Monday, December 31, 2012

How to reduce the Interest Paid on a Home Loan?

Every customer in the market is worried about the amount of interest paid on a home loan during their repayment tenure. A blind calculation gives a result of 100% of loan amount is the amount of interest paid on a home loan during the tenure considered if the customer pays the EMI’s for the whole tenure i.e 20 Years. This is a shocking result to every customer because the home loan interest rate looks very low but when calculated it is exactly the same amount of higher amount of loan that we are paying towards interest on the home loan.

If Some simple measurements taken at the time of availing the home loan then we can avoid the huge amounts that to be paid towards interest of home loan. Just follow the stated below before applying the loan

·         Make more margin money payment towards the property
·         Apply for lesser loan amount which will have lesser interest rate
·         Opt for least possible tenure
·         Opt for possibly higher EMI
·         Make part-payments yearly twice at least
·         Go for home loan linked life and General insurance
·         Opt for Interest saver account if available

Let’s see how the above measurement will save the interest on Home Loan. Banks usually give 80% of the property cost as Home Loan, means higher the property cost, higher the loan, Higher the EMI and Higher the Interest component of EMI. For the initial years the Interest component will be higher so to avoid that opt for lesser loan amount, lesser tenure and Higher EMI with which one can save a very good amount on Home Loan Interest and making part payments will be most helpful too as the amount paid will be directly deducted from the outstanding principle of loan account which in turn reduces the interest and the repayment tenure also.

Wednesday, December 26, 2012

How to manage EMI Effectively?

EMI refers to Equated Monthly Installments a key term in all loan products which stands for the loan repayments to the bank. The EMI is calculated by taking the loan amount, Interest Rate and repayment tenure into consideration. All the Banks and Financial Institutions do the calculations in the same manner so the amount will not change from one bank to other. All the EMI are calculated on diminishing rate which is mandatory in Home Loans.

Banks provide the facility of repaying the loan in Equated Monthly Installments which is a combination of Principal and Interest Components. The EMI will have Interest Component higher in the initial stage of tenure and as the tenure goes on the Principal component increases and the interest component decreases. 

The EMI can be increased if the income of the applicant increases. But the cant be reduced once it is fixed. If the customer wants to make any part-payments during the repayment tenure then the paid amount will be directly deducted from the outstanding principle and tenure will be re-scheduled according to the latest outstanding amount by keeping the EMI fixed at the same amount. This provision is available only for the Home loan customers. 

Banks reserves the right to reschedule the loan tenure if there is any change in the home loan interest rates on the Loan that the customer has availed. If there is any change then banks will increase the tenure first and if the tenure is crossing 300 months then banks increase the EMI as there is a cap on repayment tenure for 300 months. If the Interest rate reduces then banks decrease the repayment tenure but not the EMI. Customers need to personally request the bank to reduce the EMI component and the decision is at the sole discretion of the bank. All the Home loan products attract Tax Exemption under section 80© of Income Tax Act.

Monday, December 24, 2012

Why Home Loan is a Best Product?

Banks have introduced the product home loan and started funding to customers which resulted in fulfilling the dream of people who wants to own a house of their dream. Banks provide home loan on two kinds of rates of Interest one is Fixed and the other one is Floating. The fixed interest rate will be fixed for a limited period of time even if the rates in the market fluctuates and floating interest rates will be increased or decreased according to the rate fluctuations in the market.

To avail home loan from any bank or financial institution one need to submit all his personal and income documents which prove or authenticate his identity and income to the concerned bank where he wants to avail the loan. Along with the personal and income documents the customer need to submit the documents of the property which he is buying. The documents should cover last 15 years transactions over the property. 

Post submission of all the documents banks usually take a min of one week time to conform whether they will fund to the property in the name of customer or not or the application is fit to their policy. Banks will verify the details stated in the application form so it is always suggestible to stated only required and genuine information only for which you have authenticated documents to provide. Banks reserves the right to ask for additional documents if needed. It’s the bank sole discretion on all the loans. Once the application is approved then the Home loan will be disbursed by taking the required documentation like Post dated cheaque’s, signed agreements, sale agreements and disbursement request forms etc. Post disbursement the customer needs to register the property on his name and submit in the bank. The whole process takes just one week and fulfills the dream of a common man of owning a house. 

With the Equated Monthly Installments and longer comfortable tenure to repay without any worries the product Home Loan is considered as the best product in the market.

Saturday, December 15, 2012

Make the most of Mortgage loan

Banks have different products for different needs of customers at different levels. Mortgage loan is one such product which will be of great help to customers who wants to avail loan for their personal, official or business needs. This product was designed by keeping all the customers in mind who has a property on their name and who wants to give it as security to raise funds from the market.

Mortgage loans ore provides to all income category persons who are salaried or self employed. The only condition to avail this loan is the applicants should have repaying capacity with a property which is clear in title and constructed or approved by the competent authorities.

Banks will fund up to a maximum of 60% of property cost by taking market value into consideration. Customers need to submit their income documents and all property related documents for this process. Banks will do all the required verifications over the customer profile and the property and disburse the loan after receiving satisfactory verification reports. This loan will be provided at a maximum tenure of 10 years with a min of 2% higher interest rates when compared to the home loan. 

Tax exemptions under section 80(c) are not applicable to any sort of mortgage loans. Customer can opt for loan linked life insurance even if it is a mortgage loan. It is not mandatory that the applicant should have a property registered on his name only, he/she can mortgage property which is registered on parents or wife’s name. They have to be the co-applicants in the mortgage loan who are equally liable to repay the loan if the applicant fail to pay in any case.

Thursday, December 13, 2012

Properties in Bangalore

Bangalore an IT hub of India has seen tremendous rise in terms of living standards and in terms of Economic growth in the last five years. This place was considered as one of the best place to settle down for a high standard of living. The real estate also raised along with the requirements of customers who like to purchase properties in Bangalore.

Real estate developments in the areas of Bannerghatta Road, Hosur Road, Sarjapur Road, Yelahanka etc are giving great returns to the buyers of properties in these areas. Properties in these areas have very good rental values which offer considerable contribution towards their home loan EMI which makes owning property a simple task to any buyer.

Banks have simplified their home loan terms and conditions to ease customer who look for housing loan to buy property in Bangalore and offering home loan at least possible interest rates and with maximum funding for a longer repayment track. The documentation is also very simple, customer need to submit his/her personal, Income and Property documents along with cheaque’s for repayment of home loan and banks will approve the home loan application if the application filed satisfies all the requirements as per their banking terms and conditions. The home loan will also give Tax benefit to the applicant on the interest paid up to a maximum of 150,000/- under section 80© of Income Tax act.