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Are you one of those ambitious and enthusiastic persons eager to launch a business startup or an MSME unit? Is your head brimming with new business ideas? If you thought that your lack of business experience might throw a monkey wrench into your plans, you needn’t worry too much. Well, these five actions can make you successful in a new business sans any prior experience.

Do The Home Work
Always remember that the nitty gritty of starting a new business venture requires meticulous planning, commitment and hard work. One has to put his nose to the grindstone to get the business off the ground.

It has been seen that a majority of startups falls through the cracks for multiple reasons, and ineffective planning and unrealistic business goals are among these. So, one should be extremely careful about the venture one is planning to start.

It becomes important that one navigates the choppy waters of a new business with confidence. First, do the planning, and come up with a realistic business plan that you feel you can achieve given your limited resources and inexperience.

The Learning
It helps if you have done a business course because it would give you some guidance as to how one can set up a new business without any prior experience.

Starting a new business is an audacious decision by all means. It shows that you are ready to take the plunge, come what may. After all, a budding entrepreneur would want to run his business for the long haul.

Research Well
Many young entrepreneurs open a similar company they have worked for previously. This gives them an added advantage because when they venture on opening their own business startup, they utilise their previous experience in taking it a couple of notches higher in terms of productivity and business goals.

Whenever you decide to start your new venture, do a thorough research about its potential profitability in the market. Read  those journals which have a professional stance on business trends.

Keep getting feedback from those who have adequate business knowledge and are capable of coming up with valuable suggestions regarding new ventures.

Networking is another important aspect of business consolidation. On various online platforms, you can touch base with other entrepreneurs and seek their opinion on your business model. Don’t be surprised if opinions and suggestions fly thick and fast much to your advantage.
There is no dearth of experienced business people who might proffer an opinion on how to run your startups smoothly. You may be lucky enough to find a suitable mentor who would be willing to financially help your new business venture.

Have A Definitive Goal
Develop some clear goals and strategies regarding finance. Then, set up the website followed by aggressive marketing.

When you have taken care of these basic requirements, you need to make sure whether you require a proper office and staff to take things forward.

Those who are starting their venture should set realistic business goals. Avoid getting carried away by thoughts of high profits and brand equity in the initial stages. Play for high stakes always, but be pragmatic in your plans.

Calculate The Finances
Once you decide to float your new business venture, factor in certain important things like budget, cash flow, growth plan, and the kind of services that you are planning to provide. And please ensure that you have some finance runway of nearly 6 months and MSME loan for business is one such option which you can avail. 
An efficient workforce is the lifeblood of any successful company. So, once you float your new firm, look for expert and efficient people who can turn things around with their expertise and even experience. Intelligent and results-driven graduates with business degrees are an asset for such companies.

Business is always rife with uncertainty and, like limited overs cricket, you never know what is going to happen the next moment. So, you always should have backup and support plan in place.

Aavas Blog

5 Benefits of using EMI Calculator

27-Mar-2021 |Home Loan EMI Calculator

Here are the five benefits of the EMI calculator that would make things easier in making you pay your monthly payments towards your loan

Loans have become an important part of our lives. From buying a house, a car to managing children’s overseas education, we can’t do without loans. And, when we talk about loans, the word EMI (Equated Monthly Instalment) immediately comes to mind. EMI implies monthly amount payments we make towards a loan we opted for. An EMI calculator like a home loan EMI calculator is an online tool, easy to access, and enables you to calculate the amount you need to repay each month towards your loan. The EMI calculator factors three important aspects: the loan amount, number of months, and interest rate. An EMI is an amount that is payable by you every month to the lender in order to satisfy the principal and the accumulated interest. 

Calculation much easier

The calculation makes the world go round. It is extremely important to calculate your EMI amount before completing all the formalities of the loan. Because everything hinges on calculation. So, if you are one of those customers who have applied for a loan, enter the loan amount, rate of interest, loan tenure and processing fee. The home loan calculator will do the necessary calculation and give you the EMI amount. The loan amount calculator will tell you how much you can borrow.

Access the calculator at home

The best thing about a calculator is that it can be accessed anytime and anywhere. You can use the calculator umpteenth number of times depending on your convenience. That is much better than paying a visit to the bank and figuring out complex mathematical calculations that might drive you crazy. If it’s not too much to ask, just access the internet at home and use the EMI calculator. 

Less time consuming 

If you are planning to rely on your manual calculations to work out the details of your loan amount and interest rates, better avoid this tedious route. Moreover, manual calculation is generally lengthy and time-consuming. It would test your patience at every step. Better go for a home loan calculator for EMI as it works smoothly and quite fast, displaying the results in the blink of an eye. Home loan planning involves proper calculations and so you can’t go wrong with the numbers. A home loan EMI calculator gives you the correct result, every single time.

Comparing loan offers of banks

When you go for a loan, the important thing that needs to be kept in mind is to compare the loan offers from different banks. Here, your EMI loan calculator would come in handy. You can find out the total cost of the loan along with the respective EMIs. As a result, you can easily choose the best loan option available that suits your requirement. Loan interest rates vary from lender to lender. Even a mere 0.04% difference in home loan interest rates can significantly impact the EMI amount. 

Go for a Loan-specific EMI calculator

Using a loan-specific EMI calculator is much easier and makes your job that much smoother. In other words, one can use a different calculator for every type of loan be it one for education, home or car. The parameters for every loan may be basically the same, but there can be instances where you will need to use loan-specific EMI calculators. The suitability of the EMI calculator can be measured in terms of a particular loan and to be used for only the specific one.

Aavas Blog

Why Constructing a Home is a Better Option than Renting

27-Mar-2021 |Home Construction Loan,Home Construction

The satisfaction and comfort that one derives in living in one’s own house as compared to staying in rented accommodation are immense. In fact, there are instances of people, who, tired of shelling out monthly rents, apply for home construction loan to build their own houses. Some maintain that staying in a rented accommodation costs less, while some say that having one’s own house is the best way forward as one can live with freedom and without having to worry about paying monthly rent.

Rent keeps on increasing and the rented house always has a threat of vacating. 

Owning a home is the dream of every person, the only fly in the ointment being the fact that the sky-rocketing property prices in the recent past have made people take the easy way out of staying in rented accommodation, rather than buying a house. However, if you have decided to stay put in the city of your choice and want to have a dream house of your own, apply for house construction loan. At the same time, make sure you have the necessary funds for the down payment and stable future cash flows.

There is no denying the fact that having your own home gives you that rare sense of security and happiness which staying in a rented accommodation can’t. Buying a house with a loan makes things easier as you mentally prepare yourself to pay the EMI over the long term. After your EMI is over, you can breathe easy knowing that you don’t have to pay any further money on your housing loan.  

Experts are of the opinion that the best period of buying a house is at a young age; maybe, just after settling down in a secure job, or sort of settled in a business-owned or parental business because one doesn’t have to worry about the financial part. Managing the EMIs initially may be difficult, but after, say, five to ten years, when income goes up, it would be fairly easy to pay monthly EMIs. Moreover, there is a corresponding rise in property prices with each passing year.

Those who happen to occupy a rented accommodation, count their blessings once the landlord extends the tenure of their stay through a legal agreement. But not all are lucky in this respect. It all depends on the whims and wishes of the landlords. Moreover, the rising rental prices cause anxiety among those who are not in a position to buy their own homes. However, there is good news for those in a mood to buy their new homes thanks to the availability of lower interest rates and the government subsidy for first-time buyers of affordable homes.

Owning a house gives you the additional advantage of getting extra income through rentals or from paying guests. Those who happen to pay monthly rents in rented accommodation may find the expenses cheaper in the short run as compared to the EMI, but in the long run, you actually end up paying more. Needless to mention, there is no way you can recover the cost of your rent. As a homeowner, you can easily mortgage the property but a tenant cannot mortgage a rental property.

Buying a house is a smart idea for many as there are tax benefits on the principal amount, the interest one pays, in addition to some more benefits that can accrue to you if you are a first-time buyer. There is no doubt that home construction loans are a unique way to reduce tax and own the house of your choice.

One more advantage of owning a home is that it frees you from the annoying ritual of monthly rent payment because your mortgage payment each month turns out to be your investment for your own secure future. You can pay as much or as little as you like by going for a payment schedule that suits you from many mortgage options. Needless to say, a day will come when your house might be worth more than you paid for it. So, always work toward having your own house which is a golden goose for your future.

For construction cases, in fact area of construction can also be restricted to suit our cash flows and as the cash flows increase over a period, he can extend the house. 

Aavas Blog

With low-interest loans announced by various leading banks, is this the best time to buy a home? Read on to find out… 

The pandemic has created a sense of uncertainty and volatility in the world as never before; even it in the sphere of the economy or job market. No one can say with any degree of certitude what will happen next. In the banking sector, a change is perceptible in the way many banks are currently providing low-interest rates for home loan and construction loan. Obviously, low-interest rates, post-pandemic, are like the manna from heaven for potential homebuyers. 

So, for those, who are toying with the idea of buying or constructing a home, this is the best time to apply for loan and having a home of your own which is also a source of emotional solace in these hard times. It has been seen that banks try to outdo each other by winning over borrowers with their own attractive rate of interest. Recently, banks have considerably reduced their rate of interest as the repo rate set by the Reserve Bank of India (RBI) is now at its lowest.

If current trends are to be believed, most of banks are willing to provide home loans with floating interest rates that are acceptable to the borrowers.  Prospective homebuyers should always remember that these loans are related to and determined by repo rate which implies that whenever there are adjustments or changes in the key policy rate, it may lead to a relative hike in the corresponding rate of interest. 

Homebuyers, on their part, should have satisfactory income flow to pay their entire EMI before or the stipulated deadline.  If your creditworthiness or credit ratings are high, you will get the best of interest rates. Those with a low credit score may find the going tough when it comes to getting a pocket-friendly interest rate. So, they better ramp up their credit score.

However if someone is new to credit i.e No credit score and have informal income meaning no IT returns or audited financials can also avail Home loan. There are quite a few housing finance companies available in affordable housing finance space with better reach even at semi-urban and rural areas.

Whenever you go for a home loan or construction loan, touch base with the bank where you are a customer. After all, the bank where you hold an account would offer you a better deal as compared to what other banks are offering you. Once you avail a low rate of interest, you can go for a higher loan and repay the same within the stipulated time period. 

Borrowers now have a choice of settling for a fixed rate over a floating one. Since floating interest rates are determined by RBI, it can overturn your applecart in terms of your EMIs. So, just go for fixed rates when availing of home loans as interest rates are quite low. It will also help you manage your monthly finances. On the other hand, floating-rate suits those borrowers who are not sure about the volatility of interest rate movements and would rather be comfortable going with the market rates.

We would advise you to opt for the loan with smooth processing and disbursement periods, ideally online loan and it is applicable for all types of loans like MSME Loan, construction loan, home renovation loan etc. Financial institutions or banks take a minimum period of fourteen working days to approve a home loan application. Then it takes another four to five days for the loan amount to be disbursed. The disbursement period generally varies from lender to lender.

Aavas Blog

This year’s union budget was significant and important in more ways than one. After the pandemic cut a swathe through the economy, there were expectations that the startup and MSME (Micro, Small and Medium Enterprises) would get a shot in the arm, and rightly so. 

The finance minister, in her third budget speech, didn’t disappoint and announced a slew of measures which are going to help the badly battered MSMEs and startups recover lost ground.

  1. Allocation fund to MSMEs doubled

This year’s first digital budget focused on small businesses with respect to ease of doing businesses and the insolvency process. The heartening aspect of this year’s budget is that it has relaxed norms around setting up businesses and incentivising funding for startups. The budget has also shown considerable flexibility by doubling the allocation to MSMEs to Rs 15,700 crore for the next financial year. The budgetary allocation for the MSME sector for 2020-21 was Rs 7,572 crore. 

  1. Emergency Credit Line Guarantee Scheme a major boost

An interesting aspect of this budget is that the bulk of allocation for 2021-2022 has been earmarked for the Emergency Credit Line Guarantee Scheme (ECLGS). The scheme has turned out to be a real boon for MSMEs, which found itself tussling with numerous challenges like liquidity crisis, shortage of labour and non-payment of dues triggered by the Covid-19 pandemic. So much so that till November 12, 2020, Rs 2.05 lakh crore of loans was sanctioned to 61 lakh borrowers under this scheme. This scheme has helped revive the sagging fortunes of MSMEs in a big way in the last few months.

  1. Encouraging skill development programme

The government wants to make sure that not only MSME business loan is easily available but even entrepreneurship and skill development programmes for the MSMEs get higher allocation so that they can hit the ground running. In a commendable move, the government has proposed to allocate Rs 300 crore towards the establishment of new technology centres for the MSME units. Meanwhile, the Federation of Indian Micro and Small & Medium Enterprises (FISME), feels that the reduction in customs duties on steel and ferrous and non-ferrous scrap will do a world of good to the MSMEs as it will help considerably reduce the raw material prices. In fact, FISME has for quite some time been making a pitch for a reduction in raw material prices.

This year’s budget has seen major announcements like strengthening of NCLT (National Company Law Tribunal) framework, implementation of e-courts system, a special framework for MSMEs, besides introduction of alternate methods of debt resolution. These steps would give a substantial boost to MSMEs in the coming days. 

  1. Covid-19 related debt excluded from the definition of default

It needs to be mentioned that the strengthening of NCLT framework would definitely bring relief to cash starved firms that bore the brunt of the pandemic. The government has already made it clear that Covid-19-related debt would be excluded from the category of default. In an effort to insulate small businesses from being dragged to the NCLT, the government has decided to raise default threshold for triggering insolvency to Rs 1 crore from just Rs 1 lakh earlier.

  1. Norms for setting up OPCs eased

In order to encourage entrepreneurial spirit and benefit startups in setting up one person companies (OPCs), the finance minister has said that OPCs would grow without any restrictions on paid-up capital and turnover. According to the minister, the OPC can be converted into any other type of company at any time. The reduction in residency limit has also been announced according to which an Indian citizen can set up an OPC within 120 days instead of the initially approved 182 days; besides it will also allow NRIs to incorporate OPCs in India. Please note OPC can already apply for MSME business loan online 

  1. Tax holidays for start-ups extended by a year

In a major post-pandemic boost, the 2021 budget has proposed an extension of eligibility for claiming tax holidays for startups along with the capital gains exemption for investment in startups till March 31, 2022, to incentivize funding. 

Aavas Blog

Things to Know About Home Construction Loan

20-Feb-2021 |Home Construction,Home Construction Loan

Constructing one’s own beautiful home on a piece of land is every man’s dream. And if you happen to be one of those lucky few with a piece of land at your disposal, then it’s time that you thought seriously about constructing your own home.
Frankly speaking, constructing a house is no walk in the park. You need to have the necessary financial wherewithal to meet the escalating costs of the project. In other words, constructing a house involves a lot of money. In this situation, you can make arrangements for necessary funds by applying for a Home Construction Loan. You can either employ a contractor for the job or handle the entire thing all by yourself. The choice is yours. You also need to keep in mind that the process of approval and disbursal of the home construction loan is different from the regular Home Loan. Before you choose the lender, you should do thorough research of the different financial institutions and review their interest rate, documentation requirements and loan terms.

Four Must-Known Facts About Home Construction Loan

A construction loan, which is also known as a “self-build loan", is considered a short-term loan that is sanctioned by a bank to finance the building of a home or another real estate project. As for the loan amount that you are eligible for, it depends on your income and repayment eligibility. You can be eligible for construction loans up to 80 - 85% of the value of the property.
Borrowing a home construction loan would definitely help you save more money in the bargain. Ideally, you should settle for an owner-builder construction loan; it would save money on the labour. On the other hand, if you hire a builder to do it for you, the construction cost in all probability would shoot up.

Loan Disbursal Process
When you apply for a home construction loan, the amount will be disbursed in instalments only. This is, however, not the case with home purchase loans, where the lender pays you the full amount in lump sum. However, in the case of home construction loans, one should tread carefully. The approved loan will be disbursed in phases, depending on how much progress the construction has made. Most banks in India, as a rule, pay the approved loan amount in about 3-5 instalments. This obviously implies that you must have sufficient funds at your disposal to purchase the raw material and get started.

The bank which has sanctioned your Land purchase and construction loan must be convinced that the work is making smooth progress. It is only then that the bank concerned would disburse the loan.

Using Construction loan for interior work:
Home loan for self-construction is generally sanctioned for the immovable construction works. And it is always ideal to check with the concerned institution, whether the sanctioned construction loan can be used for interior work or not?

Aavas Blog

Five Traits Of A Successful Entrepreneur

13-Feb-2021 |MSME,Entrepreneur

What traits do you need to run a successful new venture in today’s challenging time? Read on to find the five must-have traits which an entrepreneur need to acquire.


A Growth Mindset
A growth mindset is the best thing to have to take your business to the next level and achieve exponential growth whatever the circumstances or difficulties may be. A fluid and unruffled entrepreneur with a growth mindset, unlike someone with a fixed mindset, goes full steam ahead to execute his ideas. A person with a growth mindset always looks for the right opportunity to strike out on his own. As a matter of fact, there is a tremendous need to develop a growth mindset in today’s challenging times. For an entrepreneur, a growth mindset is an asset given the competitive and volatile nature of any business venture.  
Have a Not-To-Do List
Warren Buffett once said, “The difference between successful people and really successful people is that really successful person say no to almost everything.” Having a not-to-do list implies that it is absolutely essential to focus on the priorities related to your business through self-discipline which would make a qualitative difference to your commitments. You need to be extremely adept at task management to delegate and outsource work so that it doesn’t cut into your precious time. It has been seen that the most successful people have shaped their careers by saying no to things and proved themselves wiser in the long run. One must always remember that time and energy are a limited resource for each of us, and a lot depends on how we choose to spend that precious resource. A not to-do list, by all means, will cement your relationships with your colleagues and customers; after all it will be a case of promises kept.
Be a Better Listener
One of the good qualities of an entrepreneur is his ability to listen patiently to his customers and employees. Your body language matters a lot. When a magazine asked Virgin Founder Richard Branson what it takes to be a good leader, he said one should be a good and an ardent listener, adding that if you want to make a mark as a leader, “begin by listening.” No doubt, listening is a great art, and a person imbued with this quality can do wonders in his business ventures. Listening, after all, builds trust. The entrepreneur should show utmost interest and listen attentively to their clients’ responses. Listening also minimizes the scope of misinterpretation and miscommunication to a great extent because you are hearing out the other person before putting across your own message. There may be differences of opinion between you and the person on the other side, but imagine how talking things out can be mutually beneficial in terms of business interest.

Have Definitive Goals
It is extremely important to define your business goals once you decide to take the plunge. The focus should be on financial security which would help you fire on all cylinders. As an entrepreneur try to achieve specific goals. Remember, never go after unrealistic goals. Don’t set the bar too high in the initial stages. If you have set a goal to earn Rs 6 lakh a month when you've never earned that much in a year, that goal becomes unrealistic and elusive. Start with increasing your monthly income by 20 to 25%. Once you are able to achieve your first goal, you can now spread your net wide. Short-term goals would yield results in a period of weeks to a year. Long-term goals can be achieved within five to twenty years. Or a definitive goal may be to raise rupee 20 lac MSME loan in the next six months. The more explicit and definitive is your goal the more are the chances of achieving it.
Timebox Think Time
An entrepreneur should have a wealth of ideas to get his business into better shape. Try spending quality time reflecting, exploring, learning and strategizing to brace up for the next move. Ideally, one should set aside more than 20 to 30 percent of their week to focus on innovative business ideas. One of the greatest challenges budding entrepreneurs tend to face is carving out think time. Think time helps you think and reflect on where you’ve been and explore where you want to go. Becoming a leader brings with it a sense of added responsibility to make things work and take them to their logical conclusion. Remember, your entrepreneurial success is measured not by how busy you are, but how intelligently you can keep a safe distance from busyness! Your ability to make a mark as a leader is predicated on your success in mastering the discipline of think time.

Aavas Blog

MSME New Definitions 2021

18-Jan-2021 |MSME

If knowledge is power then constantly updating your knowledge is a superpower. Whether it's is personal development or scaling up your business, the more aware you are the better it is. And one form of learning is to keep yourself updated with the latest change in the various rules and regulations. One such rule change has been witnessed in the definition of MSME units and now we have revised definitions of MSME. Read on to find out how you can make the most of these changes to expedite the growth of your business in 2021.

Well if you run a micro or a small or a medium enterprise then you need to be aware of the latest revised definitions of MSME. Knowing these will help you to grow your business in 2021.

Earlier, the MSMEs were defined on the basis of investments that have been put into them, however, now the revised definitions will also include the turnover of the unit as well, and rightly so.

What are Micro Units

Earlier the criteria was solely on an investment basis. Like:

1. An investment up to Rs 10 lakh for service units

2. An investment up to Rs 25 lakh for manufacturing units.

New Definition Of Micro Units

An MSMEs will now be called a micro-unit if up to one crore, it can be proprietor own money or through MSME business loan, has been invested into it and it has a turnover of less than Rs 5 crore. Unlike earlier now these two aforesaid factors will define a micro unit. 

New Definition Of Small units

As for the small units, the investment limit has been doubled from the earlier rupees 5 crore to rupees 10 crore, now besides that it must have a turnover of less than 50 crore. This new definition encompasses all MSMEs, service enterprises included, earlier service enterprises were under-investment of up to Rs 2 crore category.

New Definition Of Medium units

An enterprise that has an investment up to Rs 20 crore along with a turnover of less than Rs 100 crore will now be called a medium unit. Whereas earlier, the investment limit for a medium unit was up to Rs 10 crore and for Service enterprises, the limit was up to Rs 5 crore.

Aavas Blog

Home is one of the basic necessities for all and to own one is actually a dream for every Indian. Home is not just a structure with four walls and a roof; it also comes with an emotional side attached to it. For some, it may be about a sense of security, comfort, and an accomplishment, while for others it is about being independent and carrying a status in the society.

But on a candid note, buying a home is no small expense. In the context of Indian society, the decision to buy a home is not only a major decision and a milestone in one’s life but also the biggest financial decision to make. Since it requires a huge expense and a big financial commitment, one may feel that why not choose the option of living on rent – it is a better fit. 

The debate goes on – buy a home or rent a house –which one is better?  It is difficult to choose from these two options.  

Let’s try to understand why buying a home is better than living on rent. Just have a look!

Freedom and Security

Owning a home always gives you greater freedom, for the way you live and how exactly you have dreamt of living within one. There are multiple options of buying a home –  you can  buy  a ready to shift home, and you may go on to purchase a plot and construct a home over it. Renting a home will always invite certain compromises like location, size, amenities, etc. For spending your life, for sure you would look for freedom within your living space.

Purchasing a Home provides added security, privacy, and comfort not only to you but also to your  family. The fear of untimely termination of the rental contract, infringement within the private life from landlords is automatically taken care of when you own your home. Additionally, the decision to change or remodel/renovate, extend, utilize the space as per your choice (covered and open both), is always with you and your family – there are no permissions required, but when you are renting you are dependent on landlords consent –even to hammer a nail in the wall. And it means – when you own your home, you are your own boss!

Tax Benefit on Home Loan

One big reason, why people do not go for buying a home, is skyrocketing and fluctuating prices of real estate. However, when you opt to buy a home by availing a Home Loan, you get entitled to avail Tax Benefits on the Home Loan Principal and Interest you payback. These benefits basically add-up to an affordable deal, in owning your home.

Availability of Easy Financing Options

Times have changed. Today, a lot of easy financing options are available in the market. Apart from banks, there are multiple financial institutions that provide loans. Housing Finance Company(s) like Aavas Financiers Ltd. provides up-to  90%*of the cost as Loan to prospective buyers, which means that the down payment is  not heavy on your pocket and easy to arrange.

On the other hand, you don’t get any such benefits when you live on rent. The entire money you pay becomes your expenditure, which increases with time.

On the above perspective let’s see what all benefits you get when you opt to buy a home by availing a Home Loan– You get Tax Benefits, the amount paid to buy a home with interest is fixed, however, with time the Property Value appreciates and the appreciation is much more than inflation rates.

In return to what you pay as cost and interest on your home loan – what you get is the property, but the rent paid never gives you any return. They are expenditure which keeps on increasing with every passing year, as per the terms of Rental Agreement.

Let us understand this with an example here – assume that there are two houses each costing 15 Lakh Rupees

> Rent a property – you will have to pay some amount as rent every month. Assume you are paying a rent of Rs 7,500 per month, which increases every 11 months at the rate of 8%.

> Buy a property – you will have to take a loan, which will cost you Rs 13,000 per month as EMI for 20 years, and also you pay a down payment of 5 Lakh Rupees from your side.

 While it appears that if you are staying on rent, you save Rs 5,500 per month and above that, you have shell out 5 Lakh Rupees as a down payment – which you could have invested in a SIP or any other scheme of your choice. However, when you analyze in detail, you will find that the gap in the EMI v/s rent ratio increase with time. Let us see how

  • When you are paying Rs 7,500 as rent per month, in the 12th year of living on rent, your rent will increase to Rs 17,487 per month (consider 8% increase per annum). This now becomes more than EMI of the Home Loan if the Property was bought and will continue to increase till 20th year.
  • But when you are paying an EMI for buying the same home, you will also get income tax  benefits on interest and principal paid during the financial year if you are a tax payer. In addition, the property value after 20 years will be appreciated many folds, whereas the amount saved by you living on rent will be more or less equal to zero.

 It is very clear and evident that owning a home is a much better deal as compared to living on rent.

Owning a home is not as difficult as it seems. You simply need to plan it wisely and go for it. Aavas Financiers Ltd is a leading housing finance company that has helped lakhs of customers in fulfilling their dreams of buying their dream homes.

We at Aavas, firmly believe that every individual who wishes to have a home should get an opportunity to own it, irrespective of his/her financial status. And that is why we provide housing loans to customers in low- and middle-income segments in semi-urban and rural areas too.

Start the journey of being a proud owner of your dream home with Aavas Home Loan today – Sapne Aapke -Saath Hamaara!


*Subject to NHB norms and eligibility.

Aavas Blog

6 Tips to Increase Your Home Loan Eligibility

01-Jan-2020 |Home Loan Eligibility

‘Buying a home for your family’ that’s what going at the back of your mind? If yes, then this article is a must-read for you.

Buying a dream home is always a crucial decision of an Individuals life. One needs to do a lot of arrangements & adjustments in their budget & financials. Most of the time, It may happen that your dream home budget goes out of your pocket. It’s the situation when you have to make a decision, either to drop your plan or opt to apply for a home loan and make your dream come true.

Before you apply for a home loan, it is advisable to check your home loan eligibility, so that you have a clear picture of your eligibility.

When you apply for a home loan, the lender would assess your credibility to repay the loan amount within an agreed time frame based on the home loan eligibility criteria.

Home Loan eligibility is defined as the maximum loan amount that you can expect to get, based on certain criteria such as your current source of income, repayment capacity, age, credit score, and many others. 

In this article, we will walk you through 6 vital steps that help you to increase your home loan eligibility without having any trouble.

  1. Clear Out All Existing Loans

All your existing unclear loans would negatively impact your home loan eligibility criteria. The previous loan dues would majorly hit your home loan eligibility. A lender would always consider your outstanding dues before sanctioning your home loan.

Before seeking for a home loan, make sure that you have cleared and closed your entire existing loans, collected no-due certificate and get it updated in your CIBIL credit score.

  1. Extend Your Home Loan Tenure

Your home loan eligibility criteria are determined by your repayment ability of loan amount every month which is what we called as equated monthly installments (EMIs).

If you go with longer loan tenure, you would have to pay lower EMIs every month, which fits to all middle and lower middle-class applicants’ to repay their loan amount and you are eligible for higher home loan amount to buy your dream home for your family.

But longer loan tenure means you would have to pay higher interest to the lender.

Don’t get disappointed, there is a solution to this situation as well.

Considering that your income would increase every year, the option is to increase the EMI amount every year with an increase in your income. You just need to restrict your expenditure to some extent and you would pay off the home loan amount in a lesser time period.

You can even take help of an online home loan EMI calculator which is available on Aavas Financiers website for you to quickly calculate your EMI based on your tenure, interest rate & loan amount.

  1. Keep your FOIR below 40 %

Fixed Obligation to Income Ratio (FOIR) is a critical parameter for determining your loan eligibility. It is defined as the part of your source income currently being used for loan repayment.

Higher the FOIR, lower the chances for loan eligibility. Therefore, try to limit your FOIR to up to 40% in order to increase the chances of loan approval.

You can lower your FOIR either by increasing your source of income or you have cleared out all your debts.

Lower FOIR means your liabilities are less which enhances your disposal income, thereby increasing your repaying capacity.

  1. Make a strong credit report

The home loan lenders of any financial institution or banks consider your credit report to measure your repayment behavior and mark you as high-risk or a low-risk potential home loan applicant accordingly.

The CIBIL score is one of the significant factors while the lender approves your home loan. Your CIBIL score is a measure of your capability to repay the loan amount within an agreed time frame. Always maintain a credit score greater than 750 (out of 900) to increase your home loan eligibility and even helps you to avail lesser interest rate from the concerned loan provider.


  1. Opt for a joint home loan for higher eligibility

Low income, low credit score and so on are common factors for the rejection of home loan applications by the lenders.  You can increase your home loan eligibility by choosing joint home loan instead applying as an individual applicant.

A joint home loan means you need to consider a co-applicant who is your immediate family member (salaried or self-employed, Indian or NRI).

If your co-applicant is a woman then even better, as woman co-applicant enjoys a lower rate.

By this method, you would increase your eligibility loan amount to many folds because your co-applicants source of income is also considered by the lender in assessing your eligibility criteria. And other benefits as well such as tax benefits, share loan repayment amount and so on.

  1. Additional Income Source

If you are failing to fulfill the home loan eligibility criteria, then you can even consider other income sources such as rental income, interest earned from fixed deposits or any bonus amount you have received from your employer or extra income earned as part of your freelancing work. All these sources of income would back you as well to enhance your home loan eligibility criteria for buying your dream home.

During the loan approval process, make sure that you have disclosed all the correct information in your application. Otherwise, you may face rejection in your home loan application.

Aavas Financiers Limited is a housing finance company helping many to fulfill dream of owning their dream home. Aavas Financiers Ltd has the vision to help majority of Indian population which belongs to low and middle-income by offering them home loans, plot purchase loan & construction loan, loan against property and balance transfer. You can take the help of home loan eligibility calculator or home loan EMI calculator to avoid Home Loan rejections.