How to tackle high home loan rates.

                                      

There is a steady hearsay in the market on whether the interest rates force up further, stay behind stagnant or diminish over a time period. Moreover, the insensitive reality is that the recent climb in home loan rates has fasten the budget of just about 3 million households. The EMI's have risen extensively, and with monthly earnings unable to keep pace with the increasing expenditure, people now stretching too extreme to make ends meet.

Those who are concerned, whether the presently prevailing hovering rates on home loans, will surpass the fixed rate can try to adapt their floating rate into a fixed rate one. Although the fixed rate are not often truly fixed, however, the banks commonly lock them for a fixed period of around 3 years. Earlier to taking any such measure it will be valuable to acquire all the truth concerning the fixed rates and their period. An additional thing that warrants interest in this case is the cost bank charge to switch from floating to fixed and vice Versa

In this quick ever-increasing interest rates regime, there are banks and housing finance companies (HFC's) which, are gripping the alarm and keeping the interest rate load to themselves. It is judicious to compare the presently prevailing interest rates of all such banks and HFC's. If someone finds one such entity, which offers a cheaper interest rate of 0.50% or more and offers balance transfers, think it seriously. The thing to observe out is the balance transfer fees, the EMI's and loan tenure. Make sure that the benefits of transferring balances are not outweighed by the balance transfer fees and harsher conditions.

If your banks let an augment in your loan tenure, this will notably diminish your monthly home loan EMI load. One foremost thing a bank keeps in mind despite the fact that deciding for an increase in loan tenure is the age of the candidate. If one are not nearing retirement and have a substantial employment track record probability are the banks will relent. The upper age limit is 60 years for salaried and 65 years for self-employed with most of the banks.

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

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

Guidelines for applying home Loan.

                                 

Buying a house is the most significant factor for families in India, middle and upper-middle class. Importantly, purchasing a home is not a burger, however, people in India runs a deep research and planning for attempting a home loan. The article proves to be supportive for those seeking for it, in order to make one understand better, one should know all the tasks and performs involved in the process of home loan.

Financial Institutions/ Banks is the best source to avail a loan for your desired home. However, selection of the property to purchase must be done before applying for it.

Banks or financial institution needs borrowers to move forward their business. People running with existing mortgage loans can consider to a new lender if they cannot sets with a low interest rates with the existing lenders.

Banks here in India are remarkably reluctant to finance more than 15 years old residential property, which, the previous owner has resold it many times.

Moreover, if one would like to buy an under construction property is not at all listed in the bank’s preapproved loans, one may certainly experience enormous amount of problems to avail home loan for that property. Most of the banks or housing finance institution have links ups with a number of builders. The potential home buyers can surely avail home loans, at low interest rate and financial support up to 80% of the total property market value.

The current economic situation is that all potential home loan customers only prefer the floating rate than the fixed rate. One of the only reasons for this situation is that because the interest rate on floating is 2% cheaper than the fixed interest rate, so is the reason borrowers find it more suitable for them.

However, risk factor is always involved to go for them as the fluctuation in floating rate is subject to market conditions, during changes of the interest rate.

However, 90% home loan-seekers choose the floating rate of interest. Are the reason, banks cannot follow the dramatic way of increasing interest rate on floating rate of interest. As a home loan client, one should be alert to go through the previous record of benchmark rates of your bank; to understand whether or not your bank passes on the benefit of reduced rates to the loan seekers.

Home Loans with Best Interest Rates

                                       

From Home Loan, the person can buy their own home. Though, it is the most delicate finance, as the person has to pledge their most valued asset i.e. the house they are planning to buy. Therefore, if the customer is planning to take home finance then, customer should do a thorough study about the loan and loan providers. The customer should compare various lenders on the basis of the loan amount, tenure, processing fee, additional fee and most importantly on interest rate. The customer should choose that lender that gives lowest rate, maximum tenure, maximum amount, low EMI amount and free from penalties, processing fee & additional charges. This article will help the customer in providing information regarding home loans.

Eligibility Criteria

All banks or financial institutions or housing finance companies have their own set of norms or terms and conditions for the eligibility norms. Though, they are almost similar in one or the other way. The customer has to submit various documents according to eligibility norms, i.e. identity proof, age proof, residential proof, employment details, income proof, latest bank statement and property documents.

The banks verify these documents and decide the loan amount, interest rate and tenure according to these documents and customer profile. The banks provide the loan amount only up to80% of the house market value and also consider the person’s net monthly salary, i.e. 40-50% as an EMI amount while deciding the amount of home finance. The banks give this finance for a longer period normally 15-20years and charge interest rate around 10-16%, which entirely depends upon the loan amount and customers profile, i.e. financial position, source of income, creditability and repaying ability.

The person can apply home finance for various reasons, such as, for construction of home, for extension of the house, for house renovation, for purchase of plot or flat or home, etc. The home finance cost not only involves the interest rate but also other charges such as processing fee, annual maintenance charges, penalties and many more charges.

The processing fee is the fee which is non refundable fee, which all banks or financial institutions or housing finance companies charge to the customer. This fee varies from 0.5% to 4% of the amount of home finance. The banks charge this amount for the processing of the loan application, and it is usually charge while submitting the application form. The person should also check the prepayment charges, as many lenders still also levy charges on the prepayment.

Basic Rules of Home Loan

                                            

Home is like a heaven for every person where person get peace of mind and relaxation. The increasing prices of realty sector has made tough task realize this dream. Though, home loan is a path with which one can easily realize their dream.

Types of Home Loan

The person can avail various types of home loan, such as home purchase loan, bridge loan, home conversion loan, refinancing loan, NRI home loan, land purchase loan, home construction loan and so on.

Interest rates of Home Loan

The person can avail home loan at a fixed rate or floating rate or teaser rate.

1.      Home Loan at a fixed rate

Fixed rate means that the rate is stable or fixed for the complete tenure. This is so; it is not affected by the market interest rate. Therefore, the customer does not have to care about the market rate. Though, in reality, all banks or financial institutions give clause that they can reset the interest rates at any time during the tenure.

2.      Home Loan at Floating rate

Floating interest rate means that the rate which varies with market variation, i.e. it is not stable. It is also known as adjustable rate or variable interest rate.

3.      Home Loan at Teaser rate

Teaser interest rate means that the rate initial years will remain fixed and that too at a low rate interest which is below the market rate. After completion of honeymoon period, the banks convert the loan interest rate at a floating rate and also match the rate with the market rate.

Documentation

1.      Application form to be submitted which is duly signed by the customer.

2.      Identity proof

3.      Age proof

4.      Residential proof

5.      Income proof

6.      Bank statement

7.      Employment details

8.      Processing fee Cheque

9.      Property documents

Processing Fees

The banks or financial institutions charge a processing fee on the applicant loan application for the processing of the application. The banks charge a processing fee around 0.5% to 4% of the home loan amount. This fee is nonrefundable fees.

 Eligibility Criteria

The banks or housing finance companies or financial institutions provide the finance only up to 80% of the house market value. The bank also gives loan on the customer’s profile, i.e. source of income, credit worthiness, repaying ability and financial position. The banks only consider 40-50% of the net monthly income as EMI amount while deciding the home finance amount.