When Should I Refinance If I Have a Fixed Rate housing loan interest?

Many home owners took up a fixed rate housing loan when its rate is relatively low. A fixed rate housing loan also gives the home owner a peace of mind, without having to worry about fluctuations. However all good things come to an end. Your fixed rate term expires and it starts to float. For some, the rate really balloons up and then you wonder if you should refinance now.   

Frankly speaking, when should you really refinance? Should you refinance after the lock in period? Refinance within the lock in period? If you decide to refinance within the lock in period, at which point of time will you be doing it?

Before we go into that, let's spend some time understanding the refinancing process. When you send in your application, the contract takes about 2 - 3 weeks to get back to you. After you have signed the contract and appointed your lawyer to do the conveyance, he or she will probably take three to six months to complete the process.  

Now let's look at this example: You are holding onto a fixed rate housing loan at 3% and it has expired. It balloons up to 5%. With the extra 2%, of course you will feel unhappy about it, so you decide to refinance now. However, you will still be paying at 5% for the next three to six months before your housing loan interest gets refinanced to a lower rate. Remember, the interest you paid to the bank cannot come back to you at all. The money you saved from refinancing can be pumped into alternative investments. No matter what kind of investment you have decided to take up, you are allowing that amount of cash to work harder.

Looking at the above example, you will realize that you should start considering refinancing, three to six months before your fixed housing loan interest rate expires. By positioning yourself to refinance earlier, you are effectively saving more money in the long run. This is also known as "lean finance". Of course, what if your housing loan has penalties, claw backs and so on? Different people have different terms in their contract. It is better to talk to your mortgage advisor about it, so he or she can help you with your refinancing option.

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Article Source: http://blogs.rediff.com/homeloaninterest/2016/08/11/when-should-i-refinance-if-i-have-a-fixed-rate-housing-loan-interest/

House Loan - Tips on How to Get the Best Interest Rates

Many people have turned to lending institutions when they want to buy a house. This is because there are many lenders out there who have different and affordable rates and it is up to you to dig deep and find them. Most times home financing normally comes under the secured loans category. This means that you will be required to put up collateral that will be security should you default. Usually the house you intend to buy is the security against non-payment of the loan.

It is important that you have all your facts and information on the type of housing loan interest you want. You can do research online and do comparisons on the various types of loans on offer. When you have narrowed down your choice, you can then approach the lenders. The lenders will then verify the nature and the value of the property that you are giving as collateral. This is where you will be requested to submit all the documents that support the value of the house that you intend to buy using the home loan.

Additionally, the lenders will scrutinize your credit history, your credibility and your employment history. There is a general rule that home financing institutions ask for which is to make a three to six percent of the total loan amount your contribution. This amount is usually negotiable. The interest rates of house loans are in two different packages. These are the fixed interest rates and the adjustable interest rates. The fixed rate option ensures that you will pay a specific interest rate throughout the loan period, while the adjustable one has the housing loan interest change according the changes of the bank's policies.

The Annual Percentage Rates (APR) are another aspect of housing loan interest that has to be taken into careful consideration. These include the capital, interest, points (profits that are earned by the lending institution), mortgage insurance, fees and other hidden costs.

Article Source: http://blogs.rediff.com/homeloaninterest/2016/08/10/house-loan-tips-on-how-to-get-the-best-interest-rates/

5 Ways to Tackle the High home loans in India

There is a constant speculation in the market on whether the interest rates will climb further, remain stagnant or decrease over a period of time. But, the harsh reality is that the recent rise in home loan rates has driven the budget of almost 3 million households, out of gear. The EMI's have risen significantly and with a monthly salary unable to keep pace with the growing expenditure, people are stretching too far to make the ends meet. If you also a part of the populace left gasping with this sudden unexpected rise in home loan interest rates, here are a few tips to lower its impact and successfully manage your home loan in these testing times.

1. Shifting from a floating to fixed interest rate on your home loans in India

Those who are bothered, whether the currently prevailing floating rates on home loans, will exceed the fixed rate (currently around 13%-14%) can try to convert their floating rate home loan into a fixed rate one. Though the fixed rate are rarely 'truly fixed' but the banks generally lock them for a fixed period of around 3 years. Before taking any such measure it will be beneficial to get all the facts about the fixed rates and their period. Another thing that warrants attention in this case is the fees bank charge to convert from floating to fixed and vice versa. For example the ICICI bank charges 1.75% on the outstanding principal for changing from fixed to floating rates of interest. All such factors should be carefully considered before taking any such step.

2. Switch to another lender which offers better rates

In this fast increasing interest rates regime, there are banks and housing finance companies (HFC's) which, are absorbing the shock and keeping the interest rate burden to themselves. It is judicious to compare the currently prevailing interest rates of all such banks and HFC's. If you find one such entity, which offers a cheaper interest rate of 0.50% or more and offers balance transfers, consider it seriously. The thing to watch out is the balance transfer fees, the EMI's and loan tenure. Make sure that the benefits of transferring balances are not outweighed by the balance transfer fees and harsher terms.

3. Try to get the loan tenure increased

If your banks allow an increase in your loan tenure, this will significantly decrease your monthly home loan EMI burden. One major thing a bank keeps in mind while deciding for an increase in loan tenure is the age of applicant. If you are not nearing retirement and have a good employment track record chances are great the banks will relent. The upper age limit is 60 years for salaried and 65 years for self-employed with most of the banks.

4. Try to pre-pay a part of your home loans in India

A good option to decrease the EMI burden is to prepay a part of your home loan. Part prepayment is allowed by major banks subject to their terms. If you have a fixed deposit, or any other asset which can be used to bring down your total home loan amount, try to use it. Some people think that taking another loan or overdraft on their existing deposits and using that money to pre-pay a part of home loan is a good option, but it is only another loan. Though, it will make your decrease your EMI's on the home loan but will add another repayment burden for the new loan.

5. Budget out your unwanted expenditures

Budgeting is a tool which is much recommended but rarely used. We go on spending money without sparing a thought about its usefulness. If you keep a track of everyday expenditure and weed out the unnecessary ones, you have some spare valuable cash! This will be a very handy resource to fund those hike in EMI's or at least a part of it. Though, budgeting will require a little self discipline, but the amount of help it can bring to strained financial situation can never be understated.

Home loan rates follow a cycle and they'll continue to rise or fall depending on market forces. Whether the home loan rates will increase or decrease is a question that only time can answer, the current hike can be tackled successfully to a great extent if a home loan borrower follows the above mentioned advice carefully.

Article Source: http://blogs.rediff.com/besthomeloanblog/2016/08/08/home-loans-in-india-2/

Home Loans In India - A Way to Find Your Own Home

Food, clothing and shelter are the basic necessities of a human. In fact the availability of these three completes the definition of a human life. On one side where food is necessary to survive, clothing is necessary to cover one's body on the other side shelter is necessary to give safety and security in one's life. The importance of shelter is unimaginable.

Shelter in a common terminology is defined as a house. A house where we live, where we cherish the best moments of our live, where we spend the most of our time, is a place to find the comfort and peace after doing all tedious jobs outside. For a human or an animal a house or a shelter is of extreme importance.

India, where we live is a place full of diversity and different cultures; however, in all the cultures and apart from all the diversity the need of home and its importance is impeccable. Though everyone loves to have a shelter and a house but how many of them are really able to invest in for a property like house? The biggest problem while purchasing a house is the availability of finance.

For those who belong to a middle class culture it becomes extremely difficult to aspire for their own house as they find themselves unable to purchase a house by paying a lump sum amount, specially in Indian families, people do not earn that much through which they are able to save a lot of money and keep the money handy every time. To overcome this kind of a problem Indian banks have come up with home loans so as to provide the availability of cash anytime for the purchase of houses.

Those home loans in India are available on different interest rates depending on the repayment tenure. Apart from that one can easily opt for an EMI according to his own budget and affordability. These home loans are available on different schemes i.e. flat rates and floating rate of interest (again providing a choice to the borrower)

Following a simple procedure and handover of minimal documents one can avail himself/herself of home loan. At last we have something to back up our desire to own a house and that is these home loans. So welcome to your own haven through these home loans.

Article Source: http://blogs.rediff.com/besthomeloanblog/2016/08/05/home-loans-in-india/

Desire A New Home? Get Easy Home Loans To Fulfill Your Dreams

If in the near future you plan to buy a home then looking into the necessary pre-qualification for the home loans is very essential. With the help of a loan for a home mortgage this is a preliminary step. Negotiations between you and the seller can take place in case you pre-qualify for the home loans which are an indication that you are serious about purchasing the home.

Starting right from the beginning is not at all necessary with a pre-qualification for the loan. Find a good lending institution, compare the quotes of different companies and only then finalize one of the best companies. Check out if the interest rate offered is an adjustable rate or a fixed rate on the home loan. Even if you are rejected by one company there are many more to check out as well.

To meet your housing needs, home loans of different types are offered. Loans for home improvement, loans for home purchases, loans for construction, loans for home extensions and conversions, loans to purchase land and bridge loans are the different types of home loans offered by the financial institutions.

Criteria to Qualify for home loans:

Anyone interested in purchasing a property and having the capacity to pay back the loan can qualify for the loan. Lenders generally have criteria that clients have to meet before the loan is taken. There has to be stability in the income source and besides this you need to be at least twenty-one years of age to apply for the home loan. It is best to have your eligibility for the loan assessed beforehand itself before availing the loan.

Besides your income, your bank statements, credit history, bill payments, credit report, etc. will also be looked into by the financial institution. In case a non-resident individual needs a home loan and the benefit of tax deduction, then a few additional documents will need to be provided. More than one person can also apply for the loan by clubbing the income earned by each of the individuals opting for such an arrangement. This helps in enhancing the eligibility for the home loan.

Things to consider when looking out for home loans:

It is best to discuss all the terms and conditions with the lender before finalizing the home loan. The lender will disclose all the terms clearly and be responsive to your loan needs. Besides this, he offers a good rate of interest as well. If need be you can negotiate with lender for an affordable rate. For this you will need to provide necessary requirements to the lender.

Just the rate of interest should not be the main consideration as for the next few years, say ten to fifteen years, constant servicing will be needed for the mortgage loan. Get to know the property cost, have your monthly budget evaluated, get a proper idea of your expenses, and consider the extra amount you have before considering the loan. If in case there are any debts, get them cleared off soon. This will help in attaining a better looking credit report.

Article Source: http://blogs.rediff.com/besthomeloanblog/2016/08/04/easy-home-loans-to-fulfill-your-dreams/

Home Mortgage Reduction - One Infallible Tip to Reduce Your Housing Loan Interest Rates

"A mighty ocean is made up of little drops of water." This is a wise saying that is worthy of consideration for anyone who is saddled with any form of mortgage or any loan for that matter.

The housing loan interest rates are the largest amount of money that most people will ever have to borrow and paying it off is a dream which many share.

Paying off your housing loan interest rates, however, requires some sacrifice. The sacrifice is, nevertheless, worth making if one considers the attendant advantages. I concede, though, that such sacrifices may not be easy to make. But the very fact that these sacrifices are difficult is what actually qualifies them as sacrifices. If they were easy, then they would not be sacrifices. Every rational person knows that to endure some hardship or discomfort today in order to have a future that is financially safe and secure is a worthy enterprise.

How does this apply to your housing loan?

Well, the connection is this fact that cutting your home mortgage or your home mortgage interest comes with some discomfort today. This discomfort, however, translates to a huge gain in the future if endured. When it comes to cutting your home loan, the truth is that if you put in a little but consistent effort, you could achieve a significant cut and save big. Your consistent effort, however little, will result into savings which can be used to slash the size of your mortgage and rewarding your effort.

Somewhat less apparent is that your personal sacrifice in this regard will see more of your monthly repayment going into actually reducing the amount you owe rather than being consumed in paying interest to your lender. This will accelerate your debt reduction as less and less of your regular repayments are swallowed up by interest. The end result is that your housing loan interest rates is paid off sooner and significant savings are made in the form of interest you have not had to pay.

Now, let us see some figures to buttress the foregoing point. Consider the case of a person with a $250,000 mortgage with an interest rate of 7.0%being paid monthly over 30 years. This person will have to pay $1,660 every month over a period of 30 years. This will translate to a total repayment of approximately $599,000 at the end of the mortgage term.

Suppose this person decided to make a little more sacrifice every month by adding an extra $240 to the monthly repayment thereby making a monthly repayment of $1,900 instead of $1,660. This person would end up paying a total of #477,80 by the time the loan is paid off. That is a whooping net saving of $121,000. Think of what this saving can do in the life of any person!

Wait a minute, but this person has also slashed the mortgage term from 30 years to less than 21 years. Is this not great?! This person is certainly a winner or what do you think? So, go and do likewise.

Article Source: http://blogs.rediff.com/besthomeloanblog/2016/08/03/home-mortgage-reduction-one-infallible-tip-to-reduce-your-housing-loan-interest-rates/

Home Loan Interest Rates - The Basics

Applying for your first home loan is a big financial step. Depending on the type of mortgage you obtain, the interest rate you secure and the length of your mortgage, you can drastically affect the total amount you pay by the time you make that final house payment at the end of the loan term.

In this article we'll cover the basics of mortgage characteristics and then go deeper into mortgage interest rates to cover how they affect your mortgage and total cost of borrowing.

There are four factors that can affect the characteristics of your mortgage - they are:

1. Interest. The home loan interest rates are basically the percentage of the loan that your lender charges you to borrow money from them. Your interest rate, whether varied or fixed, will affect your cost of borrowing. Essentially, a higher interest rate equals a higher monthly and overall cost.

2. Terms. Most mortgages have a maximum term that typically hovers anywhere between 15-30 years. It can be shorter or longer, but that's the standard for most home buyers.

3. Payment frequency. How much and how often you pay will affect your mortgage costs. Some homeowners opt for weekly payments because they can squeeze in one or two extra payments a year, thus reducing the length of their mortgage.

4. Prepayment options. Some mortgages allow you to pay off your mortgage early, while others restrict prepayment or put a penalty on early payment.

Of all these, interest is typically the most important. Depending on your mortgage, your home loan interest rates can fluctuate with the market (variable or floating rate) or it can remain the same for the duration of the loan (fixed rate).

A fixed rate mortgage retains the same interest rate throughout the course of the loan. Homeowners benefit because they're given a fixed monthly payment that they can effectively budget for and it won't change with the market. However, because the interest rate risk is placed on the lender, fixed rate mortgages tend to have a slightly higher interest rate.

A variable rate or floating mortgage changes its interest rate depending on the economic index and federal interest rates. While borrowers will typically get a lower opening interest rate, they're subject to the tides of the market. Overall, variable rate mortgages tend to be cheaper than fixed rate loans, but homeowners need to remember that they are at the mercy of the market.

Home Loan Interest Rates aren't the same for everyone, meaning you may not get the same rate as your neighbor. Lending institutions base their rates on the borrower's credit score, meaning a higher score typically translates to a better rate. Before you commit to any interest rate, always shop around and don't be afraid to negotiate with a lender for a better rate.

Article Source: https://onlinehomeloanblog.wordpress.com/2016/08/02/home-loan-interest-rates-the-basics/