Home loan questions
Eligibility maths, EBLR resets, prepayment rules and the charges lenders quote separately.
How do lenders calculate home loan eligibility?
Lenders cap total EMIs at roughly 40% to 55% of net monthly income (FOIR) and cap the loan at 75% to 90% of property value (LTV). The lower of the two limits becomes your sanction.
Are there prepayment or foreclosure charges?
RBI bars foreclosure charges on floating-rate home loans taken by individuals. Fixed-rate loans can still carry 2% to 3% of the prepaid amount.
Should I reduce EMI or tenure when I prepay?
Keeping the EMI and cutting tenure saves far more interest, because the extra payment goes entirely against principal. Reducing the EMI improves monthly cash flow but keeps you in debt longer.
How often does an EBLR-linked rate reset?
External benchmark loans reset at least quarterly against the repo rate. Older MCLR loans reset on a six-month or annual cycle, which is why they lag policy cuts.
What charges apply beyond the interest rate?
Processing fee of 0.25% to 1%, legal and technical valuation, CERSAI registration, stamp duty on the mortgage deed, and property insurance if the lender requires it.
Is a balance transfer worth it?
Generally when the rate gap is at least 40 to 50 basis points and substantial tenure remains, since the saving must cover the new lender's processing and legal costs.