Two key factors to determine before applying for a home loan

 Buying a home is a difficult process which can take a lot out of you. And as difficult as it is, looking for your dream house is just a part of the process. Arranging financing, or applying for a home loan, is a taxing experience for home loan seekers. Given the nature of the loan, the long tenure involved, and the amount of the loan, there are many things that applicants need to take care of before applying for it. One of them includes selecting the right financing company. However, in this tackle two factors which applicants need to determine before they make an application for a home loan.

Demarcating a budget

Everyone wants to buy their dream house. But practicality demands differently. Applicants need to consider the affordability of their dream house before they can go ahead and make that purchase. Assessing one’s finances can be considered the first step in buying a house.

There are many online tools available that can help you ascertain a budget based on your income and other sources of finance. This budget becomes your base to hunt for suitable houses that fit it. Given the size of the expense, it is important to stick to it as going over-budget can cost you dearly.

Arule of thumb is that the maximum portion of 35% of your gross income should be looked at as your EMI. In a gross monthly income of Rs 1,00,000, a sustainable level of EMI would be up to a maximum of Rs 35,000.

How much mortgage can I afford?

Determining the EMI, as done in the previous section, can help you ascertain the total loan you should apply for. Also it is easier that a maximum of 25% of your gross monthly income should be utilized for paying off your loan. The gross monthly income should be without any pre-existing debt and this percentage can change based on your lifestyle.

Once you come to the right home loan amount for you, you can apply for the same. This factor helps you remain within your means and boosts your home loan eligibility. Even if a lender is willing to provide you a loan for a higher amount than what you have worked out, you can decline it.

If you’re looking for a home loan in Delhi, Finway can be a great option to look at. You can fill their application form which will help you determine your home loan eligibility.