SKYLINE REALTY
FEB 26, 2025
10 MIN READ
Most banks will lend up to 5–6x your annual gross income for a home loan. On a ₹15 lakh annual CTC, expect a maximum eligibility of ₹75–90 lakhs. But banks also cap the EMI at 40–50% of net monthly income. If existing EMIs reduce your net take-home significantly, your loan eligibility drops accordingly.
Floating rate loans are linked to the repo rate via EBLR (External Benchmark Lending Rate). They are currently lower than fixed rates but carry rate-hike risk. Fixed rates are higher by 1–2% but insulate you from future hikes. For a 20+ year tenure, floating rates have historically been cheaper in India's rate environment. For shorter tenures of 10–15 years, fixed offers more certainty.
Banks will only lend on projects they have internally approved. If the project you want is not on your bank's approved list, the bank will not fund it — regardless of your eligibility. Always check project approval before shortlisting, especially for under-construction properties from smaller developers.
Floating rate home loans from banks and HFCs cannot charge prepayment penalties under RBI guidelines. This means any excess income you have — annual bonus, rental income — can be applied directly to principal without penalty. Even a single extra EMI per year on a 20-year loan can reduce your tenure by 2–3 years and save significantly in interest.
Under Section 24(b), interest paid on a home loan is deductible up to ₹2 lakhs per year if you occupy the property. Under Section 80C, principal repayment up to ₹1.5 lakhs per year qualifies for deduction. For a ₹1 Cr loan in the first few years, interest payments alone will exceed ₹7–8 lakhs annually — the ₹2 lakh cap limits the effective benefit considerably.