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Does the Location of the Property Affect Home Loan Eligibility?
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When you plan to apply for a home loan, the first thing lenders check is your eligibility. Home loan eligibility basically refers to whether you can get funds or not. It is based on factors like your age, income and employment type. It helps the Bank decide whether you qualify for a loan and how much funding you can get.
The eligibility to apply for a Kotak Home Loan is really simple. If you are between 18 and 65 years old and meet the minimum income requirement based on your city, you are generally eligible. A bachelor’s degree is needed for private firm employees, while those working with public companies or government bodies have no specific qualification requirement.
Many people often wonder whether the location of the property affects home loan eligibility. Generally, it does not. Whether you are buying a home in a metro city or a smaller town, what matters first is that you meet the basic personal eligibility criteria. Banks mainly focus on your income, age and repayment capacity, not the property's location.
However, the property's value will influence the loan amount you can get. Let us now see how the property you choose can shape your home loan journey.
The property value affects the loan amount
While your income determines if you are eligible for a loan, the actual property you choose plays a big role in deciding how much loan you can get. Banks usually offer loans as a percentage of the property’s market value, i.e., Loan-to-Value (LTV) ratio.
The higher the property value, the higher the eligible loan amount, provided your income supports it. However, the Bank will also ensure that the loan amount is within safe lending limits based on your repayment capacity.
Example:
Suppose you want to buy a flat worth Rs. 90 Lakhs. If the Bank offers 70% of the property value as the loan, you could get up to Rs. 63 Lakhs as the home loan, assuming your income qualifies for this amount. If the property value was Rs. 60 Lakhs, the maximum loan could be around Rs. 42 Lakhs.
Monthly income requirements vary by city
When you apply for a Kotak Home Loan, one important factor that comes into play is your monthly income. The required income level depends on where you live. If you are a resident of a Tier 1 city like Delhi, Mumbai, Bangalore, Pune, Hyderabad or Chennai, you need to have a minimum monthly income of Rs. 20,000. If you live in any other city, the minimum income requirement is slightly lower at Rs. 15,000 per month.
This difference is because property prices and living costs in major metro cities are much higher compared to smaller towns. A higher income ensures you are financially ready to manage the loan comfortably in these costlier locations.
Example:
If you live in Bangalore and earn Rs. 18,000 per month, you would not meet the basic income requirement for a Kotak Home Loan. But if you live in a city like Jaipur or Indore with the same income, you would be eligible.
Your down payment influences the loan amount, too
The amount you are willing to pay upfront as a down payment also impacts the loan amount you need to borrow. A larger down payment reduces the loan size and often increases your chances of loan approval. It also means smaller monthly EMIs and lower interest costs over time.
Lenders appreciate borrowers who show strong financial commitment through a higher down payment, as it reduces the Bank’s risk.
Example:
If your property costs Rs. 80 Lakhs and you are ready to make a down payment of Rs. 30 Lakhs, you only need a loan of Rs. 50 Lakhs. But if you can only arrange Rs. 20 Lakhs upfront, your loan requirement will go up to Rs. 60 Lakhs, which could be tougher to approve if your income is just meeting the minimum criteria.
Way forward
Before you finalise a property, it is important to slow down and check a few key points. Think of it as setting a strong foundation for your home loan and your financial peace of mind. Here is what you should focus on:
Choose a home where the EMI will fit comfortably within your income, even after accounting for other expenses. Do not pick a property just because you are eligible for a bigger loan.
Make sure the project has clear legal titles, proper approvals and, wherever needed, RERA registration. Banks prefer properties with clear documentation.
Select a property that has strong connectivity, essential services nearby and future appreciation potential. It will help not just with living comfort but also with future resale value.
Get a realistic sense of the property’s fair market price. Remember, your home loan will be sanctioned based on the property’s valuation, not just the seller’s asking price.
Shortlist and visit a few properties before deciding. Check construction quality, maintenance needs and the reputation of the builder if buying a new property.
Buying the right property not only makes your home loan journey smoother but also protects your financial stability in the long run. A little care today can make a big difference tomorrow.
When you are ready, explore Kotak Home Loans to find flexible options that match your needs and realise the dream of homeownership today.
Disclaimer - This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
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