Getting A Home Loan For a 1 Crore Property

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Buying a dream home is an exciting and significant milestone, but with today’s skyrocketing property prices, especially in urban areas, it often requires more than just savings.But before you start picking out paints and planning the housewarming party, it’s crucial to understand what taking a ₹1 crore home loan really means, particularly when it comes to EMIs.

In this guide, we’ll break down everything you need to know about managing your ₹1 crore home loan, making sure your dream home remains a blessing, not a burden.

₹1 Crore Home Loan EMI Breakdown by Tenure

Principal	Interest	Tenure	EMI	Interest Amount	Total
₹ 1 Cr	9.00% p.a.	10 years	₹1,26,676	₹ 52,01,092	₹ 1,52,01,092
₹ 1 Cr	9.00% p.a.	15 years	₹1,01,427	₹ 82,56,799	₹1,82,56,799
₹ 1 Cr	9.00% p.a.	20 years	₹ 89,973	₹1,15,93,424	₹2,15,93,424
₹ 1 Cr	9.00% p.a.	25 years	₹ 83,920	₹1,51,75,892	₹2,51,75,892
₹ 1 Cr	9.00% p.a.	30 years	₹ 80,462	₹1,89,66,414	₹2,89,66,414

Are You Eligible for a ₹ 1 Crore Home Loan?

Criteria	Salaried	Self-employed
Age	18 to 60 years	18 to 65 years
Eligible Professions	Permanent government employees, employees of reputed private companies	Doctors, engineers, dentists, architects, chartered accountants, cost accountants, company secretaries, management consultants
Work Experience	At least 2 years total work experience, with 6 months in the current organization	At least 3 years in the current business or profession
Loan Affordability Check	Combined EMIs of all loans should not exceed 40% of take–home pay	Combined EMIs of all loans should not exceed 40% of take-home pay

Documents Required for ₹1 Crore Home Loan

Category	Document Requirement
Mandatory Documents	Application Form PAN Card
Identity Proof	Passport Aadhaar Card Driving License Voter ID
Address Proof	Aadhaar Card Gas Bill Driving License Voter ID Electricity Bill Telephone Bill (Landline) Property Tax Receipt Job Card by NREGA, duly signed by an officer of the State Government Letter issued by National Population Register confirming details of Name, Address, and Photograph
Date of Birth Proof	Passport PAN Card Aadhaar Card with Date of Birth Driving License Birth Certificate SSC Marksheet
Signature Proof	Passport PAN Card Banker’s Verification Notarized Affidavit with ID and Address Proof (not applicable for financial applicants)
Proof of Income (Salaried)	Last 3 months’ pay slips Last 6 months’ pay slips showing all deductions for variable income 6 months’ bank statement showing salary credits Form 16 for the last 2 years (or employment continuity proof)
Proof of Income (NRI)	Last 3 months’ pay slips Appointment letter or contract letter Continuous Discharge Certificate for shipping cases 6-month Domestic NRE/NRO account statement 6-month international salary account statement Overseas credit report Valid visa copy/OCI card Passport copy Power of Attorney (POA) details
Proof of Income (Self-employed)	Last 2 years’ Income Tax Returns (ITR) Computation of Income, Profit & Loss (P&L) statement, and Balance Sheet Tax Audit Report Last 6 months’ bank statements (personal and business accounts) Centralized Processing Center (CPC) Tax paid challan Proof of business continuity for the last 3 years
Property Documents	Sale Agreement Title Deed No Objection Certificate (NOC) Approved Building Plan Occupancy Certificate (OC) Encumbrance Certificate (EC) Property Tax Receipts Allotment Letter Possession Certificate Completion Certificate

Factors Affecting Interest Rates on a ₹1 Crore Home Loan

1. RBI’s Repo Rate:
   Home loan interest rates are linked to the Reserve Bank of India’s (RBI) repo rates. Any changes in the RBI’s repo rates directly impact home loan interest rates, either increasing or decreasing them accordingly.
   
2. Type of Loan:
   The choice between a Floating Rate Home Loan and a Fixed Rate Home Loan affects the interest rate. Fixed rate loans generally have higher interest rates compared to floating rate loans, which vary based on market conditions.
   
3. Job Profile and Credit Score:
   Lenders consider your employment stability and credit score when determining the interest rate. Borrowers with stable jobs and high credit scores are likely to secure better interest rates on home loans compared to those with lower scores or unstable employment.

Key Considerations for Choosing Between Home Loan and Upfront Payments

• Evaluate Your Financial Situation:
  Check if you have a stable income and enough savings. If you can afford to pay upfront without risking your financial security, it might be a good option.
  
• Consider Interest Rates:
  Look at current home loan interest rates. If the rates are low, taking a loan could be more attractive. If rates are high, paying upfront might save you money in the long run.
  
• Think About Investment Opportunities:
  If you could invest the money elsewhere and earn higher returns than the loan’s interest rate, it might make sense to take a loan and invest your money.
  
• Assess Your Risk Tolerance:
  Taking a home loan means committing to monthly payments for a long time. This can be risky if your income is not stable or if you face financial uncertainties.
  
• Check Your Cash Flow:
  Paying a large amount upfront can reduce your cash reserves, affecting your ability to handle monthly expenses or emergencies. Ensure you still have enough savings left after making an upfront payment.
  
• Consider Property Value Growth:
  If property prices are expected to rise, using a home loan can help you benefit from the increase in property value, potentially boosting your return on investment.

The Pros and Cons of Buying a ₹1 Crore Home with a Home Loan

Advantages	Disadvantages
Capital Appreciation: Potential for significant long-term returns.	High Interest Cost: Total interest paid can exceed the principal.
Tax Benefits: Deductions on principal and interest.	Long-term Commitment: Home loans can last up to 30 years.
Leverage: Buy a larger asset with a smaller initial investment.	Risk of Default: Non-repayment can lead to foreclosure.
Improved Credit Score: Regular repayments boost credit history.	Market Fluctuations: Property value can decrease, creating a liability.
Stable Housing Costs: EMIs are predictable compared to rent.	High Initial Costs: Down payment and legal fees are substantial.

The Pros and Cons of Buying a ₹1 Crore Home by Making an Upfront Payment

Advantages	Disadvantages
No Interest Cost: Saves money by avoiding interest payments.	Reduced Liquidity: Ties up a significant amount of cash.
No Long-term Commitment: No monthly EMI obligations.	Opportunity Cost: Loss of potential returns from other investments.
Full Ownership Immediately: No need to wait for loan repayment.	Limited Tax Benefits: No tax deductions on interest or principal.
No Risk of Default: No risk of foreclosure due to missed payments.	High Upfront Costs: Requires a substantial amount of money all at once.
Simplified Process: Less paperwork and fewer legal formalities.	Impact on Cash Reserves: Can affect your ability to manage emergencies.

Conclusion

Deciding whether to take a home loan or pay upfront for a ₹1 crore property involves considering both the benefits and risks. Financing offers liquidity, potential tax benefits, and investment leverage while paying upfront provides stability and saves on interest. The right choice depends on your financial situation and goals.

To navigate these options effectively, consulting with financial experts is crucial. Contact the professionals at Credit Dharma for personalized advice on home loans. Our expertise can help you understand the financing landscape and make a decision that aligns with your financial health and homeownership aspirations.

Frequently Asked Questions