We all dream of owning a home, however, the question is, where do we get the money from?
The answer is simple – Getting a Home Loan from a bank or non-banking financial company (NBFC), or other financial institutions.
However, before you decide to apply for a Home Loan, it is important to understand what it entails.
A Home Loan is availed for the purpose of buying a house/flat, purchasing a plot of land for the construction of a house or renovating/repairing/expanding your existing house.It is a secured form of financing that comes with maximum repayment tenure of 30 years.
As per the current guidelines set by the Reserve Bank of India (RBI), lenders can finance only up to 80% of the property’s purchase price. The remaining 20% has to be arranged by the borrower on their own. This arrangement is referred to as a down-payment.
Can You Apply for a Home Loan Despite Having Other Active Loans?
Yes, despite having other active loans against your name such as a Personal Loan, or others, you can still geta Home Loan. You can either apply for a Home Loan online throughMyMoneyMantra or do it traditionally by visiting any bank or other financial institution.
However,whether your loan application gets approved or not depends on the lender. Although the bank’s decision in this regard is not subjective, there are a few factors which they consider while deciding whether or not to lend money to the borrower.
Factors Considered by Banks for Approving a Home Loan
1. The current loan obligations
The percentage of equated monthly instalments (EMIs) which you are currently paying for all other loans is actively considered in relation to your monthly income. This is known as a debt liability to income ratio.
For example, as a thumb rule, your Personal Loan EMIs should not exceed 10% of your monthly income. Similarly, your car loan EMIs shouldn’t account for more than 15% of your income. Collectively, the outgo of your EMIs (including the EMI of your fresh Home Loan) should not be more than 50% of your monthly income. If it exceeds this percentage, your Home Loan application might not get approved.
2. Employment status
The status and nature of your employment also have a bearing on the lender’s decision to accept or reject your loan application.
For example, if you are a salaried professional, the bank can easily calculate your repayment capacity based on your monthly salary. However, if you are self-employed, the calculation of your repayment capacity is difficult unless backed by collateral. Therefore, banks prefer giving a Home Loan to professionals over non-professionals.
3. Credit score
Your credit score is calculated on the basis of your past and present repayment record. When you apply for a Home Loan, the lender pulls out your credit score and analyses it thoroughly.
For example, if you have not paid the EMIs on other active loans in time, it will leave a negative impression on the lenders. Correspondingly, if your existing outstanding liabilities are disproportionate to your registered assets, the bank will not risk giving you a loan.
4. Availability of co-borrower
With other active loans, if you apply for a housing loanalone, the bank might be reluctant to grant it to you. However, if you were to apply with a co-borrower, your collective income limit would grow higher. This makes it much easier for the bank to offer you a Home Loan.
For example, as a single salaried professional, the 50% EMI limit might soon be exhausted if you avail multiple loans. But with a working co-borrower at your side, this limit can be stretched to avail another loan.
Before you apply for a Home Loan, you can compare the offers made by different lenders online at MyMoneyMantrato choose the one which suits your needs appropriately.
Also read:5 Best Home Loans for Women Borrowers
To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 70+ Banks and NBFCs. We have served 2 million+ happy customers since 1989.
Talk to our Loan Specialists toll-free at 1800 103 4004 to know more about our products and offers.