3 Points to Consider Which Can Impact Your Housing Loan EMI

Home loans are one of the most common forms of financial advances availed in India due to the surging demand for real estate and the ease of credit availability. However, there are many things to consider while applying for a home loan as it remains a financial liability for an extended period of time. 

An important thing to consider while applying for a home loan is the total EMI payable every month. EMI payments depend on various factors. You can determine the exact value of instalments you are liable for, using a housing loan EMI calculator. 

However, before EMIs and its associated factors, it is essential to determine whether you are eligible to apply for a home loan. The parameters determining your home loan eligibility are:

• Age

Applicant should be of a minimum of 25 years and a maximum of 60 years of age.

• Income

An individual must have a sustainable and stable source of income in case they are salaried employees. Entrepreneurs, on the other hand, should have accessible profit and loss statements with a considerable annual turnover. For financial institutions such as Bajaj Finserv, an individual with a minimum salary of Rs. 25,000 is eligible for a home loan.

Along with several lucrative benefits like flexible tenor and online account access, they also provide pre-approved offers, making the loan application procedure quick and easy for potential borrowers. Such offers are available on numerous financial products like home loans, business loans, personal loans, etc. You can take a look at your pre-approved offer by providing your name and phone number.

• CIBIL score

CIBIL score gives financial institutions an idea about your credit history. A high credit score implies that an individual is financially responsible and has a good track record of past repayments. A person with a higher CIBIL score is more likely to get a loan sanctioned than a person with a poor score. A score of 750 and above is considered to be an excellent CIBIL score. This would ensure you get approved for a loan from banks quickly. It is an essential factor affecting your home loan eligibility. 

Points to remember for EMI determination

The final EMI that you are liable to pay when you avail a loan depends on several factors, some of which are mentioned below.

• Interest rates

The most important criteria determining the value of your EMI payments per month is the housing loan interest rate at which you have availed the housing loan. There is a proportional relationship between your monthly EMI payments and interest rates. Higher the interest rate at which the money is borrowed, higher would be the value of the EMI. 

Type of interest rate opted for also plays an essential role in this regard. Fixed interest rates guarantee a fixed EMI payment every month. On the other hand, the EMI may vary when you avail a loan with a floating interest rate. It can be higher or lower depending upon the market interest rates. Using an EMI calculator, you can easily figure out how much home loan EMI you can afford.

• Size of the loan

The loan amount borrowed is arguably the most crucial factor in determining the EMI amount. Higher the size of the amount borrowed, the greater will be the EMI payments.

• Loan tenor

The duration for which the loan is due is a deciding factor in determining the monthly instalments to be paid. Longer tenors allow you to spread your debt over several instalments, entailing a lower amount of EMI payments for an extended period. On the other hand, if you opt for a shorter duration for repaying the loan, then you have to pay a higher amount of EMI for a trimmed home loan tenor.

Using an EMI calculator, you can calculate the instalments you are required to make for different tenors, interest rates and loan amounts. Choose an EMI amount that wouldn’t stress your finances.