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Owning a house is a mark of financial success in Indian society. No wonder every earning individual in India dreams of buying a home they can call their own. The biggest impediment? Soaring property prices. After all, the high property prices require prospective homeowners to set aside larger sums to buy a house, putting them under financial stress.
Here, a home loan from a leading financial institution can help in two ways. When buying a house, you won’t need to worry about your savings depleting. And two, you can repay the loan at your convenience.
Are you planning to apply for a 20 lakh home loan? Read on to learn more about a 20 lakh loan EMI and interest rates.
A home loan will give you access to the funds you need to purchase a house. But you must pay off the loan within the stipulated tenure. Most financial institutions allow you to pay off the loan monthly as Equated Monthly Instalments or EMI.
It is calculated by adding the total interest you need to pay to your principal amount and dividing this sum by the loan tenure in months. Here is a formula to make this simpler.
((Principal x Interest Rate x Loan tenure) + Principal )) / (Loan tenure x 12)
Wherein the loan tenure is in years.
Alternatively, you can head to Tata Capital’s website and use the EMI calculator to plan your finances.
As evident from the above, the loan interest plays a role in determining your monthly EMIs. But there are a number of factors that influence interest rates as well. Here are a few you should know about.
1. LTV ratio: LTV ratio or the Loan-to-Value ratio shows the percentage of the property amount financed through a home loan. If you finance a significant portion of the overall amount through a loan, it will attract a higher interest rate. This is because your lender views this as a higher dependence on loans to manage your finances and believes you are more likely to default on your loan repayments. So, borrowing only a small percentage as a loan will get you less interest rates.
2. Property Location: The property’s location often plays a vital role when deciding interest rates. A property in a prime location with good connectivity will have a higher resale value than one in the outskirts; hence, it will attract a lower interest rate.
3. Credit score: A CIBIL or credit score determines your creditworthiness based on your loan history and repayment discipline. If you have a good credit score, you will have a higher chance of getting the loan sanctioned at an attractive interest rate.
Tata Capital offers home loan interest rates in 2023 starting from 8.6% p.a. You can plan out your Rs. 20 lakh loan EMI based on interest rates at our official website.
The EMI calculated for Rs. 20 lakh home loan depends on the interest rate offered and the tenure of the home loan. Let us have a look at how EMI varies with changes in the loan tenure:
|Loan amount||Interest rate||Repayment term||EMI||Interest payable|
|Rs. 20 Lakh||8.6% p.a||10 years||Rs. 24,904||Rs. 9,88,508|
|Rs. 20 Lakh||8.6% p.a||15 years||Rs. 19,812||Rs. 15,66,196|
|Rs. 20 Lakh||8.6% p.a||20 years||Rs. 17,483||Rs. 21,95,981|
|Rs. 20 Lakh||8.6% p.a||25 years||Rs. 16,240||Rs. 28,71,863|
|Rs. 20 Lakh||8.6% p.a||30 years||Rs. 15,520||Rs. 35,87,284|
From the above-shown chart, we can figure out that:
1. 20 Lakh loan EMI for 10 years will have a higher EMI amount, but the overall interest payable will be less than Rs. 10 Lakh.
2. 20 Lakh loan EMI for 30 years will have a much lower EMI amount, but the overall interest payable will be more than Rs. 35 Lakh.
Note: The interest rates are taken for calculation purposes. The actual interest rate may vary depending on the lender, the borrower's profile and the ongoing interest rates determined by the RBI.
Lenders require you to meet their eligibility criteria to apply for a home loan. Since these parameters vary slightly between lenders it's a good idea to check if you meet the eligibility criteria for a lender before taking a loan from them. Here are some general eligibility requirements for your reference.
|Eligibility head||Eligibility criteria|
|Age||Indian citizens between 24-65 years of age|
|Income||1. Salaried individual: Minimum experience of 2 years and a salary of Rs. 30,000.|
2. Self-employed individual: Minimum experience of 3 years in the same business.
|Credit score||A credit score above 650 is preferred.|
|Debt-to-income ratio||Debt must be less than 50% of the borrower’s income (The lower, the better)|
Make sure that you have access to these documents before applying for a home loan:
1. Age proof: (Any one) Adhaar card, Birth certificate, PAN card, Voter ID card, Passport, or Driver’s licence.
2. Residence proof: (Any one) Adhaar card, PAN card, Voter ID card, Passport, or Driver’s licence.
3. Identity proof: (Any one) Adhaar card, PAN card, Voter ID card, Passport, or Driver’s licence.
4. Income proof (Salaried employee): Three months’ salary slip, six months’ bank statement, and latest Form-16 and IT returns.
5. Business proof (Self-employed): Business registration certificate, business profile on letterhead, last 2 years’ IT returns, and bank statement.
6. Income Proof (Self-employed): Copies of Profit & Loss (P/L) Projection Statement for the last three years, six months worth of Operative current account statement, Bank statements of the CC/OD facilities used in the last six months
7. Cheque: Processing fee cheque from salary/business account.
8. Existing loan details
Tata Capital streamlines the process of home loan EMI repayment by offering two repayment options:
1. Standard EMI plan: This option allows you to pay a fixed EMI throughout the loan tenure.
2. Step up flexi EMI plan: This option offers better repayment flexibility where your EMI starts lower and gradually increases over the loan tenure.
Opting for a home loan is a good stepping stone toward your dream of owning a home. It is advisable to consider your repayment capacity and financial situation carefully or consult with a financial advisor before choosing your home loan tenure.
Make your home loan application process efficient and hassle-free with Tata Capital. Visit our official website today!
Policies, Codes & Other Documents