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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Debt Management and Loans

Vikram Joshi earns a net monthly income of Rs 1,00,000. He has existing EMIs of Rs 20,000 and wants a home loan of Rs 30,00,000 for 10 years at 12% p.a. The EMI factor is Rs 14.35 per Rs 1,000 of loan. His lender caps FOIR at 50%. Which statement is correct?

The proposed EMI is about Rs 43,050, and adding the existing Rs 20,000 gives total obligations of Rs 63,050, or roughly 63% of income. This is above the 50% FOIR cap, so the requested loan exceeds the lender's eligibility limit.

  1. AProposed EMI is about Rs 43,050 and FOIR is about 63%, so the loan exceeds the capCorrect
  2. BProposed EMI is about Rs 43,050 and FOIR is about 43%, so the loan is within the cap
  3. CProposed EMI is about Rs 30,000 and FOIR is 50%, so it is exactly at the cap
  4. DProposed EMI is about Rs 23,050 and FOIR is about 43%, within the cap

Explanation

EMI = 30,000 x 14.35 = Rs 43,050. Total obligations = 20,000 + 43,050 = Rs 63,050, which is 63.05% of Rs 1,00,000. This exceeds the 50% cap, so the loan as sought is not eligible. The 43% option ignores existing EMIs.

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