Home loan of Rs 12 lakhs: EMI calculator, eligibility, documents required

If you do not have sufficient funds, purchasing a home can become a challenging endeavour. It is reasonable to investigate the possibility of acquiring a home loan. The majority of banks now provide home loans with rates of interest that are quite desirable, allowing you to purchase the home of your dreams.

The article will cover a wide range of topics, including the Rs12 lakhs home loan EMI over several terms, how to apply for the loan, eligibility and required papers, interest rate, and more. 

 

What is a home loan? 

An amount of money that is borrowed from a financial institution or bank to buy a home is referred to as a home loan. It is a type of secured loan where the collateral is the property. 

A home loan can be used for a wide variety of purposes, including the purchase of a new house or apartment, the purchase of land on which to build a home, and the cost of renovations, additions, and repairs to an already existing residence. 

 

12 lakhs home loan: Tenures provided by top banks 

• 30 years
• 25 years
• 20 years
• 15 years
• 7 years
• 5 years

 

12 lakh home loan interest rates 2022

As of August 2022, the average interest rate for a home loan in India ranges from 7.40% p.a to 9.80% p.a. The rates can change based on many variables, including the lending institution, the repo rate set by the Reserve Bank of India (RBI), the level of inflation, and the state of the economy. 

Some banks provide unique concessions, such as lowering the interest rate for women, bank employees, and the elderly when applying for a home loan. 

Additionally, a home loan’s interest rate can be either fixed or floating. The fixed interest rate on a home loan stays constant for the duration stipulated by the lender. The market has no impact on this type of mortgage. In the case of floating home loans, the relevant interest rate fluctuates depending on market changes. It could or might not be advantageous for the borrower.

 

Home loan EMI break-up 

The total amount of a loan decreases over time as interest and principal are paid back. Interest accrues at a rate that is gradually less than the principal and, eventually, is negligible. The rule of a fixed EMI each month does have a few exceptions, though.

When a borrower makes a lump-sum payment on an existing loan, the payment is credited against the remaining debt, therefore lowering the EMI. Now, in this instance, the borrower has the choice of maintaining the EMI while shortening the loan term. If the borrower has chosen a variable interest rate, then the EMI fluctuates with market changes.  

 

Year wise break up of 12 lakh loan with 7.50% interest rate

EMI (in year)	Amount
Monthly EMI for a duration of 5 Years	Rs 24,046
Monthly EMI for a duration of 10 Years	Rs 14,244
Monthly EMI for a duration of 15 Years	Rs 11,124
Monthly EMI for a duration of 20 Years	Rs 9,667
Monthly EMI for a duration of 30 Years	Rs 8,391

 

Home loan options in India

The majority of banks, both public and private, and housing financing institutions provide home loans, which can be used to buy a home with a down payment and monthly payments over time. You can borrow up to 80%-90% of the home’s value. The lender will retain the property until the debt is repaid in full.

Home construction loan

If you currently possess property and need finance to build a home on that land, this is the ideal form of home loan for you.

Home extension loan

Consider that you currently own a home and would want to add additional room or floor to suit your increasing family. Home extension loans give the necessary financial assistance.

Home improvement loan

Whether it’s exterior or interior painting, plumbing repairs, electrical upgrades, roof replacement, or any other kind of home renovation, a home improvement loan helps you pay for it.

Home loan balance transfer

If the interest rate on your home loan is too high or you are unhappy with the service you are receiving from your present lender, you have the option of refinancing the loan to a new lender who can provide you with a discounted rate and/or better service.

Composite home loan

This form of home loan offers funds for both the purchase of the land on which the house will be built and the building of the residence.

 

Advantages of taking a home loan

Tax benefits 

The primary advantage of a home loan is the ability to deduct interest and principal payments from your taxable income. For principal repayments, you may be eligible for up to Rs. 1.5 lakh under section 80C, up to Rs. 2 lakh for interest repayments under section 24B, up to Rs.2 lakh for interest repayment under unusual circumstances under sections 80EE and 80EEA, and up to Rs.1.5 lakh for stamp duty expenditures under section 80C. 

Reduced interest rates

A home loan’s interest rate is much lower than that of any other accessible loan type. To address a financial shortage, you can also avail a top-up on your current home loan at a cheaper interest rate than a personal loan.

Due diligence on a home

When you go via a bank to acquire a home, the bank will do due diligence on the property and ensure that all paperwork presented is genuine. This vigilance on the part of the bank will limit your vulnerability to fraud. If the bank authorises the property, you and your home are in good standing.

The extended period for making payments

Home loans, in contrast to other types of loans, often have lengthier payback periods of 25-30 years. This is because getting a mortgage involves taking on a large debt burden. The EMIs can be easily reduced by spreading the loan amount and interest over a longer repayment period.

No prepayment penalty

You can make prepayments on a home loan with a variable interest rate anytime you have a lump amount available without incurring a prepayment penalty. This will allow you to pay off the mortgage considerably earlier than expected.

 

Your home loan repayment (EMI) is determined by seven essential factors 

Principal amount

The true amount of funds that the borrower is requesting from the lender is referred to as the principal amount. Unquestionably, the principal amount is a significant determinant of the EMI that you must pay.

Interest rate 

The rate at which the borrower has received funds from an institution or market is the rate that is used to calculate the interest rate. When calculating your EMI, this is the most crucial aspect. The interest rate determines the amount of your EMI payments. Before settling on a financial instrument, it’s wise to conduct some research into the rates of different lending institutions.

Loan tenure

The length of time that the borrower has committed to repaying the loan is referred to as the loan’s tenure. When the loan is extended for a longer period, the monthly obligation of making EMI payments decreases for the borrower.

Method of computation

The methodology used to compute the EMI is a critical aspect in calculating the EMI you are responsible for paying. The different approaches used include:

Annual reducing method

Although the EMI is paid by the borrower at the end of each month, with this system, the principal amount and the interest rate are calculated once a year. One major drawback of this method of calculating EMIs is that borrowers would wind up paying interest on the principle that they have previously repaid.

Monthly reducing loans

Calculating EMI using this approach is preferable since it is straightforward and is often used the most. With this method of computation, the principle is reduced every month, together with the EMI payment that is made. The amount of interest is determined by the total amount still owed.

Daily reducing loans

The principal balance is gradually reduced daily as the loan is repaid in full each day, as the name suggests. Interest is calculated on the total amount due. However, as it is impractical to make a payment every day, this mode of EMI payment is not widely used.

 

Home loan calculator 

When applying for a home loan, applicants can utilise an online home loan calculator to estimate their monthly EMI payments. A home loan calculator determines the EMIs that must be paid each month based on many different variables.

Home loan calculations require inputs like loan amount (in rupees), loan term (in years), and interest rate (in percentage). The results page will provide information like the home loan EMI chart or amortisation table, as well as the monthly EMIs (Equated Monthly Instalments) owed to the bank. 

How does it work? 

The monthly principal and interest payment (EMI) on a home loan of  Rs12 Lakhs is determined using the following mathematical formula:

EMI (E) = [PxRx(1+R)^N]/[(1+R)^N – 1]

Here, the value of E or EMI will change based on P, R, and N;

• P refers to the quantity of principle
• R is the rate of interest determined by the lender. If the annual percentage rate of interest is 7.2%, then r is 7.212/100, or 0.006.
• N is the number of years or duration for which the loan was obtained. EMI payments must be made monthly, and the term of the loan is measured in months. 

 

Steps to use Housing.Com Home loan calculator 

• Go to the housing.com website or click on this link to access the home loan calculator.  
• Fill out the fields on this page to get an estimate of your monthly payment on a home loan from a certain bank.
• When you enter your information, the total interest, processing costs, and other data will appear, and you can immediately determine whether it fits your budget.

 

Home loan calculator for Rs 12 lakhs home loan

• Rate of interest – 7% 
• Tenure – 10 Years 

• Rate of Interest – 7% 
• Tenure – 20 Years 

 

Rs 12 lakh home loan: Eligibility criteria 

To determine whether or not you are eligible for a Home Loan of up to 12 Lakhs, you must review the eligibility requirements listed below.

• The candidate for the loan must be at least 18 years old.
• The maximum age for obtaining a 12 lakh home loan is 70 years old.
• You can be either a self-employed professional or an employee of the government or private sector.
• Salary employees are required to have a minimum income of at least Rs25,000.
• To qualify as self-employed, a person requires a minimum income of at least Rs40,000.
• For your application for a home loan to be accepted, you will need to have a credit score that is more than 750.

 

Required documents for Rs12 lakh home loan

Be familiar with the documents that must be submitted for a home loan of 12 Lakhs.

• Aadhar card or PAN Card for ID proof. 
• Voter ID, Passport, Aadhar Card, Driver’s Licence, Gas bill, electricity bill, water bill etc. for address proof. 
• Property documents include a registered deed of sale, transfer, or lease. In addition to the allocation letter, the builder agreement and payment documents are also required.
• For income proof, salaried persons are required to provide three months’ worth of bank statements with evidence of salary credits to their salary account. Self-employed must present their bank statements from the most recent three months.
• For business proof, a certificate attesting to the existence of your firm.
• Complete and accurate application form.
• Home tax return.
• Passport-size photographs.

 

How can you reduce the monthly payment on your Rs 12 lakhs home loan? 

If you have a 12 lakh home loan and want to lower your monthly EMI payment, there are a few viable options that you can explore. Although talking to your bank about a better interest rate is one option, there are other methods to reduce your instalment payment.

Make a down payment 

If you put down a larger amount of money on your home loan, your monthly instalments will be lower. You will be able to reduce the EMI by making a larger down payment since doing so will result in a lower total loan amount. Therefore, the best way to guarantee that you have a low EMI is to make an effort to pay a significant down payment.

Increase your tenure 

By extending the length of time you have to make payments on your home loan, you can minimise the amount of stress you feel each month. This has a significant bearing on the total quantity of EMI. When compared to the home loan EMI of 12 Lakh for a term of 5 years, your EMI will be less expensive if you extend the length of your loan over a longer period, such as to 20 years.

Step-down EMI plan 

Some financial institutions, including banks and non-banking financing organisations, have a plan known as the Step-Down EMI Plan. You have the option of paying an EMI that is greater at the beginning of the loan’s term, and then the amount of the EMI gradually decreases as the loan’s main balance does as well.

Prepayment 

Prepayment is one of the greatest and most efficient techniques to reduce your 12 Lakh home loan EMI. Therefore, when you have the funds, prepay and reduce the loan amount.

 

FAQs

How is my home loan eligibility for a loan determined?

Home Loan eligibility is largely determined by the following variables: The cumulative monthly net income of the applicant and co-applicant. Sum the total of your current debts, including unpaid loans and credit card balances. Typically, a bank would deny a loan if the entire EMI commitment (including the present home loan for which you are applying) exceeds 50-60% of your total net income. A loan-to-value (LTV) ratio of 75% indicates that the borrower must cover the remaining 25% from savings or other methods.

Is pre-closing/partial payment permitted on home loans?

Prepayment of a home loan is permitted without additional fees so long as the form of repayment selected is a Floating rate of interest and not a fixed rate of interest. Some banks may limit the number of times you may make a partial payment every year, as well as the total amount that can be made in instalments. Before signing the loan agreement, please get clarification from our or the bank's loan consultant on each of these aspects.

How does the bank determine the interest rate for my home loan?

In contrast to personal loans, every bank has a set interest rate for all consumers, and it does not change across applicants. The fixed interest rate will be somewhat more than the floating interest rate. Therefore, it is dependent on the choice that you make.

How long does it typically take for a home loan to be disbursed?

Generally, it takes roughly 3 to 4 weeks for your home loan to be sanctioned. Your home loan application can be put on hold for a variety of reasons, so please be patient.

What happens if I am unable to make a monthly payment on my home loan?

The bank reserves the right to implement a selection of ECS bounce costs and penalties. In addition to that, it will be shown negatively in your credit report. Depending on the severity of the default, it may have a significant influence on your ability to get future credit, such as a mortgage or a car loan, among other things. In addition to this, the lending institution can pursue legal action against the customer.

I am interning. Can I obtain a home loan?

If you do not have a minimum of two years' worth of job experience, you will not be eligible for a home loan.

Is it possible to bring down an increased EMI?

No, unless you make some kind of partial prepayment ahead of time.