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How Much to Borrow for Your Home Loan

By Finserv MARKETS - Jul 6,2019
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How Much to Borrow for Your Home Loan

The current day home loan interest rates, though not exorbitant, are still on the costly side. The home loan market has been on an upward growth trajectory of late with more and more cooperative societies and apartments cropping up across the country. Having said this, it is important that you consider the interest rate when planning on how much to borrow.

Apart from the interest rate, there are several factors that come into play when applying for a home loan. Some of these include your credit score and your repayment capacity. Coupled with your income and the present interest rates, you can calculate how much you really can borrow to purchase your ideal home.

Read on to understand better.

Individuals are generally eligible for a loan amount up to 60 times their monthly income. So while getting a home loan, it is better to borrow the maximum amount available so that the money can be used to fund the entire process.

Calculating these numbers and comparing them to the rates of an average 1BHK home in a decent locality (which falls between 20- 25 lakhs), one realizes that it would be prudent to borrow anywhere between 70 – 75% of the loan amount provided.

So for someone looking to get a 1 BHK with a salary of 25,000 per month, it would make sense to borrow an amount up to 12 lakhs or more if that is possible.

Similarly for someone who earns around 50,000 per month, it would make sense to borrow an amount of 25 lakhs for a home of around 40-45 lakhs and perhaps even look for a 2BHK.

Finally, someone who earns 75,000 per month can easily opt for a loan of 40 lakhs or more, if possible for a home of 50 – 60 lakhs.

It is important to understand the dynamics of a home loan and how much it is that you can borrow. Once you have decided that, you can go about figuring out how much you can borrow.


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