I am a teacher in a UP government school and my monthly income is ₹ 29,000. Can I avail of a home loan? Is there a limit to the amount I can borrow?
— Vineet Chaudhary Normally lenders grant a home loan of up to a maximum of 80% (90% for loan amount below ₹ 20 lakh) of the agreement value of the property as a home loan. You will also have to pay stamp duty and registration charges (if your property cost exceeds ₹ 10 lakh), as banks do not fund these charges. The overall eligibility will be based on your income, your regular outgoings and repayment track record.
Different banks presume different portions of your income as available for payment of EMIs for loans. It varies from bank to bank and there is no standard norm/formula. But normally the bank will assume that around 40% to 45% of your net salary is available for payment of EMI to serve all
With your income, you should be eligible for approximately ₹ 11.75 to ₹ 13.25 lakh at the rate of 9.75% for a 20-year loan tenure. You can also enhance your eligibility by making your earning spouse/parents to join you as a co-borrower or increase your loan tenure.
I have booked a flat that costs around ₹ 13 lakh and my loan amount is ₹ 11 lakh. This is an under-construction project and will take around two years to complete. Since my EMIs will begin after the unit is handed over to me, will I have to pay pre-EMI interest now? The builder claims that I will have to pay an interest of only ₹ 200 to
₹ 300 per month until I get the keys
to the house.
— Siddharth Gupta The builder may be misleading you. On every disbursement made to the builder directly by the bank you will need to pay pre-EMI interest at the rate provided in the agreement. If the disbursements are high, the pre-EMI interest will be significant and certainly not ₹ 200 or
₹ 300 as has been claimed by the builder.
Pre-EMI is the simple interest payable on a home loan taken for an underconstruction property where the loan disbursement is linked to the construction plan. It starts from date of disbursement of the loan. This amount does not have
the principal component. The actual loan repayment as EMI will start only when the entire loan amount is disbursed to the builders.
You have the option to tell the bank not to disburse the entire amount before completion of the project and the bank will accordingly disburse the money partially to the builder as per the terms of the contract between them.
Please note that the bank does not guarantee timely construction of property and it is your liability if the construction is delayed.
I am planning to buy land, Can I apply for a home or flat loan for this or can I apply for a personal loan? Is there a bank that offers home loans for plots? — Snigadh Mehra You can get a plot loan based on your income and the title of the property. Plot loans are more restrictive and available for purchasing non-agricultural plots bought from statutory authorities or approved developers only. Normally, lenders will not finance more than 60% to 65% of the total cost of the plot and the remaining 35% to 40% has to come from your own sources. Also plot loans are more expensive.