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Home Loan

Everything you need to know about home loan calculation

Summary: Check your home loan eligibility against salary with home loan calculation. Before approving a loan, a lender considers your credit score, age, job, work experience, and other details. Pick the right bank for a hassle-free home loan process.

15 Jul 2024 by Team FinFIRST
home loan calculation guide
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The home loan market in India has grown at a 15% compound annual growth rate (CAGR), according to a news report . 

The growth of the home loan market is good news for average consumers since they can get loans at affordable rates. If you want to know how much home loan you can get, you can do so with home loan calculation.

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Find your home loan eligibility against your salary
 

Your salary is a key factor for home loan calculation and your home loan eligibility. Your ability to repay a loan depends on your income. 

For example, for Metra Trust Home Loans, if your net salary is Rs 50,000, you can get a loan amount of a little over Rs 37 lakhs.'

How does home loan calculation work
 

For a home loan against salary, you need to consider the following for home loan calculation -

  • Leave travel allowance (LTA)
  • Medical expenses
  • House rent allowance (HRA)
  • Miscellaneous allowances

The formula to calculate the maximum home loan amount is below -

Maximum home loan amount = [Net monthly income * Fixed obligation to income ratio (FOIR)] / EMI per lakh

To know the loan amount you can get, use a home loan eligibility calculator.

Points to consider before applying for a home loan
 

Besides your salary, a bank considers the following points for home loan calculation -

  • Your credit history

Lenders prefer a good credit history and a credit score between 300 and 900. A higher credit score will increase your creditworthiness.

  • Your job and work experience

If you are a salaried employee with at least three years of experience at a well-known company, there are more chances to get a home loan.

  • Your age

In most cases, the borrower’s age should be between 21 and 60 years to get a home loan. Younger people may get approval faster since they will likely have a longer working life.

  • Spouse's income

If you are married and your spouse is working, your eligibility will improve for joint home loans as the repayment capacity increases.

  • Loan-to-value ratio (LTV)

The loan-to-value ratio (LTV) is the proportion of the property cost you can bear.

For example, if the price of the home you are looking to buy is Rs 70 lakhs and your lender offers you an LTV ratio of 70%, your home loan amount will be Rs 49 lakhs. You need to finance the remaining amount of Rs 21 lakhs.

A bank also considers FOIR, or outstanding dues and loan repayments. 

Home loan repayment and EMI calculator
 

Lenders also consider the repayment capacity of the borrower through EMI.

If you are thinking about how to calculate home loan EMI, check out the simple formula below -

EMI = [P x R x (1+R) N] / [(1+R) N – 1]

P - Principal loan amount

R - Monthly interest rate

N - Loan tenure (in months)

You can also use online Home Loan EMI Calculator to calculate monthly installments and plan your finances accordingly.

Various home loan fees and charges
 

For reference, various types of home loan fees and charges of Metra Trust are listed below -

 

Types of fees and charges

Details

1.

Processing fees

Maximum 3% of the loan amount

2.

Bounce charges - EMI

Rs 500 excluding GST

3.

Swap charges for repayment instrument

Rs 500

4.

Documents charges

Rs 500

5.

Issuance charges for duplicate no objection certificate

Rs 500 excluding GST

6.

Stamping fees

As per actuals

7.

Repayment schedule

Physical copy Rs 500 excluding GST

8.

Account statement fees

Physical copy Rs 500 excluding GST

9.

Document retrieval charges

Rs 500 excluding GST

10.

EMI collection charges

Rs 500 excluding GST

11.

Swap charges for cheque or instrument

Rs 500 excluding GST

12.

Cancellation & rebooking fees

1% of the loan amount + interest from the date of disbursal till receiving a cancellation request

13.

Penal charges (per month)

2% per month (excluding GST) of the outstanding EMI or Rs 300 (excluding GST), whichever is higher

14.

Re-pricing Fees

Up to 2% Exclusive of GST

15.

Switch from Floating to Fixed rate

0.1% of sanctioned loan amount or Rs.10,000/- whichever is lower, excluding applicable taxes.


For more details, check home loan fees & charges. 

Before we go
 

To round it up, before buying a home, you must try home loan calculation to determine your home loan eligibility based on your salary. It will help you understand the finances you need for your desired property. 

You can check the Metra Trust Home Loans for an ideal home finance solution and own your dream home.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Metra Trust or its affiliates to any licensing or registration requirements. Metra Trust shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.metratrust.com for latest updates.

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