YOUR QUERIES: LOANS: Income stream & current debts determine home loan eligibility

October 20, 2021 1:07 AM

Buying a house early is a good decision as it ensures you get a longer time to repay the loan. If the bank is insisting on a co-applicant, you will have to follow the norms of the bank as prescribed for a co-applicant.

The loan amount that you can get will be limited by the maximum loan-to-value (LTV) ratio allowed by the regulator based on the value of the property you purchase.The loan amount that you can get will be limited by the maximum loan-to-value (LTV) ratio allowed by the regulator based on the value of the property you purchase.

By Manish Chaudhari

After working abroad for 15 years, I returned to India in July this year. I want to take a home loan to buy a flat in Ahmedabad. What are the documents that I should put in place and what is the eligibility criteria?
—Amit Rajwagshi
For availing a home loan, you should keep your KYC documents, income documents as well as your passport along with the resident status details readily available with you. The eligibility will be based on the income stream that you have and the current obligations that you may be running. Apart from this, your credit bureau score will also have a bearing on your eligibility. The loan amount that you can get will be limited by the maximum loan-to-value (LTV) ratio allowed by the regulator based on the value of the property you purchase.

I have recently sold a family property. Should I use the money to pay a part of my home loan or invest the money in the markets?
—A K Shetty
Selling of a family property may have tax implications. Before you use the money, take some advice from a tax expert so that you optimise your tax outflow. Using the money to pay part of a home loan or to invest in markets will depend on your risk appetite and your financial goals. If the risk adjusted returns on investments are expected to be higher than the interest outflow on home loan, then you should invest the money somewhere else and prepay the loan and reduce your liability, which seems to be a prudent option.

My unmarried daughter wants to take a home loan to buy a flat. The bank is insisting on a co-applicant. I am retired and my wife has another five years of government service left. My son is also working. Who should be the co-applicant?
—Kirti Kumar Pant
Buying a house early is a good decision as it ensures you get a longer time to repay the loan. If the bank is insisting on a co-applicant, you will have to follow the norms of the bank as prescribed for a co-applicant. As it is a closed family, anyone meeting the criteria can become a co-applicant. Parents rather than siblings is a preferred choice typically. However, in case of default by the applicant, the co-applicant will have the liability to pay for the dues.

The writer is head, Digital and Corporate Alliance, Poonawalla Fincorp. Send your queries to fepersonalfinance@expressindia.com

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