining amount the eligibility is calculated by dividing the amount with the per lace EMI component of the home loan interest rate charged for the desired tenure or applicable tenure which results the home loan eligibility.

The Eligibility process is the same for the NRI Salaried also the only difference is the amount is converted to Indian currency before calculating the eligibility. The calculation differs a bit for self employed whose gross income along with depreciation, Interest paid, and remunerations are considered for the calculation and remaining process is same. The calculated eligibility by the bank is final. Liabilities that a customer would like to close to avail a home loan will not be considered as a liability and liabilities below 6 months are also not considered. Having liabilities will decrease the loan eligibility and it is always suggestible to close all the liabilities before applying for a home loan for comfortable repayment of home loan.

Eligibility calculators help you to know how much amount you will be eligible for if you go for a housing loan depending on your requirement. The Eligibility calculators will take all the information about your income and your requirement's then give final eligibility depending on the values provided. The value arrived finally may vary from bank to bank depending on product and tenure considerations.










 

Why construction loan is a best product?

Banks design different products for different needs of customers which are based on specific needs of ones requirement. It is believed that Construction loan is the product that suits best to the customers who are looking to avail loan on the property or vacant land to start construction. The property can be a constructed house on which developments are proposed or can be an open land. To avail the loan the customer’s needs to undergo a very simple process which will give the loan required by the customer?

The customer needs to avail all the required permissions from the concerned departments before applying a home loan. The required permissions are Plan of Construction from the municipal authorities and land regularization approvals if the land is not regularized or falls under Gram Panchayats. Once the approvals are availed a construction agreements is to be executed in favor of the Builder if the construction has been given on contract, if it’s a self construction then there is no need of any agreements just the property documents will suffice the requirements.

The customers need to submit all his Personal documents which proves his/her identity and provides information about the residential address and income documents which authenticate the monthly salary received from the employer and the form-16 which gives the details of the tax deducted by the employer from the customer’s salary.  

All the personal documents along with property documents on which the construction being done need to be submitted in the bank of which verifications are done and post satisfactory verification the loan will be disbursed. The property on which the construction is being done can be a registered property on customer’s name or his/her parents name. Customer by making his/her parents as co-applicant in the home loan application can avail the construction loan. Tax exemptions US 80© of Income Tax are applicable on the principal and interest components of the loan.

Customers are advised to check with the home loan interest rate conveyed to you at the time of applying a home loan with the interest rate mentioned on the sanction letter given by the bank before going for disbursement of loan amount.

How to reduce the Interest Paid on a Home Loan?

Every customer in the market is worried about the amount of interest paid on a home loan during their repayment tenure. A blind calculation gives a result of 100% of loan amount is the amount of interest paid on a home loan during the tenure considered if the customer pays the EMI’s for the whole tenure i.e 20 Years. This is a shocking result to every customer because the home loan interest rate looks very low but when calculated it is exactly the same amount of higher amount of loan that we are paying towards interest on the home loan.

If Some simple measurements taken at the time of availing the home loan then we can avoid the huge amounts that to be paid towards interest of home loan. Just follow the stated below before applying the loan

·         Make more margin money payment towards the property

·         Apply for lesser loan amount which will have lesser interest rate

·         Opt for least possible tenure

·         Opt for possibly higher EMI

·         Make part-payments yearly twice at least

·         Go for home loan linked life and General insurance

·         Opt for Interest saver account if available

Let’s see how the above measurement will save the interest on Home Loan. Banks usually give 80% of the property cost as Home Loan, means higher the property cost, higher the loan, Higher the EMI and Higher the Interest component of EMI. For the initial years the Interest component will be higher so to avoid that opt for lesser loan amount, lesser tenure and Higher EMI with which one can save a very good amount on Home Loan Interest and making part payments will be most helpful too as the amount paid will be directly deducted from the outstanding principle of loan account which in turn reduces the interest and the repayment tenure also.

How to manage EMI Effectively?

EMI refers to Equated Monthly Installments a key term in all loan products which stands for the loan repayments to the bank. The EMI is calculated by taking the loan amount, Interest Rate and repayment tenure into consideration. All the Banks and Financial Institutions do the calculations in the same manner so the amount will not change from one bank to other. All the EMI are calculated on diminishing rate which is mandatory in Home Loans.

Banks provide the facility of repaying the loan in Equated Monthly Installments which is a combination of Principal and Interest Components. The EMI will have Interest Component higher in the initial stage of tenure and as the tenure goes on the Principal component increases and the interest component decreases. 

The EMI can be increased if the income of the applicant increases. But the cant be reduced once it is fixed. If the customer wants to make any part-payments during the repayment tenure then the paid amount will be directly deducted from the outstanding principle and tenure will be re-scheduled according to the latest outstanding amount by keeping the EMI fixed at the same amount. This provision is available only for the Home loan customers. 

Banks reserves the right to reschedule the loan tenure if there is any change in the home loan interest rates on the Loan that the customer has availed. If there is any change then banks will increase the tenure first and if the tenure is crossing 300 months then banks increase the EMI as there is a cap on repayment tenure for 300 months. If the Interest rate reduces then banks decrease the repayment tenure but not the EMI. Customers need to personally request the bank to reduce the EMI component and the decision is at the sole discretion of the bank. All the Home loan products attract Tax Exemption under section 80© of Income Tax Act.

Why Home Loan is a Best Product?

Banks have introduced the product home loan and started funding to customers which resulted in fulfilling the dream of people who wants to own a house of their dream. Banks provide home loan on two kinds of rates of Interest one is Fixed and the other one is Floating. The fixed interest rate will be fixed for a limited period of time even if the rates in the market fluctuates and floating interest rates will be increased or decreased according to the rate fluctuations in the market.

To avail home loan from any bank or financial institution one need to submit all his personal and income documents which prove or authenticate his identity and income to the concerned bank where he wants to avail the loan. Along with the personal and income documents the customer need to submit the documents of the property which he is buying. The documents should cover last 15 years transactions over the property. 

Post submission of all the documents banks usually take a min of one week time to conform whether they will fund to the property in the name of customer or not or the application is fit to their policy. Banks will verify the details stated in the application form so it is always suggestible to stated only required and genuine information only for which you have authenticated documents to provide. Banks reserves the right to ask for additional documents if needed. It’s the bank sole discretion on all the loans. Once the application is approved then the Home loan will be disbursed by taking the required documentation like Post dated cheaque’s, signed agreements, sale agreements and disbursement request forms etc. Post disbursement the customer needs to register the property on his name and submit in the bank. The whole process takes just one week and fulfills the dream of a common man of owning a house. 

With the Equated Monthly Installments and longer comfortable tenure to repay without any worries the product Home Loan is considered as the best product in the market.