Evaluation of the Cost of Investment in Property Buying

In the course of recent decades, land has been progressively concentrated on as a venture vehicle. A decent interest in land ought to yield significant yields over a drawn out stretch of time. It's basic to know about situations where individuals put resources into properties worth a couple of thousand rupees a couple of decades back and now those properties are being sold for crores. Be that as it may, such ventures depend on capital addition increase over a drawn out stretch of time and they have a tendency to be extremely illiquid as the holding time of such properties is long. Illiquid resources have long sitting tight period for creating pay.

An option alternative is to invest in rental land properties. The month to month rental returns add to riches notwithstanding the capital addition valuation for the property over a more drawn out period. Additionally, for learners in land venture, a little sum (as a rule 15-20% up front installment) is adequate to claim an investment property and after that utilization rental comes back to cover a Home Loans and influence to auction it at a higher value, which gives exceptional yields considering the sum contributed.

For instance, if a purchaser needs to possess a property worth Rs. 1 Crore, she'll require an initial installment of 20 lakhs and whatever is left of the sum can be obtained with a home advance. In the event that the purchaser can discover rental inhabitants for the property it can produce solid month to month returns and pay for the month to month interest. At the point when the purchaser offers the property for Rs 1.2 Crore, considering the enthusiasm on her advance was paid by the rental returns, she picked up a measure of Rs 20 lakhs. This is 100% profits for the contributed measure of Rs. 20 lakhs. Consider the situation where the purchaser had purchased the property totally utilizing her own cash, she would have then gotten profits of 20% for the contributed sum.

Purchasing a property for rental salary can be a promising venture choice. In any case, the choice procedure for selecting a property can be an impressive assignment for a speculator. Dissimilar to purchasing a home to live in, financial specialists who need to lease their property need to consider components like capital increase and rental returns before making their speculation.

Capital addition is the energy about the property over a time frame. This is influenced by factors like adjacent improvement ventures, government framework ventures, and so on. Such activities and their fulfillments are very subject to nearby financial aspects and political elements which are time variable and infeasible to appraise.

Rental returns are the month to month rents acquired on the contributed property. The Return On Investment (ROI) in rental ventures is computed using Rental Yield. This post shows on an information driven and inferential investigation of private venture alternatives utilizing Rental Yields. The sort of investigation showed in this post can help in contrasting areas as far as their rental yield exhibitions, which ought to prompt a more educated venture choice.

[Source: http://www.sooperarticles.com/real-estate-articles/property-investment-articles/evaluation-cost-investment-property-buying-1516076.html?]

Home loans at attractive interest rates

Home Loan Interest Rates

Post-demonetization best time to invest in property

For NRIs, these changes herald good omen since many builders are already adopting 100 per cent transparency policy and cheque payments, which obviously boosts the trust level between the two parties.

"The implementation of Real Estate Regulation Act (RERA) rules, have also been instrumental in bringing professionalism, standardization and transparency in real-estate sector. This, along with the recent wave of demonetization has helped the Indian realty industry emerge more transparent and buyer-friendly," he said.

Despite initial hiccups, experts foresee an uplift of the real-estate sector in the long-term as a result of these corrective measures. Consumer sentiment has already improved over the last year, and reputed developers are reporting higher transactions.

With RERA Bill in place in particular, NRI consumers will no longer have to deal with delayed possession, fluctuating prices and diversion of funds towards other projects - to name a few - instilling confidence in the Indian developers and the country's real-estate sector.

"The direct and most significant benefit of demonetizations is increased liquidity across the banks. Such availability of funds will lead to lowering the rate of interest across different loans which will in turn reduce EMI giving a boost to real-estate demand. We expect Home Loan Interest Rates to be down to approx. 7-8 per cent

"By bringing greater compliance, RERA will help making real-estate class more efficient, transparent and healthy than any other asset class, so best time to buy real estate is now," Shah added.

"The passing of RERA the Benami Transactions Act and the demonetizations move will ensure the sector loses much of its historic taint. Only players who conduct their business with integrity are expected to survive.

"This bodes well for end-users, who will be aware of their rights and have the assurance of not being cheated. They will be able to buy properties of their choice at affordable prices, in projects which will undoubtedly be delivered on time.

[Source: http://www.business-standard.com/article/pti-stories/post-demonetisation-best-time-to-invest-in-property-116120900448_1.html]

Why interest rates on home loans in India will come down

The Indian real estate industry is passing through a transformation phase, and recent reforms introduced by the government will ensure transparency, protect the buyers, and bring down the cost on home loans in the near future, experts say.

They also noted that recent developments such as the passing of the Real Estate Regulation Act (Rera), GST and Real Estate Investment Trusts, demonetization, Goods and Service Tax, among others, combined with the government's focus on infrastructure will only serve as positive factors for the growth of the real estate industry in the country.

The industry players acknowledged a negative short-term impact of demonetizations over the industry, but expect a stable and mature market in the long run. They deemed it good for the industry in the long run and said that it will increase investor confidence in the India real estate market.

The real estate industry contributes around seven per cent to India's gross domestic product annually, and is the second biggest employer after agriculture. The Modi government gave special attention to the sector, and introduced various measures to put it on a growth path in years to come.

"Given the scale and size of the industry, it is imperative that we also understand a long-term impact on the industry. With the demonetizations move, banks are expected to have additional funds of almost Rs10 trillion. This will lead to a sharp fall in interest rates, which may be as high as up to 200 basis points. In a recent move from one of India's largest banks, the State Bank of India has cut deposit rates by 1.75 per cent," according to Shah.

Referring to Credai, an apex body of private real estate players in India, he said that the House Loan Interest may come down to less than seven per cent from its current rate of 9.25 per cent in the next one year or so.

"This would lead to lower EMIs; on the other hand there would be higher tax collection from the next financial year. In all, demonetizations would put more money into the pocket of the end consumer and incentivises them for home ownership."

Liquidity impact

Shah said that small and unorganized players [where more transaction recorded] may be impacted adversely due to the liquidity crunch, but it would be a short-term effect.

"With government's demonetisation move, banks have been flooded with funds and with Rera round the corner, developers will ensure better transparency in their dealings and this will lead to higher trust and banks will be ready to avail loans to real estate and infrastructure players in the interest range of 11-12 per cent. This will lead to the least number of issues for organized real estate brands as their sales velocity is being driven by housing finance."

"If Interest rate on fixed deposits is just five to six per cent then interest on home loans will come down to seven to eight per cent, since banks keep a margin of two to three per cent. Historically at such low interest rates, the real estate industry gets a massive boost as property becomes attractive to everyone," he said, adding that apartment rates come within reach of buyers due to lower EMI on loans.

"Investors find investing in property more attractive than earning a paltry five to six per cent on bank deposit, as simply buying and renting out gives them more return. In addition, they create an asset and earn appreciation over a period of time and they also get income tax deductions as well," he added.

Infrastructure development

That real estate prices show slower rise in countries which have a fully ready infrastructure like the US, UK and Japan, among others. Whereas in developing countries like India, there is a vast difference in prices in a city before and after creation of infrastructure, he said.

"The government will have money to invest in infrastructure as banks will deploy millions of rupees in government securities. With a few lakh crore at its disposal, the government can only boost funding to infrastructure schemes such as Smart City Mission, Swacch Bharat Mission, and Housing for All etc. New airport in town, better connectivity to national/state highway, upgrades in city transport all lead to an increase in demand and prices of properties in the city," he said.

Why demonetization is good for the real estate sector

More funds to boost infrastructure - Government will have more tax collection now and hence more funds which can be deployed to boost infrastructure including roads, highways, more numbers of smart cities, new airports, etc. This will help cities to grow their infrastructure and will eventually lead to an increase in demand, resulting to prices elevation especially for real estate.

Easing on home loan rates - The direct and most significant benefit of demonetization is increased liquidity across banks. Such availability of funds will lead to lowering the rate of interest across different loans, which will in turn reduce EMI, giving a boost to real estate demand. We expect home loan rates to be down to approximately seven to eight per cent.

One of the best investment options - Demonetization will lower interest rates on deposits as well, earnings are expected to be in the range of five to six per cent on deposits in short to medium term, and this will lead to better ROI from real estate investments in long term apart from getting tax benefit on home loans. Hence real estate will become the best investment option among all the asset class.

Housing demand is set to become higher - More and more people have been depositing their money in banks post the demonetization announcement, which means they will be eligible for home loans. With reduced home loan rates, demand for housing is here to increase and this will drive the pricing factor.

[Source: http://www.khaleejtimes.com/why-interest-rates-on-home-loans-in-india-will-come-down]

Benefits of Joint Home Loan

Home Loan India

Refinance Your Home Loan to Dispose Your EMI Burden

A recent survey conducted in Indian households found that the biggest outflow of cash was home loan EMIs. The result is not surprising. Even though the entire economy is a little gloomy after the Rupee did a free-fall and the overall real estate market showing no real promise, yet the need to buy a house is of prime importance for any Indian family. People go beyond one's means to purchase their dream home by taking home loans at high rates of interest. There is no other way also but to take a home loan since prices of residential property are soaring too high.

However, since you cannot avoid taking a housing loan, there is an alternate way to reduce your EMIs. This can be done by refinance a home debt. In simple words, refinancing a home debt means taking an additional loan to pay out your current house loan. It comes with a lot of lucrative benefits depending on the situation of your current personal finance. For instance, it offers cheapest home loan EMI, there is an option for lowering your tenure in case you enjoy monthly surplus. You can also stretch the debt tenure which will result in reducing your monthly EMIs substantially.

Though the prospect of refinancing your home debt seems attractive, the process is loaded with a lot of paper work since everything has to be done all over again. Moreover, a lot of complex terminologies come into play which only adds to the workload and creates a lot of confusion. This might even lead you to rethink your decision of taking up a refinancing loan even if it is giving you lowest rate on Home Loan Process. Fortunately, there are a lot of mortgage refinance companies that offer tangible results and works at a speedy pace.

They in fact come as a form of savior providing succor to clueless customers. Though refinancing often helps you but in some cases it might also backfire in the long run. But if you take the guidance of specialists, they will be able to show you the true picture and assist you in making the right decision. The mortgage companies hire experience professionals who know every tricks of the trade and are serving hundreds of clients every day. It will be only wise to consult them before making any hasty decisions so that you do not regret later on. Get all benefits on your home loan EMI through us.

[Source: http://www.sooperarticles.com/finance-articles/loans-articles/refinance-your-home-loan-dispose-your-emi-burden-1227139.html?]

How the Housing Loan Provider Offers the Best-Suited Deals?

Whether you are buying or renovating a residential property, you might need the help of affordable housing loan product. Obviously, purchasing or constructing a dream house is the desire of every individual. It is life's biggest and secured investment that enhances the emotional values.

An abode is place where you can spend the quality time with the loved ones. In fact, beautifully crafted house gives you peace and happiness. Thus, every one of us wants to have a house of dream that can define your personality and living standard.

In order to fulfill this dream, you can take a loan from the bank or certified money lender at the lowest lending rate. There are many reputed finance and non-financial companies that are offering the wide range of home loans at a different lending rate and the longer tenure to facilitate you with the adorable repayments.

Usually, a product is introduced with an objective to financially support the individuals those don't have enough funds to finance a house or make any improvements in the existing one. With this, you can borrow over 80% to 120% of your house value. It means you need to pay off the amount as per the decided tenure period.

In most of the situations, people opt for a product that can offer them lowest lending rate with the longer tenure because it makes the monthly installments manageable and you can easily pay off the amount without any extra burden.

But, before choosing a product you need to check out the varied lending rates that are offered by the banks. Actually, the rate of interest on the product may vary from bank to bank and it is very necessary for you to choose the best one that can fit your needs.

To find the desired or an affordable deal, you can assist a reliable housing loan provider who can offer you the wide range of products at the lowest lending rate. Such companies help you in finding the best deal that can suit to your needs.

Moreover, they also guide you in arranging the essential documents, mortgages or legal papers with an objective to offer the hassle-free and speedy loan processing. With their assistance, you can save your time and money because they are associated with the reputed banks and trusted money lender companies.

In fact, they also help the new borrowers by giving them the options to choose between the fixed and variable rates. Most of the new buyers don't know the different types of rates available on the market.

Therefore, they help you to understand the basic difference between the two and which would be beneficial to you. In fixed, you need to pay the fixed lending rate through the term, while, the other type will give you the flexibility to enjoy the low-interest rates of Home Loans as it fluctuates when the market changes it.

You can also get other essential information as well from the best and experienced home loan provider in Delhi, NCR. They not only offer you the affordable deal, but also make you aware with the other charging fees and additional schemes to make your repayments manageable.

[Source: http://www.sooperarticles.com/finance-articles/how-housing-loan-provider-offers-best-suited-deals-1415187.html?]

Apply for a Housing Loan and Buy Your Dream Home

With inflating property prices across the country, affording even a small sized flat/apartment may leave you financially drained. With property prices soaring rocket high, it has become almost impossible for even a middle class man to afford a flat. There are a number of banks as well as financial institutions which are known to provide different types of home loans to provide assistance to such people who are financially in need. Not only do they provide assistance to those people who desire to purchase homes but for a variety of other reasons such as for repairing damaged parts of their home, renovation of the house or even to extend the house.

Housing loans are funds which are provided by a bank or a financial institution so as to help a person in the acquisition of property. These types of loans play an extremely important role in helping people either buy a new home or construct one. There are many other cases where these loans can be used such as for extension, improvement or repair.

Some of the housing loan eligibility conditions that a person needs to meet before applying for these loans includes:

The person needs to be an Indian resident or an NRI

The person has to be above the age of 21 years

The person has to be below the age of 65 years when the loan matures

The person should either be salaried or self-employed

The person should be worthy of credit facility

There are a number of online tools which help a person to determine their eligibility. One of the tools is the Housing Loans eligibility calculator. This calculator helps to provide valuable information about one's loan eligibility.

There are many different types of loans and they may vary from person to person; depending firstly on how much he wants and largely on his ability to repay the loan amount. The loan amount that is given is also dependent on the age of the person as well as his/her income. These loans are available to everyone, with the only exception that they are not provided to minors i.e. people who are below the age of 18 years.

They may be taken by professionals, salaried individuals; NRI's or even self-employed individuals. There are mainly three stages involved in transferring the home loan from the lender to the borrower. These three stages include:

Filled applicant forms along with necessary housing loan documents: The borrower will have to submit a duly filled housing loan application form along with all the necessary documents that are required.

Sanction: This refers to allotting the housing loan to the borrower. This is based on the age of the borrower, his/her repayment capacity as well as the value of the property.

Disbursement: This refers to the process whereby the loan is transferred from the lender to the borrower.

[Source: http://www.sooperarticles.com/finance-articles/loans-articles/apply-housing-loan-buy-your-dream-home-1271021.html?]

How to choose the best home loan

CHOOSING a wrong home loan can have massive financial implications. All necessary steps should be taken to choose the best lender for your dream home.

Interest rate

The interest rates on home loans depend on your loan amount, credit score and loan tenure, and rates can range from 9.40% to 12% per annum. As a small difference in home loan rates can lead to a sizeable difference in home loans, opt for a lender offering home loan at lowest rates. Also keep in mind that banks follow the MCLR regime for interest rate. This rate-setting mechanism is much better placed to pass on interest rates reductions to you than the Retail Prime Lending Rate (RPLR) system followed by NBFCs.

Loan to value (LTV) ratio

LTV is the proportion of your property value that lenders will finance through your home loan. The remainder, popularly known as down payment, has to be financed out of your own pocket. As per RBI guidelines, banks can finance up to 90% of the property value for home loans of R30 lakh or less. For loans in the R30–75 lakh range and above R75 lakh, LTV ratio can go up to 80% and 75% respectively.

Credit history

A low credit score may reduce your chances of securing a home loan from a public sector bank or may lead to higher Housing Loan Interest rates. However, housing finance companies take a more relaxed position on your credit score. The flip side is that they may offer you lower LTV ratio and charge higher rates.

Loan processing time

The time taken for approval and disbursal of home loans varies across lenders. Choose a lender on the basis of the urgency of your home loan funds. Opt for one that has faster loan processing system in case you have an immediate loan requirement.

Processing fee

Lenders charge processing fee to cover various expenses incurred while assessing your home loan application. While many lenders charge a fixed processing fee, most charge 0.50–1.50% of the total loan amount. As this is a non-refundable charge irrespective of final sanction of the loan, opt for a lender that charges the lowest. The other major charges that need to be considered include prepayment penalty (only applicable in case of fixed interest loans), late payment fee, CERSAI charge and switching fee. Compare these charges across lenders as these may add up to 4% of your loan amount.

[Source: http://www.financialexpress.com/personal-finance/how-to-choose-the-best-home-loan/441634/]

What Are The Available Investment Options For NRI's?

"Although plenty of individuals have settled abroad, they still maintain a form of investment back in their home country. Through this, an NRI can invest through two different routes, namely the automatic route or the government route where prior permission is required from the government before an investment is made.

But when it comes to selecting the right option for investment, there are plenty of options available, each with different features and restrictions. These options can also be used for short term or long term investment goals. Given below are some options you can consider:

Non-Resident Ordinary Rupee Account (NRO):

This is one of the popular NRI accounts that several individuals have opted for, especially for individuals who are looking to deposit or manage earnings from India. Foreign funds can also be deposited in this account. In both cases, the funds that are deposited in the account will earn interest. The interest, however, is subjected to income tax deductions at the source plus applicable surcharges. However, repatriation is only allowed under certain circumstances, such as the upper limit for sending funds is only 1 million USD in a single financial year. Additionally, you will need a tax paid certificate from a certified CA before you repatriate any funds.

Non-Resident External Rupee Account (NRE):

The NRE account is the second NRI account that is a popular option amongst other NRI's, who want to deposit funds earned abroad and transferred to India. The funds that you invest in this account will be converted into Indian rupees, with the conversion value taken at a rate prevailing at the time of deposit. The funds in this account, which includes the principal amount as well as the interest, are repatriable, without any conditions.

Foreign Currency Non-Resident Bank Deposits (FCNR):

The FCNR account is mostly used for termed deposits, especially if you want to deposit foreign currency. Like any other termed deposit, this account will help provide the ideal protection against fluctuating market conditions and volatile currency values. This account can be opened jointly with an Indian resident. However, the account must be made for a minimum maturity period of one year, and a maximum period of 5 years. The interest earned in this account is tax

Free, while the principal amount is taxed, this is calculated through home loan interest calculation.

National Pension Scheme (NPS):

Through this scheme, the policyholder can invest funds in creating a corpus, while also opening a post annuity retirement. Individuals between the years of 18 to 60 years can invest in this scheme. However, unlike the other accounts, this account can be held only by an individual. Once the policy is opened, a PRAN is provided which is the Permanent Retirement Account Number. However, this scheme is only allotted to individuals who hold an NRI status and a citizenship of India. If at any point, an NRI gives up his citizenship, the account is closed."

[Source: http://www.sooperarticles.com/finance-articles/what-available-investment-options-nris-1536535.html]

Home Loan Offers

How your home loan EMIs are calculated

What is an EMI?

In plain financial terms, an EMI is the amount of money paid by borrowers, each calendar month, to the lender, for clearing their outstanding loan. This also means that a sum of money gets deducted from your particular account irrespective of any sudden untoward financial stringency faced by you. EMI payments are made every month, generally on a fixed date, for the entire tenure of the loan, till the outstanding amount has been completely repaid.

EMI break-up

When it comes to segregating the sum that is payable towards the loan, EMI is actually deduced based on an unequal combination of principal and interest. In the initial years of the loan, a major portion of the EMI comprises the interest payable by the borrower. As the loan matures, and as the principal gradually gets paid, the outstanding loan amount reduces. The interest component thus becomes lower than the principal, and finally minimal. The EMI, though, stays as a constant amount each month, 

except in the following cases:

Instances when the borrower paid a lump sum amount of the outstanding loan, then this amount gets duly adjusted against the remaining balance, thereby reducing the EMI. Now, in this particular case, the borrower gets an option where he/she can maintain the EMI while reducing the loan tenure.

In case the borrower has opted for floating rate of interest, then the EMI varies according to market fluctuations.

The EMI of your home loan is determined by four major factors

Principal amount: The principal amount refers to the actual sum of money that is borrowed by the lender. Beyond question, the principal amount is a major determining factor towards the EMI that is to be paid by you.

Rate of interest: The rate of interest is the rate at which the borrower has taken money from an organization or market. This is the most important factor when it comes to determining your EMI. The higher the rate of interest, the greater is the EMI payable by you. It is always advisable to do a market study of various interest rates offered by lending bodies and then decide upon a particular product.

Loan tenure: The tenure of the loan refers to the duration for which the Housing Loans has been taken. The longer the duration of the loan, the lesser the monthly EMI burden on the borrower.

Method of computation: The method that is adopted to calculate the EMI is a crucial factor when it comes to determining the EMI payable by you. The various methods adopted are:

a. Annual reducing method: In this method of EMI calculation, although the EMI is paid by the borrower at the end of every month, the principal amount and the rate of interest is made at the end of the year. This type of EMI calculation has a huge disadvantage attached to it, as the borrowers continue to pay interest on a portion of the principal that has already been paid back to the lender.

b. Monthly reducing loans: This is a better and easy-to-understand method of EMI calculation and is usually the most common calculation method adopted. In this calculation methodology there is a reduction in principal with EMI being paid every month. The interest is calculated on the outstanding balance.

c. Daily reducing loans: As the name implies, in this method the principal reduces every day, with daily loan repayments. The interest is charged on the outstanding balance. However, daily EMI payment is not a very feasible option; hence this method is not a very popular method.

[Source: http://profit.ndtv.com/news/your-money/article-how-your-home-loan-emis-are-calculated-323311]

7 Tricks to Get the Best Mortgage Rate

A High Credit Score is an Asset

It all starts here, doesn't it? A few late and missed payments later, you suddenly find that your credit score has tanked and you are being denied or being charged prohibitively high interest rates for additional credit - be it a credit card or a mortgage

Compare Multiple Offerings

In case you haven't been living under a rock, you know that there are choices aplenty when it comes to choosing a mortgage - perhaps one too many. This even after the fact that, subprime lending has been relegated to the position of a historic misadventure.

Ensure that Multiple Credit Checks don't happen

Here's another common mistake that many prospective applicants make - they apply for multiple mortgages thinking that they can pick the one that offers them the best deal. The problem with this is that, all of these separate applications lead to separate credit checks.

The Home Equity Conundrum

Home equity or down payment is among the most important considerations when you are planning to get a mortgage. The logic is simple, the more you pay as down payment, lower your mortgage payments will be.

Choose your mortgage tenure wisely

It is only natural that you explore multiple tenure options when you are seeking home loans that works for you. If you seek a longer mortgage term, individual EMI payouts will be lower as compared to a shorter one. But the lower EMI payout comes at a price.

Qualification for Special Programs

God might have created everyone equal, but the manmade financial sector works a bit differently. Some groups of individuals qualify for a reduced rate of interest based on meeting some predetermined qualifying criteria.

Get the Closing Cost Issue Sorted

The moment you finalize or close the purchase of your house, you have to deal with closing costs. These costs are usually equal to 3% of the home's purchase price and comprise multiple factors including processing charges, appraisal costs, and fee for title insurance and charges for underwriting.

Conclusion

You are well within your rights to look for details not just when you are indulging yourself during a festive sale, but also when you are purchasing a new car or a house.

[Source: http://www.huffingtonpost.in/entry/7-tricks-to-get-the-best-_b_12562026]

How to Choose the Best Home Loan Lender

Owning an apartment is probably the biggest financial goal that everybody has. With the easy availability of Home Loans, the dream of buying a home is coming true for many individuals. Almost all banks and NBFCs offer Home Loans and borrowers are actually spoilt for choices when looking for lenders. However, choosing the best Home Loan deal can be a daunting task. Remember, Home Loans lock you for a period of 20-25 years and sometimes even more. A wrong decision on your part can become really costly in the long run.

Before you start searching for a home lender, it’s important to have a fair idea about the types of Home Loans available in the market and what do they have in store for you.

Home Loan - Things to Know

Property Type

Not all banks and NBFCs offer a Home Loan in the event of self-construction on a plot you own. It’s easier to get a Home Loan if you’re planning to buy a ready-to-move-in apartment, or even apartments that are undergoing construction.

Look for private banks and NBFCs, if you want Home Construction Loan.

Property Location

It’s important to consider the location of your property as not all lenders have branches everywhere. If the property you’re investing in is far away from work, try and look for a lender who has branches in both the locations.

Credit History

Before looking for a lender, take a look at your own credit score at the CIBIL website. It’ll be difficult to get your application for Home Loan approved if you have a poor credit score or history.

However, that doesn’t mean that you can’t avail a loan. Many lenders offer Home Loans to individuals with a bad credit score too but these come with a high interest rate and a higher margin requirement.

Loan Tenure

Lenders offer Home Loan for a period of 10-30 years. Keep your expenditure in mind while choosing the tenure.

EMI Affordability

Try and opt for a high EMI to lower the interest payouts. Ideally, it shouldn’t be more than 40-50% of your net salary. Also, keep in mind your long-term financial goals, and other investment options while setting the EMI amount. Use the Home Loan interest calculator and calculate the interest payouts before closing the deal.

Interest Rate

Home Loans are available under three types of interest rates—Fixed, floating, and mixed variant. In the case of a fixed rate, the interest stays the same all throughout the tenure. Floating rates are linked to the MCLR fixed by specific lenders and it keeps varying. Finally, in a mixed variant, the lending rate stays fixed for a specific period and then it becomes floating interest rate.

All these will give a fair idea on how Home Loan functions in our country. The next step will be to choose the right lender.

How to Choose a Home Loan Lender?

First time Home Loan borrowers face a lot of obstacles in choosing the best Home Loan and also choosing the right lender. Here are some tips to help pick the right lender:

Lender’s Reputation

Consider a background check for the lenders you shortlist. Home Loan frauds are not uncommon and so make sure to go for names that you’ve already heard off. Check their website and also read online reviews and testimonials.

Compare

Needless to say, there are multiple financial institutions offering Home Loans in today’s market. So, it’s crucial to do a thorough research and compare all terms and conditions offered by various banks and NBFCs. One of the most important things that you need to compare is the interest rate. Look for lenders offering lowest Home Loan interest rates.

You don’t need to visit lenders for this purpose, simply check their websites for all the details. Randomly selecting a scheme or a lender may lead to loan rejection or get you a sub-optimal loan scheme. However, this is not the only thing that matters.

Use the Home Loan Rates calculator to know how much EMI you’ll need to pay for different lenders. Compare this as well.

Loan Eligibility

Your loan eligibility depends on your net monthly income and of course on your credit score. The lower benchmark for net monthly income varies from one lender to the other and this is something you need to check at their website. If your income level is too low, you can have your working children or spouse as co-applicants to increase your chances of Home Loan approval.

Fees and Charges

All lenders charge a processing fee in order to cover all the expenses incurred while assessing your eligibility and verifying all the paperwork. Ideally, this gets deducted from the principal loan amount and the remaining is transferred to your account.

This fee ranges from 0.5-1% of your loan amount; make sure to keep this in mind. Another important thing that you need to consider is prepayment charges. Many lenders penalize you if you make prepayments—the charge levied when you make a part payment towards the outstanding balance before the due date. Many lenders charge foreclose penalty too, i.e. they charge you if you close the loan and repay the entire amount before the tenure ends. Look for lenders who don’t have such penalties.

[Source: http://www.lifehacker.co.in/jugaad/How-To-Choose-The-Best-Home-Loan-Lender/articleshow/55289541.cms]

Will RBI’s new base rate guidelines help borrowers?

The much-awaited Reserve Bank of India (RBI) guidelines on calculating the benchmark lending rate are finally out. In yet another attempt to make banks pass on policy rate cut benefits to borrowers, the RBI has brought out a new methodology: Marginal Cost of Funds based Lending Rate (MCLR). Marginal funds refer to money raised by banks in the last month or quarter before the lending rate review. The new methodology will come into effect from 1 April 2016 and is expected to curtail banks' ability to hold on to higher base rates despite the RBI slashing rates.

How it works

So far, banks followed diverse methodologies for computing the minimum rate at which they could lend—the base rate. Now, the RBI has asked all banks to follow the marginal cost of funds method to arrive at their benchmark lending rate. MCLR will be calculated after factoring in banks' marginal cost of funds (largely, the interest at which banks borrow money), return on equity (a measure of banks' profitability), negative carry on account of cash reserve ratio (the cost that banks incur on account of keeping reserves with the RBI), operating costs and tenure premium (longer the loan term, higher the interest/premium).

The actual lending rate will be MCLR plus the spread determined by banks after taking into account their business strategy and credit risk of the borrower, among other parameters.

Banks can review MCLR once a quarter till March 2017, after which they will have to publish the MCLR on a monthly basis. Lenders will also have to specify the interest reset dates on their floating rate loans. They can either grant loans with reset dates linked to the date of sanction, or the date of MCLR review. The Home Loan Interest Rates charged to a borrower will be applicable until the next reset date. The gap between two reset dates cannot be longer than a year.

Core benefits

The RBI expects the new formula to make floating lending rates more responsive to its policy rate cuts. Ratings agency ICRA believes that the norms will improve policy transmission for new borrowings. "(MCLR) will impact new borrowers immediately: they will benefit in a declining interest rate scenario and take a dent when interest rates are rising," says ICRA. Even existing borrowers will have the option to switch to MCLR when it is introduced.

[Source: http://economictimes.indiatimes.com/wealth/borrow/will-rbis-new-base-rate-guidelines-help-borrowers/articleshow/50330944.cms]

Loan Basics: A guide to NRI home loans

One of the most sought-after investments for Non-Resident Indians (NRIs) is buying property back home. At a time when the Indian rupee is weakening against the US dollar, taking a home loan in India could be a good option for the NRIs rather than using up all the money earned in the foreign currency. Are NRIs allowed to take a home loan in India? Yes, they have. “NRI Home Loans” are offered both by banks and Non-Banking Financial Companies (NBFCs). Here we take a look at what is required to avail this loan and how it differs from a normal loan taken by a resident Indian.

Paper work

For the documentation process, a copy of your passport, visa and employment related documents such as your three to six month salary slips, appointment letter, and employment contract if any and address proof are mandatory. These documents can be submitted to the overseas bank branch located the closest to you, in the country where you reside. The documents are then sent to the Indian branch for processing. Note that the overseas branch just acts as an intermediary for collecting and sending the documents to India. The verification process happens only in the Indian branch.

Loan tenor and interest rate

Earlier there were differences in the interest rate charged for a NRI home loan and for the ones offered to resident Indians. But now the rates are the same. “The Home Loan Rates and other charges like processing fee for NRI home loans are the same as offered to resident Indian. Also, loans to NRI are of larger average size of ₹40 lakh when compared to an average size of ₹23.5 lakh for a resident Indian home loan.

Tax implications

On a home loan, a resident Indian can avail a tax benefit on repayment of up to ₹1.5 lakh on the principal component and ₹2 lakh on the interest component. Can the NRI who repays the home loan also avail of tax benefits? Most of the NRIs who are currently serving their home loans are not aware of the tax implications on their loan repayment. They just earn their incomes abroad and repay their loan.

[Source: http://www.thehindubusinessline.com/portfolio/beyond-stocks/loan-basics-a-guide-to-nri-home-loans/article7880720.ece]

Selling a house? Watch out for tax implications

It's critical to keep an eye on the calendar when you sell your house. If you don't time it well, you could end up paying a hefty tax. If a property is sold within three years of buying it, any profit from the transaction is treated as a short-term capital gain. This is added to the total income of the owner and taxed according to the slab rate applicable to him. For those earning over Rs 10 lakh a year, this shaves off 30% of the profits from the sale.

Also, if a house is sold within five years of the end of the financial year in which it was purchased, the tax benefits claimed go out of the window. The tax deduction claimed for the principal repayment, stamp duty and registration under Sec 80C are reversed and the amount becomes taxable in the year of sale. Only the deduction of the interest payment under Section 24B is left untouched.

This is why it is advisable to hold a property for at least three years. If you sell after three years, the profit is treated as long-term capital gains and taxed at 20% after indexation. Indexation takes into account the inflation during the holding period and accordingly adjusts the purchase price, thereby slashing the tax burden for the seller. There are other benefits too. The owner can claim various exemptions in case of long-term capital gains, but no such benefit is provided for short-term gains

"Expenses incurred on repairs and renovation can be added to the cost of acquisition of the house while computing long-term capital gains. Also, the interest paid during the pre-construction period of the house can be added to the cost, if not already claimed as a deduction earlier

How to avoid tax

There are several ways to avoid paying tax when you sell a house and Home Loan Processing Fees. There is no tax to be paid if you use the entire gain from the transaction to buy another house within two years or construct one within three years. The two- and three-year period applies even if you bought another house a year before selling the first one. But the property should have been bought in the name of the seller.

If you are not keen to lock-in your gains from sale of the house in another property, there is another way out. You can claim exemption under Section 54 (EC) by investing the long-term capital gains for three years in bonds of the National Highways Authority of India and Rural Electrification Corporation Limited within six months of selling the house. However, one can invest only up to Rs 50 lakh in these bonds in a financial year.

Tax tips for house sellers

1. If the cost of the new residential property is lower than the total sale amount, then the exemption is allowed proportionately. For the remaining amount, you can reinvest the money under Section 54EC within 6 months.

2. The exemption is still allowed even if the builder of the new residential construction fails to hand over the property to the taxpayer within three years of purchase.

[Source: http://economictimes.indiatimes.com/wealth/tax/selling-a-house-watch-out-for-tax-implications/articleshow/52583834.cms]

Get the right value of your money by calculating interest rates….

Owning a house is one of the biggest financial goals for many people who wish to buy their dream property. Till a few years back, buying a home seemed to be a daunting task for the common man because of huge property rates, tedious process of application and waiting for months for loan approval. Traditional finances were always a costly option in terms of extremely high-interest rates, stringent payment measures with no time flexibility. 

Borrowing from friends and relatives always had a chance of creating a rift in the relation. Thanks to the efforts taken by leading government and private sector banks & finance companies in India who offer home loans under several customized schemes to common masses to buy their dream homes easily. The process of home approval is quite simple as gone are the days when people had to visit branches to collect the form, filling up, attest the copies, submit with demand drafts and then wait for months on home loans approvals.

While availing housing finance, home loan interest rates are one of the most essential elements associated with it. Without sufficient and careful guidance, it may make a big hole in your pockets in the long run. The most important thing for housing finance interest rates is the fluctuation in the rates based on the market volatility. Therefore, a careful consideration has to be done when it comes to avail a loan and the interest rates applicable to it.

Home loans in India can be taken at interest rates as low as 9 to 10% and come under fixed or floating rate basis concept. Under fixed rate loan the ROI remains constant throughout the loan period, while in floating rate loans the ROI is linked to market conditions and may change periodically. They could be linked to the base rate, inflation, or other parameters, each bank selects its own methodology to fix this base rate. These home loan interest rates have to be declared by the bank each quarter. Some leading private sector banks offer loans in the form of adjustable rate of interest loan, Trufixed loan (2 to 3 year fixed rate variant) or Trufixed loan (10-Year Fixed Rate Variant).

The most beneficial aspect of a person starting with a fixed rate is the interest applicable stays almost constant through the payment tenure. Although, it’s revised every 5 years but the margin is more or less the same. You can have a preset mind towards your loan repayment. You can cut down the expenses, save money in advance and keep the repayment at a set mode. 

In case of floating home loans interest rates, the rate depends on the market volatility, inflation and other economical parameters that could impact the home loan policy. Although, there is always a plus point of getting fairly low rate of interest in floating basis, but you will  also have to save for the days of shooting interest rates. Thus, the fluctuations in the financial market are very sudden and volatile for the common person and rapid changes can hold anyone unprepared.

An understanding of what influences current and future fixed or adjustable rate mortgage rates will help you make financially sound mortgage decision. This knowledge can help you take a decision about whether to choose an adjustable over a fixed rate. You can decide when it makes a sense to refinance your home loan structure. The main objective is home loan interest rates should be curbed so that your home loan gets easier on your pockets in the long run.

Smart moves in a falling interest rate regime

In their first policy review, the new Reserve Bank of India (RBI) governor and the Monetary Policy Committee (MPC) debuted with a repo rate cut of 25 basis points (bps), bringing it down to 6.25 per cent. While fixed-income investors stand to lose from falling interest rates, borrowers stand to gain. Both need to realign their strategies to make the most of this low rate environment.

One more rate cut, perhaps

Experts say rates may soften a little more. "RBI is comfortable with an inflation range of four to six per cent. India is experiencing significant disinflation, with further disinflation possible in pulses. The next few inflation readings may print significantly lower than the RBI's suggested inflation trajectory.

The majority view is that we may now be close to the end of the rate cut cycle. Only a few believe that interest rates are headed structurally downward, allowing for further rate cuts of 100-125 bps over the next 18 months.

Fixed deposits

Fixed-income investors should invest in products that match their risk profile. "When rates begin to fall, investors typically begin to invest in products that are too risky for their profile.

Investors in the highest tax bracket looking to lock into current rates for the long term may buy tax-free bonds from the secondary market. These offer a yield-to-maturity of 6.25-6.35 per cent. Those in the lower tax brackets may bet on highly-rated corporate deposits.

Shift to lower rates

(Home Loan Offers) Interest rates on home loans have come down by around 50 bps since the beginning of the year, with the best rate available declining to 9.25 per cent. If banks decide to pass on a greater portion of the fall in interest rates to customers, home loan rates could fall further.

While new borrowers get the benefit of the latest rates, older borrowers could still be stuck at higher levels, especially if they had borrowed under a different regime, say, base-rate linked, instead of MCLR-linked.

[Source: http://www.business-standard.com/article/pf/smart-moves-in-a-falling-interest-rate-regime-116101200927_1.html]

Indian Real Estate: Looking Back... And Forward

The structural adjustment programme of the early 1990s initiated the liberalization of the Indian economy. The roots of the high appreciation rates on India's property market witnessed during the boom period lie in the reduction of interest rates that were instituted from year 2001 by Government’s continued policy of liberalization of economy initiated in 1991. In early 2004, home loan rates sank to a record low of under 7.5%, and this paved the way for the spiking that typified the country's property rates in many Indian cities.

The very amenable borrowing rates encouraged individuals to avail of home loans to buy residences, where actual property purchase had only been an option for the considerably rich before that. This also brought down the average age of a home purchaser from late 50s to mid-20s, a big change in the way India was buying houses before.

This resulted in a huge demand for real estate all over the country post 2003. After March 2005, Indian real estate rates displayed a seemingly unstoppable upward curve. This was also related to the opening up of FDI in real estate. The market then proceeded to expand at an unbelievable rate, both size-wise and price-wise - in three years, prices were doubled, and so was the construction activity. Adding to this was purchases of large land parcels by developers all over the country. Land banks of this size were never created before. Developers were going places and exploring new territories, and a sense of national players was building up.

This continued right until the slowdown that manifested itself in 2008. The Lehman debacle and the subsequent foundering of global economies were indeed hugely operative factors in this, with changes in House Loan Interest but the fact remains that India’s real estate sector had also reached a stage where maturity was of the essence. In any case, the slowdown served the purpose of bringing many a location and its overenthusiastic rates to its knees.

Tracing the bust…

The slowdown was predominantly brought on by the sharp rise in property rates seen over the preceding 2-4 years, and a large proportion of investor purchases (at times as much as end user purchases) eventually added to the supply of houses. The result was a misleading demand assessment. An adjustment of such irrational growth was therefore natural and expected.

Today, real estate prices have corrected in most overheated locations. Residential, office and retail were all impacted at various levels, but the greatest need for correction was in the residential sector, which had seen the highest price appreciations and as a segment is more sensitive to non-amenable lending norms. The exact degree of impact varied across locations, influenced by local market dynamics and property formats.

In ‘Real’ terms…

The current market dynamics have served the purpose of bringing about a renaissance in the Indian real estate sector. Realistic retail and commercial spaces which are in tune with actual market demand dynamics are now becoming a reality. In the residential space, developers who had previously focused largely on luxury spaces for the cash-rich IT/ITeS and HNI buyer segments have begun launching housing projects for the common man.

Granted, this dynamic is a fluid one which is primarily influenced by the overall performance of the economy. In other words, developers have in the past reacted to upward movements by diluting their focus on affordable housing and going back to higher-priced formats and offerings. However, the incumbent Government's determined drive towards 'Housing for All by 2022' has made its mark with several new incentives for developers and buyers of budget housing. This will ensure that a good cross-section of Indian builders will retain their focus on affordable housing and mid-income housing for at least a few more years.

Even today, the dominant trend in India is a huge demand-supply mismatch in the housing sector. This would indicate that residential property prices will rise again – and we are indeed witnessing the first signs of this happening already. The corrections that have taken place in overheated cities were required, since developers had priced themselves out of the market. The fact that the slowdown forced them to rationalize their rates has been working to the developers' advantage, and one would have assumed that the recent market dynamics had delivered a clear and unequivocal message.

That said, the rollercoaster ride that Indian real estate was on will not see the same exhilarating twists and turns for some time to come. The onus from now on will be on affordable housing and mid income housing in the residential sector, efficient buildings – in terms of both energy consumption and space utility, at infrastructure serviced locations in the office sector and well-researched expansion plans in the retail sector. The present market vagaries have force-fed transparency into Indian real estate.

[Source: http://www.indiainfoline.com/article/article-latest/indian-real-estate-looking-back-and-forward-116080100157_1.html]

Home Loans

Home Loans in India (India) - Laying Foundations for Your Sweet Home

The proportion of limited income earners in India are increasing day to day. Because of their flat income people face challenges in purchasing land or flat of their own. But now dreams of owning a home can be materialized just by considering the home loans in India. The home loan schemes in India are gaining popularity because of its cheap interest rates and features of simplicity. This loan scheme gives you the opportunity to borrow loans according to your necessity and earning ability. In India banks, public sector housing finance or private financial institutions are main source of home loans.

The housing finance companies allocate funds up to 80-85% of the flat or plot cost. And the approved loan amount is transferred to the given account or a cheque is handed to the candidates. Borrowers can make use of the amount according to their requirement. These sorts of loans usually follow long repaying terms and candidates can repay them in easy installments. The benefits are open for all categories of people like self-employed, salaried individuals, housewife, business professionals, retired persons and cultivators. The scheme also gives a warm welcome to NRI's.

Interest rates matter a lot and influence your monthly installment burden. So, you should be savvy while spotting interest rates. In India there is no scarcity of home loan lenders but one should not always rely on offers of a single lender rather contrast the various offers available in the market. A detail comparison through internet helps you to collate information of many lenders. Moreover make sure you are thorough with all terms and conditions mentioned.

The process of approval of home loans in India is simple. The applicant can mortgage his/her property against the loan or if applicant is a salaried individual then he/she should enclose documents proving his/her earnings. The other related identification proofs vary from lender to lender. So, you can now easily own a house and decorate it with colors of happiness.

Buying a home is one of the major decisions a person has to take during his life. It is rare to find someone who pays the entire cost of home at one go. A home loan is an essential part of any home buying endeavor. Taking a home loan is a long journey, which involves many stages. The key to getting your home loan in a smooth way is being familiar with the entire home loans process.

Beginning the home loan process in India

The process of getting a home loan starts with a formal application for the loan. The application form requires certain basic information about you. This will include your personal, residential, income, employment, educational details, and details about the property, estimated costs and current means of financing the property. Though the requirements may vary from bank to bank but there certain thing which every bank will ask.

[Source: http://ezinearticles.com/?Home-Loans-In-India-(India)---Laying-Foundations-For-Your-Sweet-Home&id=1040720]

Home Loans Bank or Independent Loan Lender?

Do you intend to book a flat, buy a house or build one? To make it clear from the very start, building a house requires a great deal of financial input. A very small part of the population can claim to have enough money to build a house all on their own. It is the lack of enough money to buy a house or build one which forces people to go for home loans. It was an easier deal before to get home loans, but with frauds being on a high in recent times, getting a loan requires fulfilling many formalities and is a tedious thing.

The process of procuring a home loan in UK is easy. If one has ever applied for a loan there, they would be rather familiar with the process after which the loan is sanctioned. It would be better if one already has contacts in the bank and knows people working there. Getting the loan sanctioned would just become easier.

In the post-recession period, things have begun to change. One cannot disagree that UK was one of the countries that was worst affected by recession. The rules to get a home loan have just got stricter and it is a problem for the common Britons to get a loan sanctioned from a bank in UK.

Now a day, to get a home loan from the bank one should be able to offer a good credit score. Home loans from a reputed known bank are the safest loans available in the market. The only problem is that the loan is sanctioned against collateral of some other asset you own. For example, if you have a garage somewhere, you can draw a loan against it to buy a house for yourself.

Due to the growing number of frauds everywhere, banks have just got stricter about the rules of sanctioning a loan or lending any kind of money for that matter. If you involve a minuscule of risk factor, they might just reject your loan plea without even properly considering it. If you owe someone money or have a bad credit to your name, forget about managing a home loan. It is next to impossible.

In UK, you can apply for a home loan if you are 18 years of age and above and you are a permanent resident of UK. You must be engaged in a regular job and must be able to prove your identity through driving license or passport. Migrant population find it more difficult to get a home loan in UK than Britons. They have to prove their citizenship first.

Loans are often denied on the basis of a very high risk status which leads to immense frustration and depression in people unable to get a loan. In this case, it is advisable that one takes help of independent money lenders who give loan as well.

One might have a hazy idea about these people. They are not the employees of any bank, or run a bank. They are independent and money lending is a business for them. These companies lend money for educational purposes, medical facilities, starting a business and so on. The money is lent against collateral which is usually an asset of yours.

These new money lending companies have lately proved to be ultimate solution for people seeking loans, especially home loans with Housing Loan Interest. The UK banks have become averse to any sort of risk factor. Before recession struck they would sanction a loan to any individual who applied for it. But as on today, getting a loan from an independent loan company is a better option.

Most of the criteria they put forward are easier to fit in to the general circumstances. The LTV offered is usually higher. LTV refers to Loan to value. The markets which were struck by recession in which the independent lenders function more are recuperating faster than the bank markets. These lenders place an unimaginable high rate of LTV, as higher as 85% and can also help their customers to search the market for better and more lucrative opportunities.

They usually also have a specialist lender who deal with high risk people. The best part about loan lenders is that bad credit and reputation doesn't matter to them.

[Source: http://ezinearticles.com/?Home-Loans-Bank-Or-Independent-Loan-Lender?&id=4941842          ]