You must be searching for ‘home loan calculator India’ to understand how much your monthly installments will be. But there are multiple factors that impact your interest rate and thus, also affect your EMI amount.
Take a look at some such factors-
Your credit score is a numerical representation of your creditworthiness. The higher the score, the better are your chances of availing of a loan. A higher credit score may also help you to negotiate a lower interest rate or a longer loan tenure.
Thus, if you are planning to take a housing loan in the future, it is advisable to start working on improving your credit score.
Location and Value of the House
Houses that are in newer or upcoming areas are considered to be more valuable or those that have amenities close by. Loans for such homes can generally be availed at a lower interest rate
The Marginal Cost of Funds based Lending Rate is the minimum that a bank or financial institution can lend at. This is decided annually and depends on various factors such as operating cost, the marginal cost of funds, etc. The interest rate imposed will increase or decrease based on variations in the MCLR rate
Loan to Value or LTV Ratio
This is essentially the percentage of the property value that the loan can finance. The higher the loan amount availed, the higher is the rate of interest. This is because the risk of the lender increases with higher loan amounts.
Employment Status of Applicant
Salaried employees or those with a steady stream of income can generally avail loans at a relatively lower rate of interest as the risk is much lower for the lender as compared to applicants who are self-employed
In addition to all of the above factors, the repayment term can determine the rate of interest imposed. Generally, a shorter repayment term leads to a lower rate of interest and vice versa.