What is the Fix Obligation to Income Ratio | An important component for taking a bank loan

 

When you apply for a loan in a bank, the bank considers many things before giving a loan to you. One of the main things is the Fix Obligation to Income Ratio (FOIR). This shows how much amount of loan you can pay every month.

 

The problem with the High FOIR is the Fix Obligation to Income Ratio (FOIR) shows that your already going EMI, house rent, insurance policy and other payments are about a percentage of the current income. If the loan donor incurs all these expenses up to 50% of your salary, then he can reject your loan application. Therefore, keep these things in mind that the loan amount should not be more than this.

 

Understand this by example, assume that you are already paying 10 thousand months home loan instalment. If we assume that his salary is 30 thousand, according to which his monthly liability is 33% of the total salary. After this, if a bank gives them a loan, then take care that your total FOIR does not exceed 50 per cent. That is, you will be given the same loan as the remaining 17 per cent. Banks generally believe that no person can pay an EMI of more than 50 per cent of their monthly income.

 

What will be the calculation? You are now paying 10 thousand months instalment, which is 33 per cent of your salary which is 30 thousand. In such a situation, the bank would like that you can pay up to 15 thousand instalments because you will also need half of your salary to meet your expenses. In such a situation, if you want to take a loan of 10 lakhs for 10 years at 10%, then the bank will reject such. Because its monthly instalment will be Rs 6,608. With this, your total monthly expanse liability will be Rs 16,608 (10000 + 6608), which will be more than 15 thousand and 50 per cent FOIR. FOIR will arrive at 55.36. Due to this, a loan can be rejected.