Home Loans – A Way to Realize the Dream

Home is a heaven for every person, as the person feel secure and relax in their home. Having own home is a dream of each person. Few years back, it was like touching the sky, as the rates or value of the property was increasing day by day. Though, now it is not at all tough to accomplish the dream of having own home, as various banks and financial institutions provide home loans to fulfill your desire.

The bank provides home loan usually at floating interest rate, but various banks provide loan under the teaser rate. Teaser rate means that, at initial years, the interest rate will remain fixed, i.e. the interest rate will not change with the market fluctuations, and the EMI amount remains the same. Usually this is for 3 years. After a certain time period, the fixed interest rate of the home loan will be converted into the floating interest rate of the home loan. The customer gets the prevailing interest rate at the time of conversion and EMI amount also changes with the change in the interest rate. The floating interest rate means that the rate of interest will be affected by the change in the market conditions. Therefore, the customer should ask their lender that whether the person can do regular repayment of the loan, so that in adverse time the loan amount does not put the burden on the customer monthly financial budget and affects the person repaying ability. In floating interest rate home loan; usually the bank provides flexible repayment option, but in fixed interest rate; might the customer has to pay the charges or penalty for prepayment of the loan.

Now days, one can easily avail the home loan, and that too with attractive rates, as there is immense competition among the loan providers or financial institutions. To attract more customers, the banks provide loans at highly attractive interest rates with lucrative benefits. Hence, the customer should always keep an eye on these offers.

The person can apply the home loan in both ways: online and offline. The person will find ease while filling the form online, as the customer will get all the information about the loan. Even the customer can compare various lenders by visiting their websites on the basis of interest rate and the benefits that are offered by various lenders. The loan processing is also quick on it. Thus, one can easily realize their dream through home loans.

Home Loans – A way to own Home

                                     

Home loans are given on the basis of the market cost of the house/home/land/property. The valuation of the home/property/land/house is done by the bank itself or through registration price of the house or property. Home loan is one of the promising loans that most of the consumers demand. However, the process of home loan can turn out to be tedious once the customer starts searching about it. The most tedious work is to decide upon the interest rate, i.e. it should be fixed, floating or teaser and it becomes more complex as each bank has its own interest rate offerings.

 Taking a home loan is one time decision, but its impact on the person financial position is for a longer time. Therefore, the person should look around before finalizing any home loan provider, as there are chances that customer  do mistake while opting the home loan that does not suit his budget. The areas where customer should look for home loan are: eligibility, additional charges, processing fees, interest rate, loan tenure, loan amount, documentation, penalties, etc.

 One can avail home loan in two forms fixed rate home loan or floating rate home loan. This is the most crucial factor while deciding upon the home loan, as it affects the person financial position in the long run. Though, the person can get lucrative interest rates by comparing various lenders from each other. Most of The banks provide loan at 10% to 16% depending upon person profile & loan requirement. Mostly banks provide home loan at a floating rate of interest and banks that provide loan at a fixed rate; give clause that they can revise the loan rate anytime during the tenure of the loan.

 In home loan one should not fix the lender, as each lender has its own unique offer and might the person get a home loan from other lender that suits his requirements. For availing home loan, the person has to follow various steps, i.e. they have to submit various documents. Some documents that are commonly asked by various banks are:

1.      Identity Proof (driving license/passport copy/pan card/Voter ID card)

2.      Age Proof (pan card/passport copy/birth certificate)

3.      Residence Proof (Voter ID card/ passbook/ration card/passport copy)

4.      Income proof; for salaried: Form 16 & latest salary slips and for self employed: ITR & balance sheet (CA certified)

5.      Latest bank statement of last 6 months

6.      Property document

Have dream home with Home Loans

Having own home are everybody’s dream and desire. The person spends all his accumulated wealth and savings for this purpose only. However, the entire savings and accumulated savings are also not enough to buy a house/home/property, as the prices of the property are increasing like anything. The person, whose financial background is strong, can think it is an easy task but for many people arranging funds for purchasing a home is a tough task. Therefore, banks have made a product, i.e. home loan, for this segment of people, to satisfy their desire of having own home.

The home loans gain immense demand among the consumers within a short period of time. Currently, most of the home seekers avail this loan for having their own home. The loan justifies its name. It is found out that billions of transactions are made for home loan through financial institutions; housing finance companies, NBFCs and financial institutions and the number of the amount are increasing every day. The person can avail home loan, in two forms: fixed rate home loan and floating rate home loan.

Fixed rate Home Loan

The fixed interest rate means that the interest rate will not change if there is any change in the market rates. In the market, whether interest rate goes up or down, it does not affect the fixed interest rate. The customer pays same EMI throughout the loan tenure, but in reality, the banks give clause that the bank can revise the interest rate after a certain time period, usually it is 3 years. The customer benefitted if the interest rate goes up in this case.

Variable rate Home Loan

The floating interest rate or variable interest rate is that interest rate that changes if there is any change in the market interest rate.  The person is benefitted if the interest rate goes down in this case, as the interest rate of the loan will also come down. Even banks do not charge prepayment charges on floating rate home loan.

The home loan is made up in such a way; that person can easily afford its total cost and interest rate.  The growing demand and competition among the lenders has compelled the financial institutions to provide this facility online, so that more and more customers apply home loan through their bank or institution. It helps the customer, as the process of loan is little faster through online mode.

Business Loans: A new financial tool to start the business

                                

Many banks and financial institutions provide loans to the business person for meeting their business requirements, to initiate business, for expansion of the business, etc. They are providing these loans at reasonable interest rate with flexible guidelines.

The customer can avail this loan up to Rs.25lacs and for a maximum tenure of 5years. This loan is also known as commercial loans. Banks provide this loan at lucrative interest rate, i.e. from 15% to 22%. Business loan is an offer to the business person, self employed professional and traders. They can avail this loan for the expansion of their business or the establishment of their business. Business Loans are same of personal loans, as it is also given on the customer creditability, repaying ability and on his financial background.

The customer can avail this loan only if they meet the eligibility criteria of the business loan. The criteria for eligibility are: the person must have a past record of loan repayment, have financial standing and most essential are that the person has the ability of repaying the loan amount. If an individual satisfies these criteria, then only the person is eligible for availing the loan.

Business loans are of two types, i.e. an unsecured business loan and a secured business loan. A secured business loan means that in which the borrower has to give any collateral for availing the loan. The interest rate is also low in it, as the risk of lending is low. In case of an unsecured business loan, the customer does not have to give any collateral to the lender for availing this loan. This loan is given on the creditability of the customer. The interest rate is also high, as the risk of lending loan is high. The tenure of an unsecured loan is usually short.

Business loan is also availed by the self employed professionals, i.e. doctors, chartered accountant, interior decorator, company secretary, architect, etc. It is the best option for professionals. Banks normally provide loan from Rs.25000 to Rs.25lacs. Though, the person has to satisfy the eligibility criteria for availing the business loan. The person can repay the amount through EMI. The interest rate of business loan is usually a fixed, i.e. the interest rate does not fluctuate with the market conditions.

The banks provide various types of business loan to individuals or traders, as for establishing the business or for expansion of the business; the cost of investment is large. The terms and conditions are also slightly different from the professional loans. One can avail this loan from any banks and financial institutions.

For renovation of the house

If the person want to renovate their house and still the person is paying an EMI, in that case, the person should take a home improvement loan instead of the personal loan. The person has existing home loan, then also person can pledge the value of the house/land/property for arranging funds for renovation purpose.

Eligibility Criteria

The property value increases as the customer repays the loan amount or complete the loan tenure. The loan amount will be 60% -70% of the remaining value of the property, and if the property is not pledge, then it will be treated in the same way as the fresh home loan.

The interest rate of home improvement loan is low; normally it ranges from 10% to 12% while the personal loan, interest is high, i.e. from 14% to 25%. The interest rate of home improvement loan depends on various factors, i.e. the loan tenure, loan amount, seasonal factors, and repaying capacity. One can take a loan for longer tenure; also, i.e. up to 15 years, whereas, in case of the personal loan, the loan tenure is up to 5 to 7 years. The person can also prepay the loan amount.

The home improvement loan is disbursed in a lump sum. Many banks offer a home improvement loan for a specific reason only. The loan is given on the terms that the work must be completed within 1 year. The maximum loan amount that the person can avail for renovation or improvements is Rs.50lacs. All profile people can avail the home improvement loan; i.e. salaried individual, self employed person and self employed professionals. This loan is for residents of India and the person should have a regular source of income. The person cannot claim tax rebate on this loan unlike in the home loan.

One can also avail top up on his existing home loan, and the customer does not have to specify anything to the bank, for what the person is availing this loan. If the existing bank does not provide the facility of top up on the existing home loan, then the customer can shift from one bank to another, i.e. balance transfer and avail top up loan on the existing home loan. The interest rate is little higher in this case, i.e. from 12% to 14% depending upon the requirement. However, the person has to give a certificate that person is not taking a loan for speculative purpose.