20 Lakh Home Loan

Most lenders provide home loans to loan applicants at floating interest rates. Although a few lenders do offer home loans at fixed interest rates, they usually levy higher interest rates for it. Some banks/HFCs also offer home loans at mixed or hybrid interest rates. Under this interest rate regime, the rates usually remain fixed for first 2 to 3 years of the loan tenure, after which the lender charges floating interest rates from the home loan borrower. Note that existing home loan borrowers availing home loans at higher interest rates can transfer their existing home loans to other lenders through the balance transfer facility at lower interest rates.

EMI for 20 Lakh Home Loan for 10 years

EMI for 20 Lakh Home Loan for 20 years

Loan-to-Value Ratio

The LTV Ratio is the percentage of a property’s value that a bank/HFC can finance as a home loan. Home loan applicants have to fund the rest of the property’s value from their own fund sources for a down payment or margin contribution. Note that RBI has restricted the LTV ratio for home loans of Rs 20 lakh at 90%. However, the lender has the discretion to decide the final LTV ratio of home loan applicants based on their credit profile, credit score, repayment capacity, the property’s market value, etc. Note that some lenders provide lower home loan interest rates for loan applicants opting for lower LTV ratios.

Loan Tenure

Most lenders offer home loans with repayment tenures of up to 30 years. Banks and HFCs usually ascertain the repayment capacity of a home loan applicant while finalising their loan tenure. Home loan lenders usually require loan applicants to confine their total EMI payment, which includes the EMIs of both their ongoing loans and the proposed home loan, to be within 50-55% of their total net monthly income. Thus, prospective home loan borrowers should select a loan tenure that limits their total EMIs, including that of the proposed home loan, to within 50-55% of their monthly income and improve their chances of home loan approval. Home loan applicants can make use of the Paisabazaar home loan EMI calculator to determine their optimum home loan tenures and EMIs based on their repayment capacity.

Credit Score

Lenders usually consider credit scores of 750 and above as ‘good’ and home loan applicants with such credit scores stand a better chance of getting home loan approval. Many home loan lenders have also begun to offer preferential interest rates for loan applicants having good credit scores. Therefore, it is important for prospective home loan borrowers to review their credit reports before applying for a home loan. Doing so will allow applicants having lower credit scores to initiate corrective measures to enhance their scores. Once their credit scores show an improvement their chances of getting a home loan approval increase proportionately.

Home loan applicants with low or no credit scores can also avail Step Up Credit Card co-branded with SBM Bank India Ltd. to steadily improve their credit scores and increase their chances of getting home loan approval.

Processing Fees

Home loan processing fees is a one-time charge that most lenders levy for processing loan applications of prospective home loan borrowers. The processing fees is usually up to 2% of total loan amount, with some lenders levying a higher tariff on home loan borrowers. Lenders also provide partial or complete waiver of processing fees on home loans during festive seasons or on other important occasions

Prepayment Charges

RBI has directed banks, non-banking financial companies (NBFCs) and HFCs not to levy prepayment fees on floating-rate home loans. However, lenders are free to decide if they want to charge prepayment fees or waive it off completely on home loans with fixed interest rates.

Although the eligibility criteria for availing home loans may differ from one lender to another, some of the main conditions required for loan applicants applying for a home loan are as follows:

Lenders might also give weightage to additional factors, such as, a loan applicant’s monthly income, existing EMIs (if any) from other debt obligations, work experience (for salaried) and business continuity (for business owners), liabilities, assets, age of the property, etc. while ascertaining their eligibility for availing home loan.

Most lenders require loan applicants availing home loans to submit multiple documents. Some of the main documents required while applying for home loans are as follows:

Note that this list of documents required for availing home loans is non-exhaustive as lenders may ask for additional documents based on their requirements and the loan applicant’s profile.

Keep your credit utilization low.