If you have a good CIBIL score, you are eligible to buy your own home. Here’s a few things to keep in mind
Many of us who want to buy or own flat are seldom aware if we are eligible to buy one. Even if we are eligible, we wonder as to how big a home we can buy. This article will try to explain the process of buying a home, especially for salaried individuals.
If you are a salaried person and possess a good CIBIL score, you are eligible to buy your own home by taking a Home Loan. To have a good CIBIL score, all it takes is not to have defaulted in any kind of loan previously or dishonoured any cheque and other transactional activity that will reflect on one’s bona fide.
Can you pay 100 per cent of your property cost through a Bank Loan?
The answer is no. You need to pay at least 10 per cent of the property cost as your own contribution if the value of the property is within Rs 33 lakhs or the loan amount proposed is Rs 30 lakhs or less. However, if the required home loan is more than Rs 30 lakhs, then the own contribution amount will be 15 or 20 per cent.
How much of the Home Loan are you eligible for?
Eligibility of the Home Loan amount depends on the capability of paying Equated Monthly Instalment or EMI by one person. The amount of EMI one is entitled to pay is anywhere between 50 to 60 per cent of one’s take-home salary. It is also dependent on one’s age.
The following examples will explain eligibility better:
If your monthly take home salary is around Rs 40,000, and your age is between 35 and 40, then you are eligible to pay EMI of up to 50 per cent of your net take home salary or Rs 25,000 per month for a period of 20 to 25 years. Since the current home loan interest rate is at the most 7.1 per cent p.a., you are eligible for a home loan between Rs 25 lakhs and Rs 28 lakhs. Hence, you will be able to buy a property worth Rs 28 lakhs and Rs 31 lakhs. 3BHK apartments in Joka, Kolkata is an example of such property. Its price starts from Rs 26.57 lakhs.
In case your monthly take home salary remains at Rs 40,000 but your age is 45 years, you will be able to get a home loan for 15 years only. In that case, your home loan eligibility will reduce to Rs 22 lakhs. Hence, you will be able to buy a property worth around Rs 24.5 lakhs such as 3BHK flats in Serampore, price of which starts from Rs 23.60 lakhs.
Similarly, if your monthly take home salary is around Rs 75,000, and your age is between 35 and 40 years, then you may be eligible to pay EMI of up to 60 per cent of your net take home salary or Rs 45,000 per month for a period of 20 to 25 years. This will entitle you to get a home loan between Rs 58 lakhs and Rs 63 lakhs. Hence, you will be able to buy a property worth Rs 68 lakhs and Rs 74 lakhs.
In case, your monthly take home salary remains at Rs 75,000 but your age is 45 years, you will be able to get a home loan for 15 years only. In that case, your home loan eligibility will reduce to Rs 50 lakhs. Hence, you will be able to buy a property worth around Rs 59 lakhs.
The above is provided, you have no other loan liability. In case you are servicing any other loan, you EMI eligibility will reduce and so will be your loan eligibility.
What does the property cost comprise of?
For the purpose of calculating property cost, we have considered, the cost of Flat, cost of Car Parking, extra charges and taxes that you need to pay to the promoter.
Apart from own contribution of between 10 per cent and 20 per cent of the property value, you must also make provision for Sale Agreement Registration charges of 2 per cent which you need to execute immediately on buying the property. This 2 per cent will be adjusted with total stamp duty you need to pay at the time of executing the conveyance deed at the time of taking handover of your property.
What documents do you need to submit for obtaining a Home Loan?
You need to submit the following documents along with your home loan application:
If you are a first-time home buyer and you family income is not more than Rs 18 lakhs per annum, you may also apply for Credit Linked Subsidy Scheme (CLSS) under Pradhan Mantri Awas Yojana - Urban (PMAY-U). Flats by Eden Realty provides such benefit to its customers. If you are eligible, depending up on your income, you may get up to Rs 2.67 lakhs subsidy directly paid to your home loan account and thus reducing the interest liability on your home loan. You may apply for CLSS subsidy in the prescribed format at the time of submitting your home loan application to your bank / financial Institution.
Act now, before it is too late. Happy home buying!
The author is Managing Director, Eden Realty
DISCLAIMER: Views expressed are the author's own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.