Home Loans to Get the Best of Your Property

At least once in life everyone thinks about moving. Either to a bigger home if the family is growing; or to a smaller one, if the kids are leaving and the actual home is going to be too big for you. Whatever your reason may be, selling a house is always an opportunity.

Home loans, if well used may help you to make a good deal from your property's sell. There are many suitable options, depending on your situation and what you are looking for. Even with bad credit, and also if you are still repaying your home mortgage.

Types of Home Loans

There are many options to be evaluated within home loans, you should start evaluating first what is that you want to do. If you want to switch to a bigger home, to a smaller one, and how would you like to invest the extra benefit obtained from the selling, if any.

There are two important home loan categories that you should look at when thinking about moving. Those are, home purchasing loans and home improvement loans.

Home improvements loans point to, as their name says, improve your current home. Either if there are any reparations to be done, or if you would like to make your home look better before selling it, these kinds of loans may be a good help. If you do the right modifications, your home value could be increased by the time you find a buyer. Financial companies will also approve loans for landscape improvements, such as constructing a swimming pool, if that is favourable to increase the property's value.

Home purchasing loans, in the other hand, are meant to help you on your new home's purchasing.

Different Options

You will find a wide range of loans within both, home improvement and home purchasing loans.

Home purchasing loans will vary according to what do you intend to do. In example, if you had purchased your actual home whit a home loan which you are still repaying, and the home you are willing to move to will also need extra finance, you could get a home conversion loan. These kinds of loans, place your actual loan into the new home, including the extra amount you need. If you do not have any previous home loan, you can have a mortgage loan or a home equity loan, just over the extra amount you need to buy your new home.

You will also find many options on home improvement loans, the most common are unsecured personal loans for home improvements, home mortgage refinancing, first mortgage loans and second loans.

Unsecured personal loans may be a little more expensive than secured loans since they represent more risk for the lender, but you will not need to have equity in your property or any other collateral to apply. Credit score may be a limitation for the borrowed amount, but you are still eligible even if you have bad credit.

Home mortgage refinancing and first mortgage loans, are good options to evaluate if you have purchased your home with a mortgage loan. First mortgage loans are offered by your current lender, to finance your home improvements over your existent mortgage. With home mortgage refinancing your actual mortgage loan will be refinanced. You will not be borrowing more money, but refinancing will lower your home mortgage monthly payments leaving you extra money to invest on improving your home.

Second loans are suitable if you have equity in your property to justify the loan.

All these options, if well used may help you to obtain the best of your property's sell. Try to search and compare as many lenders as you can before you decide to apply for any loan.

Source: http://EzineArticles.com/expert/Jess_Peterson/70408

Unbelievable interest rate of 9.40% on House Loan Interest

If you are looking to buy a house, ‘high-interest rates’ will no longer be an obstacle is here with an incredible Home Loan Flash Sale.

Now you can buy a home or transfer your existing home loan to an unbelievable interest rate of 9.40%.

This limited period offer will last from 18th April to 22nd April 2016 and will help you achieve the elusive milestone of owning a home or availing a better rate of interest and services on your existing Home Loan.

If this hasn’t convinced you, wait till you hear about some of the other customer-friendly features offered

Easy approval and disbursal

Let’s you apply for a home loan online without leaving the comfort of your home or office. If you fit the eligibility criteria, your loan will be approved within 5 minutes and their representative will get in touch with you shortly after that.

Also, if you have used your own funds to purchase a house loan interest in the last 12 months, then you can opt for the refinance option offered and avail a loan amount that’s less than or equivalent to the registered value of your property.

Relaxed part prepayment facility and nil foreclosure charges

At any time during the loan tenure if you come across some additional funds, then you can use them to repay your personal loan without paying any extra charges. You will be able to prepay without any additional charges for a maximum of 6 times in the same year and there’s no set limit for the prepayment amount.

On the other hand, if you want to close your loan account any time after you have paid the first EMI, you can do so without paying any foreclosure charges.

Source: http://blog.bajajfinserv.in/unbelievable-interest-rate-of-9-40-on-home-loans/

The Differences between Investing in housing finance ltd and Mass Infrastructure

From an investor's perspective, the ROI in housing might be greater than that achieved from road and rail projects. But infrastructure is fundamental to development and deserves holistic thinking.

The relationship between housing and public infrastructure has always been strong, even if indirect. One need look no further than the London Cross rail project, which is adding 75 miles of commuter trains to the city's system and where, to no one's surprise, housing values near new system stations are rising rapidly.

But to an investor, if a choice must be made between financing various kinds of infra (transport, utilities, broadband, flood mitigation, and more) and residential development, it can be challenging to determine which might yield the greatest return on investment. Yet because the two are interdependent it is entirely logical for investors to consider them within the same investment decision-making process.

This discussion is ramped up by the pressing need for additional housing in the UK. This is strongly incorporated into the National Infrastructure Plan 2014 by HM Treasury, the Government's economic and finance ministry. The report cites several infra projects where housing and public amenities could be inextricably linked if the Plan is fully implemented, as well as where previous public projects have succeeded:

• Suburban network rail connected: A Government loan (contingent on a principal heads of terms agreement) of 55 million to extend the London Over ground to Barking Riverside, predicted to help deliver 11,000 homes.

• Land remediation and infrastructure: In Ebbs fleet, a 100 million infrastructure fund will enable up to 15,000 homes to be built in a new garden city.

• Rail upgrades: Already, a major upgrade since 2010 of King's Cross Station rail unlocked 2,000 new homes.

• Road transport and public spaces: A spend of 23 million for a road crossing between Swindon and Wichelstowe (on the M4) opened a new site for thousands of homes. Meanwhile, construction begins in 2015 to provide transport links and public spaces that will transform Battersea, Nine Elms and Vauxhall, with the potential for creating 16,000 new homes.

Housing Finance Ltd

Very often, both housing and major infrastructure programmes are a mix of private and public funding. But housing exists in a different sphere, providing returns to investors in relatively short order and the majority of homes are built by the private sector. True, financiers, including those who work in real asset portfolio investing, may need to go through planning authority processes.

Investors working in infrastructure through municipal bonds are not as common in the UK as they are in the United States and other European countries. The majority of local government borrowing is historically through central Government, but since 2014 a consortium of local councils has begun to fund the Local Capital Finance Ltd. Agency, which takes bonds to investors. The Chartered

Institution of Highways & Transportation called for a greater sense of interdependency in public and private projects in a 2012 report (Action Plan for Change; Infrastructure Funding & Delivery), stating "A hybrid public and private sector infrastructure fund should be created for a discrete geographical area which, whilst not generating mainstream capital market investment returns, would deliver infrastructure that benefits local land values and local businesses." The problem, argue some, is that infrastructure lacks data and benchmarking, lending an opacity to municipal investments that makes councils and investors skittish; the broadest benefits of roads, rails and flood abatement are at best proven over decades, not quarters or fiscal years.

Investors need to weigh many factors relative to development in the UK. While the overarching economic factors of population growth and housing finance ltd inventory suggests strong opportunities, individuals are wise to engage an independent financial advisor to examine where development projects fit wealth building objectives.

These are not simple "apples to apples" comparisons, and the potential for growth in some types of real assets funds is not always easy to ascertain. It is largely a transaction amongst owners of UK land, site assembly professionals, builders of utilities and structures, as well as the private individuals who buy the homes.

Source: http://EzineArticles.com/8959685

Home loan without income tax return: 4 Steps to claim your Interest on Home Loan Deduction

The limit on the amount that can be claimed as interest on home loan deduction has been increased to Rs 2, 00,000 from financial year 2014-15. As we have seen here this can bring you significant tax savings. Let’s understand what are the steps you need to take to claim this deduction –

Step 1 Documents you will need

·         Ownership details of the property – Goes without saying that you must be an owner in the property to claim this deduction. In case you are a co-owner in the property find out your share in the property. The amount of deduction you can claim is based on your share in the property.

·         Completion of construction or date of purchase of the property – the deduction for interest can be claimed starting the year in which the construction of the property is completed. You can also claim pre-construction interest. Pre-construction interest is allowed in 5 equal instalments starting from the year in which the house is purchased or the construction is completed.

·         Borrower Details – Just like ownership, the home loan must be in your name too to claim this deduction. You may also be a co-borrower in the loan.

·         A certificate from the bank which has your interest and principal details.

·         Municipal taxes paid during the year. Note that municipal taxes can be deducted from House Property Income only when these have been actually paid during the year.

Step 2 Submit these documents to your Employer

·         If you submit your interest on home loan deduction documents to your employer, your employer will adjust your TDS deductions accordingly. Therefore, you won’t have to wait until the year end to find out your tax liability and adjust your tax. Do make it a point to inform your employer.

·         If you are a Freelancer or you are self-employed – you don’t need to submit these documents anywhere, however you will need these documents to estimate your Advance Home loan without income tax return liability for each quarter.

·         You are not required to submit these documents to the Income Tax Department.

Step 3 Calculation of Income from House Property

In case of a self occupied house property, the amount of deduction is limited to Rs 2,00,000. However for a let out house property there is no limit on the amount of interest you can claim as deduction.

Here are the steps to calculate your income from House Property.

Gross Value of the property (nil in case of Self Occupied Property and Rental Value if rented)

Less: Municipal Taxes actually paid

Less: Standard Deduction (30% of Net Annual Value= Gross Value less municipal taxes)

Less: Deduction for interest on home loan

= Income from House Property.

Do note that when you file your return with Tax, you DON’T have to do any of these calculations – you only need to enter your details and we will automatically calculate the amount which will be your Income from House Property.

Step 4 Claim your Principal Repayment under section 80C – In case there is Principal Repayment by you during the year (check your loan instalment details) – principal repayments are allowed to be claimed as a deduction under section 80 C. However, the total amount allowed to be claimed under section 80C is capped at Rs 1, 50,000.

Hope you will be able to successfully claim deduction for Interest on Home Loan with these steps listed above, in case you still have questions, do write to us support@cleartax.in and we will be happy to help you!

Source: http://blog.cleartax.in/4-steps-to-claim-your-interest-on-home-loan-deduction/

What are the Advantages for Women Applicants in Case of Home Loans?

If you are a woman who is planning to buy a residential property, you’ve got some reasons to cheer. It is a known fact that women in India enjoy certain benefits when it comes to loans, more so in case of home loans. They need to pay lower interest rates as compared to men. It is because there is a general perception that women pay their dues on time and are less likely to default.

The financial sector in India at large provides special benefits and concessions to women whether it is about opening an account, tax exemption or borrowing a home loan.

Home Loan Advantages Enjoyed By Women in India

One of the most crucial factors in case of a home loan is the interest rate at which it is offered. The interest rate helps in determining the financial institution as well. Every small variation in the loan interest rate can make a huge impact on your monthly EMIs (Equated Monthly Installments). Since home loan involves a huge sum of money, having a concession in interest rate can help you save a good amount over the entire loan period.

This is one of the most important benefits that Indian women can have while applying for a home loan. However, a woman can get preferential or lower interest rates only when she becomes a primary applicant or co-applicant for a Home Loan for Women.

Banks Promote Women Empowerment by providing them Loans at Concessional Rates

Banks highly promote loan assistance at concessional rates to the womenfolk. By doing so they encourage financial empowerment and independence of women. Besides, they also believe that women have a lower risk profile as compared to men.

Interest rates have a close relation with the perceived risk profile of the applicant. However, for an applicant with higher risk profile, the home loan interest rates will be higher. Having said that, whether woman or a man, no bank will extend a home loan or any sort of financial assistance to an applicant without a satisfactory credit score as well as necessary documentation.

[Source: http://www.biz2credit.in/blog/2015/09/08/what-are-the-advantages-for-women-applicants-in-case-of-home-loans/]

What Happens after Your Home Loan is approved?

You’ve searched for your dream home. Now you’re looking for a Home Loan? If you’re wondering what happens after your Home Loan is approved, this is your quick guide to the post-application process.

Property assessment

First things first, property assessment! The property that you want to buy, as well as any property that you provide as collateral security will be inspected by a technical officer. If it is an under-construction property, the stage of construction and quality of construction is noted. If it is a completed property, the age of the property, internal and external maintenance, and development of the surrounding area will be noted by the officer.

Scrutiny of documents

The documents pertaining to the property will also be scrutinized by a lawyer. Generally, only the original documents for the property are accepted by the bank. The No Objection Certificates (NOC) need to be submitted to the bank.

Property Registration

You need to go to the sub registrar office for the registration of your property. You also need to pay your stamp duty and registration charges. After this process is complete, you will receive a copy of the Sale Deed and another copy will go to the bank.

Pay Your Part

The bank will ask for proof of your contribution to the loan. This is your down payment. You might need to give your bank statement, with a cheque or net banking details of transferring the money to the builder.

Disbursal of Home Loan

On your acceptance of the loan offer extended by your lender, the assessment is done and documents are scrutinized. The property also gets registered in your name. Once this is completed, you will need to submit the final processing fee to your lender by cheque.

When the processing fee is received by your lender, a cheque for the approved loan amount is prepared and given to you. Your Home Loan repayment schedule will begin one month after the loan is disbursed.

Additional Reading: How A Home Loan EMI Calculator Works

Funding Release

If you purchase an under construction apartment, your bank will release the funds in stages. This will be based on the construction progress. So, until the construction is totally completed, you needn’t pay EMIs for the whole Loan amount. Sounds fair? For a completed apartment or house, the funding will be released in one shot.

ECS Set Up

The Electronic Clearing Service (ECS) or the standing instructions need to be set up for your loan. Here, you need to sign ECS forms so that the EMI gets auto-debited every month. Earlier, this might not have been mandatory. Now, banks are making it mandatory to submit ECS forms for all best home Loan. This way, you don’t have to worry about forgetting the due date of your EMI.

Get Demand Letters

As and when the builder completes the construction of the house or apartment, funds will be released by the bank. You need to get a demand letter from the builder and give it to the bank whenever the funds need to be released. The builder needs to provide a receipt for the same. This receipt should be handed over to your bank.

Additional Reading: All about Home Loan Insurance

Getting a Home Loan is simple, really. If you’re ready to get one step closer to your dream home, why don’t you browse our offers on Home Loans?

Source: https://blog.bankbazaar.com/what-happens-after-your-home-loan-is-approved/

Housing Loans/ Home Loans in India

What is housing Loans?

Housing loans are loans allowed by financial institutions, especially banks. Earlier, banks in India were not allowed housing loans to general public, in easy terms and conditions. But, as per instructions from Reserve Bank of India, housing loans became priority sector advances and it is one of the fast selling products in in Indian banks.

Priority sector lending under housing loans, as per budget, for 2012-13 is as follows.

1. Loans up to Rs. 25 lakh, irrespective of location, to individuals for purchase/construction of a dwelling unit per family, excluding loans granted by banks to their own employees.

2. Loans given for repairs to the damaged dwelling units of families up to Rs. 1 lakh in rural and semi-urban areas and up to Rs. 2 lakh in urban and metropolitan areas.

3.Assistance given to any governmental agency for construction of dwelling units or for slum clearance and rehabilitation of slum dwellers, subject to a ceiling of Rs. 5 lakh of loan amount per dwelling unit.

4.Assistance given to a non-governmental agency approved by the NHB for the purpose of refinance for construction/reconstruction of dwelling units or for slum clearance and rehabilitation of slum dwellers, subject to a ceiling of loan component of Rs. 5 lakh per dwelling unit.

5.Loans granted up to March 31, 2010 to Housing Finance Companies (HFCs), approved by National Housing Bank for the purpose of refinance, for on-lending to individuals for purchase/construction of dwelling units, provided the housing loans granted by HFCs do not exceed Rs.20 lakh per dwelling unit per family.

Whereas, loans up to Rs. 25 lakh to individuals for purchase/construction of dwelling unit per family (excluding loans granted by banks to their own employees) and loans given for repairs to the damaged dwelling units of families up to Rs. 1 lakh in rural and semi-urban areas and up to Rs. 2 lakh in urban and metropolitan areas.

Priority sector loans are, comparatively with smaller rate of Interest. So banks allow housing loans, under priority sector, with a limit as shown above.

General public individuals are eligible for housing loans under non-priority sector also, beyond the above limit, provided that they have enough repaying capacity.

[Source: http://yourhouse4u.blogspot.in/]

The problem with home loans

The latest in Reserve Bank of India’s measures to protect customers with home loans is a proposal to change the way banks determine their `base rate’ – the benchmark for all floating rate loans. The need for a re-look arose because customers have been complaining of a raw deal in pricing.

In recent years RBI has taken a number of measures to provide a better deal for home loan borrowers. The introduction of base rate ensured that banks do not reduce rates only for new customers by playing with the interest spread. In the past banks could play with the spread as they would lend below the prime lending rate (their earlier benchmark) for new customers while old customers continued to pay over the PLR.  This was not possible with the `base rate’ which was also the floor rate for pricing. In June 2012 RBI forbade banks from imposing a penalty on pre-payment of home loans irrespective of whether the loans were being refinanced or repaid. This made it possible for disgruntled borrowers to move away to rivals if their loans were not re-priced when interest rates were falling.

But there are a number of areas RBI could look into as part of its consumer protection initiative. Here are a few.

Compulsory insurance: Banks have an interest in the property mortgaged with them and they need to ensure that it is protected against any eventuality. At the same time banks also gain by selling insurance policies.  But what needs to be insured is the cost of construction and not the cost of land. A 1000 square foot house may cost Rs 2 crore in Mumbai but the cost of construction would be around Rs 20 lakh. So there is no need of buying property insurance for the whole loan amount. Yet many banks insist that the buyer pay 15-year insurance premium upfront based on the market value of the property rather than the construction cost. Also in cities like Mumbai, the property is owned by the cooperative society which is required to insure the property. It is therefore not clear whether the bank’s insurance policy will pay a claim when the housing society is also making a claim for the property damage.

Non-intimation of interest rate changes:  Most home loan borrowers focus on the interest rate at the time of availing home loans. But floating rates are dynamic and vary from time to time. The borrower is not aware of this because while rates vary, the equated monthly installment or EMI does not. Banks merely change the tenure of the loan. So in a rising interest rate regime it is not unusual for borrowers to find that their principal loan amount is unchanged even after years of repayment.  Very rarely does a bank communicate to the borrower changes in interest rates.

Notice of intimation of mortgage: In Maharashtra the government has made it compulsory for all mortgage interests to be registered. This is aimed at preventing fraudulent sale of the property even as a loan is outstanding.  While the objective is laudable, the trouble is with the process. Although the law actually protects the bank’s interest lenders have shifted the onus on the borrower.  Rather than use their institutional clout to facilitate smooth registration, borrowers are forced to approach agents and spend a few thousands to complete this process.

No refinancing of existing loans:  Lenders often poach from home loan borrowers of other institutions. But when it comes to their existing customer they do not offer them the benefit of new rates.  If there is a special scheme running in the bank, existing borrowers are not informed of it. Also banks charge customers a processing fee even when their loan is refinanced within by their own bank but under a different scheme.

Complex pricing: Some banks have resorted to complicating the pricing of home loans introducing interest free years in middle of the tenure of the loan. Innovations in financial products are good only as long as they do not obscure pricing. Borrowers need to have the opportunity to compare the home loans rates of one home loan against another.  One way to make the pricing transparent is to disclose the cost in the form of annualized yield to the lender based on prevailing rates.

Document Checklist for Home Loans

Getting a Home Loan is easy these days. As long as you have the necessary documents with you, your Home Loan will get approved and disbursed without any complications. Here is a comprehensive checklist of documents that banks and financial companies require for sanctioning a Home Loan. It’s a fairly lengthy read but so, so important!

Read this. Become very knowledgeable. Buy a home. Simple!

Tip: Check with your Bank or Non-Banking Financial Company to figure out which of the following documents you need to submit, as requirements differ from institution to institution.

The Long List Begins!

The documents mentioned below must be provided when applying for a Home Loan:

Identity proof

— Driving license

— Voter ID

— Passport

— PAN card

— Aadhaar Card

— NREGA Card

Address proof

– Driving license

– Voter ID

– Passport

– Ration card

– Utility bill – telephone, electricity, water, gas, postpaid mobile (less than 2 months old)

– Letter from any recognized Government authority verifying the residence address of the customer

– Letter from your employer (in case no other proof is available)

– Bank Statements/Pass book/ other Government documents such as post office pass book

– Property or Municipal tax receipt

– Pension or family pension payment orders (PPOs) issued to retired employees by Government Departments or Public Sector Undertakings, if they contain the address

– Documents issued by Government departments of foreign jurisdictions and letter issued by Foreign Embassy or Mission in India

Age proof

– Driving license

– Passport

– PAN card

– Birth certificate

– 10th standard mark sheet

Income proof

Income proof and property proof vary for salaried individuals and self-employed individuals.

Self Employed/Businessmen

– A brief introduction of your business/profession

– Balance sheet, profit and loss account statement of income, proof of income tax returns for the last 3 years certified by a CA

– Receipts of advance tax payments made (if any)

– A photocopy of Registration Certificate of establishment under Shops and Establishments Act/Factories Act

– Certificate of Practice for professionals such as doctors

– Proof of investments (FD Certificates, Shares, any other fixed asset)

Salaried individuals

– Form 16

– Increment/Promotion letters

– Appointment letter

– Payslip (Last 3 months) with salary account bank statement

– IT returns (for the last three years)

– Investment proof (FD certificates, shares, any fixed asset)

– Documents supporting the financial background of the borrower (liabilities and assets if any)

List of the must-have property documents before applying for a Home Loan:

You must check for current home loan interest rates

Sale Deed (Title deed /Mother deed/Conveyance Deed)

The Sale Deed or Title Deed is the most important legal document required while buying a property. It is evidence of the sale and transfer of ownership of the property to you. It is also an essential document if you plan to sell the property after a few years since it serves as proof of ownership. The Sale Deed has to be registered at the Sub Registrar’s office of property jurisdiction within four months from the sale date. Very, very important.

Joint Development Agreement

A crucial document when opting for a property which is part of a joint venture project; the Joint Development Agreement (JDA) is an agreement between a landowner and a builder wherein the landowner contributes his vacant land and the builder undertakes real estate projects on that land. The JDA lets you know whether the landowner or the builder holds ownership of the property you’re buying.

[Source: https://blog.bankbazaar.com/document-checklist-for-home-loans/]

These are the factors that Impact how much Home Loan you will get

Besides checking an applicant’s eligibility for a home loan, lenders also have certain criteria to ascertain the quantum of home loan that they can grant to the person.

Income

An applicant’s income is the starting point for determining his home loan eligibility. Generally, lenders consider 40% to 50% of your monthly income as available towards servicing the loan. The proportion of income considered for servicing the loan increases, as the income level rises. So, for a person in a higher income slab, the lender may even consider a higher percentage of his monthly income.

However, the percentage that is considered for servicing the Current Home Loan Interest Rates may vary from lender to lender. Moreover, the criteria adopted for salaried persons, is different from that for self-employed borrowers. For self-employed professionals, like doctors, some lenders consider the gross receipts and not the taxable income, for the purpose of home loan eligibility.

Any existing loan

While computing your home loan eligibility, the lender will subtract the EMI on your existing loan, from the amount available for servicing the home loan. Consequently, your home loan eligibility will be based on this reduced amount. Therefore, if you have an existing loan, where the outstanding amount is small, it makes sense for you to prepay the outstanding loan, as this could enhance your home loan eligibility substantially. The incremental home loan eligibility will be much higher than the outstanding amount on the existing loan.

Age and remaining years of service

Home loans are generally available for tenures of up to 20 years. However, your age and remaining years of service could restrict your loan amount. For example, if your age is more than 40 years and your remaining years of service is less than 20 years; your loan eligibility shall accordingly get reduced. For a salaried person, a retirement age of 60 years is taken into account, while for self-employed borrowers, the lenders consider a retirement age of 65 years, for determining the home loan’s tenure.

Availability of co-borrowers

The amount of home loan that you are eligible for will increase, if you are able to add someone, who is acceptable to the lender, as a co-borrower to the home loan application. The lender will pool the income of all the co-borrowers, to determine the amount available for paying the EMIs. Please note that all the joint owners of the property, have to be included as co-borrowers, irrespective of whether they have any separate income. However, a person can also become a co-borrower, even if he is not a co-owner of the property.

Tenure of the home loan

Your home loan eligibility is directly linked to the tenure that you opt for. With the same surplus income, longer home loan tenure will give you higher home loan eligibility. As there is no prepayment penalty on home loans and with lenders mostly offering loans under the floating rate of interest, it makes sense for you to choose a longer home loan tenure, so as to have higher eligibility and better flexibility. You can always prepay your home loan partly or fully at any time, in case you have surplus funds.

[Source: https://housing.com/news/these-are-the-factors-that-impact-how-much-home-loan-you-will-get/]

6 Tips to Follow for a Successful Home Loan

There’s no denying that buying a home is one of the most crucial financial decision you can make in your entire life. This is why you need to know each and every aspect that impacts the approval or rejection of a particular loan application.

In case you are a prospective home buyer looking to get your loan disbursed without much complications, here are 6 essential tips to help you out.

Gauge Your Financial Situation

All the banks that offer a home loan these days intensely scrutinize your capability to repay the amount you apply for. Considering the fact that buying a home in India currently would, at the minimum, cost you INR. 40 lakh, you certainly need to have a proper plan to repay the amount. So whatever income documents you have, take a quick run to analyses them and figure out whether your current income allows you the luxury to get a loan without risking a financial meltdown.

Use the Co-applicant Feature

If you’re already sizing up options and filling up application forms, you must have come across the column that asks for a co-applicant’s’ name. Use this to your advantage. If you have a spouse who is also earning a sizeable income, you can use them as a co-signer. This will improve your chances of getting a better loan amount as banks allow you to club the net income of the signees. This will improve your chances of getting the loan you are looking for.

Maintain Your Credit Score

Important criteria called credit or CIBIL score can make or break your chances of getting a loan. So, if you have any current or previous loans, make sure to pay them on time without any default. As a majority of your application’s future will depend on these scores you should make improving your credit score a priority. Ideally you are expected to have a CIBIL score anywhere above 750 for banks to even consider your request.

Provide the Right Collateral

Whenever a lending institution offers you a loan with proper Home Loan Rates, it runs the risk of not getting the return on investment they were expecting as there’s a likely chance, however small, of your defaulting. Let’s explain this with an example; Mr. X applies for a loan despite having a less than ideal financial history. But he is willing to provide any sort of documentation to avail of the loan. He submits a personal property as collateral for the money he is borrowing, which the bank can foreclose on if he fails to repay. Despite this being a risk lenders offer a loan as they have a guaranteed return on their investment. So, if you feel you have a relatively sketchy financial history, providing the right collateral or guarantor can do the trick for you.

Pay More to Pay Less

Usually, when you apply for a loan, every bank expects you pay at least 10% of the loan amount upfront so that they can get your disbursement process started. So, if you have saved up enough money, you can use it as a down payment because the less you borrow, the less you’ll have to repay.

Choose the Right Property

There have often been instances when several apartment complexes by even reputed builders have landed in a huge trouble due to some illegal dealings. Banks tend to refrain from providing home loans unless the property in question is free from legal hassles of all sorts. So, make sure to research on trusted sites like Common Floor which has a huge inventory of trusted builder with the right credentials. Once done, you can rest assured that you’ll have the loan amount disbursed.

Follow these aforementioned tips to increase your chances of getting the loan you applied for and move one step closer to the property of your dreams!

[Source: http://loanwalle.com/blog/6-tips-to-follow-for-a-successful-home-loan-disbursement/]

Home Loan

Home loans: A guide to claiming tax benefits

To alleviate the burden of a home loan, the government offers several tax concessions to borrowers. While most people may be broadly aware of home loan tax benefits, there are several other nuances that need to be highlighted.

Principal repaid on home loan

The principal amount repaid on the home loan taken can be deducted from your income up to Rs 1.5 lakhs under Section 80C. This deduction, however, comes with a couple of caveats. You can only avail of this deduction after construction of your house is complete and possession is received, and not while construction is underway. “When your developer delays the possession of your apartment, this is one more way in which he hurts your interests,” points out Rajendra Kumar Chauhan, a Delhi-based chartered accountant.   

Secondly, speculators should know that you can’t avail of this deduction on principal repayment, if you sell the house within five years of taking possession. If you do, you will have to reverse the deduction. This means that all the deduction you have availed of so far, will be treated as income in the year of sale and taxed entirely.

 Interest repaid

Tax saving is also available on interest repaid on a Home Loans in India. However, the deduction is different for a self-occupied property than for a house that you intend to rent out.

Self-occupied: If you have taken a home loan to buy a house that you intend to live in, the interest paid on this loan is eligible for a deduction up to Rs 2 lakhs under Section 24 of the Income Tax Act. This deduction is also available only after you have received possession of the house. Construction must be completed within three years from the end of the financial year in which the loan was taken. The interest paid while the house is under construction, will continue to accumulate. You can claim deduction on this amount for five years after possession. So, if you paid a total interest of Rs 6 lakhs while the house was under construction, you can avail of a deduction of Rs 1.2 lakhs for the next five years after possession.

In case you don’t receive possession within three years of taking the loan, you can only claim a deduction of Rs 30,000 each year. “If your job is in another city and you don’t live in the house that you bought for self-use, then the house will be treated as self-occupied and you may avail of deduction on interest repaid up to Rs 2 lakhs,” explains Arvind Poddar, a Delhi-based chartered accountant. 

Second property: If you buy a second property from which you intend to earn rental income, the deduction on interest repaid, is even more generous. Here, the entire interest repaid can be claimed as a deduction. In other words, the ceiling of Rs 2 lakh doesn’t apply in this case.

You will however have to show the rent that you earn from this property, as ‘income from housing’. This will be added to your total income. However, you are entitled to deductions on rental income. First, you may deduct all the taxes (such as property tax) that you pay on the house. You can also avail a deduction of another 30% for repairs and maintenance.

There is a catch here which to some may appear illogical. Even if the second house remains vacant, it will be treated as being on rent. You will have to show a notional rental income from it based on market rates, which will be taxable after factoring in the two deductions mentioned above.

Deduction on home loan insurance: If you bought a home loan insurance cover (a single-premium policy) along with the loan, you can avail of deduction on the premium paid under Section 80C.

[Source: https://housing.com/news/home-loans-guide-claiming-tax-benefits/]

Housing Loans

Pros and Cons of Home Loan Prepayment

It is an interesting irony with Home Loans. Till the time a person does not have a home loan, he aspires to take one as soon as possible in order to purchase a home. Once he has taken a home loan, the first priority in his life becomes to repay his home loan even though it may come with a cost of his reduced standard of living. It is a prudent decision to repay a loan if one does not require it. After all why should you pay interest on a loan costing roughly 10% when you have idle funds sitting in your bank account earning just 4% interest?

However there are a group of thinkers who do not believe in the philosophy of repaying back their home loans. Let’s discuss the pros and cons of repaying a home loan and I will leave it to the readers to decide which the best option suitable for them is.

1. Reduction of Interest Payouts – The most obvious benefit out of prepayment is that your interest payout reduces. Prepayment of home loan results in an immediate reduction of the outstanding principal on the home loan which results in less Housing Loan Interest Rates being accrued on the loan account. For example, if you have an outstanding loan of Rs. 10 lacs at 10% interest, you would be annually paying approx. Rs. 1 lac interest. If you prepay the loan by Rs. 1lac, 

your interest would reduce from Rs. 1 lac to Rs. 90K per year – approx 10 K saving per year for the duration of the loan.

2. Prepay – without reducing the tenure – Generally when you are going to prepay your home loan, you have two options. Either you can reduce the number of home loan installments or keep the number of installments same but reduce the monthly mortgage payments (EMIs). For example, if you prepay your home loan by Rs. 100,000, you may be provided two options:

a) Instead of paying your monthly EMI (e.g. Rs. 10K per month ) for original tenure of 120 months, reduce the tenure of the same monthly EMI of Rs. 10K to 110 months (illustrative) OR

3. Impact on Leverage

This is an interesting topic and in order to understand it let me take an example. John has an investment opportunity which requires Rs. 1 lac investment and it would provide him annually 15% return. His annual return in this case is Rs. 15,000.

Now let’s bring in another situation, say John has just Rs. 20K in his pocket and he still has the same investment opportunity. John goes to a bank and takes a loan of Rs. 80K at 10% interest.

[Source: http://insight.banyanfa.com/home-loan-prepayment/#]