Home Loan Eligibility: Know the maximum amount of home loan one can borrow

The maximum home loan amount you can get depends on your creditworthiness and borrowing potential determined in terms of the norms and standards of the bank.

Here are some of the points that will determine the amount of your home loan:

1. Downpayment

Usually, builders ask buyers to pay 10-20 percent of the value of the property as a downpayment. Rest 80-90 percent can be financed from the bank. You can choose to pay more from your pocket if you can afford. You must save up for the downpayment before finalizing a property. In case, there is a deficit, you might have to take a soft loan from your employer, family, and friends. Try to minimize the borrowing amount to reduce the interest outgo.

2. Your eligibility

Home loan lenders have a list of eligibility criterion and only if you happen to meet those, you are considered a potential borrower. Banks typically look at your credit history to understand your repayment habits and prefer a credit score of 750 for lending out. Your age, income, occupation, collateral security, margin requirements, etc. are also important factors when it comes to determining the interest on the loan.

3. Your affordability of paying EMIs

Many times buyers take up a lot of burdens when it comes to paying EMI thinking that it would get easier with time, as their income would increase eventually. Consider the possibilities of not getting a raise soon or other unforeseen circumstances. You should look at a loan to income ratio of 20% to 30%. You can make changes in the tenure to reduce or increase the EMI amount depending on your affordability.

News Source: Times Of India, Url: https://bit.ly/2DXaUl9

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