Refund Home Loans Low Doc and No Doc Home Loans

Both low doc and no doc home loans happen to be ideal for private contractors, self-employed, people with poor credit rating, consumers with financial obligation on their existing mortgages and debtors whose loan applications happen to be turned down by the typical mortgage lenders. These two also works if you have stable net income but are struggling to match the bank requirements.

Low doc home loans are the types of refund home loans that do not expect you to validate your income. Aside from the proof of income source, you will be expected however, to show other records. And so basically, low document mortgages remove the difficulties out of applications for the self-employed. If acquiring revenue records proves to be a hassle, then this house loan product is your best option since it gives rapid and immediate access to financial resources.

Low document mortgages also cost a tad bit more costly as opposed to conventional mortgage loans simply because individuals who purchase them are regarded as high-risk. A much larger down payment is furthermore necessary for both .low document and no document mortgages. More often than not, men and women use low doc home loans to purchase investment properties and residential properties. Low document home mortgages can also be used to refinance active properties purchased by individuals without the latest tax returns or PAYG to validate their salary with proper Home Loan Repayment Calculator.

Low Doc Loans and No Doc Loans are actually categorized into three types, particularly no ratio home mortgages, stated-income (low doc) loans and no document home mortgages.

No ratio mortgages are made specifically for individuals who may not wish to disclose their incomes. That means that there is no income to debt ratios for the lender to think about. The consumer makes up for the non-disclosure via his excellent credit in addition to abundant resources.

Stated-income loans on the other hand would be your option if your household money adjusts per week. But compared to no document mortgage loans, low doc loans require the customer to divulge his financial state and earning capacity, commonly for two years. The client might also be required to bring banking statements and tax returns.

No doc loans are offered to people who are totally unable to qualify for traditional loan products. It is also the suitable type of loan for individuals who do not wish to divulge their financial circumstances.

In the event that you feel that you will be far better off with both a low document loan and no document loan, you may possibly want to speak to a mortgage loan expert first before you actually take out a loan.

[Source: http://www.sooperarticles.com/real-estate-articles/mortgage-financing-articles/refund-home-loans-low-doc-no-doc-home-loans-354957.html?]

5 Essentials of Loan against Property You Can’t Avoid

Availing a loan against property (LAP) has become quite easy these days. The procedure can be completed online on websites. However, as an applicant for LAP, you must be aware of certain criteria to make sure the entire loan procedure happens smoothly.

Here are some aspects to checkout before applying for a loan against property with a bank or financial institute.

1.      The Property Value

Whether you intend to apply for a loan against property on residential or commercial estate, you must know the monetary worth of the property in question. Suppose you need a loan amount of rupees 40 lacs, but the estate’s current market value is only INR 35 lacs, then getting entire amount of INR 40 lacs as loan, is impossible on the concerned property.

The loan amount sanctioned cannot be more than the property’s value. But, you can get up to 70 to 90% of property’s market value as loan. If your loan requirement is higher than the property’s cost, then other financing options have to be considered in combination.

In the above case scenario, however, you may be eligible for a lower loan amount, depending on the income you obtain.

2.      Income & Repayment Ability

LAP is majorly taken when there is a requirement for large amount of money. The mortgage loan approval will depend on your monetary income, and repayment ability. Depending on the income, and EMI scheme suitable, repayment tenure will be decided, which is maximum up to 15 years. You must draw a comfortable income in order to take care of loan against property payments.

The reason why banks are serious about the applicant’s income status is because a person with regular income will be able to pay the EMIs consistently, than defaulting in its payments. So the bank does not have to worry about selling the pledged property to recover the LAP amount, which would otherwise take intensive time and efforts.

3.      Co-applicant for Mortgage Loan

If you alone cannot fulfill the income or repayment capacity essential for getting Loan for Home sanctioned, then you may be able to bring in a co-applicant. The loan providing institute will run a check on the co-applicant to confirm if he/she and you together can repay the mortgage loan amount or not.

4.      Real Estate Ownership

If you are the sole owner of the property, then there must be no problem in acquiring a loan against the same. If there are co-owners who do not agree with your decision of applying for LAP, or the property is disputable with necessary documentation out-of-place, then the mortgage loan can be rejected.

5.      Know the Fees Involved

Apart from the LAP interest rates, there could be other charges such as loan processing fee, pre-closure charges, sales tax, agent cost and more. You must acquaint with all these charges or fees that have to be paid for, when applying for a loan against property.

Keeping the above mentioned factors in mind, you can seek a. Read more to know the finer points about loan against property.

[Source: http://blog.loanbaba.com/5-essentials-of-loan-against-property-you-cant-avoid/]

Do not Overestimate Tax Benefits on Home Loan Repayment

You have some cash in hand because of the recent annual performance bonus that you received. You have not yet decided how to use that money. You have no credit card or personal loan which needs to be settled at a high priority. You only have a home loan but you are not planning to part prepay it because you will lose out on tax benefits.

This is a common refrain among home loan borrowers. They do not want to prepay their loan just because of associated tax benefits. I do not deny that home loan repayment comes with tax benefits bringing down the effective cost of loan through calculating Home Emi Calculator.

However, sometimes, these tax benefits on home loans can be overrated.

Tax Benefits of Home Loans

Deduction in total income by up to Rs 1.5 lacs for principal repayment under Section 80C of the Income Tax Act

Up to Rs 2 lacs for interest payment for a self-occupied property under Section 24 of the Income Tax Act. For a let-out or a deemed let-out property, there is no cap on tax benefit for interest payment.

You may get limited Tax Benefit for Principal Repayment

You may be re-paying more than Rs 1.5 lacs of principal in a financial year. The tax benefit is capped at Rs 1.5 lacs per financial year.

Even if you are paying less, your other Section 80C investments such as PPF, EPF, ELSS, insurance premium etc may exhaust the entire or major portion of Rs 1.5 lacs even before principal repayment comes into picture.

You get tax benefit for principal repayment only once you get possession of the house. Principal repayment done before the financial year in which you got possession of the house does not get you any tax benefit. This assumes important for tax-payers who have purchased under-construction property.

[Source: http://www.personalfinanceplan.in/opinion/do-not-overestimate-tax-benefits-on-home-loan-repayment/]

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?]

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?]

How best to reduce the burden of home loan prepayment

If you have a home loan, you may have often thought of repaying it, either in whole or in parts. What’s the best way to repay?

We receive a lot of queries from young double-income-no-kids (DINKs) clientele, whose primary and high priority goal is buying that “dream home”. On an average, one out of five clients asks such a question. They are usually in the middle of paying a home loan, or have booked an apartment and want to know which is the best method to fund it—through regular equated monthly installments (EMIs), or only interest payments for under construction properties.

What are the tax benefits that they can claim in both options? Whether the vested stocks they receive annually or the bonus they get should be directed to reduce their home loan liability? Which is the best EMI option: fixed or floating? Which option to choose when interest rates are rising or falling, and what is the fine print on “fixed interest rate”? These are just some of the questions that we receive on a regular basis.

Obviously there are many permutations and combinations, and each case is unique and requires individual analysis, calculation and guidance. The idea is to work out the best possible option for loan repayment, to enable the lowest impact of interest rate cost to the client.

Firstly, there are many ways to reduce the burden of a home loan—through prepayment (partial or full), by increasing EMIs, or shifting to another loan.

Some choose to foreclose an existing loan and take another loan with the same bank or another bank. This scenario works best in a falling interest rate regime. Mind you, there are costs associated with this, and every individual’s loan would involve weighing the pros and cons based on the client situation at hand.

Some choose to increase their EMIs (from the normal specified for a given rate of interest and tenor) to reduce the principal outgo, reduce the tenor, and thereby, reduce the interest charged by the bank. This choice is possible when other commitments such as child’s education are already being saved for or the goal has already been met. Some people prepay from the bonus that they may have received or other windfalls.

Let’s assume a client has taken a home loan a few years ago, and has a current outstanding amount of Rs.26,04,262 with a monthly EMI of Rs.36,407 to be repaid to the lender. The current interest rate on this loan is 11.75%, and the remaining tenor is 124 months.

There are four scenarios in which this Home Loan India can be repaid. The aim is to see which option works in the best interest of the client for a speedy closure and lowest cost incidence.

Scenario 1: We are assuming that the client makes no change in her EMI, and continues to make the monthly payment towards her home loan. The total interest to be paid for the remaining tenor of 124 months would be Rs.18, 99,000.

Scenario 2: We tweak the interest rate and reduce it to 10.50%, and assume that the client’s affordability hasn’t changed and she is paying the same EMI of Rs.36,407. Since, the interest rate is reduced, she can close the loan in 113 months, saving a total interest of Rs.3,94,000 over the remaining tenor of the loan.

Scenario 3: We further play with the numbers, and assume that the client will make prepayments towards the home loan from the annual bonus she receives. With the same EMI of Rs.36, 407 and assuming that the client and her spouse are able to make annual prepayments of Rs.2, 00,000 for a duration of five years, the total interest paid under this scenario will be Rs.10,49,147. And surprisingly, the loan will be completed in just 73 months, versus the original duration of 124 months. The total interest saved in this option, is a substantial Rs.8, 49,803.

Scenario 4: Lastly, we worked with the assumption that the client is able to increase her EMI to Rs.42, 000 per month (because of her annual pay hike). She will be saving a total interest of Rs.4,76,000 over the remaining tenor of the loan, and by doing this, the loan would completed in 96 months.

The result

After doing these calculations, we finally went back to the drawing board and provided the client with the analysis of our findings under different scenarios.

What we learnt was that maximum amount saved (Rs.8, 49,803) through interest was with the annual prepayment option. In this scenario, even the loan tenor came down to 73 months. But this is not a thumb rule. One must analyze factors such as the outstanding loan amount or the bank’s prepayment charges asked by banks. Apart from this, some banks also put a limit on the quantum of prepayment allowed in a year. Such clauses must be studied carefully. Then there are the client’s other goals to be seen—life insurance, healthcare, retirement planning, or even tax planning.

[Source: http://www.livemint.com/Money/DqhQ6uOxGDtpKyfEMElWwK/How-best-to-reduce-the-burden-of-home-loan-prepayment.html]

How to choose the best housing finance deal?

Home Loan

How interest rate increases will Impact you

December 14, the Federal Reserve raised its key short-term interest rate by a quarter-point, from 0.5% to 0.75%, which is still considered low. Most banks then raised their prime rate to 3.75% from 3.5%.

It was the second rate hike in 13 months. For most of the last decade interest rates were untouched, in an attempt to improve the economy after the financial crisis. If you applied for a credit card or even a mortgage, these low interest rates certainly helped.

The increase, which is subtle, wasn't entirely surprising, partly because 2016 has been a year of relatively robust economic growth. In fact, more than 2 million jobs have been created in the last year, and the unemployment rate fell to about 4.6%, the lowest it has been since the summer of 2007.

Low interest rates give consumers more borrowing power. When consumers spend more, the economy grows. Higher interest rate encourages people to save more, and borrow less, and reduces the amount of money in circulation. This slows the rise in prices. Learn more about how interest rates work.

One of the few surprises from the Fed's announcement is that in 2017, there may be two, or three, additional interest rate increases. JPMorgan Chase's head economist, James Glassman, offered this analysis:

“Ideally, the Fed's policies will prolong the current business cycle and keep the economy operating at its peak potential for as long as possible. In the past, the top of every business cycle has generated imbalances as the economy began to overheat. But as we approach the current peak, slightly higher interest rates may effectively discourage the creation of the asset bubbles and bad investments that could lead to the next recession."

Here's what the interest rate increase may mean for you:

Checking, savings, CDs & IRA CDs: Most banks will not automatically change deposit rates, because they aren't tied directly to the prime lending rate. The prime lending rate is used for pricing short- and medium-term loan products, such as credit cards and home equity lines of credit. (This infographic explains more about the prime lending rate.)The good news for people with savings accounts is that they may start seeing larger returns, at least in the long term.

Credit cards: Most credit cards carry a variable interest rate. So, credit card interest rates will likely go up—but modestly. It probably won't affect your ability to pay your bills each month.

Home Equity Lines of Credit (HELOC) and other variable-rate products: In general, the rate that banks charge on many HELOCs, it can be calculated through Online Emi Calculator and other lines of credit is a variable rate, so they will be affected, but only slightly since the rate hike is only a quarter point.

Adjustable-rate mortgages: These mortgages, often called ARMS, are tied to a different index which can change only at specific time periods, usually annually. The rate hike could cause your mortgage rate to increase on your next rate change date.

Existing fixed-rate loans: Interest rates on car loans, fixed-rate mortgages and other existing fixed-rate loans won't be affected. Currently, an average mortgage rate is about 4%. Going forward, that may increase, but mortgage rates vary from customer to customer, based on any number of factors.

[Source: https://www.chase.com/news/121916-interestrate-hike]

What’s a top up loan!

A top up loan basically allows you to avail a loan amount on top of your home loan. The usual loan tenure is about 10 years and is often offered only after a few years into the home loan disbursal, as this gives a fair idea about your repayment track record, which means no defaults down the line and this also increases your loan eligibility.

Vinita Mistry took a home loan from her friendly neighborhood bank two years ago. She bought a cute cozy apartment in a block of 60 apartments in a community enclave, which housed 300 apartments in all. At that time she did not have a four-wheeler and rode a trendy power bike to work, which was always parked under the stairway that went up to her 5th-floor apartment. She eventually moved office and upgraded to a gorgeous looking small car. Then she had a problem! Parking Space!!.

She figured she needed to buy that additionally apart from her apartment cost. She wished to take a loan to cover the cost of purchasing a parking slot. How can she go about this? Are you stumped like Vinita wanting more amenities or are you looking for some urgent funds, without expensive interest rates attached to it?  Well, a top up loan on your existing home loan might just be the answer. Let us understand the various nuances of a top up loan before you decide to shortlist this as an option.

How it works

A top up loan basically allows you to avail a loan amount on top of your home loan. The usual loan tenure is about 10 years and is often offered only after a few years into the home loan disbursal, as this gives a fair idea about your repayment track record, which means no defaults down the line and this also increases your loan eligibility.

The logic behind a top-up loan is the fact that you have already started repaying your loan, hence your outstanding loan amount with the bank has already begun decreasing with each payment. A top up just enables you to utilize that margin towards obtaining a loan that you may urgently require to meet some of your needs.

Utilizing a top up loan

Top up loans are a boon to people who are in urgent need of funds. It is almost like a personal loan, except that it comes with better interest rates though not as good as home loan rates but is based on the prevailing rack rates. You can utilize this loan for any purpose. A top loan on your existing home loan is an ideal choice to pay for your parking space or to fund your son’s higher education for instance.

Eligibility

You can take a top up only when you have a Loan for Home to top up on. The conditions for top up loans vary from bank to bank. You can approach the same bank in which you took your home loan but if your bank does not offer you the option, as some reserve the right to provide a top up, then you could shift the home loan to a bank that is willing to give you a good deal on the top up loan. Keep in mind that you need to have an impeccable repayment track record.

The outstanding loan amount pending with the bank, the market value of the property and your ability to repay a top up, are all taken into account to figure out how much top up the bank gives you. In fact the upper limit on the loan amount is defined based on these three aspects.  It is always ensured that the outstanding loan amount you owe the bank plus the top up personal loan does not increase beyond around 70% of the market value of the property. Also, each bank will have its own upper limit and the loan amount will be restricted accordingly.

Tax benefits

Tax benefits are dependent on the purpose for which the loan is utilized. For Vinita, the loan is for parking space, which is part of property acquisition. Hence, she would be eligible for a tax rebate on both the principal and tax repaid towards the top up loan capped at Rs. 1 L and Rs. 1.5 L respectively, which is inclusive of the rebate she would avail from her current home loan.

A sample calculation for Vinita’s top up loan

Let us assume Vinita has taken a loan of Rs.30 L at a 12% interest rate for a period of 20 years and as specified is now in her third year into the loan.

Let us make another assumption that from the time she purchased the property, the value has risen by Rs. 20 L, which pegs the current market value of the property at Rs.50 L.

70% of Rs. 50 L = Rs. 35 L (70% of the value is taken as the margin beyond which the loan will not exceed)

Next, the outstanding loan amount is deducted from the above figure:

Three years into the loan she would have repaid a principal amount of Rs.1.31 L

Remaining Principal amount to be repaid – Rs. 28.7 L

Rs. 35 L ( 70% of market value) – Rs. 28.7 L (principal yet to be repaid) = Rs. 6.3 L

Hence the maximum top up loan she will be eligible for based on this example, is Rs. 6.3 L.

However to avail a top up loan, factors like your repayment capacity based on your income and commitment towards any other loans other than your home loan etc., will be factored in before the bank decides on the exact top up loan amount they can offer you.

[Source: https://blog.bankbazaar.com/need-more-from-your-home-loan-take-a-top-up-loan/]

Why it makes more sense to switch your home loan after this interest rate cut

If not all then at least the old borrowers who have been servicing their EMI's based on the erstwhile base rate system of lending, stand to benefit. Even though bank's base rate hasn't come down as much, they now have a stronger reason to switch to the current MCLR-based lending. With the recent interest rate cuts on loans by banks the differential between base rate at which old borrowers are servicing their loan and the current MCLR is widening.

For those who had taken loans after July 1, 2010, but before April 1, 2016, the loans are linked to the bank's base rate. And for most of these borrowers, the home loan interest rate is around 10 per cent. After the recent rate cuts announced by banks, the average MCLR has fallen to about 8.75 percent or even lower. This differential of 1-1.25 percent in base rate and MCLR will help old borrowers to switch to MCLR and save on total interest outgo.

Why to switch now

The primary reason to switch from base rate to MCLR has to be the sluggishness seen in banks' passing on the benefits of RBI rate cuts to borrowers. RBI's repo rate cuts were not reflecting in the bank's base rate but are a part of the factors that goes into calculating the bank's MCLR so, the moment repo rate changed, MCLR was impacted.

Further, the MCLR takes into account the marginal cost of funds which includes the rate at which the bank raises deposits and other cost of borrowings. With banks flush with funds post demonetisation, the bank's CASA deposits (current account-savings account) have swelled and have given the banks the leeway to go for such major rate cuts.

The base rate, on the other hand, has seen only marginal reduction since last 24 months. Post demonetisation, banks are expected to wait and see the impact once the restrictions on cash withdrawals are removed. If the funds don't move out from the banking system in significant amounts, further rate cut is expected.

MCLR based borrowers

For the new home loan borrowers who have taken loan after April 1, 2016, there's not much immediate benefit from the recent rate cuts. For most MCLR-linked home loan contracts, the banks reset the interest rate after 12 months for their home loan borrowers. So, if someone has taken home loan from a bank say in May, 2016, the next re-set date will be in May, 2017. Any revisions by RBI or banks will not impact their EMIs or the loan till the reset date it is done through Home Loan Emi Calculator

What's MCLR mode of lending

A new method of bank lending called marginal cost of funds based lending rate (MCLR) was put in place for all loans, including home loans, given after April 1, 2016. Under the MCLR mode, the banks have to review and declare overnight, one month, three months, six months, one year, two years, three years rates each month.

Watch outs

In a falling interest rate scenario, quarterly or half-yearly could be a better option, provided the bank agrees. But when the interest rate cycle turns, the borrower will be at a disadvantage. After moving to the MCLR system, there is always the risk of any upward movement of interest rates before you reach the reset period. If the RBI raises repo rates, MCLR too, will move up.

Options for base rate borrowers

When the interest rate on your loan goes down banks, on their own, typically reduce the tenure automatically (instead of reducing EMI amount) and thereby, transfer the benefit of lower rate to the customers.

The base rate borrowers now have two options - switch to MCLR based lending with the same bank or else transfer i.e. get the loan refinanced from another bank on MCLR mode. One may also continue the loan on base rate, especially if the loan term is nearing the end.

The RBI has made it clear that banks should allow base rate borrowers to switch to MCLR. The existing loans can run till maturity or borrowers can switch to MCLR on mutually agreed terms.

Switching from base rate to MCLR within the same bank

It makes sense to switch if the difference between what you are paying and what the bank is offering now as MCLR is significant. And also in cases where the time for the home loan to finish is not near.

Switching loan from base rate to MCLR with another bank (refinancing)

If your bank is offering a high home loan interest rate (MCLR plus spread) then look for refinancing. Gets the loan refinanced from a bank offering a lower interest rate. You may have to incur processing fees. However, banks are not allowed to charge foreclosure or full repayment charges. Other charges may include lawyer's fees, mortgage charges, etc. Remember, the bank may ask you to buy a home loan insurance cover plan, which is not mandatory. Get the loan insured through a pure term insurance instead, in addition to any insurance that you already have.

[Source: http://economictimes.indiatimes.com/wealth/borrow/switch-home-loan-on-base-rate-to-mclr-to-cut-interest-burden/articleshow/56326321.cms]

Choose your best Financial Dream for your dream home

Housing Loan

Smart ways to Manage your Home Loan

Use the interactive home loan emi calculator to calculate your home loan EMI. Get all details on interest payable and tenure using the housing loan calculator

Become a Proud Home Owner with the Help of a Home Loan

The society that we live in is changing with every passing year. This is not just limited to the spending habits of the public, even the basic mind-set of the people has been evolving. Traditionally, joint families were the ideal form of living. However, nowadays more and more people are opting for nuclear homes rather than living with their parents.

Thus, it goes without saying that the number of home owners has increased in the recent past. It order to make the house an asset that is within the reach of the general public, banks offer loans that are especially designed for the purchase of property.

With the help of these loans, purchases can be made on credit and the amount can be repaid to the bank in installments. This amount is calculated taking a number of different factors into consideration. This includes; the principal amount, rate of interest, tenure of the loan and the method of computation. You can find this figure yourself, using an EMI calculator.

These calculators are available online and will help you compare the offers of different banks before narrowing it down to a couple. A home loan emi calculator will help you to get an overview of how much you will have to pay the bank on monthly bases, in order to repay your loan in time. This is an extremely beneficial tool as it will help you understand how much of your income will go towards repayment of the loan. It is important to avoid a loan that is more than 60% of the monthly income, as it will be difficult to make payments in time.

Default payments can hamper the credit score and affect the chances of getting a good rate of interest in the future. This score is calculated taking the past finances into consideration. This includes everything from payment of credit card bills on time to bouncing of cheques. If you have a good credit score, the rate of interest changed of the loan will be low. However, if you do not have a good credit score, it will be difficult to even get a loan.

Similarly, your past financial record and the monthly income in sued to determine the maximum amount you are eligible to receive as credit. Although banks can offer a loan of up to 80% of the cost of the property, the amount actually offed depends on the state of your finances.

In order to reduce the amount to be paid on monthly bases, you can choose a home loan that spreads over a long tenure. However, while doing this, you must keep in mind that the amount you will be paying as interest will increase. Hence, it is important to make sure that the monthly installments are easy on the pocket, without having the cost of interest pile up.

It is important to take these things into consideration while selecting a loan. Steps must be taken to constantly improve credit score so that when you do apply for a loan, you are sure to get a good rate of interest.

[Source: http://www.sooperarticles.com/finance-articles/loans-articles/become-proud-home-owner-help-home-loan-1229597.html?]

An Insight into Buying Resale Property

You didn't plan, but you did fall in love with a pre-owned house in a much-coveted locality? Buying a resale property can be a smart move, however, before you make the big purchase, be aware of all the pros and cons involved in purchasing it. It is absolutely necessary that you rule out any discrepancies that could give rise to legal issues in the future.Benefits of buying a resale property

Easy on your pocket and time: You can save both effort and time by choosing to buy a resale property, as you are likely to find most amenities in place at the time of possession. With resale properties, chances are that you might be able to acquire a property at a discounted price, or come across an eager seller willing to negotiate.

Good Investment Option: A resale property in a prime location is a great investment option as there will be a constant demand for such properties. Since prime localities are saturated and there are no fresh projects, resale properties have a great potential for resale. You can avail a home loan for properties not older than 20-25 years. If you have disposable cash from a recent property sale, investing in an older property is a great option. What to Look Out for When Buying Resale Property

Never let a prime location or an unbelievable bargain take away your attention from the essential measures required to safeguard yourself from fraudulent sellers. With a little caution, you can buy a great resale property at an amazing price. Here are a few cautionary tips to be followed when buying resale property.

Look for Physical Damage: While it is a norm to renovate and paint a house before selling it, do not let the beauty make you blind to any physical damages in the building structure. It is a good idea to hire an architect to examine the property and rule out any problem areas. When you identify damage, do not let go of the house immediately. Instead, calculate the amount you'd have to spend to fix the issue and try to adjust it in the final price you'd be paying for the property. If the expense is too big, then it might be practical to strike the property off your list.

Check Documents Thoroughly: Look beyond the title deed of the property and ask the seller for the mother deed - a document that covers all the transfers the house has undergone. In order to root out any legal hassles, you could hire a lawyer specializing in real estate to put a search report together. This is a necessary caution while investing in a resale property with proper Home Loan Emi Calculator as it safeguards your ownership. Also, insist on examining the original conveyance deed as it gives you an assurance that the seller is indeed the owner of the property. Besides checking the conveyance deed, also make sure that all outstanding dues and taxes have been paid. Caution Against Legal Hassles

It is recommended that you seek the help of district court records to find out if the property has been involved in any litigation. When buying an apartment, all you need is a no objection certificate from the society. However, if you are buying an independent house, watch out for duplicate sale deeds.

[Source: http://www.sooperarticles.com/real-estate-articles/selling-property-articles/insight-into-buying-resale-property-1506940.html?]

Are you searching for right finance for your home

Online Emi Calculator

How to Calculate Home Loan Emi

how to calculate home loan emi

A Start-to-Finish Home Loan Tips

Difficulties' pertaining with property loan is easily solved by the available option of Home loan. Borrowing a home loan helps the individual to reduce the burden from his head; it is also true that borrowing should be done with proper and right source. If you are failed to track the correct source and are not aware of the fiscal and taxation consequences in getting property loan it can soak your life and peace of your mind at every single point of time. Here are some guidelines for acquiring, taxation policy and repaying your home loan.

Means, Mediums and borrowing capacity of an individual?

Banks, private money lenders, financial institutions, friends and relatives and also many others are the available means, or sources for grasping the loan, in this Banks plays major role in providing a Property loan. Banks have their own criteria for calculating the capacity of an individual’s borrowing. Banks judge your borrowing capacity from the chart of the total income expenditure done by you in the given period of time. It depends upon the monthly income and expenses flow from your income. Bankers assume around 40% of monthly income can be utilized for paying into the monthly installment.

Like, if your monthly income is about 50000, then the maximum installment amount can reach around 20000. Further, calculation for the final loan amount is also calculated on the period of loan & rate of interest associated. For eg, rate of interest at 9.5%, along with tenure of 20 years then loan of approx 22 lakhs can be availed. Here, your Liabilities are also taken into account by the banks. Henceforth it is recommended that overall expenses should not exceed 55 - 60% of your total monthly earnings to acquire a residential or commercial property loan.

To acquire property loan age factor is also considered by bankers. If an individual is 53 years of age then there are chances of not getting loan through banks whereas on other side if an individual is at 30 years of age then he can easily quote and receive the applied loan. Here age factor is considered by banks so that there should not be any existence of default payment of installments or loss to banks. As the age of 60 is the age where an individual’s get retired from his service and the person with 30 years is still young at his age to easily repay his Emi for Home Loan and outstanding as compared to person of 53years of age.

Monthly CTC salary is also indeed important factor. Allowances and special allowances are not taken into account while lending the money. This includes commission, incentives, monthly bonus all this may reduce your eligilbity for loan to acquire since it is not fixed regular income. Home loan is also favorable for the person who is opting loan for renting the house. Individuals, who has availed the loan and given his flat on rent, can apply for the deductions without harming their HRA's received in their gross salary under sec 24(b).

Joint, family, friends and Relatives loan

If an individual is running with short of funds or reserve to acquire a property and banks reduces his borrowing eligilbity he can go for a co-borrower. Banks generally accepts a co - borrower and provides loan. Some lenders are not very much OK with co - borrower as your spouse, since they think that, there can be any time disputes between the both. So the idea of making your life partner as co - borrower is a good option.

Loan managed from friends, relatives or any other financial sources also enjoys the tax benefits. This comes into effect only if the loan so acquired is for building a property, to buy property, other repairs and renovations accomplished with the property. But, claim and deductions for the loan availed from other financial institutions is not considered under sec 80C. Taxation is liable only in ready constructed properties. However, no tax deduction is followed if the loan is availed to buy an open plot of land.

Taxation Benefits on Property Loan

Under section 80C deductions upto1 lakh can be claimed if an individual repay housing loan. This is very much beneficiary to the person who actually pays the huge amount of installments. Not only this, deductions under sec 24(b) of 1.5 lakhs a year can also be claimed apart, from the taxable earnings of the borrower.

Tax deductions can be claimed individual if there are co - borrowers for the home loan. Individuals are eligible for the benefits as per the ratio of contribution to acquire and ownership of so called property. For instance if wife pays 30% of overall amount from her source then she is liable for the deductions as per her contributed ratio. Thus, if in a current year, principal is repaid of 1 lakh, she can claim the deductions of 30,000 following her husband to 70,000.

[Source: http://www.sooperarticles.com/real-estate-articles/mortgage-financing-articles/start-finish-home-loan-tips-335902.html?]

How to buy property - Home Loan Emi Calculator