How to check home loan eligibility

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All of us are bogged about how much we can take up as home loan and while there are some plugins and apps which can help you figure out the exact amount, here is how it is calculated. How much you can borrow relies on the fact that how much you can repay in EMI or equated monthly installments every month. Banks calculate the ability of you to repay them the loan. Here are some simple steps of doing so. 

• Step one: It will start by analyzing your income statement that includes the salary slips, tax returns and bank statements etc. That will calculate your total monthly income if your rental income, your salary, and interest income are added. All these details are present in your Bank statement.
• Step two: Now, they will calculate the amount of money you have saved all this while. Since, your savings depends on a number of factor such as income level, lifestyle etc. The banks apply thirty percent to calculate this number.That means if you have an income of Rs. 1,00,000 per month, then the bank will predict that you save around thirty percent, which is Rs. 30,000 per month. The higher your income, the more you can save and thus it is assumed.
• Step three: If you have already been paying some other EMI then that amount will get reduced from the calculated savings. Hence, if your savings every month is Rs 30,000 and you are paying Rs 10,000 on your study loan, then the bank will come down to a figure of Rs. 20,000 as your net savings.If you are already paying some other EMI, that amount will be reduced from the calculated savings. So, if your savings per month
• Step four: Thereafter, some backward calculation is done to calculate the amount of loan that will result in an EMI equivalent to the amount that you are capable of saving. The bank uses the latest interest rate to calculate this. And That’s how they calculate your eligibility.

Things to keep in mind: There are a few things that you should know before going to the bank. Usually, your salary plays a spoilsport because there are some components of your salary that might not be qualifying for adding to your home loan eligibility. It has following parts: 

• Basic salary
• Leave travel allowance
• House rent allowance
• Medical allowance
• Conveyance allowance
• Performance allowance
• Special allowance which has different names in different companies.
• Food coupons
• Provident fund
• Any other allowance

The bank will not consider LTA and medical allowance because they think that you would be spending these allowance on the activities that they are paid for.