Get the Tata Capital App to apply for Loans & manage your account. Download Now

Blogs SUPPORT
Loans For You
Loans for Business
Investment
Insurance
Apply

Quick Links for loans

Quick Links for Insurance

Investment

Offers Quick Pay
Back

Equipment Finance

Avail Digital Equipment Loans
up to Rs. 1 Crore

  • Attractive ROIs
  • Customizable Loan tenure
Know More
Back

Equipment Leasing

Avail Leasing solutions
for all asset classes

  • Up to 100% financing
  • No additional collateral required
Know More
Back

New Commercial Vehicle Financing

  • First time user
  • Retail and strategic Clients
Know More
Back

Used Commercial Vehicle finance

  • Repurchase
  • Refinance
  • Top up
  • Balance Transfer
Know More
Menu  
 
Apply Now

Tata Capital > Blog > Home Affordability in Current Market Scenario

Loan for Home

Home Affordability in Current Market Scenario

Home Affordability in Current Market Scenario

Most people looking to buy a house will agree that properties have remained overpriced for last several years.

But a slew of recent unexpected events seem to have happened in favor of home-buyers. Demonetization and RERA Act are slowly curbing the flow of black money in real estate. This will continue to have a downward pressure on property prices. Another reason for property buyers to rejoice is the lowering of borrowing rates.

So a stagnation (if not a fall) in property prices alongwith low home loan rates are making more and more people consider buying a house now than later.

But affordability of property is not only dependent on external factors but also on borrower’s financial profile. As buyers, most people are concerned with two things:

  • Whether they will get the loan amount they need?
  • Whether they will be able to easily pay the home loan EMIs in future?

Additional Read: How To Find The Right Home Loan Amount?

Now lenders focus on both questions. The amount of loan that you can take depends first of all on the downpayment you make. Most lenders want borrowers to bring in 15-20% of the cost of the property as downpayment. So if you have Rs 10 lac for downpayment, you can expect to get a home loan of about Rs 40-45 lacs.

But there is more to it. Lenders would then want to assess your ability to repay the loan. There is an unwritten rule that lenders avoid lending more if borrower’s EMI-to-Income ratio exceeds 40%.

Lets take a simple example. Suppose you want to purchase a house of Rs 50 lac. You have Rs 10 lac saved up for downpayment.

Now the need of Rs 40 lac loan fits into the 15-20% downpayment criteria. But what about your ability to repay the loan?

Additional Read: How To Ensure Easy Repayment of Your Home Loan EMIs?

A Rs 40-lac loan at 9% for 20 years has EMI of about Rs 36,000. If you do reverse calculation (using lenders’ 40% rule), then this EMI is 40% of Rs 90,000 monthly income. So if your monthly income is more than that, lender wouldn’t have much issue giving you the home loan. On the other hand, if your income is lower (lets say Rs 60,000), then lender might ask you to lower your loan requirement – which might not be possible if you don’t have surplus money to increase your downpayment.

That’s how home affordability is evaluated by both borrowers and lenders.

Apply Now

Say Hello to Your New Home with Our Easy Home Loans!

Apply now
Popular Searches
anyror modt charges 712 utara online gujarat pre emi calculator earnest money deposit Goa Land Record earnest money khasra number meebhoomi Assam Land Record
Disclaimer

Most Viewed Blogs

Trending Blogs

Calculator

Personal Loan EMI Calculator

Personal Loan EMI Calculator
Home Loan EMI Calculator

Home Loan EMI Calculator
Business Loan EMI Calculator

Business Loan EMI Calculator
Used Car Loan EMI Calculator

Used Car Loan EMI Calculator
Two Wheeler Loan EMI Calculator

Two Wheeler Loan EMI Calculator
Loan Against Securities Calculator

Loan Against Securities Calculator
Loan Against Property Calculator

Loan Against Property Calculator
More Tools
Our Subsidiaries
Our Other Websites

Useful Links and Resources

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download

Policies, Codes & Other Documents

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download

Tata Capital Solutions & Services

Uh oh, something went wrong

Please try again later.