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28 February 2011

Early Closure / Pre-closure of Home Loan

Home loans are easily available and the procedures for applying also have become very simple. Many families opt for applying for a home loan for purchasing a flat.  They are happy with the EMIs and payments are going as scheduled. But due to heavy interest charges the borrower is always on the look out for completing the loan tenure as fast as possible.
Early closure of loan can be done if the borrower has made arrangement of the required total amount left in the loan. The couple have other financial option available like increase in salary of both spouses, unexpected gifts from families of either side or maybe a property deal which gives them access to the amount required to repay the loan amount. In such case the borrower can opt for pre-closure of the home loan by paying the remaining amount left in the loan. During purchase of the flat one must also inspect the documents of home loan carefully if there is this option available. Some lenders apply cancellation fees and some also have penalty charges with the loan amount paid in large sums early to clear off the loan.
It is always understood that home loans though are the best option for buying a home they also increase the total value of the house by a substantial amount. Interest charges are paid along with the total principal amount of the house.  The amount to be collected for prepayment of the home loan must also be ready as many investments require time to fulfil requirements of closure deals and the final amount to come in your hands.  It always pays to pay off the loan early as you save on precious time and money which can be used for other family benefits.
Here’s wishing all the home loan takers a happy loan repaying and also a happy closure of loan earlier than their home loan tenure!
All the Best from Rizwana!
Hidden costs in Home Loans
Importance of preapproval of home loans

Advice for Married Couples for Home Loans

Buying a dream home is the most precious desire of every newly married couple. Gone are the days when people used to stay in rented flats for many years and would purchase a flat in later years of life. It is very easy to get carried away by advertisements during selection of a flat and applying for a home loan.
The most important aspect to be considered is our repayment capacity. Even if both spouses are working one salary will have to be kept aside as the other takes care of monthly household expenses. Interior decoration and house warming are another expense which often goes unrecorded.  There is strong need for financial planning of the budget and extra expenses like honeymoon, movies and eating out which may be a part of new couple’s lifestyle. They also need to do family planning so that the most part or total of the home loan is repaid before they begin a family. Welcoming a new life involves many expenses right from the pregnancy till the birth and also for later years of the toddler. Monthly EMIs must be according to the affordable payment amount by the couple. Most of the couples also go in for personal loan for decorating their homes. It is not advisable to club loans as personal loans are available at mush higher rate of interest than home loans.
Planning the expense before applying for a home loan helps as the couples are both into this decision.  There is also a tendency for opting for a bigger home than they can afford.  This can be done if the salary of both spouses is expected to rise substantially over the years and also if the have assured income from other property or investments. There are many loan lending financial institutions who have attractive offers on home loans. Hence for the couple many options are available in the market and they can select the best home loan.

Home Loans and the meaning of Appraisal

When one applies for a home loan considering mortgaging their previous home then an appraiser is sent by the lending institution or bank.  They are termed as appraisers and they calculate according to certain factors and come up with a price that indicates the market value of your home. Why is an appraisal required? 
When one has to apply for a home loan against property then we do not know the total value of our home. How will the bank decide if we are qualified to get a home loan? All this is possible when the lending institution or bank sends an appraiser to assess the market price of the property to be offered as mortgage. The home owner can also privately call upon services of an appraiser to  get the estimated price of the home for selling purposes or buying a bigger house.  The appraiser calculates the total area of the house and rate for area per square feet in that area. They compare prices in that area and homes available are at which rate. They have to consider the maintenance dues, bills and any repairs needed in the house. If all payments are up to date and the borrower has no dues remaining. They then come up with an estimated value for your house. The appraisal is a formal written estimate given by the appraiser.
This home appraisal benefits both the lender as well as the borrower. The person applying for a loan gets an rough estimate of the value of their property and thus comes to know how much loan they can apply for. The lending institution also on appraisal of the house understands the market value of the property and how much amount they can offer as loan.

18 February 2011

Understanding Home Loans and House Amenities - External and Internal

Home amenities are one of the most important aspects in selecting a dream home. Selection of a home for buying has become easy due to advertisements in the news papers and ads on televisions. The internet is another very important option if you are not comfortable visiting places and enquiring about homes from other people. Amenities are services and additional facilities offered by the builder to the buyers along with the house.
Applying for a home loan involves taking into account the area of the flat, the rate per square feet in that particular area and also the amount for down payment.  With these you are ready to give an application for a home loan. The important question arises when you want to purchase a flat that has latest amenities and it increases the total cost of the house. Whereas houses in the same area that have less amenities are lower in price in comparison.  This decision is personal and it must be remembered that with the amenities also comes the monthly maintenance that has to be paid by the home owner. This will add up to your compulsory expenses with monthly EMIs and house expenses.  Amenities can be external or internal which are offered by the builder to the house buyer. External facilities like swimming pools, water fountains, jogging parks, gardens and playgrounds, club house and gymnasium are a few amenities which most of the reputed builders offer the customers coming for shopping a home. Internal facilities can be solar heaters, internal security systems, geysers, furnished kitchens and bathrooms, as well as intercom facilities and generators for power backups during electricity cuts.
While buying a home one must remember that all these amenities are not included in the home loan. Sometimes parking facility and other membership charges of club house and swimming pool also need to be paid by the buyer during purchase of a flat directly to the builder.

10 February 2011

Step Up Loans

Home loans involve various administrative procedures and costs and the borrower has to prepare for the down payment before going in for a home loan. Step up loans are a familiar term used in the dealings of home loans and let us understand the meaning of this.
EMIs are the amount paid every month as the repayment of the loan. This amount is deducted from the total amount of the home loan along with interest rate added to this amount. The total loan tenure is decided according to the loan repayment capacity of the borrower and the options available with the lender. This monthly amount is decided and goes on till the end of the loan period. Here the borrower has to keep continuing to pay interest on the loan amount and this comes to a very much higher total amount of the property purchased.
In case the borrower has the facility and available amount to repay the loan early then also there are many options available. One can opt out of the home loan by transferring or closing the loan. Also there is an scheme of step up loans where the borrower has guarantee that their salaries and assets will increase over the years. Hence their loan repayment capacity will also increase. The total amount they can shell out every month will increase so they can increase the EMI during later years of loan repayment and payoff the loan early.  In this scheme the EMIs accelerate every year. This is considered in proportion of the rise in the income of the borrower.
Banks and other private loan lenders have this option and also if the borrower is unable to repay the higher amount they can shift back to their normal EMIs. Switch to the current loan procedures and follow the longer tenure option of loan repayment.

Is There a Need for a Home Loan?

Many people follow the standard procedures for purchasing a home and apply for a home loan during the purchase of a home. It is important to understand and critically assess whether we really need this loan? Applying and paying the loan amounts to large interest added to the total property value and in the long run we end up paying much more than the total value of the property purchased.
One must be honest and do critical appraisal of their financial standing. Their monthly salary if one or both spouses must be considered.  If in a good financial post then whether it is possible to save one spouse’s salary or more than that also must be considered after assessing the monthly expenses. Gold, property and other assets the family possess is also important. Some of the people also are in the process of selling their old home to purchase a new one. So here also finances are added though this may take some time. Fixed deposits, bonds, shares and other investments must also be considered to get he right financial standing of the family. Relatives and friends also can pool up some amount without interest added on friendly terms or as gifts. All this will help in collecting money required for the purchase and one can assess how much loan do they require critically. Whether they really need to take a home loan or a small personal loan will do. Also consider whether they can manage without applying for a loan with selling of some assets that are not giving proportionate returns. Always consider that the lender will offer loans on a high interest rate and the borrower though over a long tenure of many years ends up paying a large sum than the total value of the property purchased.

07 February 2011

Understand What You Can Borrow

Buying a dream home,  and one shops for the most beautiful spacious and luxurious flat. Each one feels that their home must be in the best locality and have all the latest amenities in the campus. But when they actually survey the rates of property they are in for a shock. And another shock comes when they face the loan amount and how high it is and how they can repay it every month.
To avoid this entire hassles one must first do an honest appraisal of their financial standing. Their salary or salaries if both spouses are working will indicate the figure of money coming in monthly. Their assets in terms of car , property or gold also needs to be assessed as they can get personal loans on these.  Try to collect maximum amount beforehand to give as down payment as this will reduce the burden of the loan amount. If you are going to sell your old house and then shift into the new then you must assess the value of your old home and also till you get the buyer for your old home you can select the best home loan deal. You may also consider the loan tenure if you are going to get the money by selling your old flat then the tenure may be smaller and you can repay the loan quickly. Gold loans are also available and taking small personal loans may also reduce the amount taken as home loan. 
Your financial responsibilities and other expenses have to be critically considered as home purchase involves multiple costs. Down payments, property taxes, loan EMIs, insurance, maintenance as well as interior decoration and colouring of the new house will end up in more than expected expenses.  It would be advisable to be honest with your financial standing and also taking advice of an financial consultant would help in the planning of easy repayment and deciding a comfortable loan amount.

The Right Way of Choosing the Home Lender

Home loan lenders are many in the market and the consumer is at the benefit of choosing the correct and appropriate loan from a reputed home loan lender. What are the criteria for selecting the right lender amongst the many available will be discussed in this article.
It is very important to note that property rates are on the rise and the loan amount involved will be substantial. Crores are involved in buying a flat and hence the home loan amount may come in lakhs and even crores. The available loan amount from any financial loan lending institution would be maximum 80% of the total price of the property. The rest of the 20% has to be given as down payment before going in for a loan.
1) The first step for choosing the right lender is to have a option of at least three financial institutions who are willing to o9ffer you home loan. This will depend upon your financial standing and loan repaying capacity.
2) Critically assess your financial position. Financial appraisal in a practical way is a must to decide the loan amount to be applied for.
3) How much loan amount is available is also important as many financial loan lenders have only a certain percentage of the amount from the total price of the flat offered as home loan.
4) The interest rate with which the loan amount is offered. Whether it is on higher side as compared to other lending institutions or they have additional facilities must also be considered.
5) The loan repayment schedule and the tenure for repayment is also an important criteria for selecting the right lender. If the loan tenure is adjustable and the EMIs are fixed accordingly as also if there is consideration for some period in case of failure to repay for a certain month then it is beneficial during unexpected crisis and financial emergency. Some lenders also are willing to take accumulated amounts instead of every monthly EMI.
6) Options available fro loan closure and the requirements for this are also to be considered. In case the borrower has decided to close the loan and repay the amount totally or when they decide to shift the loan from one lender to another better option then what are the procedures and penalties must also be discussed before selecting  the right home loan lender.