Those who are planning to buy or construct a home and who do not have ready cash for the payment always rely on the home loan schemes offered by various financial institutions in the economy. There are many things to keep in mind before selecting a plan of loan. Some of those important points are briefly explained here.
The eligibility of the applicant of loan is the most important matter. The applicant’s capacity to repay influence the eligibility. The repayment capacity, in turn is influenced by the disposable income (the income which a person save after all expenses). The total income of the applicant in a month, spouse’s income, assets, liabilities and stability of income are main factors which determine the range of surplus income. Every institution in which a loan is applied for checks the repayment capacity of the applicant t before the sanction. A person with higher disposable income in a month gets higher amount as loan. The typical assumption of a bank is that fifty per cent of a person’s income which is surplus available for repayment. The other two factors which influence the determination of amount of loan are tenure and rates of interest. Age limit is also a criterion for the application of loan in certain financial institutions.
In most case, ten to twenty per cent of the estimated amount for construction or buying of a house is applied and sanctioned. It is usually given as a down payment from the applicant. The rest amount that is eighty to ninety per cent of the amount is financed by the lender. This also includes the fees for registration, transfer and the charges of stamp duty. Most of the banks require a co-applicant which is usually the co-owner of the property. Otherwise, a close family member who is solvent can also be the co-applicant.