How do I manage my Home loan better

Loan Eligibility is a factor of the following criteria:

Property Value – Usually home loans are pegged to 75 – 80% of the value of the property, as determined by the lender. Borrower’s Profile – The key aspects that come into play are:

• a) Occupation – Salaried/Professional segments command a better eligibility quotient than Business owners with erratic income
• b) No of dependents
• c) Company category for Salaried individuals – Most often the top 1000 or the Fortune 500 companies are regarded as Category A employers by banks and employees working in these companies enjoy better terms
• d) Business or employment continuity – Most lenders expect a minimum of 2 years of employment; as higher experience means higher income stability

As per Income – Usually banks cap the Maximum serviceable EMI of a prospective Home loan to 50 – 60% of the Gross Monthly income. In case of self-employed borrowers, the banks look at the cash flows generated from the business such as:

• Profit after tax
• Depreciation
• Partners’ remuneration (in case of a Partnership firm)
• Interest on Capital (in case of a Partnership firm)
• Director’s remuneration (in case of a Pvt Ltd Company)

How to increase my loan eligibility:

Adding a co-applicant on the loan; who can be your spouse, parents or children.

For every Rs.1,00,000/- of loan quantum at a 20-year tenure & 9.50% Interest rate, it takes about Rs.1533/- of additional income.

Reducing the current monthly liabilities by paying-off low priority loans

Here’s a simple calculator that shows what happens to your home loan eligibility if you cut out an existing EMIs of any other loan type