Credit Appraisal
Content
Credit appraisal:
Are you eligible for a Home Loan? A crucial process before your request for a home loan is actually sanctioned by any bank is the credit appraisal process, which is a three-fold securitization process that decides your loan eligibility. This is to determine your loan repayment capability and with increasing loan applications, banks can definitely run into credit risk when doling out lakhs of rupees to borrowers. Hence, evaluation of home loan applicants becomes critical. Financial Appraisal An important part of credit appraisal is financial appraisal, where the applicant's financial position is reviewed. Past repayment records including defaulting, late payments, delinquencies and bankruptcies, earnings potential including your spouse's, any outstanding debt, assets, liabilities and stability of your employment income comes under close scrutiny. Financial stability of the borrower and the co-borrower is an important factor not only for credit appraisal but also for increasing your creditworthiness. A housing finance company or bank sets a fixed upper limit for the amount of money that can be sanctioned for a particular type of loan. Depending on the creditworthiness of a customer, the amount of money sanctioned to him can be increased to a certain degree. Age is another factor that can also impact how much you will be sanctioned and speaks about your repayment capacity. Those earning high salaries and carrying a professional degree with a bright growth potential can definitely strike a great bargain. Age also matters when the tenure is quite long. Technical Appraisal Apart from the financial appraisal, the technical appraisal is also an integral part of the credit appraisal process. Here the validity for approvals for construction from local government bodies is verified. Compliance with building laws, like restrictions on the number of floors or height of the building, is also verified and the property to be financed is valuated and its condition is checked. Technical appraisal judges if the property to be financed is viable at all. Legal Appraisal Finally, legal appraisal of the property takes place. It requires the borrower to submit sale deeds, khata certificates, encumbrance certificate and other property related papers. Then these papers are handed on to lawyers who verify if the borrower is the absolute owner of the property that needs to be financed. Subsequently, validation of succession of title from earlier owners to the present one is done. In short, credit appraisal is a three-fold securitization process that includes financial, technical and legal appraisal of the property. Credit appraisal is sometimes done by the housing finance company itself or outsourced to other firms for a fee. As a part of the credit appraisal process, the applicant may be required to visit the bank branch for a
credit interview. If you are found to be financially sound with a good credit history and your property financially viable and legally clear of hassles, then there could be no hiccups to your obtaining a sanction of your loan application.
In order to get a housing loan the customer has to go through a credit appraisal process. Each bank / Housing Finance Company (HFC) has its own norms and standards to evaluate the credit worthiness of the customer to be eligible for loan application. Banks / HFCs employ various stringent financial and non-financial tools and techniques to evaluate the credit worthiness of the customer. During this whole process, the repayment capacity of the customer is established, mainly based on Income, Age, Qualifications, Experience, Employer, Nature of business (if selfemployed), Security of tenure, Taxation history, Assets owned, Alternative /additional sources of income, Other loan obligations, Investments, Other present and future liabilities.
YEAR 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
PRINCIPAL RS. 21,269 RS. 23,554 RS. 26,087 RS. 28,889 RS. 31,994 RS. 35,433 RS. 39,239 RS. 43,456 RS. 48,125 RS. 53,297 RS. 59,023 RS. 65,366 RS. 72,388 RS. 80,168 RS. 88,783 RS. 98,323 RS. 108,889 RS. 120,590 RS. 133,547 RS. 147,688
INTEREST RS. 134,935 RS. 132,650 RS. 130,117 RS. 127,315 RS. 124,210 RS. 120,771 RS. 116,965 RS. 112,748 RS. 108,079 RS. 102,907 RS. 97,181 RS. 90,838 RS. 83,816 RS. 76,036 RS. 67,421 RS. 57,881 RS. 47,315 RS. 35,614 RS. 22,657 RS. 8,308
BALANCE AMOUNT RS. 1,304,731 RS. 1,281,177 RS. 1,255,090 RS. 1,226,201 RS. 1,194,207 RS. 1,158,774 RS. 1,119,535 RS. 1,076,079 RS. 1,027,954 RS. 974,657 RS. 915,634 RS. 850,268 RS. 777,880 RS. 697,712 RS. 608,929 RS. 510,606 RS. 401,717 RS. 281,127 RS. 147,580 RS. 0
Calculated Monthly EMI
13016.59
Total Amount with Interest
3123981.6
Flat Interest Rate PA
6.78 %
Flat Interest Rate PM
0.56 %
Total Interest Amount
1797981.6
Yearly Interest Amount
89899.08
The EMI (Equated Monthly Installment) is fixed for the tenure of loan. Your EMI has two components: principal and interest.
In the initial years, the interest component is higher which decreases with time and the principal component increases with time. EMI depends on the loan amount, interest rate and tenure of loan.
Where,
L = Loan amount i = Interest Rate (rate per annum divided by 12) ^ = to the power of N = loan period in months
Are you eligible for a Home Loan? A crucial process before your request for a home loan is actually sanctioned by any bank is the credit appraisal process, which is a three-fold securitization process that decides your loan eligibility. This is to determine your loan repayment capability and with increasing loan applications, banks can definitely run into credit risk when doling out lakhs of rupees to borrowers. Hence, evaluation of home loan applicants becomes critical. Financial Appraisal An important part of credit appraisal is financial appraisal, where the applicant's financial position is reviewed. Past repayment records including defaulting, late payments, delinquencies and bankruptcies, earnings potential including your spouse's, any outstanding debt, assets, liabilities and stability of your employment income comes under close scrutiny. Financial stability of the borrower and the co-borrower is an important factor not only for credit appraisal but also for increasing your creditworthiness. A housing finance company or bank sets a fixed upper limit for the amount of money that can be sanctioned for a particular type of loan. Depending on the creditworthiness of a customer, the amount of money sanctioned to him can be increased to a certain degree. Age is another factor that can also impact how much you will be sanctioned and speaks about your repayment capacity. Those earning high salaries and carrying a professional degree with a bright growth potential can definitely strike a great bargain. Age also matters when the tenure is quite long. Technical Appraisal Apart from the financial appraisal, the technical appraisal is also an integral part of the credit appraisal process. Here the validity for approvals for construction from local government bodies is verified. Compliance with building laws, like restrictions on the number of floors or height of the building, is also verified and the property to be financed is valuated and its condition is checked. Technical appraisal judges if the property to be financed is viable at all. Legal Appraisal Finally, legal appraisal of the property takes place. It requires the borrower to submit sale deeds, khata certificates, encumbrance certificate and other property related papers. Then these papers are handed on to lawyers who verify if the borrower is the absolute owner of the property that needs to be financed. Subsequently, validation of succession of title from earlier owners to the present one is done. In short, credit appraisal is a three-fold securitization process that includes financial, technical and legal appraisal of the property. Credit appraisal is sometimes done by the housing finance company itself or outsourced to other firms for a fee. As a part of the credit appraisal process, the applicant may be required to visit the bank branch for a
credit interview. If you are found to be financially sound with a good credit history and your property financially viable and legally clear of hassles, then there could be no hiccups to your obtaining a sanction of your loan application.
In order to get a housing loan the customer has to go through a credit appraisal process. Each bank / Housing Finance Company (HFC) has its own norms and standards to evaluate the credit worthiness of the customer to be eligible for loan application. Banks / HFCs employ various stringent financial and non-financial tools and techniques to evaluate the credit worthiness of the customer. During this whole process, the repayment capacity of the customer is established, mainly based on Income, Age, Qualifications, Experience, Employer, Nature of business (if selfemployed), Security of tenure, Taxation history, Assets owned, Alternative /additional sources of income, Other loan obligations, Investments, Other present and future liabilities.
YEAR 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
PRINCIPAL RS. 21,269 RS. 23,554 RS. 26,087 RS. 28,889 RS. 31,994 RS. 35,433 RS. 39,239 RS. 43,456 RS. 48,125 RS. 53,297 RS. 59,023 RS. 65,366 RS. 72,388 RS. 80,168 RS. 88,783 RS. 98,323 RS. 108,889 RS. 120,590 RS. 133,547 RS. 147,688
INTEREST RS. 134,935 RS. 132,650 RS. 130,117 RS. 127,315 RS. 124,210 RS. 120,771 RS. 116,965 RS. 112,748 RS. 108,079 RS. 102,907 RS. 97,181 RS. 90,838 RS. 83,816 RS. 76,036 RS. 67,421 RS. 57,881 RS. 47,315 RS. 35,614 RS. 22,657 RS. 8,308
BALANCE AMOUNT RS. 1,304,731 RS. 1,281,177 RS. 1,255,090 RS. 1,226,201 RS. 1,194,207 RS. 1,158,774 RS. 1,119,535 RS. 1,076,079 RS. 1,027,954 RS. 974,657 RS. 915,634 RS. 850,268 RS. 777,880 RS. 697,712 RS. 608,929 RS. 510,606 RS. 401,717 RS. 281,127 RS. 147,580 RS. 0
Calculated Monthly EMI
13016.59
Total Amount with Interest
3123981.6
Flat Interest Rate PA
6.78 %
Flat Interest Rate PM
0.56 %
Total Interest Amount
1797981.6
Yearly Interest Amount
89899.08
The EMI (Equated Monthly Installment) is fixed for the tenure of loan. Your EMI has two components: principal and interest.
In the initial years, the interest component is higher which decreases with time and the principal component increases with time. EMI depends on the loan amount, interest rate and tenure of loan.
Where,
L = Loan amount i = Interest Rate (rate per annum divided by 12) ^ = to the power of N = loan period in months
