You can make the most of your investment in real estate by planning in advance and being well-informed. This is because the market revolves around several economic and land pricing factors. So, you will have to check when the market is ripe and when there is a good housing project in your chosen areas. Apart from this, the most important factor that determines your investment capacity is the amount you will get as a housing loan to buy a property of your choice. However, the loan amount for which you are eligible depends on a number of conditions.
Take a look at the factors that determine the loan amount for your housing loan.
Your Home Loan Eligibility
As per the terms and conditions of a home loan, you can apply only if you are an Indian resident, have a steady monthly income and are at least 21 years old. Once you qualify for these basic conditions, check the eligibility criteria listed by your lender as most lenders have slight variations. Being aware of home loan eligibility terms in advance will give you a chance to ensure that you match them before you apply. This reduces chances of a rejection and also ensures a faster approval for a hefty loan amount on competitive home loan interest rates. You can easily check the lender-specific eligibility for each factor such as your income, number of years in employment, age, and property value using the online home loan eligibility calculator with ease.
Lenders like Bajaj Finserv, for example, offer a Home Loan if you are between 23 and 62 years of age and have at least 3 years’ work experience. Additionally, your minimum required salary is based on your city of residence. This means that you can qualify for a home loan of up to Rs.3.5 crore on low interest for a tenor of up to 25 years on a minimum salary of Rs.25,000 if you reside in Kolhapur. For the same loan, you will need to have a minimum salary of Rs.30,000 if you reside in Mumbai. The criteria are different if you are a self-employed applicant. In this case, you need to be at least 25 years old and have at least 5 years of business vintage to get a home loan of up to Rs.5 crore. So, once you meet eligibility criteria of your lender, and surpass the minimum income expectations, you are likely to get a higher loan amount.
Your Credit Score and CIBIL History
In conjunction with a steady income, a higher CIBIL score translates into a larger home loan amount. Lenders regard a CIBIL score of 760 and above as a good score. This score means that you are creditworthy and responsible, don’t have a high debt-to-income ratio, and can repay your home loan with ease.
Your Capacity for Down Payment
As per the prevailing real estate norms, you will need to pay 10-20% down payment for the property you are buying. The rest of the 80-90% then is financed by your lender as the home loan. So, if you have a high-value property in mind and can afford a higher down payment of at least 20%, you’ll get correspondingly high loan amount. This is because the value of property pledged as security is higher. Secondly, the fact that you are paying at least 20% of the value as a lump sum gives the lender assurance that you can afford a high loan amount. This, in conjunction, with your income and credit score, can result in a larger housing loan.
Your Choice of Property
Selecting the right property is the key to getting a substantial home loan. Remember that the valuation of your property is not only important to your lender, but should also be your priority. Buying a house in a good location supported by a strong infrastructure and favourable amenities will fetch you a higher value if and when you decide to sell it in the future. Conversely, an old property in a remote or isolated area with low scope of development may not induce the lender to offer you a large loan amount. To make matters easier for yourself, you can check if a developer or builder you like is listed with your lender and then determine the condition of the property you are buying. Applying with a developer listed with your lender will help you secure a bigger value loan amount at the best home loan interest rates in India. This is because the lender has pre-verified the builder and his development.
With an in-depth idea of these factors, you can get the maximum housing loan amount and buy the home of your choice. Ensure that you calculate the EMIs for your housing loan using the home loan calculator so you can plan your repayment better.