The loan amount offered by a bank is determined based on the applicant's income, the purchase value, and the market value of the property. The property must be legally and technically acceptable for mortgage purposes.

How is the Loan Amount Determined?

The loan amount sanctioned by a bank depends primarily on two things: the buyer's income and the value of the property (both purchase price and market valuation). Additionally, the property must meet all legal and technical criteria to be eligible as mortgage security.

How Much Loan Can I Get?

Two main factors influence how much home loan you can get:

• Loan-to-Value (LTV) Ratio: This is the percentage of the property's market value that the bank is willing to finance. Based on RBI and NHB guidelines, LTV can range from 75% to 90%, depending on the loan size. For example, smaller loan amounts may qualify for a higher LTV, while larger loans may get a lower percentage.

• Income Eligibility: This is assessed to determine your repayment capacity based on your income. You can check your eligibility using our dedicated calculator, which gives an estimate of the loan you may qualify for.

What Should I Know About Interest Rates?

Home loans are typically offered on a floating interest rate—meaning the rate can change during the loan term. It is linked to external benchmarks such as:

• RBI’s Repo Rate for banks

• Government of India’s T-Bill Rate

• PLR/FRR (for Housing Finance Companies and NBFCs)

The spread or margin set at the time of disbursement stays fixed, while the benchmark rate can fluctuate, affecting the overall interest you pay over time.

How is the Loan Repaid?

Repayment happens through EMIs (Equated Monthly Installments), which include both the principal and interest components. The EMI remains the same each month, but the proportion of interest and principal changes over time.

• In the early years, the interest portion is higher.

• Over time, the principal component increases.

Use our EMI calculator to get a clear idea of your monthly payment based on the loan amount, tenure, and rate of interest. Loan tenures can extend up to 30 years, depending on your age and eligibility. Longer tenures mean lower EMIs but higher total interest paid. For a detailed understanding, try our Amortization calculator to view how your EMI gets distributed over time.

Can I Add a Co-Owner or Co-Applicant?

Yes, you can have co-owners on the property and co-applicants on the loan. In fact, if a person is co-owning the property, it’s mandatory for them to be a co-borrower on the loan.

Banks usually allow only immediate family members (like spouse, parents, siblings) as co-applicants. Adding a co-applicant can help increase your loan eligibility by combining incomes.

Is Prepayment or Foreclosure Allowed?

Absolutely. You can prepay a part of the loan or foreclose it entirely at any point during the loan tenure.

And the good news is—no penalty is charged for early repayment or foreclosure on floating rate loans, as per guidelines issued by the RBI and NHB.

When you prepay, you have the option to either reduce your EMI amount or shorten your loan tenure.

Are There Any Charges for Taking a Loan?

Yes, lenders charge a processing fee to cover the cost of evaluating and sanctioning your loan:

• For salaried individuals: typically a flat fee (e.g., ₹10,000 + GST)

• For self-employed borrowers: up to 0.5% of the loan amount

We assist our clients in negotiating the best deal, and in many cases, we refund a part or full processing fee, making the loan effectively cost-free to process.

How is Each EMI Split Between Principal and Interest?

Each EMI you pay includes a portion of the principal and interest. The split between the two depends largely on the loan term:

• Shorter tenure = more principal repaid in each EMI

• Longer tenure = higher interest in early EMIs

To visualize how this split evolves over time, you can download a detailed amortization schedule using our calculator.

Amortization helps you understand how your loan gets paid off over the years with regular, fixed monthly payments.