| Availing Home Loans is not a hard task nowadays and | | | | It’s good to be positive. But they may enter into |
| it is very easy. Attractive advertisements highlighting | | | | troubled waters in case things move in opposite |
| fabulous home loan offers from Bankers tempt people | | | | direction. Home loan is a long term liability, usually |
| to go for home loans. The cumbersome process of | | | | between 10-20 years. In this period, the income may |
| home loans has now made easy and simplified and | | | | keep on rising but so do the liabilities and expenses. |
| there is no necessity to run pillar to post to get | | | | Suppose it is expected that an increase in the present |
| approval for home loans. Nevertheless, the eligibility | | | | monthly income of Rs 20,000 to Rs 30,000 a year |
| criteria are also rationalized and anyone can plan to | | | | after, then, plan your EMI as per present income only. |
| avail a home loan by fulfilling the bottom lines. Of | | | | Later when the projections turn into reality, EMI can be |
| course by availing any type of loan is a debt trap. | | | | reworked. or invest the additions into other prolific |
| The EMI (equated monthly installment), as a thumb rule, | | | | investment options. This way the liabilities can be |
| on home loan should not exceed by 40 per cent of | | | | balanced and at the same time remain stress-free on |
| your net monthly income. Net income is meant by the | | | | spiraling burden of EMI, which could form in case of |
| disposable income left after all statutory deductions like | | | | failing estimations. |
| insurance premium, income tax, PF contributions, and | | | | Once availing the home loan is decided, the next thing |
| other obligations towards mutual fund SIP (Systematic | | | | is to look for the different interest rates offered by |
| Investment Plans) etc. For example, if the monthly | | | | different bankers. Normally when fixed rate of interest |
| income is Rs 20,000 and net income comes to Rs. | | | | is selected, it is assumed that rate the rate of interest |
| 15,000, the monthly home loan installment should not | | | | will remain unchanged over the entire tenure of the |
| exceed Rs 6,000 (40% of Rs 15,000). The rest is | | | | repayment period irrespective of any subsequent |
| assumed towards your routine expenditure. However, | | | | increase in the same. But actually this is not the case. |
| it is suggested that, though 40% is a standard, it is | | | | Bankers always have a Force Majuro Clause by |
| always better to keep it below 25% of the present | | | | which there is a provision to change the fixed interest |
| net income. The reason being is to have reserves to | | | | rates whenever needed. Floating interest rates are |
| meet some unforeseen situations. It may be healthcare | | | | changed at regular intervals say three months or six |
| or financial affairs or any unexpected expenses under | | | | months, whereas, fixed interest rates are changed |
| the sun. | | | | only after a long interval and based on careful |
| Most of the people project hike in their incomes for | | | | consideration of the situation warranting the change in |
| future and make decisions based upon estimations. | | | | fixed interest rates. |