Home Loan Affordability Calculator

The home loan market has been booming in the country over the last few years, and housing loans are more accessible. However, availing a home loan without analysing repayment capacity can put a borrower in a tough financial situation.

Therefore, it is of utmost importance to gauge if you can afford the loan. Several online platforms have integrated home loan affordability calculators into their portals. By entering a few basic details, the portal will determine if you can afford a particular loan or not.

Factors That Affect Home Loan Affordability/Eligibility

•        Income – Quite naturally, your monthly income plays an important role in determining your home loan affordability. Usually, 35% – 45% of your monthly income can be spent towards your EMIs. If the home loan EMI on a particular home loan exceeds this percentage, it is likely that this loan is unaffordable.
•        Expenses – Another factor that determines your home loan affordability is the expenses you incur. Consider these expenses before availing a home loan.
•        Lifestyle – It is important to ensure that the commitment towards your housing loan doesn’t hamper your lifestyle. Since this is a long term commitment, it is important to be disciplined with your spending habits.
•        Other Debts – The chances of obtaining a housing loan reduces if the borrower has other debts to pay off. As mentioned earlier, lenders usually gauge your home loan affordability by measuring the percentage of the salary that can be spared for the EMI. In case the borrower possesses other debts, this percentage reduces drastically along with the chances of availing the loan.
•        Job Stability – Jumping jobs often leads lenders to believe that it is risky to loan money. This is so because it is likely that you are bound to switch jobs during the course of the loan, making it difficult for the borrower to pay EMIs.
•        Unpaid Dues – Any dues that are unpaid will affect your credit score adversely. Having a bad credit score means, to a bank or lender, that you are a risky loan customer. This is one of the major reasons that you may not be eligible to obtain a housing loan. Make sure to correct your credit score before applying for a home loan.
•        Age Of Applicant – A younger applicant has a higher chance of obtaining a home loan than an older one. An older applicant will have lesser time to pay off a home loan, and even worse, he/she may not have a stable source of income post retirement.
•        Loan Guarantor To A Defaulter – In the event that you are asked to stand as guarantor to someone, only do so if you are absolutely certain that they are capable of repaying the loan. If the applicant has defaulted on the loan, you the guarantor is partly responsible for the loan default. This can hamper your chances of obtaining a home loan.
•        Credit Score – As demonstrated earlier, it is of paramount importance that you maintain a healthy credit score. If your credit score is unhealthy, make sure to improve it before you apply for a home loan.
•        Rejected Loan Applications – If you have had your home loan application rejected, for whatever reason, your credit score will deplete because of this. The ramifications this may cause all future loan applications to be rejected, putting you in an endless cycle of rejection. Make sure to get your credit score corrected before applying for your loan.
•        Suitable Security – Obtaining a secured loan will increase your chances of getting a home loan. A secured loan is a loan that is backed by an asset, like land, gold, etc. This means that a lender will more likely give you the loan as it is less riskier. In case the loan cannot be repaid, the asset provided as security will be compromised.
•        Mismatched Signature – If there is any discrepancy in the signature provide by you, the chances of you attaining a home loan reduces substantially.

Non-Availability – If you cannot be contacted by the bank on the phone number or in the address you have provided, it is likely that you home loan application gets rejected. Ensure that you provide correct details to the bank and also are available when they approach you for verification. Your non-availability may cause a rejection in your home loan application