Terms to keep in mind while taking a home loan

Investing in home loans can be a really tedious affair, especially for the first time loan buyer. From comparing housing loans and finding the ones that suits your need to determining your home loan eligibility right andcalculating your equated monthly installment, an individual is bound to need assistance at some point of time.  Here are some key terms an individual needsto be well acquainted with if he is planning to take a home loan:

Eligibility of the home loan:

Each lending institution has certain set of calculations which it uses to derive the individual’s home loan eligibility. These calculations generally include certain deciding factors such as your age, your monthly income, whether or not your spouse is an earning member of your family and your credit score. Aside from these factors, there are numerous other criteria that decide your home loan eligibility that your financial institute will be more than happy to discuss at length with you.

Down payment:

Banks require that an individual who is seeking to take out a home loan contributes a certain amount for towards the home before sanctioning the home loan. This amount can be somewhere between 15 to 30 % of the total amount, but it depends on the lender and the income of the potential customer.

Home loan interest rate:

There are two types of interest rate which are given by the lenders, they are, fixed and the floating. Fixed interest rates will stay the same over the entire tenure of the loan, whereas floating rates will fluctuate as per overall market growth and government policy. There is a third option as well which is slowly picking in popularity, it is known as semi-fixed interest rate. In the case of semi-fixed the interest rate will be fixed for the initial period of the loan tenure, following which it adapts the floating interest rate.


The equated monthly installment is the amount the individual has to pay to the bank every month for a given period ofthe loan tenure. The EMI to be paid will be a product of the loan amount, the tenure of the loan and the interest rate on the home loan.

EMI calculator

The housing loan EMI calculator should be used as a guide for understanding what the EMI will be. Using a calculator is especially useful because when the individual approaches a bank or the financial institutions he can directly apply for the eligibility, because he or she is confident that they can pay back the loan with an EMI generated by the home loan EMI calculator. 


Co applicant:

The individual can also consider sharing the ownership of the loan with a co-applicant. Having a co-applicant who earns a regular monthly income will increase the combined home loan eligibility. Having a working, earning co-applicant can also you can get a loan of higher amount.

Credit appraisal:

It is the examination of an individual’s ability to repay the home loan. Banks check the income, age, past experience, qualification and even the existing loans. The credit appraisal gives the banks and the financial institutions an insight into the past record to determine the home loan eligibility.

Nothing should stop you from finding your dream home. And now that you know the pointers of getting a home loan, not even lack of fund can stop you. So go ahead, speak to a bank or non-banking financial institute now and turn your dream home into a reality.