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November 2021

FinanceLoan

The True Reason for Using a Home Loan Calculator & How it Ameliorates Your Process – Revealed!

Buying a house is a major sign of achievement, and with it comes a sense of immense pride. However, affording one is not easy at all. Going by the current real estate market, it is almost impossible to afford a house without the help of a home loan. While a home loan does provide the required financial assistance, there are many people who are worried about applying for such loans. The reason for this is that they believe repaying the loan will not be easy.

While this is a valid concern considering a home loan is most probably going to be the biggest liability that they take on, it is not something that cannot be managed. This is where a home loan EMI calculator steps in to help manage the loan EMI payments.

This calculator is an online tool that anyone can use for no cost at all. It is usually made available on most financial institutions’ official websites. Here is why it is important to use one before you apply for home loan:

  • The calculator helps maintain financial stability

After using the home loan EMI calculator, you get familiarised with the monthly instalments of the loan right from the beginning. This helps in being aware of whether the loan plan is affordable and a good option to go for. Since you opt for the loan plan only after taking a look at the EMIs, you are in a good financial position to start saving for the loan.

  • It helps in picking the right loan amount and tenure

The calculator lets you try out different variations. This means that it is possible to change the numbers in the loan amount and tenure to look at different EMI options. This way, you can find the right loan amount as well as a suitable tenure to repay the loan.

  • It gives accurate results in no time

Before these online calculators, the only way of finding out the housing loan’s monthly instalments was through manual calculation. However, this was error-prone and could cause major problems at the time of repaying the loan. Thanks to the EMI calculator, it is now possible to get accurate EMI results that you can rely on.

  • It is very simple to operate

The manual calculation of home loan EMIs was not just prone to human errors but was also quite time-consuming. After these EMI calculators were made available, they made life much easier for an applicant looking to borrow a housing loan. Now, all you need to find out about the monthly instalments of the loan is to just fill up details regarding the loan amount, interest rate, and repayment tenure. The calculator will then display the EMI results.

Now that you know the value of an EMI calculator, make sure to use it before you apply for home loan. This will help in ensuring that the repayment of the housing loan is smooth and hassle-free.

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Finance

Things to know about Equity Investment

Young investors who can take higher risks to generate risk-adjusted returns often prefer investing in equity mutual funds rather than investing in direct equities. There are several benefits of investing in equity mutual funds rather than investing directly in the stock market. Let us find out a few things about equity mutual funds that might help you make an informed investment decision.

What are equity funds?

Mutual funds can be largely categorized as equity and debt schemes. While debt schemes are more focused on generating stable income by investing in fixed income securities and debt related money market instruments, equity funds are those mutual funds that invest in stocks of companies across market capitalization to generate long term capital appreciation.

How are equity funds categorized?

Equity mutual funds can either be categorized based on the market capitalization in or depending on the sector or theme. Equity funds like large cap, mid cap, small cap, multi-cap, and flexi cap. A large cap fund predominantly invests in stocks of large cap companies that are financially stable. Mid cap funds invest in mid cap company stocks. Small cap funds invest in stocks of companies with a market capitalization of less than Rs 500 crores. Flexi cap funds must invest a minimum of 65% of their total assets in large, mid, and small cap stocks. Multicap funds must invest a minimum of 25% each in large, mid, and small cap markets. Thematic and sectoral funds are those equity funds that target only those companies belonging to a particular sector or theme like pharma, crude oil, information technology, etc. Then there is the ELSS or Equity Linked Savings Scheme, a tax saving scheme that invests across the market cap. Investors can save tax every fiscal year by investing up to Rs 150000 in ELSS.

How to invest in equity funds?

There are multiple ways in which one can invest in equity funds. Investors can either directly reach out to the AMC and fill the form manually, become KYC compliant and then invest. This is the offline and traditional way of investing in equity funds. Another way to invest is by visiting the AMCs website and buying mutual funds online. Investors can also invest in mutual funds through their mobile banking app or through an app made available by the AMC or any third party aggregator. However, investors must directly get in touch with the AMC or the mutual fund broker to understand all the pre-investment formalities to commence their equity mutual fund investing journey.

What are the different investment plans made available?

Retail investors can either make a one-time lumpsum investment right at the beginning of their investment cycle, or they can consider starting a monthly SIP in any equity scheme of their choice. Systematic Investment Plan or SIP is an investment tool that allows investors to save and invest a fixed sum periodically in mutual funds. Investors can decide the SIP sum and then continue to invest that sum in the equity scheme till their investment objective is accomplished. To determine the exact sum one must invest in equity funds so that they can target their life’s financial goals, investors can use an online SIP calculator, an easy-to-use tool freely available online.

Can anyone invest in equity funds?

Although it is possible for almost anyone above the age of 18 years to invest in equity funds, investors must understand their risk tolerance before investing. Equity funds do not guarantee capital appreciation and can even generate negative returns in the short run. Hence, investors with a very high risk appetite and a long term investment horizon may consider adding equity funds to their investment portfolio.

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Finance

What is Multicap Fund? How it works

Mutual funds have become an important investment tool, thanks to a lot of initiatives and investor awareness campaigns carried out by AMFI (Association of Mutual Funds in India) and other Asset Management Companies. One of the best ways to mitigate risk and earn long term capital appreciation is by investing in market linked schemes like equity mutual funds.

 Equity mutual funds can be categorized as on the market capitalization they target to pick stocks and form their portfolio. While schemes like large cap, small cap, and mid cap invest predominantly, in large, small, and mid cap stocks respectively to generate capital appreciation, schemes like flexi cap funds and multi cap funds invest across market capitalization. Today we are going to discuss multi cap funds, how they are different from flexi cap funds and how these funds work.

 

What are multi cap funds?

Multi cap funds are open ended equity schemes that invest in large cap, mid cap, and small cap stocks to build a portfolio of stocks that have the potential to generate capital appreciation over the long run. As per market regulator SEBI (Securities and Exchange Board of India) guidelines, of its total assets, a multi cap fund must invest a minimum of 25 percent each in small cap, mid cap, and large stocks. The manager may choose to invest the remaining of the assets in debt or other equity related instruments based on the nature and investment objective of the scheme.

 

How do multi cap funds work?

As mentioned earlier, multi cap funds invest the majority of their investible corpus across the market cap. The fund manager tries to generate capital appreciation by building a portfolio of credible stocks belonging to large cap, mid cap as well as small cap companies. The fund tries to balance its overall portfolio by giving itself stability through bluechip stocks. The small cap and mid cap components of multi cap funds try to generate risk-adjusted returns.

 

What are the different investment plans to invest in multi cap funds?

There are two ways in which retail investors can consider investing in multi cap funds – they can either make a one-time lumpsum investment right at the beginning of their investment cycle or they can consider opting for the Systematic Investment Plan. Those who have surplus capital that is sitting ideal may consider making a lumpsum investment. However, most young, as well as seasoned investors these days, are considering SIP over lumpsum. Systematic Investment Plan (SIP) is a simple and effective way to save and invest a fixed sum regularly in mutual fund schemes like multi cap funds.

The greatest advantage of starting a monthly SIP is that investors can invest the minimum investment sum stated in the multi cap fund’s SID (Scheme Information Document). This minimum investment sum can be anywhere between Rs 500 to Rs 1000. Yes, by investing such a small every month investors can invest in multi cap funds. Also, depending on how the scheme performs they may choose to increase their investment sum so that they are able to increase their corpus in the long run. Investors can even use an online SIP calculator to compute the total estimated returns which the multi cap scheme may be able to offer if they continue to invest in it via SIP for a certain duration. The two biggest advantages of SIPs are the power of compounding and rupee cost averaging. To add to that, investors can stop their SIP investments at any given time and do not have to pay any fine or penalty for doing so.

Investors must consult their financial advisor before investing in any market linked scheme.

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Finance

Sip or lumpsum. How should you invest in multi cap funds?

Investing in mutual funds has proved beneficial for a lot of investors. The key is to ensure and have a long term investment horizon so that your investments are able to compound and generate maximum returns. First time investors are often left confusing on which mutual fund scheme to invest in. That’s quite natural since there are a plethora of mutual funds to choose from. Every investment scheme has a different investment objective, invests in different securities, and allocates assets depending on its nature and the benchmark it wishes to outperform. However, investors with a very high risk appetite who do not mind exposing their finances to volatile markets for generating higher returns consider market linked schemes like multi cap funds.

What is a multi cap fund?

A multi cap fund is an open ended equity mutual fund that invests the majority of its investible corpus in stocks of companies spread across market capitalization. As per SEBI guidelines, a multi cap fund must invest a minimum of 25 percent each in small cap, large cap, and mid cap company stocks. The fund manager may invest the remaining 25 percent of the portfolio in equity or debt related instruments based on the investment objective and the nature of the multi cap scheme. Multi cap funds are best suited for individuals who aren’t sure whether they must invest in large cap funds, mid cap funds, or small cap funds. Multi cap schemes offer the best of all three asset classes. The large cap component of the portfolio of a multi cap fund offers stability whereas the small and mid cap components of the portfolio try to generate risk adjusted returns by taking higher risks. Multi cap funds aim to deliver by building a portfolio from company stocks across various markets, sectors, and industries.

 

Should you invest in multi cap funds via SIP or lumpsum?

Mutual fund investors have the option of starting their investment journey either by making a one-time lumpsum investment or by opting for the Systematic Investment Plan. A lump sum investment is made by the investor right at the beginning of the investment cycle. A lumpsum investment requires the investor to make a large investment sum in the multi cap scheme. However, through the Systematic Investment Plan, the investor can make small, fixed investments periodically till his or her investment objective is accomplished.

 

Why is SIP is a better investment option?

Apart from the fact that it allows the investor to invest a small sum regularly instead of making a hefty one-time investment, there are several other advantages that SIP has over lumpsum investing. Through SIP, investors can buy more units in the long run and surprisingly reduce their average cost of purchase. Whenever the NAV of the multi cap is low due to whatever reasons, investors can buy more units with their SIP sum and vice versa. Since multi cap funds are constantly exposed to market volatility, their NAV is bound to fluctuate from time to time. This allows investors to buy more units in the long run and reduce their cost or purchase and mitigate overall investment risk.

Another big advantage SIP investment have is the power of compounding. In mutual funds, the word compounding refers to the interest earned on the interest earned from the initial investment sum. Over the long term, the compounding effect can turn your small investment sums into a large commendable corpus. Do not underestimate the power of compounding as it can help investors create long term wealth.

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Finance

Understanding the different types and benefits of mutual funds

In the current age and time, the Indian investor is spoilt for choices. For some, the idea of having multiple choices can be overwhelming whereas for others, making an investment decision can get a tad confusing. Whether you are a first time investor or a seasoned one, you need to know all the different types of investments available and also the kind of risks they possess so that depending on your risk tolerance, investment objective, and investment horizon you are able to make the right investment decision.

These days, a lot of individuals are investing in mutual funds after realizing the kind of returns they have the potential of delivering in the long run. Under the mutual fund gamut, there are several product categories and subcategories. So, if you want to target your life’s short term, medium, or long term financial goals with mutual funds, you should be aware of all the different mutual fund schemes available and the benefits that they offer.

What is a mutual fund?

A mutual fund is an investment vehicle that pools financial resources from investors sharing a common investment objective and invests the accumulated sum across various money market instruments and asset classes.

What are the different types of mutual funds?

Mutual funds can be largely categorized as equity, debt, hybrid, ETFs/index funds, solution oriented, and international. Let us understand each of these and focus on their benefits.

Equity funds

Mutual funds that invest a minimum of 65 percent of their total investible corpus in equity and equity related instruments of companies are deemed as equity mutual funds. Equity mutual funds can be categorized based on the market cap that they choose to invest in and also depending on the sector or theme that they focus on for building their portfolio. Some of the most sought after equity funds are large cap funds, mid cap funds, flexi cap funds, small cap funds, and multi cap funds. Some investors can even save tax by investing in Equity Linked Savings Scheme (ELSS) a tax saving scheme that invests a minimum of 80 percent of its portfolio in equity and equity related instruments. Mutual funds that only invest in stocks of companies belonging to a certain sector, industry, or theme are referred to as sectoral/thematic funds. Equity funds offer risk adjusted returns over the long run and are considered by investors to have a very high risk appetite.

Debt funds

Debt funds are those mutual funds that invest in fixed income securities and debt related instruments. They may not generate returns like equity schemes but are known to offer a cushion to an equity heavy portfolio. Debt funds like liquid funds, overnight funds, or ultra short term funds/low durations funds can be considered those who wish to build an emergency fund to tackle life’s unforeseen exigencies. They try to generate stable returns with minimum investment risk.

Hybrid funds

Hybrid funds invest in both equity and debt asset classes. Their main benefit is that they offer the best of both asset classes through one single investment.

Solution oriented funds

Mutual fund schemes like retirement savings funds or children’s gift funds that aim at helping investors build a corpus for their retirement for or for their child’s future are referred to as solution oriented funds. These funds may come with a lock-in period.

ETFs/Index funds

ETFs and index funds are passive mutual funds that try to generate returns by replicating the performance of their underlying portfolio or benchmark. Since these funds follow a passive investment strategy, they carry a very low expense ratio and hence are considered to be a cost effective investment option.

International funds

As the name suggests, international funds are those mutual funds that invest in foreign company stocks. Investors get exposure to stocks and growth potential of various companies like Tesla, Apple, Microsoft, Facebook, etc. that are listed outside India.

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Finance

Know why investors should use SIP Calculator

We all save and invest so that we are able to improve our existing financial status in the near future. Sometimes we are not sure about where our investment journey will take us and hence are disheartened and may even give up mid way. But the truth is that only those who are determined to continue investing in a systematic and disciplined manner are destined to get closer to their ultimate financial goal. One of the best ways to ensure that you continue to invest for an investment horizon spanning over 15 to 20 years or more is through a Systematic Investment Plan.

Also referred to as SIP, a Systematic investment plan is a simple and effective way to save and invest a fixed sum periodically in market linked schemes like mutual funds. What SIP does is that it gives the investor the liberty to choose an investment sum that he/she is comfortable investing with and then lets them invest this sum in a mutual fund scheme of their choice till the investor’s investment objective is accomplished. There is no lock-in period involved which means investors can liquidate their SIP investments on any business day and expect the money in their registered savings account within a few days. If you invest in liquid funds, investors may expect the money in their account within 24 hours.

For investors who aren’t sure about how to use SIP as a tool to create long term wealth with mutual funds, such investors can use an online SIP calculator.

What is a SIP calculator?

As mentioned earlier, a SIP calculator is a free online tool that any layman can use by putting in a few details. You need not be a seasoned mutual fund investor to use the SIP calculator. Even a first time investor can use this SIP which is known to have many benefits. Before starting a SIP in many mutual funds schemes the investor must estimate the total returns which he or she may earn at end of their investment journey. And the SIP calculator can help them with these calculations. Why spend hours doing manual calculations about your potential SIP returns when the SIP calculator can do the same job for you in just a few seconds?

Why should mutual fund investors use the SIP calculator?

Here’s a simple example the emphasizes the importance of using the SIP calculator before starting one’s mutual fund journey –

Assume that you want to buy a house for which you to make a down payment of Rs. 5 lakhs. You want to make the down payment in the next twenty-four months but don’t know how much to invest in a mutual fund scheme so that you are able to achieve this financial goal

You can use the SIP calculator by entering the below details –

  • The total corpus required – Rs. 500000
  • Total number of months you have in hand before you need that sum – 24 months
  • Assumed returns – 10%

The SIP calculator will compute and show–

  • The monthly SIP needed to earn the total corpus Rs. 19000
  • Estimated returns earned through systematic investing Rs. 50769
  • The total value of your investment – Rs. 506679

With the use of the SIP calculator, you were able to find out the exact sum which you must invest regularly so that you have enough corpus to make the down payment and buy your dream home.

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Finance

Liquid Fund vs debt funds which one to choose?

Mutual funds are one of the most sought-after investment vehicles in the 21st century because they have the potential to offer better capital appreciation than any other conventional investment avenue. Mutual funds source financial capital from investors sharing a common investment objective and invest the sum accumulated across various money market instruments and asset classes. Mutual funds have designated fund managers, who along with a team of market researchers and analysts, study market movements and build an investment portfolio with securities and stocks that have growth potential. But not all mutual funds invest in stocks or equity related instruments.

Some mutual funds like debt funds are best suited for investors with a moderate to low risk appetite. For those who do not know, debt mutual funds are those mutual fund schemes that aim at generating stable income by investing in fixed income securities and debt related money market instruments. These funds are also considered by investors who have moved away from conventional investment avenues and are looking for other investment schemes. Investors who wish to invest in mutual funds but refrain from exposing their finances to volatile market conditions may also consider investing in debt mutual funds.

What are liquid funds?

While equity funds try to generate long term capital appreciation by predominantly investing in stocks of publicly listed companies, mutual funds like liquid funds build their portfolio with fixed income securities such that the average portfolio maturity is 91 days. A liquid fund invests in government securities, repo rates, commercial papers, certificates of deposit, etc. that have a short maturity date.

Who should consider investing in liquid funds?

If you are someone who has surplus capital that you recently received through a policy in which you earlier invested and if you do not need that money for a few more months, you can invest this money that is sitting idle in a liquid fund and earn interest without worrying about any losses. A liquid fund’s main objective is to offer capital protection and immense liquidity so that the investor can easily redeem the invested sum in case of a financial emergency. Hence, you can even consider investing in this liquid fund for building an emergency fund that can come in handy during an unforeseen financial crisis.

Should you invest in debt funds or liquid funds?

Those who are new to mutual fund investing often find it confusing as there are thousands of investment products to choose from. This is when the investor usually ends up making a mistake and makes the wrong investment decision. However, market regulator SEBI has further categorized mutual funds based on the different natures of the schemes, their asset allocation, and investment objective, etc. so that investors are able to make an informed investment decision.

So, for those who do not know, liquid funds are a product category under debt funds. So you can either choose to invest in liquid funds which is a debt fund itself or choose from a wide range of other debt schemes available for investment. Investors must always keep their financial goals in mind and then target them with schemes that are best suited for achieving those goals. Also, one’s investment horizon and risk appetite play a crucial role in deciding which funds are suitable for their portfolio.

Also, investors must do not just depend on one asset class for all their financial goals as it is less likely for that single asset class to deliver consistently through one’s investment journey. For those who need further assistance, please talk to your financial advisor who might help you make an informed investment decision.

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Finance

What is Nifty 50? Basics of Nifty explained

Nifty is a combination of two terms, the National Stock Exchange (NSE) and fifty. Nifty comprises the top performing 50 equity stocks actively trading on NSE. Introduced by the NSE in 1996, Nifty is one of the popular benchmark indices of the Indian stock market to invest. Since 50 stocks are included in the Nifty index, it is also known as Nifty 50. 

Nifty: A brief history

There are two major stock exchanges in India – the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). Sensex is an index that is an indicator of the performance of the BSE, while Nifty 50 indicates the performance of the NSE.

NSE, established in 1992, was the first electronic exchange in India that offered a fully automated screen-based electronic trading system. NSE Indices Limited (formerly known as India Index Services & Products Limited) manages and owns Nifty 50. NSE Indices is a specialised subsidiary of the NSE, focused upon the index as a core product.

Some key aspects related to Nifty 50 are:

  • While the Sensex comprises 30 stocks, Nifty has 50 stocks under its umbrella.
  • 1995 is the base year for Nifty and the base value is 1,000.
  • Nifty 50 companies are from 13 different sectors of the Indian economy; they are the top stocks in the market.

Why is Nifty important?

A market index reflects the performance of stocks and helps you make decisions about your investments in the stock market. Given below are a few aspects that highlight the importance of Nifty.

  • Nifty 50 stocks include companies from various sectors, such as financial services, information technology, telecommunications, energy, etc., which makes it a comprehensive and diversified index.
  • It is used for various purposes such as benchmarking index funds, fund portfolios, and index-based derivatives.
  • It represents about 66.8% of the free-float market capitalisation (the company value is calculated by excluding shares held by the promoters) of the stocks listed on NSE as of March 29, 2019.
  • The total traded value of Nifty 50 constitutes 53.4% of the traded value of all stocks on the NSE, for six months ending March 2019.
  • Nifty is very useful for derivatives trading.

How can the Nifty 50 index help you?

  • Nifty can help you understand the performance of the stock market today and plan your investments accordingly. It indicates whether the stocks are doing well and if they will provide good returns in the future.
  • Nifty helps pick which stocks to buy, as it includes only those companies that perform outstandingly well in the market.
  • It can help you earn good returns in the long run. The base year for Nifty 50 is 1996. If you had Rs. 1,000 in 1996 it would be worth Rs. 17,945.95 on 11th October 2021, which was the Nifty share price for that day.

Conclusion

The Nifty 50 can help you in choosing which stocks to invest in and manage your portfolio. However, if you want some expert advice on which stocks to invest in and design your portfolio, you can consult a financial advisor to help you in your investment journey.

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Finance

What is the Procedure of KYC For Mutual Funds?

Know Your Customer (KYC) for mutual funds works the same way as that for other financial services. It’s a customer identification process carried out by all financial institutions including banks and asset management companies.

KYC Registration Agencies (KRAs), entities registered with the Securities and Exchange Board of India (SEBI), maintain KYC records. The Reserve Bank of India set up the KYC guidelines in 2002. Along with these guidelines, the SEBI master circular on Anti Money Laundering Standards emphasises the requirement for the customer identification procedure.

Why is KYC Mandatory for Mutual Funds?

The Prevention of Money Laundering Act, 2002 requires you to complete the process of KYC before investing in mutual funds. It helps establish your authenticity as an investor by making sure you provide your real name and other necessary details. The process also ensures that you have constructive investment purposes and don’t come with a history of defaults. This helps prevent risks of fraud and money laundering in future.

Who Needs KYC Compliance for Mutual Funds?

Whether you want to invest in a mutual fund through SIP (systematic investment plan) or with a lump sum, you must complete the KYC procedure. You only need to go through a one-time verification for transactions across all funds. KYC compliance for mutual funds applies for:

  • Non-individual(s) or individual(s)
  • One who has legally become an investor, for instance, after the death of the original investor
  • Constituted PoA (Power of Attorney) holder(s)
  • A guardian who wants to invest on behalf of a minor

How to Get KYC Compliance?

You can check whether you have already gone through the KYC compliance process by entering your PAN details on the particular mutual fund website or the KRA website. Then you can also see the last modification date and whether you need to provide any missing details.

If you have completed the KYC procedure at an AMC or KRA branch or via a SEBI-registered intermediary like a mutual fund, DP or broker, you need not go through the process again.

If you are not KYC compliant, you can go through the process online or offline. For the online (video) method, you need to upload scanned images of your signature and proofs of address and identity with an original photograph. To carry out the process physically, you (including all joint holders if any) can download the KYC form online from the mutual fund website. Then each applicant must fill it up and submit it with proper identity and address proofs. When you submit the documents, you need to appear in person for their physical verification.

After the procedure, use the SIP compounding calculator to check the estimated returns of your chosen investment scheme.

Now that you see it’s so easy to carry out KYC for mutual funds, complete the procedure soon so you can start making investments right away. Besides, always make sure that the information in your KYC records is updated. To modify any information, you need to submit a KYC details change form with the required documents like a current address proof if your residential address has changed.

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Loan

What is the maximum home loan amount one can apply for?

Owning a house is a big deal nowadays. Hence, a home loan is beneficial when it comes to buying or building your own home. There are certain things that need to be kept in mind if you want to know more about the whole process of buying your own home. Read further to know how much home loan amount you can be eligible for.

How to know if you are eligible for a home loan?

Wondering if you are even eligible for a home loan? You can find out with the help of the home loan eligibility calculator. This calculator makes sure you know the criteria as well as whether or not you meet the standard criteria required to get a home loan. To know if the applicant is eligible for a home loan, the calculations of a salaried /self-employed customer are done based on the applicant’s age, income, expected loan amount, loan tenure and the type of company they work for.

Tips to know before applying for a home loan

  • You can enhance the eligibility of your home loan application by adding a co-borrower/ co-owner
  • You can also opt for a longer tenure loan
  • An additional source of income can strengthen your application as well.

Factors that determine your home loan eligibility 

There are certain factors that determine your eligibility for a home loan; they are as follow:

Steps to take for a home loan

As mentioned above, there are several things you need to understand before you take a further step in this process.

  1. Eligibility

With a few eligibility criteria already mentioned above, different banks have different requirements you need to meet if you want to choose them as your home loan provider. One of the essential requirements is credit history to know how often you tend to repay. The preferred credit score is 750, so make sure you have a tight credit score. Using a home loan eligibility calculator is also one of the ways to determine eligibility for a home loan. The eligibility is estimated considering various factors, including age, occupation, collateral security, income, etc. If you meet these requirements, you are considered for your home loan application.

  1. Pay the down payment amount after meeting your eligibility requirements.

Generally, the applicant is only supposed to pay 10-20% of the total amount as a down payment, but if you can afford to pay more, you can go ahead and do so. The rest can be arranged by taking a home loan from the bank or HFC. For cases when the applicant does not have 10% to pay as the down payment, they can take a soft loan from their friends, relatives or employers. But keep in mind that the lesser the borrowed amount, the lesser the burden of repaying.

  1. Check your affordability beforehand.

Before you finalize an amount you will be paying as your home loan EMI, make sure it doesn’t become a burden. The basic formula to keep in mind while paying the EMI is to look at your loan to income ratio, which should be 20-30% from your income. Don’t decide the EMI amount based on your future raise. And the rest will go easy for you.

Conclusion

These were the things you need to keep in mind if you are planning to buy your own house with the help of a home loan. Choose a trusted home loan provider and unleash your dream of owning a home.

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