Owning a home is a big thing thus the process to apply for a home loan and getting it sanctioned is a tough task. But, apart from this you the aspiring homebuyer must also know the amount that can be availed under a particular loan as each of the home buyers has a budget when it comes to purchasing a property. So, below we are listing all the key factors that help one understand a loan amount you can avail to purchase a home:
1. Applicant’s income
A person alias the applicant’s income play a key role in determining his/her home loan eligibility. The lending institution particularly the banks assume 40% to 50% of your monthly income as available to pay-off the loan. The portion of a monthly salary increases with the increasing income level. Hence, those applicants falling under a higher income slab are considered to pay more from their salary and thus the chance of availing more loan amount increases.
The loan disbursal percentage varies from lender to lender and the criteria to sanction loan is different for both the salaried applicants and the self-employed borrowers. In case of the self-employed professionals, such as doctors, some lenders consider the gross income purpose of home loan eligibility.
2. Effect of Home Loan
The lending company will firstly deduct the current EMI you are paying against the on-going loan and will calculate the amount which can be paid for availing a home loan. The deduction of your current loan will reflect on the home loan availability as the amount of the same will decrease surely. So, most of the financial experts suggest you pay-off the current outstanding loan in order to avail the maximum amount under the home loan section. By doing this, you can have better eligibility criteria to avail a home loan.
3. Applicant’s Age and Remaining Years of Service
A home loan is usually tenured for a maximum of 20 years. Thus, your age and remaining years of service play a decisive role when it comes to availing a home loan. Let suppose if you age 40 and have 20 years of service remaining then your loan eligibility will also decrease. Remember, the retirement age of a salaried person is 60 years and the retirement age is 65 years for a self-employed person. Thus, the disbursal of a home loan amount depends on these factors also.
4. Availability of Co-Borrowers
The sanction-able amount of a home loan widely depends on the borrowers. The addition of co-borrower increase the chance of availing the maximum possible home loan amount as the lender will make a sum of monthly income earned by both you and the co-borrower to pay-off the EMIs. Remember that all the joint owners of the property, are must to be incorporated as co-borrowers irrespective of having separate incomes. Interestingly, the person can act as a co-borrower even if he/she has no share in the property.
5. Tenure of the home loan
A home loan eligibility completely depends upon the tenure you decide. A long-term home loan makes you pay EMIs with small numbers similarly the deposition of the surplus amount will also bring down the home loan tenure. A home loan is usually offered at a floating rate and thus you keep managing funds in order to deposit it at a regular interval so that the loan amount comes crawling down.