How do banks decide on the amount of Home Loan should be sanctioned?

Home Loan is the go-to source for meeting the fund requirements to buy a house. You should set your budget before starting to search for the desired property and as and when you select your dream house check your eligibility for the home loan.

The amount of home loan you can get is subject to certain parameters on the basis of which banks assess your credibility and repayment capacity. These parameters are:


a) Credit Score – It is the measure of your creditworthiness. Higher your score lower is the risk for bank in advancing loan to you which will result in the higher loan amount and better rate of interest.


b) Financial Stability – You need to have a regular income source. Your income level plays a crucial role in deciding the loan amount, as you can pay only within the extent of your earnings.


c) Value of Property –You gets a home loan by placing the purchased property as collateral. The maximum limit of home loan is 90% of the property's value.


d) Liabilities – Along with income your liabilities are also assessed. If your existing liabilities are high then the loan amount is adjusted to the extent where you can comfortably pay the EMIs.


e) Balance Transfer – You can transfer your existing home loan to another lender if it is offering a significantly lower rate of interest.

Read- How do banks decide on the amount of Home Loan to be sanctioned?