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Axis Bank Home Loan Eligibility

Computing your home loan eligibility can be quite cumbersome, owing much to the fact that it is rarely explained in a manner that is easy to understand. Here we explain with an example the process of determining an individual’s Axis Bank home loan eligibility.

Part of income available for paying EMIs:

Let us suppose an individual is drawing a net salary of Rs 30,000 per month. Some home loan companies will consider 55 per cent of the net monthly salary as being available for EMI payments. In this example, the amount works out to Rs 16,500 (i.e. 55 per cent of Rs 30,000). The portion of salary available for paying EMIs varies with an individual’s income. A higher salary relates to a higher percentage. This is because a higher salary means a higher disposable income, and therefore a higher amount available for EMI payments.

Understand your home loan eligibility:

Axis Bank and other home loan providers have their own official EMI table. It lists the monthly EMIs per lakh, for varying interest rates and loan tenures. Here we show you how to calculate home loan eligibility using an example.

Let us assume an interest rate of 8% and a tenure of 20 years. Let us say the table gives us an EMI per lakh of Rs 836 for the assumed interest rate and tenure. Now, this EMI per lakh and the amount available for paying EMIs, as calculated above, is what determines an individual’s home loan eligibility. To be precise, we divide the amount available for making EMI payments, which is Rs 16,500, by the EMI per lakh, which is Rs 836. By doing so, the home loan eligibility comes out to be approximately Rs 19.7 lakhs.

Not all home loan providers use the same method for calculating home loan eligibility, but the basic logic remains the same. Some have a different percentage structure, while some calculate the percentage of salary available for EMIs based on an individual’s gross salary rather than the net salary. Also, the calculations will differ in case of self employed individuals.

In addition to the above, some intangible factors also affect home loan eligibility. They are:

Profession of an individual: Home loan providers usually have an unofficial list of “negative professions”. It is a real ordeal for individuals in a so-called negative profession to acquire a home loan.

Property location: Housing finance companies (HFC) also have a list of “negative locations”. Getting a home loan to buy a property in one of those negative locations is easier said than done. All HFCs set geographical limits. For the HFC to offer you a home loan, your selected property must fall within the geographical limits set by the HFC.

Personal profile of the individual: There are a few other factors related to an individual’s personal profile that help in deciding the individual’s home loan eligibility. These factors include, but are not limited to, his credit score (credit repayment history), saving habits, and number of people dependent on him financially.

It would be wise on your part to understand the basics of home loan calculations prior to getting a home loan. This will aid you in determining the portion of your income available for making EMI payments. Armed with the right information, you can go ahead and select the best offer from Axis Bank home loan.