Planning to buy a house of your own? There could not be a better time than today. The interest rate for home loans are at an all-time low, the real-estate market is full of affordable houses, and easily available Home Loans from private NBFCs, local banks along with government housing financing schemes etc. Collectively, all this make this period one of the most lucrative periods to take a Home Loan and finally fulfil your lifelong dream of buying your dream house.
However, as wise men have always said, buying a house is not an easy-peasy task. The process requires a lot of emotional and financial planning. Afterall, you are going to pay the EMI for a very long time, and thus, a creating a feasible repayment plan in advance is the least you can do. For your reference, you can check and follow the below mentioned steps.
Check your Home Loan Eligibility
Checking your home loan eligibility is the first step towards buying on credit. So, take the first step and find out your eligibility for the loan and restructure your expectations accordingly. There are a few ways to find out the eligibility:
The Manual Method
If you choose the first method, you need to have a lot of patience in you because the process is going to take time. Every financial institution has a different formula for eligibility calculation which they don’t share with everybody, and therefore, requesting them to calculate your eligibility id the only way. You can start with sending an email to the lender. Share all the important details which would be required: your annual income, number of debts you have on your name, the total amount of money you are paying as EMI towards your existing loans, and the other obligations you have. Also, share the market value of the property that you are planning to buy. If they are generous enough, they will share the required information immediately.
The Home Loan Eligibility Calculator
If you want the easy way, use the home loan eligibility calculator for the calculation. You need the interest rate, the tenor for which you will be taking the loan (make sure the maximum period you choose is in accordance with the lender’s policy), and the amount you are borrowing as loan. Once you have all the information, you can search the calculator on the internet and use it. It is very simple to use.
Gather All the Documents
There are very few documents or data that you need before applying for a home loan, be it any. For instance, you’ll need the ITR for past 2-3 years, last 3 months salary slip and knowledge of your deductions in the form of EMI, insurance premium, etc.
What is Home Loan Eligibility?
Home Loan eligibility is nothing but the amount of loan that a bank or financial institution can lend you for buying a home. In short, you are eligible for that amount of loan. Home Loan eligibility and EMI are very different things.
Difference Between Home Loan Eligibility and EMI:
As mentioned above, Home Loan eligibility is the amount of loan that one person is eligible to be granted. Whereas EMI is the monthly amount that the borrower has to repay for the loan. You can very easily find both Home Loan eligibility calculator and EMI calculator on site of any bank or financial institution.
Search for the Home Loans with lowest interest rates. Don’t forget to check the various other lucrative housing loan schemes by the public banks and NBFCs. The lower the rate of interest, the lower will be the EMI and higher will be your savings.
Various Housing Loan Schemes
Pradhan Mantri Awas Yojana
Under the mission for “ Housing for all by 2022”, the government has come up with a scheme wherein it provides subsidy on the rate of Rate of interest on purchase/ construction/extension/ improvement of the house by the EWS (Economically weaker section)/LIG (Lower income group)/MIG (Middle-income group).
The interest subsidy is provided upfront on the outstanding principal amount. The subsidy on Rate of interest will be provided for a maximum period of 20 years or for the tenure of the loan, whichever is the lowest. The net present value of the subsidy on Rate of interest is calculated at 9%.
For details, refer to the table given below:
|Scheme type||EWS/LIG||MIG 1||MIG II|
|Family income (in Rs)||EWS- 0- Rs.3.00 lakhs
LIG – Rs.3.00 to 6.00 lakhs
|Rs.6.00 lakhs to Rs.12.00 lakhs||Rs.12.00 lakhs to Rs.18.00 lakhs|
|Maximum subsidy (in Rs)||2.67 lakhs||2.35 lakhs||2.30 lakhs|
A lower rate of interest for the Home Loan by women
In case of Home Loan availed by women, almost all the banks and financial institutions are providing an interest discount of 0.10% to 0.15%. Thus, if a woman is an applicant or co-applicant for the Home Loan, then they are eligible for the special rate of interest available for women.
Lower rate of interest in case of a tie-up with organization
Many organization, companies whether private or PSU, ties up with the bank for the Home Loan scheme for their staff. In that case, it is very well possible that the rate of interest is lower than that of the regular rate of interest. So, go check with your HR in your organization and make yourself aware of any such tie-up that your organization has done with the banks.
Builder pre-EMI interest
In this world of growing fierce competition, some builders have come up with new and exciting offers such as this. In the pre-EMI interest scheme, the builder agrees to pay the full or part interest part during the moratorium period. Thus it significantly reduces the burden of the interest portion.
EMI Calculator: Once the eligibility has been checked and you have decided about the rate of interest, the last thing is to calculate the EMI. There are various online EMI calculators available on the lender’s website.
The Bottom Line
That’s all. Isn’t it very simple? Eligibility, the rate of interest and EMI- just these 3 steps. Choose the bank with the lowest rate of interest and select the correct housing scheme for the Home Loan. Knock on the door of the bank, apply for the Home Loan and you are on your way to make your dream come true.