How home loan eligibility is being calculated?
As a thumb rule banks give 60 months of your monthly income as home loan. For eg if you are earning Rs 50,000/- as salary per month, then you are eligible for Rs 30,00,000/- as home loan. However if any other loan is outstanding and you are paying EMI, then outstanding amount payable will be deducted from home loan eligibility.
Note: Though you have loan eligibility disbursement depends upon margin money / down payment paid by you (contribution from you on total home value). Margin money will be 25% of home loan. In the above example to avail Rs 30,00,000/- loan margin money to be paid is Rs 7,50,000/-. If you cannot give Rs 7,50,000/- loan disbursement will be reduced proportionately.
Is good to borrow home loan from public sector bank or private bank?
It is always good to borrow from Public sector because it is not only cheaper home finance but also gives validity on the documents of home. However public sector banks do not give loan for projects which has slight deviation or the borrower does not have perfect track record on loan repayment. In those circumstances it is better to go to private banks that are ready to take more risk.
What to do before applying for Home loan?
a. Check your CIBIL score (Don’t apply for loans with many banks which will affect your score)
b. Have all KYC documents
c. Fix your borrowing amount and tenure of loan
d. Regularly pay your existing loan EMIs