What Is The Maximum Amount Of A Home Loan One Can Apply For?
Whenever a person wishes to make a financial investment in real estate or need financing for the purchase or refurbishment of a home. The most advantageous choice is to take out a house loan. A house loan allows the borrower to repay the loan in manageable instalments based on his or her monthly income.
Home Loan- a Secured loan
Obtaining a home loan is a simple procedure that may be followed. The necessary bank will quickly transfer the funds to your savings account if you have a strong credit score and only a few papers. They will levy a processing fee based on the amount borrowed. The annual interest rate on house loans ranges from 6.8 percent to 13 percent.
EMI on the basis of salary and loan amount
When asking for any type of loan, be sure you know how much your monthly EMI will be. So, to assist you, we’ve created a house loan EMI calculator that will calculate your monthly EMI. All you have to do now is fill in the blanks with information like the main loan amount, the loan term, and the yearly interest rate. The borrower’s EMI/NMI must, however, be less than 50%, according to bank regulations. And the required salary is more than INR 15000. So, at a 6.8% interest rate, the EMI per lac for a 30-year term is INR 654. If your monthly payment is INR 36000, you may use the EMI calculator. You may take out a loan for up to Rs 27.5 lacs, with an EMI of INR 18000.
How to calculate EMI for a home loan
To compute the EMI, a borrower might utilize either online or manual methods. You may use the home loan Eligibility calculator or other third-party EMI calculator to determine the monthly amount you will pay in the future, as indicated above.
To describe more elaborately EMI calculation uses the following formula
EMI = p x r x [{(1 + r)^n} / {(1+r)^n-1}]
p – the home loan principal amount.
r- the home loan interest rate on the debt.
The home loan interest rate for monthly EMI= [(annual rate/12)/100]
n- Duration of the home loan in months
For instance, you took out a Rs 7.4 lakh home loan with a 6.8% home loan interest rate over 5years.
r = [(annual rate /12)/100] = (6.8/12)/100 = 0.566666667/100 = 0.0057
n = 360
EMI = p x r x [{(1 + r)^n} / {(1+r)^n-1}]
= 2750000 x 0.0057 x [{(1 + 0.0057)^360}/{1-(1 + 0.0057)^360}]
= 2750000 x 0.0057 x [1.14]
EMI = Rs 18000
As a first-time home loan borrower, you must demonstrate your reliability by using a credit card or another suitable choice. This loan should be taken out for at least six months. Make your EMI payments on schedule as well. Because any missed or late EMI payments would lower your CIBIL score. Banks may wonder if you will default on your mortgage or make late payments as a result. The most important parameter used by the home loan Eligibility calculator is the CIBIL score. So keep a score of above 750 makes you eligible for home loan at low interest rate.
Consequences of a Bad CIBIL score
CIBIL score is the important factor that determines the interest rate of a home loan. So it is good to maintain and improve the CIBIL score. Even if your credit score is poor, you may be able to get a mortgage. However, it is more challenging. A poor credit score indicates to lenders that you have a history of accumulating debt or failing to make your monthly payments. As a result, you’re a riskier borrower.
Lenders would often charge customers with bad credit higher interest rates to help offset this risk. They may also demand that these borrowers make bigger down payments.Be prepared for these financial setbacks if your credit is terrible. You can get a mortgage, but you’ll have to pay a higher interest rate.
Read More:- CIBIL Score – Charges And Impacts