Some Chat Questions on Home Loan

• Planning to take a personal loan for building a house at your native place. Is it a good move?

Ans: Taking a home loan would be better off rather than a personal loan as a home loan is cheaper.

Choose a bank which is active at your native place so that they can do the property verification. If that is difficult, then a personal loan could be taken though it will be quite expensive as compared to a home loan and will also be for a shorter duration. The EMI will also be much higher.

• Require Rs 20 lakhs for buying a flat but as home loan processing takes time, would it be better to take a personal loan and when the home loan is sanctioned, then repay the personal loan with it.

Ans: You need to disclose a huge amount of income for getting a personal loan worth Rs 20 lakhs. By making the banks complete for your home loan and providing you the best deal, you may end up getting more than expected as well as your home loan application would be processed faster.

• In an ideal scenario what should be the maximum EMI percentage an individual should/could afford, in percentage terms?

Ans: It depends on various components like -

1. Income - the higher the income, higher is the percentage you can afford to pay as EMI. However, as a general rule of the thumb, about 40 per cent of your net income is considered safe for an EMI. Anything above 55 per cent is in the red zone.
2. Loan Amount
3. Secured or unsecured loan