Q&A
I want to buy a property, but before that I want to know how much I can borrow. Can I approach a bank for any pre-loan assessment? I tried using the online eligibility calculators but it appears that every bank has an independent approach to identify the loan eligibility of an individual. Please help. - J. Raghavendra, Vijayawada
 
Yes, you can approach any bank of your choice and find out your actual loan eligibility. You can also get your home loan pre-approved by the bank if you are not sure if the loan will be sanctioned or not, before you even finalise the property.
The sanction given by the bank is valid for a specified period. But if you do not zero in on a property within the validity period of the sanction, you might lose the processing fee already paid.
As a thumb rule, if you are below 40 years of age, you should be eligible for around four to 4.5 times of your net annual income subject to a maximum of 80 per cent (90 per cent for loan amount below Rs 20 lakh) of the agreement value of the property as a home loan for a 20-year tenure.
Generally the lenders consider that your total EMI along with any other existing loan repayments should not exceed 40 to 45 per cent of your net monthly income. This ratio can go higher if you are in a high-income bracket.
Generally, the loan eligibility will not be significantly different unless there are items of income that may or may not be included in your income.
Your overall eligibility may vary from bank to bank depending on whether the income of a particular person is be considered or not. You can enhance your eligibility, if you get your spouse, parents or son to become joint borrowers: their income will also be considered for this purpose.
I want to know the best health insurance policy for my 22-year-old son that covers critical illness and accidental illness. He is currently studying engineering. Please also suggest a good policy for life insurance. - Mohd Hasan, Hyderabad
 
Life insurance, critical illness and accidental death or disability insurance cover are required only for earning members of the family.
Life insurance pays out in case of death of the policy holder, critical illness policy pays a lump sum amount if the insured person is diagnosed with the given critical illness, and accidental disability cover pays a lump sum in case of permanent total disability or death due to accident.
These policies provide a lump sum amount, which can serve as an income replacement to the family of insured person.
As your son is a student, he does not require life insurance, critical illness and accidental disability policies unless you have an education loan, which is presumed will be paid off from his earnings. In that case, you can take a term plan, critical illness and accidental disability to the extent of the education loan.
However, you should buy health insurance for him at earliest. You can buy Tata AIG Medi Prime Individual Plan for your son for a cover of `3 lakh. It will cost you around `3,831 per annum.
Alternatively, you can take the Bank of Baroda health policy. You have to open an account with Bank of Baroda. The premium is fixed up to the age of 65 years. Thereafter, it increases by 25 per cent and remains fixed up to 80 years.
The Bank of Baroda health policy for a sum assured of `3 lakh will cost you `4,734 per annum as premium. Please disclose all health-related facts while buying the policy.
(Harsh Roongta is  CEO of Apnapaisa.com. You can send in your queries to movingmoney@ deccanmail.com)