Have You Considered These Key Factors Before Availing Your Home Loan?

So you want to purchase a new house, but don't have the resources. Borrowing such a large amount of money even from your close relatives or friends is something that might put you in an awkward situation. Don't worry! There are plenty of banks, financial institutes and non-banking financial institutes which offer a variety of housing financial requirements.

However, there are of course many different factors that need to be kept in mind regarding home loans, other than the fact that a person first needs to be 'eligible' to obtain the loan in the first place. Basically monetary assistance that is offered by financial or even non-banking institutes so as to help a person in the purchase of their home is known as a home loan. While the loan that is offered cover up to 85% of the requirement (overall cost of the property), the property itself stands as a form of security until a person re-pays the entire loan amount along with the interest.

7 important factors that a person should keep in mind regarding housing loans include:

1) Eligibility: Did you know not everyone is eligible for these loans? In other words, loan amounts of high value can only be given to those people who have it within their means to re-finance the borrowed money. Lenders determine whether they can provide the loan to the person only after examining certain key factors such as his income level, financial stability, etc. It is easy to find out one's eligibility by making use of online tools such as the Housing Loan Emi Calculator' wherein a person has to enter in key information to find out his eligibility. It also plays an important role in determining the amount of EMI a person has to pay.

2) Application: Once a person is eligible, his/her application is the next step. Whether online or offline a person has to fill in an initial statement of his/her personal and financial information that is required to apply for the loan. These forms can be found online where they can be downloaded or can be physically filled in by visiting the bank branch.

3) Documents: Submitting documents is a mandatory step when availing home loans. The bank may require many different official documents such as income tax returns, copy of PAN card, last six month's bank statement, proof of identity, form 16 for the last 3 years (for salaried persons), salary certificates, proof of address, passport size photographs of the applicant, etc.

4) Loan Margin: A loan that is given to an applicant will be a percentage of the total value of the property. Depending on this amount, there will be a service tax that will be charged (as a percentage).

5) Tax Benefits: According to the Income Tax Act, people can also benefit from tax deductions on their home loans. This has been mentioned under Section 24, Section 80C & Section 80EE (inserted by Budget 2013)

6) Interest Rate: Varying from bank/financial institute the different interest rates will vary and also through certain periods. One of the key factors home loan seekers look at, the interest rate plays a pivotal role in determining whether one will avail a particular loan or not.

7) Is pre-payment option available? Is there a penalty involved? : Very often, it is wise to know if you can make any pre-payment (early repayment) so as to take advantage of lower interest rates. Based on the lender, it is also important to find out if any penalties are charged in case you transfer your loan or even close your account before maturity.

[Source: http://www.sooperarticles.com/finance-articles/loans-articles/have-you-considered-these-key-factors-before-availing-your-home-loan-1297157.html?]

Benefits of Home Loans

You can get a low interest rate on a home loan for that simple fact. Loans given against collateral will get you a lower interest rate. Banks have the assurance of collecting on their loan if you don't pay. Such loans are considered to be high-risk and many leading institutions have quit writing them completely. Loans provided for the home itself provide money for the construction, including the costs of all building materials required. A person who wants to avoid the risks of increase interest rates and have a fixed income regularly is the right candidate for such fixed rate home loan.

To take secured home loan at low cost, apply online. You are flooded with loan offers from as many lenders with each one of them having own terms and conditions. You should compare loan packages to pick up the one having interest rate suitable to your budget. If you are a home owner but want to borrow a small amount and do not like to risk home for such a loan, then you can opt for unsecured home loans.

A construction to permanent loan is a two-in-one loan ideal for most people since it would only require you to submit documents and pay closing costs once. Home loan lenders look at your credit history to gauge your ability to pay. Your credit score speaks volumes about the kind of debtor you are. These loans are very flexible and come with a variety of options that can be customized to fit your needs. Secured home improvement loans are provided on taking home or any valuable property of the borrower as collateral and these loans are ideal for raising large amount at low rate of interest. To avail secured home loans, you need to place collateral.

This collateral could be in the form of your home, which will act as a security for the loaned amount. When offering security you'll be able to obtain better House Loan terms on your bad credit loans. You can easily get lower interest rates, higher loan amounts, lower monthly payments and more flexible repayment programs. To promote the real estate sector the housing loan industry has also been growing very strongly in India. It is one of the important factors which have caused such an amazing growth of real estate sector. Online lenders are risky. Your personal information is not safe in their hands. This is what most of us are made to believe.

Most homeowner loans are secured ones. The equity of the house pledged by the borrower is valuated and in most cases, 90% of the home equity is given as the loan amount. Secured home loans are very popular with bad credit borrower also. The risk is minimum for the lenders, since it is secured against the property of the borrower who has bad credit. Online secured home loan is the fastest and easiest way to search your lender. Just you need to fill an application form that hardly takes minutes and in seconds you with your lender.

[Source: http://www.sooperarticles.com/finance-articles/loans-articles/benefits-home-loans-341976.html?]

Uncover 3 Things You Didn't Know About NRI Loans

Loans are an ideal financial aid, especially when there is a need for a large amount of funds. Various individuals apply for a loan when the occasion calls for it. There is a certain process along with the submission of certain documents to avail of this aid. The NRI loan is no different. This loan is available to NRIs' and follows the similar process. However, this loan is not like rest of them. It has a unique requirements and challenges. Here are three most important details you must know about NRI loans.

A NRI Loan Is A Different Package:

With a NRI loan, especially when it comes to gathering finances for a home, NRI citizens may find that this is more complex than just taking up a local home loan. Both these financial aid will require different types of documents, will have different tenures and different modes of repayments. Repayments can be done through the NRO or the NRE account. The interest rates are also higher compared to the local rates through Home Emi Calculator. To put it into perspective, NRI home loan rates are normally 0.25 to 0.50% higher. But, NRI and local residents need similar amounts as a down payment for the loan.

Owning A Home Is More Challenging:

A NRI home loan will have fixed purposes which cannot be used for any other use. This will include self-construction of property on a plot of land, financing the purchase of a plot of land that is allotted by a society or a development authority, renovation or improvement of an existing property in India or a purchase of a house that is either under construction, sale or on a resale.

This form of credit can be used for a secondary home too. It can be used for income tax rebate too. However, NRI home loan will require a long list of documents. In most cases, NRIs cannot make this acquisition without a local support. You will also need to submit your income details from the foreign country, which complicates it furthermore.

Tax Benefits Are Tougher But Available:

NRI citizens will have to pay tax in the current nation where they are working and earning. But, if there is substantial income from Indian resources, they will need to pay tax to the Indian government too. NRI's, though, can claim any tax benefits on their housing loan in India as well. It should be noted that gaining eligibility for a NRI home loan is not easy. But, it is the best source of tax rebate available for NRI's.

Now you know the different facts that go into making a NRI loan the product it is. These loans have several other benefits too that should be researched about. The Indian government has currently ensured that, if any Indian origin individual wishes to return home in the near future, he or she is more than welcome to do so. Thus, it is wise to invest in that option as and when you are able.

[Source: http://www.sooperarticles.com/finance-articles/uncover-3-things-you-didnt-know-about-nri-loans-1379863.html?]

Get a Best Deal on Home Loan

A house is bought using a home loan, with a certain portion being financed out of own resources of the borrower. There are a number of banks and housing finance companies in the market offering various products. It is advisable for a borrower to note down his concerns and then compare these across the board before taking a final decision on whom to borrow from and how much to borrow.

As a preliminary step, one may prepare a checklist covering these areas. Other areas of concerns may also be added. While discussing with the prospective lenders, this checklist will come in handy to make a good comparison and take a final decision.

Points for your checklist:

Purposes for which the loan is available - purchase of plot, construction, or for both

How and when the disbursement will take place Documents needed

Who can be co-applicant

What is the time taken or sanction, disbursement of loan. Generally, a bank takes 10-15 working days

Maximum loan the bank is ready to disburse

How and when the recovery through EMIs starts

In case of change in interest rate, how an adjustment in EMI will be made for interest reduction or early principal repayment

Method of calculating interest rate - daily or monthly reducing

Is a guarantor required? If yes, who can be a guarantor and documents required from him

Will the loan disbursement be made in phases depending on progress of construction or in one lump sum

Legal verification fee payable

Rate of interest and effective rate of interest. Effective rate of interest should be taken for a comparison

Commitment charges payable Processing charges payable

Procedure for switch over from floating to fixed rate or vice versa. The attendant conditions applicable and corresponding charges payable

In case of purchase of land and construction loan, will the bank sanction separate loans or a composite loan

Calculate Home Loan Emi Amount of EMI

Mode of payment of EMIs

Free or concessional insurance on the loan offered

Prepayment terms these questions constitute a preliminary checklist only. This list is not exhaustive. One may add any number of additional points. This will help in comparing and negotiating with the banks to get a good deal.

[Source: http://www.sooperarticles.com/finance-articles/loans-articles/get-best-deal-home-loan-95336.html?]

NRI Buying Property in India - A Beginners Guide

NRIs are now turning their long held aspirations of owning real estate in India, into reality by buying property in India. NRI Buying property in India is not surprising. India's growth story continues to fascinate the world and NRIs are looking to capitalize by buying property in India. NRI buying property in India is a no brainer as India has continued to give an average of 20% return on investment per annum even as most of the world economies are in recession.

More importantly NRI buying a property in India has become more prevalent as many avenues are being created as well as schemes being fashioned for NRI/PIO/OCIs to bring in maximum investment from abroad.

Below is a quick overview on developments that have led to an increasing interest for Home Loan and inflow of investments from the NRI community worldwide.

All persons residing outside India holding Indian passports and also people of Indian origin have been granted permission by the Reserve Bank of India (RBI) to invest in both residential and commercial properties in India.

The government including RBI and Foreign Exchange Management Act (FEMA) has liberalized the rules and regulations for the NRI buying property in India. Liberalization along with the added advantage of repatriation of the capital invested and even the rental proceeds under the circumstances prescribed by RBI have also encouraged NRI to buy property in India. Capital gains accruing from any sale of property can be remitted out of India after paying capital gains tax. This has encouraged NRI to buy property in India as it has been a big concern within the NRI community on repatriation of funds abroad.

With most world economies facing a slowdown, NRI buying a property in India has had a return on an average of 20% pa and in some pockets like Gurgaon a return of 50-60%pa. India is a safe destination - a brisk economy and a huge population fuelling it.

To an NRI buying a property in India, a base in the homeland also brings with it a sense of security. The number of NRIs who are investing in property for sentimental reasons and for better investment returns is quickly multiplying.

[Source: http://www.sooperarticles.com/real-estate-articles/property-investment-articles/nri-buying-property-india-beginners-guide-1073407.html]

Guide To Buy Resale Residential Property

When you set out to purchase a residential property, you have no other goal but live life in comfort and peace. To ensure this goal is fulfilled, there are some legal procedures that you need to abide by. This article will discuss some steps you need to take to settle all those legal matters and tell you what else you should do before you step into your new home, which is a resale property. So let's begin:

First of all, if you are buying a resale apartment or an old property for sale, transfer the title of ownership as fast as you can. Make sure you become the official owner the moment you have cleared your payment and moved in to your home.

Lawyer

Get a good lawyer because he/she can assist you with a proper guide to legal procedures. He/she can be the right vigilant and tell you if and when the seller is trying to fish out extra money from you for no good reason. Your lawyer will also be able to check whether there are any dues unpaid by the previous owner to the trust or governing authority of the residential property.

A good lawyer will also be able to take care of your home loan-related procedures. Since almost everyone buys homes these days with a loan, this is very important. To obtain your Loan for Home, you need to submit a certificate named NOC or no-objection certificate. This will be issued to you by the aforementioned governing authority only if all the dues have been cleared by the previous owner.

You

If you are moving into a relatively old building where money is being collected for remodeling, you have to participate in the process. That is why, it's best to find it out before buying your residential property that whether or not there is such an imminent possibility. Other than that, you need to check if the utility bills are all cleared by the previous owner of your home. You should not pay bills for things you have not used.

Also, do not forget to check out the state of wiring and plumbing in the apartment. Will you need to re-wire the apartment? Do you have to get the plumbing repaired as well? Is there adequate space for parking your car? If yes, how much will it cost? These are the questions you need to find out answers to.

Broker/Real Estate Agent

In most cases, brokers or real estate agents, whatever you want to call them, are in a hurry to sell an apartment to you. They tend to conceal facts and tell you complete lies in order to sell you a flat and bag their share of the money. Needless to say, you should never encourage such behavior and never put your complete faith in these people. Find out the truth for yourself.

Consider

Weigh every pro and con of a property for sale. Do not make a hasty decision as buying a resale property is a major step. Assess your position in detail. Are you at an advantage or at a disadvantage? Then and only then can you make your decision.

[Source: http://www.sooperarticles.com/real-estate-articles/property-rent-articles/guide-buy-resale-residential-property-1102655.html?]

Going About Refinancing Home Loan

Depending on the condition you are currently in; refinancing home loan could either be an advantageous or a disadvantageous move. A lot depends on your assessing capabilities. Simply put, refinancing is an option which helps you deal with a foreclosure-like situation. If you are unable to pay up you monthly mortgages, losing your house as a result of foreclosure may be the inevitable outcome. In order to avoid losing your property, you can apply for refinancing your loan which extends a lower rate of interest than the previous one. 

They may also provide loans at much more favorable terms as they would be using your home as the collateral. The fresh secured loan will help in settling the balance mortgage amount with ease. Although the settlement seems primarily advantageous, there are several aspects which need to be taken into consideration before deciding on refinancing home loan.

When Can Refinancing Prove Cheaper?

It could seem difficult to judge if refinancing Loan for Home is after all a favorable option. You could compare the appraised value of your home to the mortgage. If the mortgage is less, refinancing home loans may be a good idea when the interest rates are depreciating. You could then refinance for the same period but at a more favorable interest rate. As a result, your monthly installments will go down.

Second, you can also apply for refinancing for a shorter period and lower interest rate. You can save the interest charges and any refinancing fees which might be charged, in both cases. What you will need is a financing calculator. You can easily download one online. The results of the calculations will tell you if refinancing at a lower interest value is actually worth it or not.

Alternatively, you might also choose to refinance the loan balance for the same time period as the original loan but at more favorable interest rates. This could bring down your mortgage amounts. Some amount of discipline will also save you money in the long run as you pay the same amount as you would have for your old mortgage.

Advantages of Refinancing Home Loan

Considering that refinancing has proved to be a favorable option for you, the advantages of refinancing home loan could be listed as below:

* Reduction Of Monthly Mortgage Payments: Refinancing home loan will allow you to land a brand-new loan at reduced and more favorable interest rates. Therefore, your monthly home loan installments can be successfully lowered.

* Transition To Fixed Rate: Refinancing will allow you to make a transition from adjustable mortgage rates to fixed rates which can be truly beneficial.

* Doing Away With PMI: When you refinance your home loan, you can do away with PMI or private mortgage insurance when you have touched 20 percent equity on your property.

* Settling Other Bills: With refinancing, it is easier to settle your current bills. You can settle your outstanding loan balance and can also deal with other outstanding amounts with ease. You can also utilize the money you have saved for other investments.

Therefore, if you go about it correctly, refinancing home loan could be a great help in times of distress.

[Source: http://www.sooperarticles.com/real-estate-articles/mortgage-financing-articles/going-about-refinancing-home-loan-496607.html?]

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How Indians can save with income tax benefits of home loan

A home loan is a big responsibility. Typically for middle income people it eats away most of their monthly salary. While my dad had a home loan, it used to consume major portion of his salary. Imagine earning Rs. 20000 and paying 12000 for home loan. I assume most of us will face a similar situation.

On the other hand, a home loan creates an asset (at least technically, though it does not give any regular income). The government wants you to invest and provides lot of income tax deduction and exemptions when investing in a home. Let us try to understand the benefits one can enjoy on a home loan from the tax man.

Income tax benefits of a home loan

It is preferable to understand the tax benefits associated with home loan to benefit from it every financial year. Before beginning with the details of the benefits that can be enjoyed by an applicant while taking a home loan, the repayment of home loan falls into two parts/categories:

Repayment of the principal amount

Repayment of the interest

As the repayment falls into two different categories, the income tax benefits enjoyed by the applicant on the home loan are divided into various sections of the Income Tax Act. Claiming the tax deduction is possible using different sections while filing for an income tax return.

Also read: Documents to check when buying a home

Section 80C: Tax Benefit on Home Loan against Principal Amount

It is possible to claim a tax benefit on home loan for the principal amount by an individual or HUF under Section 80C of the Indian Income Tax Act. The maximum allowable deduction under this section is Rs 1.5 Lakh.

There has been an increase in the permissible amount from Rs. 1 Lakh to Rs. 1.5 Lakh during the 2014 Financial Budget.

The tax deduction under this section calculates or is inclusive of the total amount invested in PPF account, taxes, saving fixed deposits, equity mutual funds, national savings certificate, senior citizens, and saving schemes.

The reduction under section 80C is further available as payment basis, irrespective of the payment year. Furthermore, the registration fee and stamp duty also falls under tax deduction, even if the applicant has not applied for a home loan.

The important point is that the applicant should remember is that the tax benefit is only applicable on the principal amount of the home loan Emi Calculator only after completion of the construction. Therefore, it is important to submit the construction complete certificate to enjoy the tax benefit.

Furthermore, according to this section, the individual will not be eligible for tax deduction for the years during which the construction was in the process.

If an individual or HUF chooses a property that is under construction, because the price is lower than a completed property, one will still have to compensate the service tax levied on the under construction property.

In addition, the Finance Minister changes the rates of the service tax on under-construction properties during the 2013 Budget. Meanwhile, there is no service tax applicable on a completed construction.

However, if the applicant transfers the property for which he or she claims the tax benefit under Section 80C before 5 years from the date of possession of the property, there will be no deduction and tax benefit on the home loan.

The tax deduction claimed on the property for the respective years will become the income of the applicant. The amount from the sale of the property also becomes the income the applicant shall pay the tax on such amount. The tax deduction will depend on the current income tax slab rate as declared by the government.

Must Read: 7 things to do during home loan closure

Service Tax on under construction property

Service tax on an under construction property is the taxable amount collected by builders, real estate developers or any other individual who offers services for selling the unit. However, the payment is due at the time of construction and before the issuance of building complete certificate by the competent authority.

Although many developers and real estate companies have opposed the move, the court ruled the case in the favor of the government.

[Source: http://www.smartmoneygoal.in/blog/income-tax-benefits-of-home-loan/]