How Do I Find The Right Personal Loan For Me
Find Out How Much Mortgage You Can Afford
Weâll help you figure out what home price you may be able to afford.
Ready to start looking for your dream home? Donât just dream about it â let the TD Mortgage Affordability Calculator help you begin your search. Enter a few key details and the calculator will guide you in determining, with confidence, what house price may be within reach.
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Getting A Second Mortgage
A second mortgage is a second loan that you take on your home. You can borrow up to 80% of the appraised value of your home, minus the balance on your first mortgage.
The loan is secured against your home equity. While you pay off your second mortgage, you also need continue to pay off your first mortgage.
If you cant make your payments and your loan goes into default, you may lose your home. If thats the case, your home will be sold to pay off both your first and second mortgages. Your first mortgage lender would be paid first.
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Where Do You Want To Live
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How much mortgage can I afford?
The first step in searching for your home is understanding how large of a mortgage you can afford. With a few inputs, you can determine how much mortgage you may be comfortable with and the potential price range of your future home. Knowing your total household income, how much youâve saved for a down payment, and your monthly expenses , plus new expenses youâd take on , you can get a reasonable estimate. Learn more about factors that can affect your mortgage affordability.
How to estimate affordability
To estimate mortgage affordability, lenders will use two standard debt service ratios: Gross Debt Service and Total Debt Service . According to the Canadian Mortgage and Housing CorporationÂ¹Note 1:
– GDS is the percentage of your monthly household income that covers your housing costs . It should be at or under 35% of your pre-tax household income.
– TDS is the percentage of your monthly household income that covers your housing costs and any other debts . It should be at or under 42% of your pre-tax income.
How your down payment affects affordability
The amount you have saved for a down payment is also another important piece of information to help determine affordability. Depending on the purchase price of a home, there are minimum amounts required for your down paymentÂ²Note 2:
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How Can I Check My Eligibility For A Personal Loan
The eligibility criteria mentioned above refer to whether or not the lender will consider your application. However, depending on other factors, the limit on the maximum amount you can borrow is set. These criteria vary among lenders.
Prior to applying for a loan, it is advisable to work on factors that can increase the chance of your loan being approved. Your loan eligibility is calculated based on several factors that include your income, age, repayment capacity and other factors. You can also use a personal loan eligibility calculator to avail an estimate of the maximum loan amount and the different offers you are eligible for.
Follow a few simple steps using a personal loan eligibility calculator to receive an estimate of the loan amount, offers available and even receive a loan approval post uploading the relevant documents.
- Enter your location.
- Enter your age and date of birth. You require to be between 21-60 years of age to avail a loan.
- Enter your monthly income in case you are a salaried professional. Self-employed professionals are required to enter profit after tax.
- Provide details of all your current EMIs that include loans, credit card bills etc.
You will obtain a tentative amount of the loan you are eligible for. You can modify the rate of interest and tenure as per your requirements.
You have the option of calculating the exact loan amount you are eligible for by providing the additional details required. Next, using the personal loan EMI calculator, you can
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What Determines The Size Of My Loan
How much personal loan you can get depends on several factors unique to you, like your:
How much loan you should get depends on your budget. Use the calculator below to estimate the monthly payments for loans of different sizes:
Keep in mind the first four factors listed above will still influence how much you can borrow. If you have a lot of existing debt, you might not qualify for a large personal loan. In that situation, lenders could be afraid you won’t be able to pay back a large personal loan and your other debt. Below, we’ll explore these factors in more depth.
If you’re unemployed, check out our guide to getting a loan while unemployed for more information on what to list as income on a personal loan application.
What To Do If A Lender Refuses Your Mortgage Application
A lender could refuse you for a mortgage even if youve been preapproved.
Before a lender approves your loan, theyll verify that the property you want meets certain standards. These standards will vary from lender to lender.
Each lender sets their own lending guidelines and policies. A lender may refuse to grant you a mortgage if you have a poor credit history. There may be other reasons. If you dont get a mortgage, ask your lender about other options available to you.
Other options may include:
- approving you for a lower mortgage amount
- charging you a higher interest rate on the mortgage
- requiring that you provide a larger down payment
- requiring that someone co-sign with you on the mortgage
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There Is No Standard Threshold Foir
The threshold ratio may vary across banks and may not even be disclosed. As I understand, not many banks would be comfortable once the FOIR breaches 50%. However, it is possible that banks may make exceptions for very high income or high net worth individuals. And I can see reasons for the same.
Lets consider an example. Ashish earns Rs 50,000 per month and Ramesh earns Rs 5 lacs per month. Neither has any loan. You can expect fixed expenses to be a fairly high portion of Ashishs monthly income. The same cannot be said for Ramesh. At such high level of income, he may be saving much more . Therefore, it is possible that the bank may restrict Ashish to a FOIR of 40% while it may go up to 60% for Ramesh.
A similar argument can be extended to High Net-worth individuals. Note that this is a conjecture. Banks have different policies for determining loan eligibility.
Important Factors Lenders Look At To Approve Your Application
Since a credit score represents the credit history of the borrower, the lender analyses the repayment history of the borrower and concludes whether the borrower can repay on time or will he default on payments. The loan approval is based on the lenders judgement after the necessary analysis.
- Income and Employment History
Your monthly or annual income and employment history plays a crucial role in loan approval as well. Based on your income and income stability in the form of consistent and stable work history, the lender may or may not get convinced that you will be able to repay the loan.
Even if you are self-employed, the lender assumes that your business is running well for the past few years and your businesss turnover is satisfactory.
- Debt-to-Income Ratio
Not just having a good income, your debt-to-income ratio is also important. In case you have an income of Rs.1 lakh per month and if your debt repayment commitments exceed Rs.75,000 already, a new loan will not be provided to you as you will need the remaining income to take care of your domestic expenses.
Therefore, irrespective of your income, you must have a low debt-to-income ratio so the lenders can think that you have enough cash at hand every month to make the repayments as well as handle the family expenses.
- Down Payment
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What Are The Factors Affect Home Loan Eligibility
Equity And Income Requirements
Home mortgage loan pricing is determined by the lender in two ways, and both methods are based on the creditworthiness of the borrower. In addition to checking your FICO score from the three major credit bureaus, lenders will calculate the loan-to-value ratio and the debt-service coverage ratio to determine the amount that theyre willing to loan to you, plus the interest rate.
LTV is the amount of actual or implied equity that is available in the collateral being borrowed against. For home purchases, LTV is determined by dividing the loan amount by the purchase price of the home. Lenders assume that the more money you are putting up , the less likely you are to default on the loan. The higher the LTV, the greater the risk of default, so lenders will charge more.
For this reason, you should include any type of qualifying income that you can when negotiating with a mortgage lender. Sometimes an extra part-time job or other income-generating business can make the difference between qualifying or not qualifying for a loan, or in receiving the best possible rate. A mortgage calculator can show you the impact of different rates on your monthly payment.
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How Long Does It Take To Get A Loan
The time it takes to get a loan will largely depend on the type of loan you’re getting, how much you need, your financial situation, and the lender you use. The underwriting process for an auto loan or personal loan can be as quick as a day or two, but the process for a mortgage can take a month or more. Getting pre-approved before you actually make your purchase can help speed up the process.
Check Out The Details
Now that you know you are prequalified, its time to prequalify the lender. Go through information and disclosures in your preapproval letter and revisit the website to look for the following:
- Expected Loan Amount, APR, Monthly Payment, and Loan Term. It may or may not be exact, but it will give you something with which to compare other preapproved loans.
- Fees and Penalties. Will this loan have an origination fee? If so, how much? What are the penalties or fees for late or missed payments? Are there any other charges?
- Type of Interest. Is the interest rate fixed or variable? Do I have a choice, and, if so, whats the difference in rates?
- Unsecured or Secured. Will this be an unsecured or secured loan? For a secured loan, what is required collateral?
- Automatic Withdrawal. Are automatic withdrawals of monthly payments mandatory or optional? If optional, will I get a lower interest rate if I agree to automatic withdrawals?
- Arbitration. In the event of a conflict, is arbitration mandatory, or can I take the lender to court?
- Prepayment Penalty. If I pay my loan off early, will I pay a penalty?
- Fine Print. Theres always fine print, even in preapproval letters. Look for anything not answered above or anything you hadnt thought of.
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Apply For A Business Loan
After youve gathered all the necessary documents and information, its time to apply for your business loan.
If youre applying with an intermediary lender such as a bank or credit union, then youll need to contact them directly and fill out their online or paper application.
Other lenders, such as factoring companies, might prefer that you submit everything through email so they can print out the materials and forward them to their underwriting department for review.
It should take anywhere from 4-8 weeks for them to go over your application package before making a final decision about whether or not to approve your request.
Our Standards For Debt
Once youve calculated your DTI ratio, youll want to understand how lenders review it when they’re considering your application. Take a look at the guidelines we use:
35% or less: Looking Good – Relative to your income, your debt is at a manageable level.
You most likely have money left over for saving or spending after youve paid your bills. Lenders generally view a lower DTI as favorable.
36% to 49%: Opportunity to improve.
Youre managing your debt adequately, but you may want to consider lowering your DTI. This may put you in a better position to handle unforeseen expenses. If youre looking to borrow, keep in mind that lenders may ask for additional eligibility criteria.
50% or more: Take Action – You may have limited funds to save or spend.
With more than half your income going toward debt payments, you may not have much money left to save, spend, or handle unforeseen expenses. With this DTI ratio, lenders may limit your borrowing options.
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Everything You Need To Know About A Personal Loan
Personal Loan does not require any collateral or security and can be obtained with minimal documentation. Just like most loans, however, it must be repaid in monthly instalments.You can use it to fund any expense including education, a wedding, a trip, home renovation, medical expenses, and even to buy a gadget. You can even use the money to help out with the day-to-day expenses in case of a cash flow crunch.HDFC Bank offers a Personal Loan to pre-approved customers in just 10 seconds. For others, it usually takes about 4 hours. As an already existing customer, you can apply via NetBanking on the HDFC Bank website, through an ATM or Loan Assist App. Otherwise, you can drop by the nearest branch to get the process started.You can get a re-payment tenure that suits your needs. And then you have to make the payments in equated monthly instalments or EMI. This instalment amount is calculated using the loan amount, the payment tenure, and the interest rate.
The benefits of a Personal Loan:
What are the uses of a Personal Loan?There are several ways in which a Personal Loan can be used:
How do you choose a perfect Personal Loan?There are several factors that go into choosing which Personal Loan works for you. Time, urgency and capacity to repay are important factors you need to consider.
- The loan amount
Interest Rates And Fees If You Refinance Your Home
The interest rate on the refinanced part of your mortgage may be different from the interest rate on your original mortgage. You may also have to pay a new mortgage loan insurance premium.
You may have to pay administrative fees which include:
- appraisal fees
Your lender may have to change the terms of your original mortgage agreement.
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Ensure You Have All Your Documents In Order
Now that youve chosen a lender, youll have to finalize the details of your loan before it can be approved and disbursed.
This typically includes having a conversation with a representative from the company to conduct a verification process this might consist of verifying information such as your legal business name and address.
Youll also need to ensure you have all your documents and paperwork in order.
According to financial experts, you typically need the following documents on hand when applying for a business loan.
Business And Personal Tax Returns.
This is required because lenders want to make sure you will repay the loan as promised.
Just like when youre applying for a personal bank loan, your application must be accurate and complete.
This includes providing all the information that the lender needs to process your request.
If there are any errors or omissions, it could mean the application might not be approved at all.
Be sure to keep copies of everything you send in case questions arise later on down the road.
This way, you wont have any problems if something needs to be changed later in your application.
Business And Personal Bank Statements.
Lenders also want to make sure that you have a stable source of income and enough money in your bank account to repay the loan.
This is why they will likely ask for any available bank statements from your business and personal accounts.
They might also want tax assessment records from the current year.