Interest rates on home loans sanctioned from October 2019 onwards are linked to external benchmarks, which is the RBI repo rate for most lenders. Repo rate is the rate at which lenders borrow funds from the RBI.  Therefore, a reduction in repo rates means a lower cost of funds for lenders, which means borrowers can enjoy lower interest rates. The repo rate currently stands at 4%, while the reverse repo rate is at 3.35%.

Due to the reduction of repo rates, there has been an upsurge in the real estate industry. Most homebuyers’ first and foremost priority is to avail a loan amount by paying low monthly instalments. It is, therefore, advisable to check whether the loan amount and the respective tenor suits one’s needs. Every individual asking, “How much home loan can I get on my salary” should consider various terms, compare multiple parameters such as loan amount, home loan interest rates and then settle for a lender.

In this regard, the following are a few strategies one can follow to pay lower EMIs.

Ways to reduce the monthly instalments

• Home loan balance transfer

If the current lender is offering a high interest rate, one can shift to another lender offering lower rates. Doing so, one pays lower EMIs for the remaining tenor. However, one must check how much the EMIs can go down with the new lender using an EMI calculator. 

• Prepayments

Previously, banks and NBFCs used to charge a hefty fee on part prepaying the loan. Nowadays, one can part-prepay their home loan before the end of tenor without any charges. This can be extremely convenient in bringing down the EMI payable.

• Higher down payment

A borrower with significant savings or a sudden inflow of cash can make a substantial down payment to reduce the amount borrowed, which will reduce the EMI payable. This is a vital step to follow while initiating the home loan online apply process. 

• Longer tenor

With a longer tenor, one has to bear a higher interest outgo, but the EMI payable reduces appreciably. However, one must be careful about the eligibility criteria for tenor extension of the respective lender.

These are the 4 ways in which one can reduce the home loan interest outgo and EMI amounts.

Moreover, one can also reduce the home loan tenor and EMI by paying an extra EMI every year. This will reduce the burden of future EMIs by shortening the loan tenor. 

Borrowers wondering “how much home loan can I get on my salary” can refer to this section mentioned below for a better idea.

How is a home loan amount related to an individual’s salary?

The amount of loan is dependent on factors like CIBIL score, repayment capacity, existing loan debts etc. Financial lenders figure out the loan amount by not considering the in-hand salary of an individual. They will not consider allowances like medical and leave travel while assessing a borrower’s salary. 

Moreover, a higher income will fetch a higher home loan. Any withstanding loan amount will negatively affect the loan affect the amount of loan. Therefore, it is advisable to foreclose any existing loan before one can have an answer to the question “how much home loan can I get on my salary”.

Various lenders also provide different home loan offers concerning an individual’s eligibility for a home loan. In this regard, one can enjoy pre-approved offers to simplify the application process. You can check your pre-approved offer by entering your name and contact number only. 

With these factors into consideration, you can settle for an EMI amount that suits your income and repay your loan without hassle.