What is a home loan affordability calculator? aaaaaaaaa
A home loan affordability calculator is a valuable tool for anyone considering a mortgage. It enables you to adjust the various variables by entering different permutations and combinations of tenure, rate of interest, other EMIs, net income and see the total loan amount you are eligible for.
By using this home loan calculator, you can know your eligibility position as a borrower.
You also get the idea of possible EMI, you can compare loans, streamline your finances, and plan your budget in such a way that you accommodate the repayments without affecting your other mandatory expenses.
Majorly, EMI calculator removes the need for manual calculations and any scope of errors.
What are the benefits of using a home loan affordability calculator?
There are several advantage to the borrower from using this home loan affordability calculator. Here are some key points.
- You approximately know your monthly affordability, so the monthly EMI can be easily compared and a call taken.
- Based on your affordability you can simulate the output for various combinations of tenure and interest rate.
- You get a quick picture of how much interest as a percentage of principal you are paying during the loan tenure. Anything above 80%, you must be cautious.
- Most borrowers want to compare various borrowers and so this helps to create a comparative sheet of various options that the borrower can choose from.
- Being an automated calculator that is properly tested, the tedious manual calculations are done away with.
- You can prepare your monthly budgets accordingly and simulate if it is possible to manage with your existing cash flows.
The home loan affordability calculator is simple and elegant, yet very useful from an application perspective.
How to use SBI Realty home loan affordability calculator?
Ideally, you must start-off with putting genuine numbers to get a realistic idea.
You have the option to enter the amount in figures, or you can simply drag across the slider bar to set the amount. That is your preference.
Here are the steps to use the calculator:
- Enter the amount of loan required by you.
- Enter your net income per month.
- Enter the amount of your ongoing EMIs. Put the amount as 0 if there are none.
- Enter the desired tenure of the loan.
- Enter the rate of interest. Check the ongoing rates in the market to keep it as realistic as possible.
With this information, the calculator will show you the -
- Loan amount you are eligible for
- Monthly EMI payable
Once you put your loan requirement, monthly net income and details of other EMI commitments, the home loan affordability calculator tells you the loan amount you are eligible for. Remember this is only an indication and not a commitment from the bank. Based on that loan eligibility, the new home loan affordability calculator also tells you how much of EMI has to be paid on a monthly basis. That way you can check whether you can afford the monthly instalments and adjust the variables by trying out different permutations and combinations of tenure, rate of interest, other EMIs, and net income to see what combination will land you the most affordable option.
You can also add the income (which can be evidenced) of your co-applicant (spouse, children, parents, siblings) to enhance your loan eligibility.
What are the factors that affect home loan affordability?
There are several factors that will go into the home loan affordability factor. For starters, here are some key points to know:
- Your income level continues to be a key factor in home loan affordability. Higher the income, better the home loan affordability. Also, the nature and stability of job and the image of the employer makes a difference. Many large companies also have tie-ups with banks for their employees, in which case it becomes a lot simpler.
- Your personal balance sheet also matters. Your affordability improves with more of owned assets and less of liabilities to discharge. In addition, your affordability also goes up with reduced high cost loans like credit cards and personal loans.
- Property value and the past appreciation trends also matter. In such cases, the bank will be willing to fund to the maximum extent possible.
- You can also make the home loan more affordable by reducing the rate of interest or by raising the tenure of the loan. Of course, these will depend on factors like age, your credit score, etc.
Is it possible to get a home loan if CIBIL score is less than 750?
It is absolutely possible. Compared to unsecured loans like credit cards and personal loans, the home mortgage loan is a secured loan as it is backed by the security of the property. However, banks want to be totally convinced about the ability and willingness of the borrower to discharge their loan EMIs. In case your CIBIL score is lower than 750, you can give an update to the bank on the reasons and the steps taken to rectify them. That should improve your chances.
How to Improve Home Loan Eligibility?
You can enhance your eligibility for a home loan by:
- Adding an earning family member as co-applicant.
- Availing a structured repayment plan.
- Taking actions to improve your credit score.
- Repaying ongoing loans and short terms debts.
- Ensuring a steady income flow, regular savings and investments.
- Keeping a record of your regular additional income sources and variable salary components
Are self-employed people also eligible to get home loans?
That is absolutely possible. You can get home loans irrespective of whether you are salaried or self-employed. Banks like SBI give loans to salaried employees and also to self-employed. This includes professionals like doctors, chartered accountants, lawyers etc. This also includes entrepreneurs and small business owners. However, the basic requirement is that stable cash flows on a regular basis is a major qualification for such loans. Banks will not be too keen to lend to borrowers with volatile income flows. Also, the person should be able to evidence such flows through bank records, proper audited statements of accounts as well as GST returns filed regularly from time to time.
What are the documents needed to avail of a home loan?
These are the key list of documents for a home loan one must have:
- Loan application form.
- 3 photographs passport sized.
- Identify proof
- Residence proof
- Bank Account Statement/Passbook for the last 6 months.
- Signature verification by bankers of the applicant.
- Liabilities statement and Personal Assets.
- Property detailed documents
- Salary Certificate (original) from the employer. (Salaried individuals)
- Form 16/IT Returns for the past 2 financial years. (Salaried individuals)
- IT Returns/Assessment Orders copies of the last 3 years. (Self-employed professionals)
- Challans as proof of Advance Income Tax payment. (Self-employed professionals)
- Proof of business address for non-salaried individuals. (Self-employed professionals)
- IT returns/Assessment Orders copies of the last 3 years. (Self-Employed Businessmen)
- Challans as proof of Advance Income Tax payment. (Self-Employed Businessmen)
Is 100% home loan funding possible?
While there are some banks that may stretch funding up to 90%, the most common home loan percentage you get is between 80% and 85%. The banks also want you to bring some equity into the home so that you have skin in the game and that is quite logical. In fact, there is another way to look at it. In case, you can afford to pay about 30% of the home value upfront, then it is a good idea to actually pay up the amount upfront and reduce your loan to just 70%. That way you can reduce your EMI outflows and also your interest cost on the property over time. You can also look to cut down the tenure and take ownership of the property much earlier. It is a good idea to put up as much upfront equity as possible.
Can I apply for a home loan jointly with someone else?
Yes, joint home loan applications are common. Co-applicants can be family members such as spouse, children, parents, siblings. You can enhance your home loan eligibility by combined incomes of the co-applicants.