How Many Home Loans Can You Take in India?

Posted by Arwind Sharma on August 27th, 2016

Buying a home of your own is a life goal for almost every working professional. Owning a home is now within the reach of a middle class Indian- thanks to Home Loans. While some can afford just one home, there are a few who can afford to invest in two or more homes.

Is it Possible to Take as Many Loans as you want?

Home Loans in India can be availed from three sources- public sector banks, private banks and Non-Banking Financial Companies. Technically, there is no limit on how many Home Loans you can take. If you meet the eligibility criteria and can prove your repayment capacity, banks will be more than willing to offer you any number of Home Loans.

Key Factors Affecting your Home Loan Eligibility

Is it possible to get the full quantum of loan that you have applied for? Banks have a home eligibility calculator that helps to determine the amount of loan that you will be eligible for based on your current income and credit history.

• The banks decide on whether or not to approve your loan application based on the information furnished by you. In case, you have furnished incorrect information, you will lose your eligibility to avail a Home Loan.

• Your current income, and any pending liabilities have a bearing on your Home Loan eligibility. If you have a steady source of income, there are better chances of having the loan approved. Your repayment capacity determines how much of a loan you can avail.

• Your credit history reflects how regular you were in honouring your financial commitments. A higher credit score helps to improve your Home Loan eligibility.

• Your age too has a part to play in determining your Home Loan eligibility. The age of the borrower gives a clear picture of his earning capacity.

• It is not only your financial strength, but also your personal profile that can impact your Home Loan eligibility. A professionally qualified person with a stable employment and higher rate of savings is sure to be approved for a Home Loan.

• Whether your Home Loan is sanctioned is also dependent on the property which is going be financed by the Home Loan. If the property in question has any encumbrance or does not hold a clear title, it will be difficult to obtain a loan.

As long as you honour your loan commitments and make the EMI payments on the due dates, banks will have no objection to offering you a Home Loan. For this, the bank accesses your credit score and reviews your credit history. All your loans taken, EMI repayments, and outstanding loans are reflected in your CIBIL report. Any default in fulfilling your loan obligations will drag down your credit score-thus affecting your ability to avail a Home Loan. It is your financial strength and repayment capacity which act as the decisive factors for determining your Home Loan eligibility.

Home Loans and your Credit Score

A high credit score helps you get any loan approvals at favorable terms. However, a number of loans against your name does not spell good times for your credit score. With multiple loan liabilities saddling you, there is a chance of default; such a default will have an adverse impact on your credit score. A falling credit score will not only diminish your chances of a future loan, but even the existing lenders might not be willing to rework your terms and conditions. Make sure that you enjoy a good credit score before you apply for a Home Loan.

Applying for an Additional Loan

You have bought a resale flat and have availed a Home Loan. Before moving in, you need to do some modifications to make the home conform to your tastes and needs. For such purposes, you can avail a Top-up Loan. A Top-up Loan can be taken on the existing Home Loan on the same property.

What is Home Loan Balance Transfer?

Are you unable to service your Home Loan due to the high interest rates. In such a scenario, you are entitled to transfer your outstanding loan balance to another lender who charges a lower Home Loan interest rate. Such a loan transfer will be construed as a fresh Home Loan and the borrower has to fulfil the eligibility norms.

When you opt for a loan transfer, the original loan account is closed and the new lender settles the outstanding loan and gains custody of the property documents.  To rake in the advantage of lower interest rates, and other discount offers of the new lenders, you can apply for a Home Loan transfer and top up loan. After effecting the Home Loan transfer, your EMI reduces. Your outstanding loan amount also decreases and you will be able to settle your Home Loan account in a shorter time frame. The cost of acquisition is thus reduced.

The high demand for homes has fuelled the demand for Home Loans in India and you have a choice of Home Loan providers. Whichever institution is the lender, their prime concern will be to assess your repayment capacity- how good is your financial strength to service the Home Loan liability; especially do you have a steady source of income that can cover the EMI.

Though you are eligible to avail multiple Home Loans, your credit score does not appreciate having a number of outstanding loans. It is best to take a loan only when it is very essential.