Only 70-80% of the total cost is covered by a home loan and the rest must be arranged in the form of down payment by the buyer. So, if you have been wondering whether a home loan can take care of the entire cost of buying a house, the answer is no, it won’t. This brings us to the next question – how do you know if you are eligible for a home loan?
In order to know your eligibility, you need to reach out to a bank or a financial institution and submit the list of necessary documents like your income slips, identity proof, employment letter based on which you will be assessed on your credit-worthiness.
If you have a good credit score which is anywhere upwards of 600, you are instantly eligible for a home loan. Sometimes, people with lesser scores can also avail a home loan under special circumstances and higher rates on interest.
Depending on your income and credit-worthiness, the bank will confirm the maximum amount of loan that can granted which is close to 80% in most cases. The rest 20% is called a ‘down payment’ which needs to be arranged by the buyer.
In addition to this, there is a cost involved in the registration of the house and stamp duty. Below is an example which will help you understand the overall cost involved in making a purchase –Imagine you’re buying a house in Chennai for INR 60 lakhs. Following will be the final cost involved in buying the house –
Purchase price of the property: INR 60 lakhs
Registration and Stamp Duty: INR 4.8 lakhs (Differs from state to state) + INR 60000 (1% of the total cost)
Cost of fixtures and fittings: INR 5 lakhs
Total cost involved: INR 70.4 lakhs
Finance provided by the bank: INR 56.3 lakhs (80% of the total cost)
Down payment: INR 70.4 lakhs – INR 56.3 lakhs = INR 13.7 lakhs
Learn more about your Home Loan Eligibility here.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
Disadvantages of Early Retirement - What Happens When You're Not Working?
Early retirement seems to be good, many people enjoy life without working especially with extra earnings. But they are not aware about the cons. Lets explore the disadvantages of retiring early to save your retirement life.
5 Benefits of Health Insurance that Makes it a Must Have Cover
Here are the 5 benefits of health insurance that makes it a must to cover
When Should You Withdraw Money from a Mutual Fund?
In case of a sudden change in fund strategy or an underperformance scheme for more than 3-4 years, it makes sense to withdraw money.
How To Apply For Personal Loan
Applying for a personal loan has become extremely easy these days. With the increase in applicants, banks and other financial institutions have made the process very simple.