Should you invest your money or use it to prepay home loan?

If you have an outstanding home loan, and happen to have just received an annual bonus or any other lump sum payment, should you use it to prepay your loan? Or, should you invest it to meet some other goals? Assess the following conditions to arrive at the right decision.

The first variable to be considered is psyche: some people may not be comfortable with a large housing loan and to reduce their stress they may want to get rid of the loan burden at the earliest. For them, settling the question of how to use their bonus is simple: just pay off the loan. You should pay off the home loan at the earliest. Several unfortunate happenings— job loss, death of the earning member, serious illness, etc—can cause trouble during the 10-15 year loan period. Treat it as a mind game and not a numbers game."

Tax benefit is the next variable. If a home loan does not seem like the sword of Damocles hanging over your head, it makes sense to continue with the regular EMI schedule. This is because of the tax benefits that a home loan offers. The principal component of the EMI is treated as investment under Section 80C. The interest component is also deducted from your taxable income under Section 24. The annual deduction in respect of the interest component of a housing loan, for a self-occupied house, is limited to Rs 2 lakh per annum.

You won't be able to claim deduction on interest paid above Rs 2 lakh. So, if your annual interest outgo is higher than Rs 2 lakh, it makes sense to prepay the Home Loans in India, and save on future interest payment. For example,

The annual interest on a Rs 70 lakh outstanding loan, at 9.5%, comes out to be Rs 6.65 lakh. After taking into account the Rs 2 lakh deduction under Section 24C, the interest component will fall to Rs 4.65 lakh, and bring down the effective cost of interest from 9.5% to 8.64%, even for the people in the 30% tax bracket.

You can, however, optimize the tax benefits if the loan has been taken jointly, say, with your spouse.

[Source: http://economictimes.indiatimes.com/wealth/plan/should-you-invest-your-money-or-use-it-to-prepay-home-loan/articleshow/52161038.cms]

Home Loans - Discovering Capital in Your Home

See what you do when you find the home of your dreams and not the money. You take home loans. Home loans are easily available and very appropriate for someone looking for home loans. Home loans have the most attractive conditions associated with them thus making them a unique way of borrowing money.

With home loans you can borrow over 90% up to 125% of your home value. If you have equity in your home then there is no better way to tap it then by applying for home loans. Home loans are wise financial way especially with low interest rates.

The interest rates on home loans are either fixed rate or adjustable rate. Depending on your inclination you can apply for either. A fixed rate home loan will have the same interest rate for the entire loan term. So if you apply for 15 or a 30 year loan term, the interest rate for home loan will remain unchanged. An adjustable rate home loan keeps fluctuating depending on the changes in the loan market. The adjustable rate home loans start with low interest rates. That is why more and more people opt for it. However, there is an uncertainty as to whether when they can rise.

With Home loans, you can borrow from £3000-£500,000. Depending on the loan amount loan term can be 3-25 years. Home loans are offered to those who own or pay a mortgage on their home, cottage, flat or bungalow. Home loans can be used for any purpose. Home loans can finance some great plans relating to education, debt consolidation, home improvement, car purchase, vacation etc.

Home loans for home improvement purposes can add equity to your home. The best thing with home improvement through home loans is that you are providing yourself with a good living environment and also increasing equity. Think carefully before making home improvement for every home improvement project may or may not add to the resale value.

Home loans for debt consolidation are a financially viable plan. You can eliminate higher interest rate debts with home loans consolidation. High rate credit cards, unsecured loan or any other loan can be consolidated and replace by debt consolidation home loans. With lower interest rates and low monthly payments, you can save thousands of pounds with debt consolidation home loans.

Home loans are an option for you even if you do not fall under the A list for credit score. Home loans are provided to all those who have been suffering from credit problems like arrears, defaults, bankruptcy, discharge, late payments, CCJs etc. All those who are suffering from credit problems are considered as credit risks. Therefore, home loans for bad credit score carry higher interest rates. However, under no circumstances do they deteriorate ones chances of finding home loans.

Research and questioning are all related to the quest of finding a good home loan. The internet is full of options and browsing through them will lead you to a home loan that suits your finances. If you have any related questions don't be afraid to ask. It is your right and would save a lot of trouble let alone your money. There are hidden costs and fees that might not be clear at the beginning and that can amount to a lot in terms of money. Ask for free quotes from various lenders. Compare and find out which one cost you less. Then make your final decision. Look for comfort level while opting for home loans. You should be able to pay for your monthly payments easily every month. Great rates with no down payment are not possible. Protect yourself from its lure.

[Source: http://ezinearticles.com/?Home-Loans---Discovering-Capital-in-Your-Home&id=76482]

Essential Information to Provide When Applying For a New Housing Loan

New home buyers always feel perplexed by the huge amount of paperwork that is involved when applying for a home loan. They are not alone, because seasoned buyers feel the same way too when refinancing. Still, in order to successfully purchase that dream house and start a whole new life, you will have to tackle that housing loan. Remember that the lenders are the ones who will eventually make or break your dream as they are the ones who will approve or disapprove your housing loan. There are a few things to take extra care of, when applying for that loan. They are: 1) The sale agreement, 2) Your personal information, 3) Your employment history, 4) Your financial information

The Sales Agreement

One of the most important pieces of document that is required for your housing loan application. A lender can determine details of the property that you are planning to buy, from that piece of document. From that agreement, your lender will then determine the asset price of the property and use it as one of the factors in determining how much will they lend to you.

Your Personal Information

As usual, you will have to provide information such as your name, date of birth, gender and etc. Most probably, you may have to provide information such as the number of dependents that you have your present level of education and etc. You may find it strange that you have to provide so much information which you may deemed as irrelevant to the purchase of your house. However, the banks, after long years of operations, have work out a formula which includes all these information to determine if you are a good credit risk. Without all these information, they will not be able to process your loan properly.

Your Financial Information

It is never just about how much you earn. More importantly, it is about how much you spend relative to how much you earn. You will have to fill in details about the different kinds of credit facilities that you may own. The kinds of credit facilities that you may own could be: credit cards, personal loans, education loans, car loans, housing loans, renovation loans and etc. Some of your credit facilities may be on revolving terms and a good example of it is a credit card. You may not use that credit card often and think of not filling that in, because you feel that its inclusion may decrease your credit profile. Just include it and state how much of it do you use per month. Honesty is always a factor highly valued during loan applications.

You’re Employment History

Your lenders will want to know if you are still gainfully employed and if you will be able to meet the monthly installment payments. Certain professions are also looked upon favorably by your lenders and is a plus when applying for that home loan. You will be require to fill up this information in the application form and it will also be reflected when you submit it together with your CPF contribution history.

The worst thing to do is to cheat on your lenders and lie to them that you are still employed when you are not. You may not be able to meet the monthly housing payment with the decrease in your income cash flow and that may prompt them to do a foreclosure on your new house. A foreclosure is never beneficial for both your lender and you.

[Source: http://ezinearticles.com/?Essential-Information-to-Provide-When-Applying-For-a-New-Housing-Loan&id=1839394]

Type of Mortgages in India

A mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability.

The transferor is called a mortgagor, the transferee a mortgagee; the principal money and interest of which payment is secured for the time being are called the mortgage-money, and the instrument (if any) by which the transfer is effected is called a mortgage-deed.

Types of Mortgages -

1. Simple Mortgage

2. Mortgage by Conditional Sale

3. Usufructuary Mortgage

4. English Mortgage

5. Mortgage by deposit of title of deeds

6. Anomalous mortgage

1. Simple Mortgage -

In a Simple mortgage, the possession of the mortgaged property is not transferred from mortgagor to the mortgagee.

If the mortgagor fails to repay the loan, the mortgagee has the right to sell the property and recover the loan from the sale amount.

2. Mortgage by Conditional Sale -

Under such Mortgage, the mortgagor apparently sells the property to the mortgagee on certain conditions -

1. On failure to repay the housing loans money before a certain date the sale shall become absolute, or

2. On condition that on such repayment of mortgage money the sale shall become invalid, or

3. on condition that on such repayment the mortgagee shall retransfer the property.

In such case, the mortgagee is a "mortgagee by conditional sale".

3. Usufructuary Mortgage -

In a usufructuary Mortgage, the possession of the mortgaged property is transferred to the mortgagee. The mortgagee receives the income from the property (rent, profit, interest, etc) until the repayment of the loan. The title deeds remain with the owner.

4. English Mortgage -

In an English Mortgage -

1. The mortgagor binds himself to repay the borrowed money on a certain date.

2. The mortgagor transfers the property absolutely to the mortgagee.

3. But such transfer is subject to the condition that the mortgagee will retransfer the property on repayment before the agreed date.

5. Mortgage by deposit of title of deeds -

In such mortgage, the mortgagor delivers the title document of the property to the mortgagee with an intention to create a security thereon. Such mortgage is valid in towns of Kolkatta, Mumbai and any other town as the State Government may notify by publication

6. Anomalous mortgage -

Anomalous mortgage is a combination of different types of mortgages.

[Source: http://indialawfirms.blogspot.in/2007/11/types-of-mortgages-in-india.html]

Fulfill Your Dream of Owning a Home with the Home Loan

Staying in own home is a dream of everyone. People see dreams of owning home at their own choice, but everybody doesn't able to afford that. Nowadays in the country like India, money is not a barrier of the dream of owning a home. Because all the government and on-government banks in India offer Home loan. These loans are specially given to those people who wants to build-up their own home or purchase a home.

Indian banks offer home loan under different categories, these include:-

Home Purchase Loans - These kind of basic loans are being provided for purchasing a new home.

Home Construction Loan: Banks provides this kind of loan for construction of home.

Home Extension Loan: One can get the loan for expanding or extending his existing home.

Home Improvement Loans: People can avail these loans if they have the requirement for implementing repair works and renovations of their existing home.

Bridge Loans: This loan is the best loan for those people who want to sell his existing home and wish to purchase a new home. Banks help people by giving this loan to finance the new home.

Balance Transfer Loans: This kind of loan is given to pay off an existing home loan and avail the option of a loan with a lower rate of interest..

Home Conversion Loan: Banks provide this kind of loan to those people who has already purchased home by taking home loan and then wants to move on to another home and for that he requires some extra money. Under this category of loan the existing loan is being transferred to the new home and the extra amount is to be included.

Land Purchase Loans: One can avail these loans for purchasing land. The bank will give the loan without checking whether the borrower taking the loan for construction his home or using it for some other purposes.

Refinance Loans: Those who have taken loans from their friends or relative to purchase their homes, this kind of loan helps them a lot to repay that debt amount to them.

Stamp Duty Loans: To purchase a property, stamp duty is essential. This kind of loan helps people to pay for the stamp duty.

In India, banks provide home loans against fixed and floating rate of interest. Under the fixed rate home loans the interest rate remains fixed for the whole period of the loan. By taking loan under this category the borrower will get the facility of getting a fixed interest rate. But in this case they have to pay a higher rate of interest. On the other hand, under the floating rate loans the rate of interest fluctuates accordingly. The borrower will get the facility of getting a low interest rate. But the interest rate can rise anytime and the borrower has to pay a much higher interest rate than the fixed rate of these loans. The repayments of home loans are to be given through Equated Monthly Installment (EMI). The home loan EMI depends on the amount and the repayment period one takes.

In this age of technology, one can apply for the home loan Online. By applying online one gets relief from the lots of hassle like visiting to the lenders, seeking for the best home loan deal, do the huge formalities and fulfill the long paper works. By availing these loans online one just has to sit on a Internet enabled computer, make a search for the best home loan deal and after choosing one just has to fill a form, that's it. By doing some simple procedures you dreams can come true.

[Source: http://ezinearticles.com/?Fulfill-Your-Dream-of-Owning-a-Home-With-the-Home-Loan&id=1340461]

Banks Back Home - Always Keen to Help

 NRIs are those who venture into unknown and far-off places to secure a living. It is exceptionally difficult to start from the root level in a place that is not only foreign but also hostile sometimes. Starting afresh in terms of securing a shelter and to gain a livelihood require double the labor and courage than what is required in the native place. The prospects for an outlander are not so open in the foreign lands. But, there are people who sustain their existence abroad and grow to make their country proud. There are a number of NRIs who have made it big in foreign lands and earned name and fame for India. Hence, India has certain loan plans for the NRIs so that they can always look towards their roots at the time of any need.

The NRI loans are made exclusively for the Indians not residing in India. There are separate plans for them to cater to their varied needs. The NRI loans exhibit flexibility and promptness, so that during tough times they can rely on their mother country. Monetary needs are even more bothering on an alien land. The leading banks like the State Bank of India, ICICI etc. offer easy and flexible loans for the NRIs. These loans are tailor-made for the needs unique to the Indians settled abroad. These banks not only offer loans but also offer NRI savings account, fixed deposits etc.

ICICI bank offers a very unique service named ICICI home search which offers genuine service to the NRIs in their quest to search a home in India. Those who want to come back to their country in future avail this service. Since they have no or very little knowledge about the real estate of the country, the home search advice from ICICI proves quite beneficial to them. Not only for buying purposes, the NRI home loan services, offer assistance for construction, extension and also for renovation of the house.

The home loans are offered to those Non Resident Indians who have Indian passports and a regular monthly income of not less than Rs. 10,000/- . The amount for which they can apply should be maximum of 60 times the Net Monthly Income(NMI) or Average Monthly Income(AMI) for borrowers up to 45 years of age.

Apart from the housing loans, Indian banks offer education loans to the NRIs to meet the tuition expenses, admission and other fees and expenses related to the education of the person concerned. One can borrow up to Rs. 10 lakhs for studying in India and Rs. 20 lakhs for studying abroad. The eligibility conditions are quite straightforward. The borrower should be an Indian National. He must have passed the relevant entrance test and must have secured admission in any of the technical or professional courses. The repayment conditions are also extremely easy and clear. The borrower needs to pay back the borrowed amount 12 months after the completion of the course or 6 months after getting the job, whichever is earlier.

The NRI loans have definitely made the people based abroad come even closer to their country. Because however far they live, their roots are here in the Indian soil.

[Source: http://ezinearticles.com/?Banks-Back-Home---Always-Keen-to-Help&id=1685190]

Online Home Loan Calculator - Using a Finance Calculator Efficiently

During the beginning, first and foremost assemble all the required data that's crucial pertaining to employing a home loan calculator correctly. First and foremost, however, lets discuss home loans and also reasons for using a calculator.

When you make up your mind to get a loan of any type, be it for getting a home, a motor vehicle, a boat, business equipment or even a motorcycle, you obtain the funding to fund the procurement of this product, after which you'll repay it over a certain amount of time. The entire intention of that loan is always to assist you to spread the cost of the purchase over time, so you can repay it on a monthly basis when your own income or pay check is usually paid. It is also, naturally, permitting the lending company to be able to earn income; or else there will be no inducement for them to loan you the money. The financial institution's commission is based upon charging you a particular cost for every dollar you are taking in advance: a cost that's often known as ‘interest’ that is spoken in terms of a percent for the amount given as a loan.

The costs involving your loan will be dependent on the particular sum of the mortgage, the period of time you finance it over and additionally the interest price. Ultimately, typically the cost of one's finance shall grow if any of these numbers come to be larger. Despite the fact that your month-to-month mortgage repayments will be decreased by means of lengthening the term connected with the loan, the entire loan cost is going to rise, for the reason that you will be paying the interest for increased time. This is how the task from the home finance calculator becomes valuable.

The information you need, is a figure you are borrowing, the rate of interest incurred and the time period of the mortgage loan. At this time, use the online home loan calculator and just type in the chosen loan figure, repayment length plus the current interest rate being proposed by your loan provider. A result of this action going to be a quantity which will be your per month payment figure. If these are excessive, increase the loan term: for the entire process, the charge would likely go up, yet, could help you to allow for financing which you otherwise can't. The verdict for this recalculation may be the once a month payment amount within your reach. Just keep in mind, this online product generates repayments structured on the actual figures you input, and will never be some sort of offer for finance or loan approval from the calculator owner. Also you need to take into account; this will not include account fees or charges, or additional warranties.

A few individuals utilize the home loan calculator to know the interest rate that is inside their means. The dilemma with interest is that it could alter dramatically, so that you have to make a decision whether or not to get their rate fixed for the entire loan duration or risk getting a varied rate at a lower rate, which in-fact can rise later. Nonetheless, it might be useful to some to understand the maximum price they could afford for the sum borrowed. To get that, enter in the principal (amount of loan) along with the specified time period you wish to borrow it for. After this make a decision about how much you will be able to pay month for month, and enter quite a few rates of interest into the online loan calculator until you achieve the figure you are searching for. It is now clear you know the amount of loan, repayment period and highest rate of interest you can easily afford. That may help you when you're looking around for a home loan - or any other loan for that matter. These good examples show guidelines for a home loan calculator clearly so that you can collate loads of beneficial data. If you are searching for a loan to acquire a bungalow, or any sort of residence, then locate a site providing an online loan calculator and make the most of it. It is better to use this besides depending on vague numbers.

When obtaining an online home loan it is suggested you make use of an online finance calculator so you can get an indication on the amount you can afford to borrow. Looking for a property loan try a home loan calculator to get you started off.

Source: http://blogs.rediff.com/besthomeloanblog/2016/07/02/online-home-loan-calculator-using-a-finance-calculator-efficientlyhitesh-chavan/

Working With the Best Home Loan Lender

Before seeking the help of a mortgage company, you need to first conduct a simple investigation about the market players and the marketplace itself. Check out these factors that you need to consider when looking for a mortgage lender:

Professionalism

All kinds of client-services companies should exercise professionalism all the time. An excellent loan provider is notable for their constant guarantee to deliver and do the job.

There are occasion when even the most skilled mortgage lenders find it hard to claw their way inside the home loan labyrinth. Hair-raising loan troubles just do not solely originate from the actual selection process since the simplest of lapses may also bring about financial complications. This further beefs up the need to get a reputable loan provider. Working together with one gives you some type of promise that you will have a good deal one way or another.

Folks intending to buy properties want two things: the best mortgage loan and the best mortgage loan company. While choosing the best home loan is not an easy task, choosing the best mortgage company is also not easy. But when you pick a mortgage lender that's competent enough to help you get a great deal, throw away loan-related strain and say hi to financial savings.

Up-to-date with the Latest Trends

Very much like interest rates, the home loan market in general is subject to constant changes. To provide outstanding service, a home loan lender should be updated with all the most recent trends and products in the home loan sector.

Experienced

Expertise is something that's generally tough to top. A mortgage provider with numerous years of operation in its resume sure has a massive amount of understanding of the mortgage procedure. Aside from letting you avoid wasting plenty, seasoned mortgage loan lenders may also save you considerable time by giving safe and proven market shortcuts.

Superb Communication Skills

In any deal, getting a home is simpler with great communication. A mortgage loan company and a customer must always remain in each other to ensure they get everything right. A fantastic loan company keeps excellent interaction with their customers using a wide selection of mediums like text letters, e-mail, phone calls etc. to keep the customers informed every step of the way.

Excellent Customer Service

Home buyers as well as home loan lenders are generally mutually dependent. A services provider with no clients is nothing. Bear in mind that lenders need you as much as you need them. It is actually important that you find a loan provider which respects the mutual connection between borrowers and lenders.

Refund Home Loans: An Option to Think About

As brokers transition from physical office buildings to setting up online presence, a new type of mortgages is beginning to become more popular. A lot of people are becoming attracted to refund best home loan. A few online mortgage brokers have ditched the face to face model where agents go to customers for a personal meeting. And given that mortgage firms no longer have to schedule home visits, the expenses savings can be used to provide clients certain refund amounts.

Cash Back Mortgage only "true rate" comparison website, plus we give 70% of the commission back to the customer. With access to over 30 Lenders Cash Back Mortgage brokers are able to find you the best loan for your circumstances, and as a bonus we pay you 70% of the upfront commission we get from the lenders. Log on to http://www.cashbackmortgage.com.au for Australia's most comprehensive loan comparison calculators.

Source: http://EzineArticles.com/5979415

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 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.