What is the maximum loan that I can afford?
The most important factor in determining how much your loan amount is going to be, is your ability to make periodic (usually monthly) loan repayments. Your goal should be to ensure that the monthly payments on your home loan are not more than you can afford. Your lender also wants to know that you have the financial capacity to make regular loan repayments.
You need to have a good idea of how much money you can afford to pay towards your loan each month. If you are unsure about this, use the Personal Cash Flow calculator to estimate it.
Use the following calculator to find the maximum loan that you can afford, based upon:
- The maximum monthly payment you wish to make towards repaying the loan (i.e. Maximum EMI or Maximum Equated Minimum Installment)
- The interest rate
- The length of the loan (or tenure).
As you make changes to the calculator, your maximum loan amount will automatically update.
Next you should shop around for the right financial institution to take a loan from. Each of these institutions will go through their own process of determining how much loan they are willing to give you, based upon the value and location of the property, your personal profile, your income details, and your current assets. This is described in more detail in the "Loan repayment capacity" How-To guide.