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31 December 2010

Preapproval and Home loans-Narrow your search

Home loan preapproval is very advantageous to the buyer as they can narrow down their search for a home according to their budget. These statements from the banks understand our financial status and how much amount can be available as down payment as well as how much the borrower can afford to pay as monthly EMI.
Going for house hunting is a tedious process as there are plenty or options available. It may so happen that you may select a certain house but it may be out of the reach of your budget. This amounts to wastage of a lot of time and effort. Even your housing agents that offer lists will be de-motivated to show you many places. It is best to fist estimate your financial standing and how much capacity is there for the loan repayment. Here this loan which is preapproved by a bank helps. They undergo certain tedious procedures to jot down your financial assets. Liabilities and bottom line is how much amount you can shell out every month to repay the amount for the new home.
They will send agents who will check all the documents and the proofs of your securities. Your bank statements and all your financial assets available as ownership will also be examined. Their estimated value will then be calculated and they will come up with a certain figure which the bank or lending institution can offer as loan. This amount is pre-decided and helps the purchaser to select homes only under this range. You can also ask your housing agent to only show you offers within your budget. This will save lots of time and resources on your part as well as the agent’s part.
However it is required to be kept in mind that a preapproval letter from the bank is not an assured letter and bank or lender can change rules and stop the processing of loan amount at their own will.
All the Best from Rizwana!
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30 December 2010

Home Loans and Credit Card Linked Importance of Clear Credit History

With the coming of credit card it has become much easier to purchase goods conveniently and immediately. This card is termed as the ’magic card’ as this gives consumers power of spending at their own free will and paying for this later at the end of the month. Easy availability of home loans is making many opt for the offer of taking a loan to purchase a house. Credit card history is also one of the criteria’s to be considered while fulfilling the requirements for approval of the home loan.
Home Loans simplified Facts

How does this relate to the new loan? The lender be it government nationalized banks or a private money lending institution goes through your past history of credit card usage. If the client has spent more than his limits then it is considered as negative point. If the client has spent 70 to 80% of the amount then also it is considered to be under scrutiny. Mostly the lenders are happy to lend to the client who rarely uses credit card but owns one for financial safety measures. This shows that the applier for the home loan is financially secure and can manage in his or her salary the monthly expenses.
The remaining amount or saving monthly needs to be a considerable amount since the cost of the house nowadays in substantial and one may have to give away 25 to 40% or our salary as EMI for repayment of the loan. If the client is a defaulter and has not repaid the credit amount on time then this is considered as a negative point from the lender. Thus while applying for a home loan one has to consider their credit card history as the lender goes through these documents before approving the home loan.
All the Best from Rizwana!
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Value Appreciation of your House and Home Loans

Home loans are taken for purchasing of the first home and also nowadays for second home options. Loans are available easily and procurement for home loans is available in simple and convenient procedures. When purchasing a home for investment purposes and going in for a home loan one must consider the following points:
Selection is best when the house is in a complex or housing society. As individual buildings are quick projects for many builders and they move away from construction site having no regard for infrastructure and other facilities for the clients staying in the lone building. Maintenance also becomes difficult sometimes when few members are involved in the society. Such houses have low appreciation value even though the purchasing rate per square foot may be same as of that particular area.
The construction site and property must have a clear title and ownership must be clear on the name of the builder. Disputed property matters to legal hassles and such house owners also have to bear the brunt of legal delays in construction. Loan taken on such flats sometimes becomes tedious as time lapses go on increasing and without mush development in the construction the client has to keep on repaying the loan amount.
Project under construction must have a clear cut plan and timeline for completion. Very quick projects may not have good quality construction and very lengthy time lines may lead to slow progress and delay in completion of the project on time. Delayed projects do not have a good rate of appreciation compared to other projects that are completing on time.
Infrastructure must be in the complex or near the housing society. Having to travel long distances for basic necessities is very difficult and such projects are slow to appreciate in value.
Promises and offers made by the builder during booking of the home must also be considered as many builders on completion of the project avoid giving the promised facilities on account of high costs and inflation.
Selecting the best home for an investment option considering the above mentioned points will help to save many bad experiences in the long run.  Such homes are best for investment purposes and also their value is bound to appreciate over the time.

Get Easy Tax Concessions Bonus on Home Loans

Easy tax concessions are a added bonus with your home  loan. Purchasing a home has become like a rainbow and the pot of gold...so near yet so far! Our major salary can go in terms of repaying home loans. With property rates increasing day by day it is becoming more and more difficult to purchase a home even on loan. The principle amount is increasing and also the interest rate added puts a tight crunch on our monthly salary. Tax concessions and rebates come as a boon to lighten this burden a little bit.
Is it possible to get tax rebate on the loan amount? Many of us are not aware that this is taxable income money and one can avail rebate on a certain amount. If all returns are filed regularly and all criteria for applying for a home a loan fulfilled then one can avail on tax rebate for a certain amount of the money taken as loan. The main criteria would be the loan has to be taken in the prior financial year and the project has to have a fixed date for completion. The possession of the flat has to be taken within three years since the flat loan has been taken.
The home loan consists of the principle amount and the interest amount. Tax rebate is possible on both these amounts. One can take a professional guidance from a tax consultant and other people who have gone for a home loan. There are certain rules for the amount applicable for tax rebate under all the sections of laws. A certain percentage of the total amount that can be taxable depends on the individual who can get rebates for PPF, Insurance and so on.
This opportunity offered by the government to apply for tax concessions on the total as well as interest amount helps to reduce the load of the repayment of the loan amount. Still many of us are not aware that they can get tax rebates and concessions on home loans, with principle as well as interest amount. Whatever money saved is money earned!

Credit Card History and Credit Information Report in Home Loans

Credit information report is one of the most important criteria for approval of a home loan. Easy spending power with the consumer has led to many people using many different credit cards. Though they end up paying more as interest the consumer is happy to purchase at their own free will and then pay later at the end of the month. CIR as it is termed is the most important criteria for home loan approval.
The history of the client’s financial dealings that is salary and spending amount indicates their financial status. If both spouses are working than both their salary amount can be considered. Take away home pay and their monthly usage of credit card indicates how much expenses are incurred and how much remains as savings amount. This is very important by the borrower to plan their credit card history before hand and later apply for a home loan for better chances of approval. Let us note some important points for increasing our chances positively for loan approval.
1) Plan in advance before applying for a loan. Keep watch for your credit card usage and keep the amount low. The CIR must reflect your financial status.
2) Your history of repayment of loans on time will definitely be a plus point for the lender.
3) Never out spend your credit card amount. Always be in limits and your expenses must be less than the total amount available for credit. The lender will consider that you have to have a substantial balance for repayment of the newly applied loan without any hassles.
4) Always keep payments on time. Your monthly electricity, telephone and credit cards bills must always be paid on time. This shows your financial capacity and habit of paying on time.
5) Credit card usage must be limited to certain amount, in fact if the usage is less the better chances of your loan approval. This assures the lender that you can manage your expenses without credit.
Thus for better chances of loan approval and avoiding the rejection of your loan application it is better to keep a watch at your credit card history.

21 December 2010

What is Loan to Value Ratio?

What is Loan to Value Ratio??? Home loans are a simple and best way to make your dream of owning a home come true. As the property rates are shooting up it is becoming more and more difficult to own a home in the city. Taking a home loan is the best option of owning a property and enjoying the present while continuing paying for the EMI’s in the later period. The term loan-to-value ratio is often used by government banks or lending institutions.
It is always understood that the loan amount is less than the total value of the house. While applying for a home loan one must understand that some amount of the total value of the house has to be kept prepared beforehand which has to be paid as down payment. Banks offer only certain percentage of amount as loans against the property considered for buying. This ratio or percentage may vary from institution to institution and may also vary for the interest rate applied to the loan amount offered.
The total estimated value of the house or property is calculated by the financial lending institution and then the loan-to-value ratio is calculated. Nowadays many nationalised banks have sealed this ratio as 80% and the rest 20% has to be paid in the beginning by the borrower as down payment. This down payment also comes to a substantial amount as when the flat price is 1 crore then the borrower has to be prepared with 20 lakhs as down payment before applying and getting approval of the home loan.
Increasing property rates and inflation has made banks and lending institutions becoming vary of lending large amounts as home loans and this has also led to many defaulters of the loan.  Hence as a precautionary measure most banks have pre-decided the loan-to-value ratio as 80% of the total value of the house or property.

                                              Home Loans-Simplified Facts

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Home Loans and Few Down Payment Facts for Borrowers

Down payment facts are easily understood by the layman as a small amount to be paid on booking of the flat. But due to rising property prices this also accumulates and comes to a big amount. With properties ranging from 1 crore to 10 crores it is understood that the down payment will be proportionate to this amount.
Usually 20% of the total value of the property has to be given as down payment and the rest has to be repaid in monthly instalments over the tenure of time period allotted for the home loan. Let us go through some of the simple facts regarding down payments:
1) The client has to arrange for this amount before going in for the purchase of the flat.
2) This amount varies from institution to institution and also from property to property.
3) This is a part of the total value of the property.
4) This does not include administrative costs, transfer charges, property taxes, stamp duty and registration charges.
5) Home loan refinancing and other mortgage on older property can be arranged for accumulating the down payment amount.
6) Only legalised buildings and properties are eligible for getting home loan approval.
7) There is no upper limit for payment as down payment. It depends on the amount one can arrange for. The larger the down payment the lesser the amount has to be taken as home loan and the less tenure for repayment.
8) One can also start saving and borrower from family and friends for the arrangement of this amount for the time being. This can be got without any hassles and interest free.
The best way to arrange and go in for the purchase of the home is to start saving! Collect your assets and start saving for this down payment amount if you are dreaming of buying a home and considering opting for a home loan.

Loan Amount Reducing - Home Loans

Home loans are the best way for any person to fulfil their desire of a home and everyone wishes for owning a roof above their head. House is a basic necessity and each individual dreams of owning a dream home but the rates of property being very high it becomes impossible to save this amount and purchase a home. Home loans come as a boon for many customers and they can avail this offer and buy a place of their own.
The total amount offered as loan is reducing due to inflation and property prices rising. A normal 1 bedroom hall kitchen flat comes to 12 to 15 lakhs and a 2 BHK flat comes to 25 to 30 lakhs, depending on the area of property. Many people take home loans but removing instalments every month becomes tedious and stressful. If there are unexpected financial problems or death in the family this leads to defaulters and bad home loans. Many properties come up as distress sales due to this and the lending financial institutions are at a loss.
Hence many nationalised banks and private lending institutions have fixed the loan amount on maximum 80% of the total value of the property to be taken on loan. This ensures that the borrower pays a substantial amount before as down payment and the rest is recovered by monthly EMIs. Also the borrower has the benefit of taking less amount as loan and later leading to less monthly payments, as it is always advisable to take loan on lesser amount because this adds with interest during repayment.

09 December 2010

Why the Down Payment?

Home loans are easily available and at very attractive interest rates. Some institutions and nationalised banks offer loans at very low interest rates and flexible terms for repayment. Whatever the perks applied for home loans there is a certain amount to be paid by the buyer called down payment which is usually a big amount. What is the reason behind this figure?
Earlier many banks offered larger amounts as loans and it was very easy to purchase a property and then later keep paying the monthly EMIs. But due to property rise and inflation it is becoming difficult for the client to repay the loans. Unpredictable future and unexpected financial issues has made the banks vary of lending higher loan amounts. Many banks and private financial lending institutions would consider the background of the client and the past history of loan repayment and consider offering larger amounts as loan. But due to many defaulters and bad loans many nationalised banks have come to terms with this problem by sealing the percentage of loan amount to 20% of the total amount of the property or house.
The reason for this is certain amount of commitment from the customer. This down payment is not refunded and in case of default the client loses on this amount. Also this assures the bank that certain amount of the total property value has already been recovered. This is also good for the borrower as they have to repay a lesser amount and a certain percentage has already been taken care of before purchasing the home. This is a banks assurance and insurance that the client has made upon taking the home loan. In case of any problems in repayment the borrower has the fear of losing on this down payment as well as the property taken on loan.

03 December 2010

Selecting Home for Best Home Loans

How does one go about selecting the best home and the best home loans deal? Home selection depends on individual likes and rates per square foot in the particular area and best home deal offers whereas the criteria for selection of best home loans depends on the interest rate and easy availability of home loans.
Once the selection of a financial institution is done keeping in mind all the factors like interest rate on the loan amount, period for loan repayment in years, advance payments required by the lending financial institution one can easily go about applying for a home loan. It is very important to not get carried away by tall claims made in advertisements by the builder and be practical while selecting a house. Always consider beforehand the perks and facilities offered by the builder and time line for completion of the project. Unrealistic time schedules for completion lead to haphazard quality and incomplete work done during construction. Select a good builder as the quality of work during construction is very important in the long life of materials used for construction in your home. Go in for a good layout plan for construction where there are a group of building with infrastructure available. Single buildings mostly have security and maintenance concerns. Also townships and complex societies have a good chance of value appreciation over the years. There must be good medical facilities, schools, public transport, good roads, shops and basic amenities available nearby.
Also it is observed that good financial offers by lending institutions are on houses by reputed builders who have faced the testing of time. One can go about the procurement of the home loan on property and homes which are made by builders who have a good completion history and also many successful housing projects.

Home Loans – Available Loan Amount

Home loans are a very easy way to make the dream of purchasing a home come true. When applying for a home loan one has to be prepared with the required documents and paper work for processing the applications for taking a home loan. While the selection of the home is done on the basis of personal requirements and the financial budget available it is also required to consider the availability for home loans and the amount available for this.
Usually person applying for a home loan has gone through the procedures of application and different administrative procedures in procurement of the loan and is prepared with the required documents. But it is very important to note that any financial institution does not give loan on the full amount of the house. Available rules in that area and the individual financial institution whether private or government bank has certain fixed percentage of loan amount offered.  It is never the total amount but mostly many institutions offer amount up to 80% of the total cost of the house.
Some private institutions can offer high amounts of loans on keeping of property or other security assets which have a higher value than the loan amount applied for. One can also go in for other types of small loans which can be got without any paper work on reference with the already existing account in the respective bank or credit card, thus accumulating a higher total amount for purchasing a home.  The down payment has to be paid and this also comes to a substantial amount.
Hence before going in for a purchase of a dream home and the applying for a home loan one must realize that it is only a certain percentage of amounts that can be available as loan and the rest has to be given by the client as down payment and other processing fees.

19 November 2010

How to Calculate EMI?

This term EMI is very frequently used with regard to home loans. EMI stands for easy monthly installments. Any loan amount taken from private or government financial lenders has to be rapid according to a pre scheduled duration. This installment amount can nowadys be calculated very easily in the conforts of our home.
Many institutions have given online forms for calculating the monthly EMI's to be paid. It has become very easy for an individual to take a loan as ther procedures for procuring home loans have been made very simple. Easy availabilty of home loans and EMI calculators online has made the process of purchasing homes very convenient. The calculator has certain blocks where the individual going in for a loan has to fill in the amount. 1) The total loan amount 2) Loan period or duration of loan in years 3) Interest rates, and just on a click of the mouse one can get the monthly EMI amount.
Interest rates for the amount can be monthly or annually and this adds to the total amount of repayment. Some institutions also take advance one or two monthly installments at the beginning and then the regular repayment schedule begins after one or two months. The individual here gets the time to prepare for the amount and deposit it in the bank account.
Online calculators have made it very easy to calculate EMI's and decide to select the financial institution who offers best home loans. Even for car loans, property loans, second home loans as well as home renovation lons or personal loans one can calculate the EMI's easily and select the lender who offers best deals for the loans.

What is EMI?

EMI is a term often heard by us in regard with home loans. As the percentage of people going in for home loans is increasing so also is the availability of home loans becoming very simple and easy. EMI stands for "Equated Monthly Installment". EMI's are a term used not only for home loans but are used for any type of  loans example car loans, mortgage loans, business loans, second home loans etc.
            EMI

The loan amount is decided according to the individual's financial capacity for repayment and the loan tenure, the period for which the loan has to be repaid. The amount of EMI is decided upon purchase of home and applying for a home loan. The total amount depends upon the amount of the property and the rates per square foot going on in that particular area. Taking of home loans is a long term decision and calculating per month the installment helps the individual to be prepared for the loan repayment schedule.
The term 'easy' is used as this amount is calculated according to the individuals capacity in repaying the loan. There are options where the borrower can go in for selected schemes according to their individual repayment capacity of the loan amount.
EMI"s vary from institutions either private loan lenders or government financial institutions and banks as this depends upon the property rates in that area and the interest rates applied by the lender. Hence it is not a universal amount for any house and one has to calculate the EMI"s before going in for a home loan.
When an individual considers buying a home and for this decides to go in for a home loan either from private lenders or government banks he has to pay a certain amount every month as part of repayment of the loan.

14 November 2010

Taking a Home Loan for House Under Construction.

Taking a home loan for house under construction can have various loop holes which come in the lime light only later. Homes are built by people and only houses can be built by builders. All of us understand that buying a new home is a very emotional aspect in an individuals life. Many of us consider taking a home but the finances are never sufficient as the rates of property are shooting up till the sky. Home loans came as a boon for us and we can think of purchasing that dream home with loan amount which other wise we would not have dreamt of.
The property under construction always has lesser per square feet amount than purchasing an outright  house. The booking amount is calculated per square feet according to the rate going on in that particular area. Loans can be taken according to this rate and EMI's calculated for the convenience of payments every month for the period or years decided according to the loan repayment schedule. Every thing is calcualted till the last detail and every month the purchaser goes and views the progress taking place in the construction. Many of the people may be staying in rented flats and also have to pay the EMI amounts along with their rent.
What happens when the building under costruction comes in some legal dispute?
well it becomes very difficult to pay the EMI's as well as the rent for an increased number of months. The customer is also very afraid about when the decision of legal matter will be settled and when they will take possession of their new flat. Definately legal battles take up much more time than expected and is always very stressful for the home loan borrower. Sometimes the whole propertyy is taken over by some other builder and they have their own terms and conditions. Here the customer has the option to take an amount offered by the builder and leave but it is always lesser than the house amount that can be got on purchasing the flat. If the purchaser goes in for continuing then they have to amend the rules and prepare fresh documents according to the hand over of property.
Hence it is very much advisable to go in for purchasing flats from a reputed builder. Find out about the reputation of the builder over the years. Observe their ongoing property projects. Also consider visiiting their successful and completed projects to have a view of how the final flat will look. Taking a bet on new builders may come at a reasonable amount and even lesser per sqare feet rate as also they may offer may latest amenities but it is always the insecure future that has to be considered before purchasing a new flat and going in for a home loan.

12 November 2010

Attractive Home Loans Offers - All that Glitters is not Gold!

Attractive home loans offers can be noticed in the news papers as well as television and other medias. Full page advertisements are placed showing latest amenities as well as competitive lower interest rates. The customer always sees the best picture that is presented by the media and this may not always be true. Before going in for purchasing a new home and the applying for a home loan one must make a thorough survey of the market trends, area rates, and interest rates offered by private as well as government lenders.
Usually there are many loop holes in the offers that are not visible on the first sight of the offersd. The media always highlights few marketing points and cooly conceals some of the important points which may result in increased amounts for loan repayment. The customer is misleaded by the festive offers and now it is also seen that many exhibitions and property fairs end up only in bringing many buildres and lenders at one place. Where is the benefit for the customer? After calculating the total loan amount, EMI's are much larger comapred to the offered perks and goodies which are quite small. Still the lenders and house builders always unneccessarily create a hype and a false image of the offers and lure customers into the deal of procuring a home loan.
Well this doen not mean that home loans are bad. It is the best opportuinty that one can get to fulfill the dream of purchasing a new home and also at attractive interest rates. Go through all the clauses of the property as well as all the amounts to be paid as taxes, processing fees as also transfer and other administartive costs. Calculate accordingly and then consider going in for a home loan. Taking into consideration all aspects of the payments helps one to be prepared for the total down payment as well as the monthly EMI"s. It would be highly misleading to go in for an offer that publicizes only low interest rates as there may be other hidden expense and you may end up paying more than if you had considered the other offer of higher interest rates.
Property exhibitions and fairs bring many reputed builders as well as private, government and individual lenders under one roof. Pamplets are circulated and brochres are distributed. Before jumping on th decision it is better to learn which institutions are taking part and the availability of their offers. Usually there is acertain time limit given to customers for applying for a home loan at the offered rate. Maybe within a week or a month so you get the time to go through the brochures carefully and calculate the amount you end up paying for each offer. There may be benefits and losses with each offer and selection of a home and home loan lender  depends on the individual choice.

Do You Need a Home Loan? Are You Really In Need of a Home Loan?

As the trend is going on the newspapers and media advertisements are highlighting the home loans and their benefits. Every day we see 'cheap home loans' and each individual is tempted to go in for a loan as there is easy availability of home loans and the procedures for procuring home loans has also become very simple. But do you need a home loan? this is the big question asked and must be thought of  by everyone before going in for a home loan.
If you are purchasing a first home and have a reasonably fixed salary then it is fine to follow your dreams of buying a home or even a second home for investment. However much the attractive advertisements and tempting offers by the home loans lenders never ever forget that you always end up paying a much larger amount for the purchase as the loan amount  also adds interest money and it is a substantial amount. If it is possible one can encash certain investments to increase the down payment and go in for a smaller amount of loan. Consider your other responsibilities and financial liabilities before taking this step.
Best Home Loans Investment Second Homes

If you are going in for a second home it is advisable to survey the market and the interest rates as well as festive offers on the homes. Following the trend as your friends have taken a home loan is not a good idea as each individual has different priorities as well as different financial positions. You may not come to know about the pressures every month for paying EMI's on the respective dates unless you yourself are committed on a home loan.
Think according to your salary and how much money you can keep aside for payment of a home loan. Taking a home loan is the best opportuinty for many borrowers as the purchase of a home is done immediately as the processsing of home loans is completed. The dream can  be fulfilled and you can enjoy the new home over the years maybe ten, twenty even as the loan is being repayed. Many have benefitted with this opportunity and a new home which would otherwise be impossible to buy now has come within the reach of the middle class due to easy availability of home loans.
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29 October 2010

Selecting Criteria of Financial Institutions for Home Loans

Selecting the best offer from an financial institution for applying for a home loan is a tricky choice. Various factors have to be considered and deep study of interest rates, EMI’s and other administrative fees as well as loan processing fees must be considered. Every individual can prioritize their requirements and repayment capacity and thus select the best available home loan from offers in that area or locality.
Government financial institutions and nationalized banks are the preferred sources because they are reliable and they also offer reasonable interest rates on the loan amount. Usually they also have a longer tenure for repayment hence the EMI’s are also low. Private lenders have easy availability of home loans and less time is required for processing but usually they have higher interest rates and lesser tenure for loan repayment hence leading to higher amount of EMI’s. It is also noticed that on default on the part of borrower or delay in payments private institutions may resort to unconventional means for loan recovery.
One must be vary of financial institutions that boast of lower interest rates. Usually they have heavy upfront payments which offset the low interest rates for e.g. a co-operative bank may ask you to compulsorily purchase its shares during the processing of home loan for which you will have to shell out a substantially big amount. Others may quote transfer fees of home agreement and administrative costs as a much higher figure. Taking loan from a reputed institution involves their security and support and they have set rules in case of failure to complete the loan repayment.
Discussing and considering all these factors before going in for a home loan helps to ease out many problems faced during processing of home loans. Also accept the fact that loan amount will be much higher than the principle amount of the house as interest rates are added to this. Hence one must think and then go in for selecting the best institution offering home loans. The loan repayment capacity of the individual and how it will increase over the years also must be considered before deciding on the EMI’s to be paid regularly.

Interest Only Home Loans – Simplified Facts

Home loans are becoming welcoming and more accessible to the common man. It is now possible for even young couples to go in for loans according to their financial terms and conditions. No longer do people have to have large sums of money for paying out the loan amount. ‘Interest only home loans’ means that the borrower ends up paying only the interest for some years and then the principle amount is added later for years. This has risen as a better option for many who are not in position to pay large amounts as EMI’s in present years.
In this type of offer the lender gives money to the borrower and the purchase deed is completed. The borrower becomes the owner of the house. Every month he has to pay a small amount that is interest to the principle amount (loan amount). During later years he has to pay the interest along with large sums of the principle amount. This option may be good for individuals who are highly qualified and have a new job and they know that over the years their salary is going to increase with their experience. So they can pay smaller amounts in present years and later on be prepared to pay larger sums to complete the loan repayment. However it is also very risky as no one can predict about later years. The large amounts later on can be very difficult to pay back and one may end up in financial tight spot. Some people also take this type of home loan if they are confident about the price rise of their property. They can pay the interest amount and later as the value of their house increases they can sell this and make profit as well as pay the larger loan amount.
Though a boon to many there are certain risks every individual has to take before going in for an interest only home loan. Their job stability may not be guaranteed over the years and only those individuals who are very confident about their financial growth must go in for such type of loan. Also the property value may drop or remain same so the individual may end up paying more than they actually paid for the purchase of the flat some years back. This may result in financial losses and also it may become difficult to sell the house during payments of large amounts of loan.

25 October 2010

Divorce of a New Couple: Reason Home Loan

One of the most important adjustments that a newly married couple has to make is that regarding finances. Our priorities vary and one may feel the need for dining out important whereas other may place priority to travelling to exotic places and may be willing to have simple home cooked food. Whatever the likes and dislikes of the newly married couple, a home loan taken for the dream home is the most important decision in ones beginning of new life. Sacrificing certain important aspects during the early-years of marriage may build up over the time. Constant fights over finances may make the relationship sour and the pressure of the home loan may also sometimes go off hand and lead to separation of the couple. Let us discuss few tips to neutralize the negativity among couples and reduce the stress about repayment of home loan.
The decision of taking a home loan has already been done. The couple should sit down and have an open discussion regarding their priorities.  Financial planning is must for helping out in this situation. If one of the partners is unaware about the loan then it is possible that this partner may feel the other is cheating on them. Small bickering when fuelled daily may go out of reach and lead to divorce between the couple. Many adjustments have to be made as the couple is new to each other. Habits and manners are different as also the background that they come from.  ‘Looking at the dream home’ is the mantra for success and a tonic for the couple till the years of repayment are completed. Facing the fact that a home of ownership is waiting for us after some years is the bonus that is enough for both to carry on. Discussing other important aspects of life like increasing the family, health of elders and other positive points among the couple helps them to understand each other.
Having a dream and taking steps to fulfill them is the guideline and important tip for the couple to carry on in their relationship. Having frequent visits to the construction site and taking a look at the home under construction helps the couple to go ahead and be willing to sacrifice certain financial priorities in order to achieve a home.

23 October 2010

Bad Credit Home Loans – Simplified facts


Bad credit means the borrower has a bad reputation of default in repayment schedules. Loan amount taken for home purchase has to be repaid along with interest at certain timely period over the years. Not being able to pay the EMI’s and interest regularly and delayed payments make the borrower a defaulter. It gives bad reputation as a loan taker and in future other lender will hesitate to lend money to such an individual. Here the bad credit loans come as a breakthrough for the individual.
Meaning of bad credit home loans:  The reputation of the individual borrower has history of penalty charges, late payments, cheque bouncing history and so on. They are the ones whom lenders hesitate and turn down for future loans. Even these individuals have the option for taking home loan from institutions specially made for them as bed credit home loans.
Who can avail this type of loan: Anyone who has an asset like a car or house and the value is greater than the loan amount can apply for this type of loan even though they may have a bad reputation and history of repayment of previous loans.
Why to go in for this type of loan: Large sums of principle amounts and high interest rates may be the problem for the individual. Thus he can avoid paying this larger interest rates and get this offer of bad credit home loans with a smaller rate of interest fees. He can get out of his previous debt and free himself from the large amounts of home loans.
Bad credit holders can improve their reputation by taking responsibility for their loans and pay regular installments and free themselves from the previous loans. One can take secured loans or unsecured loans. Loans taken against any property or car or other material goods can be termed as secured loan and the amount permissible for loan depends on each individual lender in the market and may even be larger collectively assessing the assets. Unsecured home loans are the ones that do not require any guarantee. The loan amount here may be smaller and installments that is interest rates larger and the repayment schedule is for few years.
Whatever the loan type the interest rates are definitely larger and have to be previously considered before taking any type of home loan. The repayment schedules and financial position of an individual must be assessed before going in for any type of loan. Bad credit loans are a boon for those who have a bad reputation regarding loans and this opportunity allows them to free themselves from the tag of bad credit holder.  

Special Offers and Home Loans

Whenever we see advertisements regarding home loans it is widely publicized as low interest rates, cheap loans, best deals for home loans or also as best options for home loans. We also have come across certain offers that are advertised as offers for special categories and limited offer. Let us understand and discuss these terms.
During certain times of the years there are special offers for professionals like doctors, teachers, lawyers or freedom fighters. Here the financial institution offers home loans to these categories on a special low interest rate amounts and also tenure may be adjusted for a longer time of repayment hence coming to an understanding of lower EMI’s. These offers may correspond to certain festivals or certain month’s e.g. like doctors day, teacher’s day. So some institutions offer bonuses and concessions for professionals during a decided period of time corresponding to these occasions. Festival offers are also the most attractive offers where lenders may be willing to part with many factors on deciding the EMI, and give an attractive and difficult to refuse offer.  Some may do away with the administrative charges, while other may take the responsibility of transfer of property agreement on their part. Some may negotiate the rate of interest whereas some may reduce the processing fees.
One must be in look out for such offers before going in for a purchase of house and applying for a home loan. There are many advantages and though you have to pay the loan and EMI it  is always a bonus to have bargained and got a lower offer for the same loan amount. Government banks and financial institutions also give certain concessions and facilities which can be found out before applying for a home loan. It is also important to remember that the lender is willing to negotiate on the calculations and thus one must do a thorough survey of the available offers in the market and then decide the best payable amount monthly for loan repayment.

21 October 2010

Upfront Payments on Home Loans –Fixed Amount or Negotiable

An upfront payment is money given before applying for a home loan. These may include taxes, administrative fees, transfer agreements etc. All this put together makes a substantial amount and one must be prepared with this amount before going in for applying for a home loan. Let us learn more about these payments which are not talked about openly and nowhere do advertisements claim any discounts on these.
First of all let me inform you that these figures are negotiable and depends on every individual lenders rules. Every financial institution advertises and promotes of low interest rates but do not mention about upfront payments. They may have certain fixed charges about loan amount processing and other administrative charges but they are very well willing to negotiate on this amount. Usually we are not aware of this and we take their word as fixed charges and are willing to pay them this amount which is not included in the price of the home. The home loan dealer shows certain percentage of principle amount has to be paid as down payment , transfer charges and other charges and taxes extra. We take their word and even thought hey may be unrealistic charges we accept them and pay them the required amount. Our focus is on purchasing of a new home and loan approval. Every individual whether salaried or self employed wants approval of the loan and so we dismiss these thought and move ahead.
Upfront payments amount is negotiable and for this one must take a thorough survey of the market. Find the value of the home, price per square foot area in that locality, what discounts other builders are offering, interest rates prevalent for home loans in that area, and also various financial institutions that offer home loans. Summarizing all these points together and understanding various procedures for application of home loans helps an borrower to get the best deal while purchasing a new home.

Meaning of Interest Rates in Home Loans

Interest rates are a very common term we usually use during conversations regarding home loans. The media and advertisements highlight various real estate prices and unique opportunities for taking home loans. The most common point of luring from the lenders is that loans are available at low interest rates. Most of the advertisers use this as the best selling point of their property and houses.
Let us understand what interest rates are and how do we judge whether they are low or high. Interest rate is a percentage of money on the principle amount of loan that is taken by the borrower. Each financial institution varies in deciding the interest rates. Government banks offer lowest interest rates but their loan approval procedure requires more time. Private home loan financial lenders and institutions have easy availability of loans but they may have higher interest rates and smaller tenure for repayment. Interest rate is not the only criteria for selection of home loan. One must go thoroughly considering all the other factors before selecting the right home loan.
Rates of interest vary from institution to institution, from place to place, from region to region and also from time to time. Due to inflation and changes in economy the rates of interest decided during certain time may vary after few months. One must negotiate according to the rate of interest calculated on the day of the deal and finalize it or lock it so that other changes do not affect the calculated EMI. If the individual can afford it is best to pay a higher down payment and take loan for the rest. Thus it will be a smaller amount for lesser tenure of repayment.
However much lower the interest rate of the home loan it is always understood that we have to pay a much larger amount than the principle amount hence going for a home loan must be thought about seriously and carefully to avoid undue stress and pressures in the family. The market survey gives offers from different financial institutions regarding their interest rates. Government banks also offer loans and their rates are low. One can compare different interest rates and go in fro the best offer from a reputed financial institution.

15 October 2010

Home Loan Redemption Insurance

Home loan redemption insurance is a very important facility which can help during any unexpected crises or untimely death of the borrower. The family does not have to face the financial pressure of repayment of the loan. This is also a type of insurance taken during the purchase of home and applying for a loan.
One does not understand the importance of this insurance and many of individuals shy away from this topic due to the increasing total amount of repayment along with the insurance amount. This  does not allow the individual to think about such circumstances that happen unexpectedly during the repayment tenure. Due to circumstance of financial crises, sudden death or accident of the home owner it may bring the family in a tight financial crises. Loan repayment may become impossible for the surviving spouse and may also lead to vacating the present home due to non-payment of loan amount. The lending financial  institution may have the option to sell the property or other means for loan recovery. If this is not possible the family may have to vacate the house.
Here a presence of mind on part of the earner and borrower counts. If there is only one earner in the family it is best to go in for a home redemption insurance. A small amount is increased for payments every month and though it may give a pinch to the pocket it goes a long way in securing the safety and security of their family. Monthly payments of the insurance are cut along with the loan repayment EMI’s. The benefit of this insurance is that on untimely death of the borrower the insurance company pays the remaining loan amount and the other spouse and family may not have to let go the house.
Even though most of the times it is not required but it is always advisable to keep in mind the changing situations in our lives. Nothing is stable and economy also keeps changing. The priority of every individual must be safety, security and peace of mind of family members. Taking a home redemption insurance policy goes a long way in keeping life stress free and covering the aspect of the unexpected future.

13 October 2010

Documents required during the application and processing of home loans for the salaried class

When we think about taking a home loan the impression of making many rounds of the lending institution or bank is the picture created in our minds. We repel with the idea of convincing the authorities of our financial status and the capacity for repayment. But this is not always so. If we can get prior information regarding the documents and procedure required for taking a home loan it would ease out many difficulties and also make the process of purchasing a home a more pleasant one.
The salaried class are the ones which can get loans easily as they have their salary slips and work experience records that can help to show their financial standing in the society. Assurance of the required amount as salary is a important assurance for the financial institutions or private lenders to approve of the loan amount applied for.  People working for a company or government and getting regular monthly salary can be termed as salaried class. Preparing before hand about the documents required for home loans helps the buyer to be prepared with the documents and also knowing the procedure helps to be prepared and enjoy the blessing of purchasing a home. A list of important documents required for the application of a home loan by the salaried class is given below in simple terms.
Age proof: The ration card or Pan Card Xerox can be used for age proof of the individual or borrower.
Address proof: Telephone bills or electricity bill Xerox can be used as proof of residence.
Income Proof of the applicant: Salary slips Xerox can be used of previous few months as income proof.
Last six months bank account statements: Bank statements allow the lender to know the financial standing of the borrower.
Passport sized photographs of the applicant and the co-applicant: Recent photographs of the individual to prove the identity of the borrower.
These are simple list of documents and they may be slightly different for different institutions. During processing one may require to share total assets for proving their repayment capacity. Some institutions also require document proof of at least two individuals who have a good financial standing in the society. These are reference parties who can be contacted in case of default or not being able to pay the installments on time.

Be Prepared for Other Hidden Costs before Taking a Home Loan


‘Other hidden costs’ are a term we all are familiar with. Many a times we go to purchase some good and we are made to pay ‘taxes extra’ an amount more than the printed price. Usually there is a small asterix below any advertisement which we do not pay much attention but during purchase it increases the price. The same matter happens with home loans. We see heavy discounts and low interest rates but we do not consider the hidden costs that we end up paying during taking a loan for purchasing a home. A home loan may be in simple terms amount borrowed by the borrower from the lender for a certain period of time with a certain amount of interest charged with the amount to be paid. As an individual comes up with the decision of taking a home loan one is usually not aware of other processing charges and this may lead to quite some amount if not prepared for. Also certain financial institutions may make the borrower open account in their bank with depositing a certain amount minimum or also the borrower may have to oblige by taking their shares which can be a pinch as the individual may not be prepared for this money.
Meaning of Joint Home Loans
It is always advisable to get thorough knowledge from different financial institutions and private brokers for their special requirements other than the interest rates before taking the step of applying for a home loan. 
1) Processing charge: This amount is taken by the bank for the application and other processing charges. It may vary for every institution but usually may be 0.5% till 1% of the loan amount.
2) Administrative fees: The different paper work and documents required as well as the stationary is added as a fee.
3) Legal charges: Some banks may also charge for legal verifications and visits from the verification teams. This may vary from different individual banks or private brokers.
4) Prepayment penalties: In case the borrower or individual that has taken the loan is willing to pay the amount prior to the set dates the bank loses on the amount earned as interest so they apply penalty charges for closure of the loan. Still the borrower is at benefit as this penalty fee is much lesser than the interest rate charged by the financial institution.
5) Delayed payment charges: Sometimes under unexpected circumstances the borrower may not be able to pay the monthly installment. Here for the next month amount as delayed payment is also charged with the amount. The percentage may vary for different lenders.
6) Cheque bounce charges: Penalty charges are levied in case of bouncing of cheque by the borrower.
Keeping in mind these important financial points helps the borrower to be prepared with this extra amount before applying for a home loan. Some private brokers may also charge transfer charges of flat to the borrower or purchaser of the flat.
Advantages and Disadvantages of Joint Home Loans
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Procuring a Home loan – First Time Buyers

First time buyers of a home are new to this field. They are unaware of the many offers and options for taking a home loan. The decision of taking a home loan for the first time is stressful and needs lots of knowledge and information regarding the EMI’s, interest rates as well as the capacity for repaying over the years. The internet and media have made it very easy to get loads of information right from under your roof. If one is staying in a rented place or with other family members this becomes a major decision to purchase a home of their own.
One has the option to enquire about various options for procuring home loans. The easiest and one having lowest interest rates may be considered. As also the ones that give extra offers or bonuses can also be considered. All points mentioned and also all doubts regarding loans must be discussed and enquired before hand. Many banks and other institutions are ready to give finance for home loans.
There are quite a number of housing finance companies who would be happy to loan for the new home. Consider their requirements and other details before making the decision of procuring a home loan. Another option to get a home loan would be through a home loan lender. These institutions and companies solely give loans for purchase of home. The procedures have become quite simple now and also there is easy availability of home loans for the common man. T he private lender is also an option as loan amount can be got easily but they may have higher interest rates.
Thus the first time buyer of a home has to consider various points. Loan procedures, interest rates, and EMI’s calculated before going in for the decision definitely helps to plan expenses and the decision makes ownership of a home easy.

Easy Availability of Home Loans

Buying a dream home is the best dream for every individual and everyone wants to have a place of own under the sun. Easy availability of home loans as also simple procedures for processing has made buying a new home very accessible. Even the middle class man can avail this offer and enquire at various financial institutions or private lenders and can go in for a loan to purchase a house.
The internet as well as news papers and other media have brought the topic of home loans in the fore front. In earlier days taking a loan was looked down upon and it was not an open topic. People had to do enquiries and various documents were required, which took a toll on time and health of the borrower.  Searching for good lenders was also not easy and one had to apply only from the bank in which one had an account over the years. It was difficult to obtain loan without any guarantor as also past record. The most to suffer were the privately held business people and professionals who had no salary proof as some institutions, in order to avoid default in payments, totally refused to give loans other than to the salaried class.
The situation has now changed for good. No longer are the procedures and processing of home loans difficult and also it is open for every strata of individuals of the society. Having property deeds or other proof of financial position is taken and also some institutions do not even require guarantors. There is a lot of competition and now the buyer is the king. People have many options and can compare the interest rates to get the best offer for their loan amount. Repayment schedules can be adjusted according to individual paying capacity and monthly installments can also come to an understandable figure.
Easy availability is the mantra for home loans nowadays. One can search on the internet and find various sites that give full information regarding interest rates, availability and EMI’s. The big decision of taking a home loan has become very easy and one can avail this offer and make the decision of purchasing a dream home right from the comforts of their homes.

11 October 2010

Home Loan Application - Documents Required by the Self Employed During Processing

Loans can be taken by any individual as long as they are eligible and have the capacity to repay it. Procedures for taking loan are very lengthy and tiresome as we all have the impression of making many trips to the financial institutions till we finally achieve to get a home loan. The working category of people is lucky as they have many salary and job proofs on record and they can just produce these statements and avail the loan amount. The self employed are the ones who need to prove their identity and financial standing and usually many may not have all records of their statements. Private business people or professionals like doctors, lawyers, entrepreneurs who wish to apply loans may have to submit their assets and liabilities proof.
Let us list down few important documents required by the self employed class for application of a home loan.
Copy of audited financial statements for the last two years: These are very important as the audited documents show the financial standing of the individual applying for loan. It is very important to keep all the statements updated even if one is not wishing for taking a loan as whenever the need arises these documents are a boon and ease out the procedure for applying for a home loan.
Copy of partnership deed or company: These documents are proof of the ownership of company or as partner in the said company by the individual applying for the loan.
Profit and loss statements for the past few years: Here the lender can get an understanding of the financial position of the company or business. Profit and loss statements indicate how the business is running and  the repayment capacity of the individual applying for a home loan.
Income tax assessment statement: Filing income tax returns regularly and having these statements on record is an important document required for the application of loan. This amount also indicates the financial standing of the individual as they declare their income and this proportionately corresponds to the amount of loan that can be applied for.
Total information about your total assets and liabilities: The total amount of property and other financial assets like gold ornaments and bank statements. Each institution has their own rules and may require specific proofs for these aspects. Owning a property or home which has a higher financial estimated value than the loan amount being applied for helps to get the amount easily.
Other personal and professional details together with property details and costs: Other details regarding liabilities are also discussed. Other earning members, number of family members, dependents and sick people in the family as well as record of other loans taken before or still repaying. Ownership details of shop or clinic is also considered as an asset.

The Right Amount to Apply for a Home Loan

Mrs Rizwana Mundewadi
We take a survey of different properties and flats, their areas, and rate per square feet in that area and are ready for applying for a loan. Getting a home loan may be the easiest step to fulfill our dream of a new home at the present time. Many institutions and private brokers lend money as loans for purchase of flats and also the procedure has been made quite easy. How can we come up with the figure of loan amount to be applied for. Will it be the total value of the flat or will we get the flat ownership by paying loan amount are few simple questions that we are unaware of. Usually we feel that we can apply for a loan and purchase a new flat, but this is not so.
Banks and financial institutions only give a certain percentage of the loan amount and not the total amount. Usually they may give maybe 70 to 80 percent sometimes even 90 percent considering your past financial record. The amount to be prepared for, prior to the application of loan, is termed as down payment which the purchaser has to pay before applying for a home loan. Deciding on the amount to be taken as loan is an important decision as the borrower will have to pay installments along with interest for certain period of years. Usually loan may be taken for twenty years or less so the individual must be prepared for having financial stability during later period of years. Always there is risk of losing job or death of a family member unexpectedly and the loan may have to be cancelled and property auctioned. But still it is worth taking the risk as no progress will be done without taking certain amount of risk.
It is advisable to pay larger amount as down payment and reduce the amount for loan as the interest charged by the financial institutions is more and the same property can be got at lesser price. It is of course true that only when not possible does the individual opt for taking a loan or if the benefits in other aspects like proving financial standing of the individual. Also if finances are arranged during the loan tenure than it is also possible to opt out from the loan by paying a small penalty fees along with the total amount.

Meaning of Home Loans

Whenever we hear about the term loan we usually understand that it is an amount taken at a present time for our needs, which has to be paid in installments over period of certain years. A loan is usually in  terms of money as cash. There are different types of loans like home loans, medical loans, business loans, property loans, study loans, entrepreneur loans, needs like purchasing a flat, refurbishing our present home, purchasing a second home or just about any specific need under the sun! Loan can also be a boon during unexpected crises or emergencies in the family.
 A loan is any amount taken or borrowed from a lender which has to be paid back along with certain amount of interest during the set period of time. It is an arrangement between two parties that is the lender and the borrower usually combined with interest at some future period of time. The lender has certain risk factors involved by lending the amount hence the interest charged along with certain documents or property or gold as mortgage. Mortgage is some asset which has a higher value than the loan amount taken. Here in case of default or the borrower not being able to pay back the loan the lender can take charge of the documents kept as mortgage. Interest rates of different lenders and financial institutions are different and it is always advisable to take a thorough survey of available options and their rates of interest before going in for home loan.
A home loan is an amount that is got by placing some valuable property or other investments as mortgage.  Taking a loan and purchasing a home does not mean that the lender gives the total amount for purchase. This is the most important misconception amongst common people. A certain amount has to be given as down payment before hand and then the financial institution or bank can approve of loan for the rest of amount.

10 October 2010

Arguments resulting from home loans in a newly married couple.

The decision of buying a home is among the priority list in all couples who have just taken the plunge of marriage. They may be at a rented place or with the other family till they have a place of their own. Many a time’s couples who take home loans are seen to be stressed and argumentative due to the pressure of repayment, especially if only one partner is earning. The stress of repayment is too much and may even lead to separation if not controlled as both have to sacrifice many important aspects during the tenure of repayment.
Usually the bickering happen because one of the spouse has taken the decision. The other partner has not been involved in this major financial decision of taking and repaying a home loan. Discussing beforehand about the type of loan taken as well as repayment schedule helps to neutralize some of the stress among the couple. The amount taken as loan must be manageable with the salary of both or one partner although it does give a pinch to ones pocket. Many other aspects of enjoyment and travel will have to be compromised till the loan is repaid hence discussing all aspects and understanding that ‘some thing has to be given up to achieve something’ is very important. Usually the bride has certain expectations from the spouse and may be unaware that the apartment she has just entered as a wife may be on loan. This leads to undue stress and it is better for the spouse to let her know before regarding the financial decisions made by him before marriage. Having a clear talk regarding finances helps to solve many misunderstandings and even makes the bride more supportive of this decision. If the fact of home loan is hidden by her she may not understand where the amount of salary is going and may have negative thoughts about the character of the spouse. Small arguments may heat up and may also sometimes lead to divorce between the new couple.
Having open discussion and talk regarding finances and home loan may make the bride understanding and very supportive. The dream of owning a home may the motivating factor and both may be willing to give certain sacrifices till the repayment tenure of the home loan.

SimpleTips on Home Loans for the Newly Married Couple



Since time immemorial man has always dreamed of a ownership home. Marriage brings two individuals together and in their new life a new home plays a very important role. Dreaming of a big house with latest amenities may be what everyone wants but it is important to consider the required space and the financial position of the couple before selecting a home. Getting carried away by media and advertisements is possible but having consideration of many factors will help ease out many problems which may erupt during the repayment years. Firstly take note of the financial position and availability of extra money for repayment of home loan. One must list down how to cut down other expenses during the tenure of repayment and the schedules of amount to be paid over the time period.  Find out the interest rates for the loan amount. In the market there are many lenders and options available for home loans. Also important to consider the down payment as this amount has to be ready before getting the loan. The other specific rules of individual lenders and institutions must be read carefully as the amount of repayment and time will go on for long. Situations may change due to inflation and one must consider the interest rate accordingly before going in for a loan decision.  All documents needed must be arranged for before hand. Deciding on the amount to be taken for the home loan and the monthly installment is a very important decision. Only that amount which can be possible in the salary of one or both must be considered as there are other compulsory household expenses and one cannot let go of basics like food and clothes just for the fact that ‘we are purchasing a home and loan has to be paid’.
Tips For Newly Married couples - Rizwana Mundewadi

A thorough market survey is required to get the best deal with a balance of rate and interest. Taking a home loan has become very easy and simple and availability is also good. So your dream home is calling and all the best to the newly wed couple and their dream home.