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home loan for a salaried person

home loan for A salaried person: Financial Aspects Must Consider for buying An apartment in Hyderabad- Part I

Hyderabad offers a huge range of apartment options. For a salaried professional from a middle class to upper-middle-class income bracket, these can range broadly between Rs 35000 to over Rs 12000 per square feet, and cost anything between Rs 50 lacs to Rs 1,5 crore. Plus, the sizes of these apartments can range from 1000 sft to over 3000 sft in the luxury to economy specifications range!

The typical middle-class budget of a home buyer is approximately Rs 50 to 80 lacs for a decent-sized 2 or 3 BHK apartment. Those in the upper-middle-class segment in Hyderabad can stretch up to Rs 1.5 crore for a decently spacious 3 BHK apartment or even an independent builder floor.

In this article, we shall consider the financial aspects, constraints, and priorities of a home buyer- a working professional dependent on a salary, who is assessing ‘what can money buy for me?

home loan for A salaried person: financial aspects that are needed to delve into are-

1. Your financial condition including ‘eligibility’ to get a home loan

  • Current age and in-hand income are two simple yet important aspects
  • High income and low age are favorable things for a home loan borrower. An income of above Rs 12 lacs per annum leads to a good impression on the bank authorities to grant you a home loan
  • Assuming you have a decent in-hand salary, you can pay your bills, and also have the capacity to repay the monthly home-loan installments (EMIs).

2. Dual income help increase your home loan amount

  • Double income is a boon! If your spouse is working, then the eligibility to get a home loan goes up. For example, if your and your spouses’ combined in-hand income is Rs. 1.80 lacs, then the maximum loan amount can be Rs 1.07 crore with a rate of interest of 8% on a 20-year tenure, and an EMI of Rs 90,000…as depicted below using an online home loan calculator

[Source- www.bankbazaar.com– home loan eligibility calculator used as specified]

[Source- www.paisabaazar.com Home loan rates as of 02nd March 2022]

2. Ability to make an initial down payment

  • You must have the capacity to make a down payment of at least 20%
  • The bank needs to see you have your skin in the game. This amount could be out of your own savings, or funds borrowed from family and friends. Usually, parents come into the picture to give the initial fillip in an Indian scenario

3. Home buying options you may choose if you are financially well-off

  • If you have more money with you, your initial down payment can be high (more than 30%), you can (a) choose to make higher down payment to keep EMI low, or (b) buy a bigger home for a high budget, and take on the EMI
  • Example 1, if you are wanting to buy a builder floor apartment in Sainikpuri for Rs 1.3 crore, and you already have Rs. 50 lacs with you, you can actually get 80 lacs of loan from bank at 6.70% interest, and pay EMI of Rs. 60,592 per month with a tenure of 20 years

[Source- HDFC bank EMI calculator]

  • Example 2, if you want a regular Rs 80 lacs standalone-building apartment in Sainikpuri, Yapral for Rs 80 lacs, and you already have Rs. 50 lacs with you, you can actually get 30 lacs of loan from bank at 6.7% interest rate, and pay much lesser EMI of Rs 22,722 per month with a tenure of 20 years

[Source- HDFC bank EMI calculator] ]

4. Tenure of home loan linked to your age

  • Younger age helps you get higher tenures. Older age, beyond 40 makes it difficult to get you high tenures, and the tenures tend to become shorter
  • So, lesser the age, the better. However, that also depends on how comfortable you are financial. For instance, if at the age of 40 years, you have an income of over Rs 3 lacs per month, then even a smaller tenure is fine, since you may not need a longer repayment tenure of 15 or 20 years
  • Applying for a home loan at the age of 50 years- Most lenders may allow you to borrow, but some might decline because as you are nearing the retirement age. Some lends ask for a ‘written exit strategy’. This means they check if your superannuation and other assets that can be sold to repay home loan

When you are clear about what’s important, you can confidently manage your finances in buying your dream home!

“When you know what’s most important to you, making a decision is quite simple.”

Anthony Robbins

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To know more about “4 Things To Know About Home Loan Application Process”. Click here!

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