Loan Amount (₹)
Rate of Interest (P.A)
Loan Tenure (Years)
What is Home loan?
A home loan is debt issued by banks or financial institutions to help you buy residential property. This loan can help you get your dream home without compromising on other financial goals.
What is an EMI?
Equated monthly instalment refers to a fixed amount of money which is to be paid to the lender every month on a particular date. These EMIs are decided based on the amount borrowed. Usually, an EMI will include both the principal loan borrowed, as well as the interest. Some loans may ask you to start with just the interest amount, adding further flexibility.
What is a down payment?
It’s almost like a deposit! Generally, lenders pay approximately 75-85% of the price of the property bought, the remaining amount is to be paid on an upfront basis, referred to as a down-payment.
How does my salary affect my home loan amount and home loan interest rate?
The lender generally calculates the home loan amount and interest based on EMI and NMI ratio. Wherein NMI refers to the take home pay, after deduction of taxes. The ratio of EMI/NMI ranges between 20-70% for diverse annual income slabs. This amount can be further increased by adding a co-applicant.
Types of Home Loans
Home Purchase Loan:
A home purchase loan is sanctioned for the purpose of purchasing a house
Home Improvement Loan:
Home improvement loans are sanctioned for the purpose of improving/renovating a house.
Home Construction Loan:
This loan comes in handy when one is building a new house.
Land-Purchase Loans/Plot Loans:
This loan is sanctioned for the purchase of a land/plot for the purpose of constructing a house.
Home Extension Loan:
This loan is sanctioned for individuals who want to extend a specific portion to their house, like a bathroom, room, etc.
NRI Home Loans:
These are the loans sanctioned to Non-Resident Indians for the purpose of constructing a house or renovating an existing one.
Home Loan Balance Transfer:
Home loan balance transfer is usually used to transfer an existing home loan from a bank/NBFC to another provider/lender, mostly due to more flexibility of repayments and lower interest rates.
How does the Home Loan Calculator work?
The formula to calculate EMI is:
EMI = [P x R x (1+R)^N]/[(1+R)^ (N-1)]
P= Loan amount,
r= interest rate,
n=tenure in number of months
Now, let’s look into a simple example to see how an EMI can be calculated. Let us assume a Principle of Rs. 1,00,000; rate to interest(r) to be 10% and tenure(N) to be 12 months (one year).
Substituting the above values in the formula, let’s calculate the EMI:
1,00,000 x 10% (1+10) ^12 / [(1+10)^ (12-1)] = Rs. 8792 per month,
which is the EMI amount going out monthly.
No more Hidden Fees
Usually banks have different sort of fees attached to the home loan structure, and hide these from the customer. Some types of home loan fees are listed below:
Loan Processing Fees
Known as the loan origination fee is a one-time fee charged by banks depending upon the amount of loan being sanctioned.
This cost is annually charged for maintaining the records of your home loan.
The documents of the loan are kept at a safe central location and banks charge a fee to retrieve the documents whenever needed
Memorandum of Deposit of Title Deed (MODT) is charged on a percentage of the home loan and is executed for a mortgage by depositing the title documents of the property.
When banks validate the legal aspects, they charge a legal fee for the professional lawyer appointed to the task.
With North Loop, you can save a lot of your money on these hidden fees that the conventional banks charge and get your loan sanctioned faster. Get in touch to know more about Home Loans at North Loop.