Due to the rapid Growth & increasing Competition in the Housing Finance Sector, the chances of Procedural Lapses have also been increasing. The Probability of misuse & taking of advantage of the System by unscrupulous elements have also risen. It is very important to take urgent remedial & proactive steps so that incidents of Defaults or other Frauds taking place can be avoided.
The Housing Finance companies calculate the eligibility of Salaried person as follows.
1. Take last 6-month average salary income based on salary slips. Here you get average salary income per month
2. Less : Existing obligation as mentioned in point 6 above on monthly basis
3. Less : Dependent Family Members factors ( Note 1)
4. Step 1-2-3 = Actual Income Per Month
5. Actual Income Per Month * MLSC @ 65% (Note 2)
6. The figure as per step 5 / Factoring (Note 3)
7. The derived figure in step 6 should multiple by Rs 1 Lac to get eligibility amount in absolute figures
Note 1 – The Housing finance now a days also consider the impact of no of family members dependent on home loan applicant. The amount of deduction is depending on case to case basis. Generally, it is between Rs 1500 to Rs 2500 per family member.
Note 2 – MLSC (Monthly Loan Servicing Charges) is generally expressed as a Percentage. This Percentage denotes the portion of the Monthly Income that must be spared by the Borrower towards the Housing Loan Repayment. At the same time, it should also be ensured that sufficient Residual Income is left to meet the Expenses of the Family, considering the Family Size.
In above calculation we have consider MLSC@ 65% means remaining 35% will be left to meet the expenses of the family. Some housing finance companies may consider MLSC @50%. The higher MLSC % will give higher eligibility of home loan to applicant.
Note 3 – Factoring is the result of Loan, Rate of Interest (ROI) and Tenure of loan. It is calculated for 1 Lakh basis by applying ROI and Tenure. It is easily available on EMI Calculator.
The Golden Rule
I hope the above process will help you to calculate self-eligibility of home loan if you are a salaried person.