Loan-to-Value Ratio
The LTV ratio for home loan is the total percentage of a property’s value that any bank/HFC can finance through their home loans. The rest of the percentage of the property value is paid by the borrower.
For example: If your house costs Rs. 1 crore and the lender offers an LTV of 75%, you can get a loan of Rs. 75 lakh. The remaining Rs. 25 lakh has to be paid by you as the down payment.
Note: The final home loan LTV ratio should not exceed the regulatory caps as finalized by the RBI. The loan amount breakup for a home loan and the corresponding LTV ratios are mentioned below:
| Cost of Your Home |
LTV Ratio |
| Up to Rs. 30 lakh |
Up to 90% of the property’s cost |
| Above Rs. 30 lakh to Rs. 75 lakh |
Up to 80% of the property’s cost |
| Above Rs. 75 lakh |
Up to 75% of the property’s cost |
Lenders decide the final LTV ratio for a home loan applicant based on factors like their credit profile, property’s market value, repayment capacity, etc.
EMI Affordability
Before applying for a home loan of Rs. 1 crore, take a hard look at your finances, not just what you think you can afford, but what makes sense for long-term stability.
Your EMI should ideally stay within 30%–40% of your monthly income, leaving room for other expenses and unexpected costs. Don’t overlook existing commitments like personal or car loans, which can tighten your monthly budget and impact your loan eligibility. Use a home loan EMI calculator to ensure your monthly payments fit comfortably within your budget.
Fees and Charges
Apart from principal and interest, factor in:
- Processing fees
- Legal and technical charges
- Other charges
The processing charge for a home loan applicant usually goes up to 2% of the total loan amount, with some lenders charging a higher percentage from home loan borrowers. Some lenders also waive off the processing fees on a partial/complete basis for home loan applicants.
Prepayment Charges
RBI guidelines prevent lenders from charging prepayment fees for home loans availed at floating interest rates. When it comes to fixed-rate home loans, lenders have the discretion to either charge or waive off the prepayment fees. Furthermore, lenders can levy prepayment fees for home loans with mixed/hybrid rates during the part of the loan tenure when they are charging fixed interest rates.
