What are the steps to use the home loan eligibility calculator?

One of the quick online tools that help you decide whether a bank or NBFC will grant your request for purchasing a dream house is the home loan eligibility calculator. This tool is available on all the lenders’ website. As a borrower, you can use the instrument for calculating your eligibility before approaching the lender. The tool also helps determine the precise amount you need to pay as EMIs if the loan gets approved. Also, since they are free of cost tool, you can use it multiple times. Using the eligibility calculator is relatively simple.

Following are the steps:

Enter the income figure

The home loan eligibility calculator includes four primary tabs, the first one being the income tab. Here, you need to enter the monthly salary. Remember, enter your income figure after all the mandatory deductions, i.e. your PPF, tax deducted, and professional tax. Input your in-hand income in the figure tab. This enables you to compute the payable EMI accurately.

Enter the preferred interest rates

All lenders have a minimum and maximum interest rate they offer against the home loan. Lenders cannot sanction them below the MCLR as directed by RBI. If you use the calculator available on the lender’s portal, you will automatically find the minimum and maximum lending rate. You may need to select it from the drop-down menu, enter them manually, or adjust the cursor on the interest rate scale. However, remember that your lender may offer a different rate when you apply for the loan.

Enter the tenure of the loan

Now, add the preferred duration for calculating your home loan eligibility criteria. Different lenders offer different minimum and maximum tenure. While some give loans for up to 20 years, a few also offer loans up to 30 years. Remember, the higher the tenure, the lower the EMI, and the higher the interest rates. This increases the overall value of the loan.

Enter the figures of other EMIs

In this last slab, enter the amount spent on other ongoing debts. For instance, if you have a car loan and a personal loan as well, each EMI amounting to INR 15,000 and INR 5,000 monthly, enter INR 20,000 in the EMIs slab. This helps the lenders understand that you are paying more than one loan and that a specific portion of the net income gets dedicated towards payment of other EMIs.

Calculate Once you have added all the information, the home loan eligibility calculator projects the principal amount you can avail of and the EMI payable. However, if you have computed the EMI amount high, you can always readjust the interest rates and tenure. Note, doing this may reduce the principal amount provided by the lenders.