FAQs

In this section you will find answers to frequently asked questions on life, health, travel and home insurance, savings, loans, mortgages and personal finance.

Loans and Cards (1)

What you can afford should be determined by your ability to service the re-payments of the liability you undertake with a home loan. This would be governed by the loan amount and the interest rate applicable on your home loan.

A typical benchmark that lenders use is also to not fund more than 75-85% of the value of the property; and a total loan amount not exceeding 3 times your annual income. Lenders will assess your total income and expenses and will fund a loan only where they can assess that your free savings are adequate to cover your EMI’s.

Taking a loan with a view of selling the house a few years down the line at a higher price to help you settle your liability may not always work, especially if the property prices start moving downwards or even if they remain static – as we have seen over the last couple of years the world over.

Co-application: What you can afford will also be reviewed by the Bank that is providing you the home loan. This would depend on your past and current financial position and ability to service the loan in the future i.e. ability to pay back the loan with applicable interest. In case you want a loan amount higher than what you are being offered as an individual, you may want to have your spouse or parents as co-applicants. This helps you increase the overall limit that the bank can offer since there is more than one person sharing the repayment of loan and the combined limit will obviously be higher. Needless to say, this can only work if the co-applicants have an independent source of income.

Having co-applicants can also make sense from a taxation perspective with each applicant being able to avail the tax benefit available on interest payment of an EMI.

Given the long term nature of a home loan liability, it also makes sense to protect yourself and your family from any unforeseen circumstances. A life insurance plan that covers the re-payment of loan in the event of an unfortunate death of the borrower can at least help the family retain their home.

Category: Home Loans

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Home Loans (1)

What you can afford should be determined by your ability to service the re-payments of the liability you undertake with a home loan. This would be governed by the loan amount and the interest rate applicable on your home loan.

A typical benchmark that lenders use is also to not fund more than 75-85% of the value of the property; and a total loan amount not exceeding 3 times your annual income. Lenders will assess your total income and expenses and will fund a loan only where they can assess that your free savings are adequate to cover your EMI’s.

Taking a loan with a view of selling the house a few years down the line at a higher price to help you settle your liability may not always work, especially if the property prices start moving downwards or even if they remain static – as we have seen over the last couple of years the world over.

Co-application: What you can afford will also be reviewed by the Bank that is providing you the home loan. This would depend on your past and current financial position and ability to service the loan in the future i.e. ability to pay back the loan with applicable interest. In case you want a loan amount higher than what you are being offered as an individual, you may want to have your spouse or parents as co-applicants. This helps you increase the overall limit that the bank can offer since there is more than one person sharing the repayment of loan and the combined limit will obviously be higher. Needless to say, this can only work if the co-applicants have an independent source of income.

Having co-applicants can also make sense from a taxation perspective with each applicant being able to avail the tax benefit available on interest payment of an EMI.

Given the long term nature of a home loan liability, it also makes sense to protect yourself and your family from any unforeseen circumstances. A life insurance plan that covers the re-payment of loan in the event of an unfortunate death of the borrower can at least help the family retain their home.

Category: Home Loans

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