Buying a home loan is no less than achieving a major milestone in life. This is why people wait for years to buy a house. Buying a house of your own requires intricate planning way before one actually thinks of the same. There are a few things that need to be taken care of. Check them below.
How much can you borrow from a home loan?
As per the RBI Home Loan guideline 2018, a bank or an NBFC can’t finance more than 70% of a property’s value (80-90% in extremely rare cases). However, your eligibility is subject to your monthly income and how much you can afford to repay. Though the lender always has your home as collateral, they will still try to make sure you are capable of paying the resulting EMI. Therefore, the maximum amount you will be able to avail will depend on your gross monthly income. Financial institutions will refer to the details shared by you and the credit rating agency to decide your eligibility. You can find out the same using the home loan eligibility calculator. The perks of using home loan eligibility calculator? You will be able to plan your home loan properly and ensure maximum chances of approval.
How much and how to calculate the EMI?
Banks and NBFC use a very complicated set of formulas to calculate the EMIs but you can use the home loan EMI calculator for the same. Just for a gist, financial institutions use the formula: EMI = [P*R*(1+R)^N]/[(1+R)^(N-1)]. Here P stands for the Principal amount that you borrow, R = rate of interest and N stands for the total repayment period in number of months.
Also Read: Buying A Home For The First Time? Here Is Everything You Need To Know