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Five Ways to Reduce Your Home Loan Interest Payout

Choosing the right lender, and subsequently looking out for ways to reduce the burden of the home loan through lower interest rates, is crucial.

The most critical factor for most people taking a home loan is interest rate. And understandably so, because home loan EMIs usually are the biggest monthly expenditure for a household and it lasts for at least a decade. Even the smallest of differences in the interest rates offered by various banks and financial institutions can amount to a significant amount in the long run. Choosing the right lender, and subsequently looking out for ways to reduce the burden of the home loan through lower interest rates, is crucial.  Here are a few tips that may help you reducing your home loan interest payout:

Switch to MCLR: Both Reserve Bank of India and home loan borrowers have long accused banks neglecting existing borrowers while reducing interest rates. To solve this problem, RBI made the banks to switch over to Marginal Cost Based Lending Rate (MCLR) ¬– based lending rates from April 1, 2016. Since then, all the new floating rate bank loans have been lent on the basis of MCLR. Even borrowers of loans disbursed till March 31, 2016 have the option of either switching to MCLR or continuing with the base rate.

As the repo rate is used in the calculation of MCLR, it is better placed to reflect the changes in policy rates than the base rate and BPLR systems. Moreover, banks have been asked to mandatorily review their MCLR every month and reset your interest rate at a periodic interval of less than a year. Even your interest rate reset date has to be communicated to you at the time of your loan disbursal. These features make MCLR system a much more transparent rate-setting system. The provision of fixed interest rate reset date will also force banks to pass on the repo-rate reduction to you. Thus, given the current declining interest rate regime, it makes more sense to switch to MCLR in order to benefit from future rate cuts.

Reset your loan to lower rate (for NBFC): Currently, home loan borrowers from NBFCs and housing finance companies do not come under the purview of MCLR. However, they can reduce their interest rate to current lending rates by paying a conversion fee. This fee can go up to 1% of the outstanding principal. Many banks also offer the facility of switching from higher fixed rate to lower Home Loan Rates on the payment of a similar conversion fee.

Make prepayments: Home loan borrowers have the option of prepaying their entire or a part of their outstanding home loan balance. Currently, lenders are barred from charging prepayment of floating rate homes loans; however, lenders charge prepayment charges of up to 2% of the outstanding loan amount on fixed rate home loans. While opting for prepayment, make sure that the savings in interest cost is higher than the prepayment charges paid.

Increase your EMI: Your monthly income is considered while fixing your monthly EMIs. Usually, lenders prefer your EMIs to be within 40% of your monthly income. You can reduce your overall interest payout by diverting a part of your increment towards home loan EMIs. In order to reassess your repayment capacity, banks/NBFCs may ask you to submit your salary slips and bank statements. However, while opting for increased EMI, do not sacrifice your long term investment goals. 

[Source: http://www.blog.loanmoney.in/five-ways-reduce-home-loan-interest-payout/]

Getting a Home Loan in India

Decided on your dream home and now have to raise the funds? Fortunately bank loans are not as difficult to get as they used to be. It’s still a slightly long process, but then it’s always better to know that everything has been checked thoroughly rather than keep having to run around every three or four months. Here are the steps to go through:

1. Application

You need to fill up an application form which will ask for your basic information such as address, employment details, income, education and so on. The form will also ask for the property details like estimated costs etc. They will also ask you to submit verified photocopies of certain documents such as

Income proof

Age proof

Identity proof

Address proof

Employment details

Proof of educational qualifications

Details about the property if finalized

Bank statements

These are for security-both yours and the bank’s.

2. Processing fees for home loans in India

An important thing to note about home loans is the processing fee. Banks charge a processing fee for every home loan application. This fee is nonrefundable. The processing fee varies from bank to bank and is generally between 0.25% to 0.50% of the loan amount. This fees is used by the bank to start and maintain the home loan process including completing the various formalities during the entire period.

3. Evaluation and Verification

Once all your paperwork is in, it takes a few days for the bank back after going through your application and deciding your eligibility. If you pass this stage, field verification begins for which they send representatives to talk your family and neighbours as well as your colleagues to verify that the information you have provided is correct. The references provided in the application are cross checked and verified.

4. Repayment Verification

The bank now verifies your repayment capacity. After reviewing your credit records and bank account details, if convinced that you will be able to make payments every month, the bank sanctions your home loans. The sanction can be conditional or unconditional. If the sanction is conditional, you’ll have to fulfill the conditions imposed before the loan is disbursed. If they feel that you will not be able to pay back the loan, they will not sanction your loan.

5. Offer letter for home loan

The bank then prepares an offer letter which contains the following detail:

The amount of home loan sanctioned

The interest rate applicable on your home loan

Whether the interest rate is fixed or floating

Your home loan tenure

The mode of repayment of the home loan

If any special scheme applies to the home loan, its details

The terms and conditions associated with the home loan

If you find the offer attractive and agree with all the facts mentioned in the offer letter, you will have to provide an acceptance copy to the bank. This is generally a duplicate of the offer letter signed by you, provided to the bank for its records. If the bank charges any Administrative fee, it will have to be submitted at this stage.

6. Property Verification

The bank sends representatives to verify the property you are looking to buy. For this, you have to submit the original property documents. These include the title deeds, no-objection certificates and other documents. The bank conducts a legal check so as to verify that the property has a clear title and the home loan is being disbursed to the right person and for the right reasons. Banks don’t lend for disputed properties and for titles where ownership cannot be easily enforced.

[Source: http://www.midtownstructures.com/blog/getting-home-loan-india]

How to Get a Pre-Approved Home Loan

What is Pre-Approval?

Whenever people think of buying the house of their dreams, the only thought that crosses their mind is to get a Home Loan. Various private and public sector banks have started the trend of providing Home Loans. This has been a great boon for many people.

This process of getting an approval from the bank can be a tedious process. Many a times, it so happens that people lose their desired property due to the long waiting time demanded by the bank for processing a loan request.

Thus, this trend of getting a pre-approved Home Loans even before the acceptance of your request has been initiated. Banks would provide pre-approval to you after considering your background. The yearly income of the customer and other major factors are considered before giving a pre-approval. This pre-approval can be shown to the dealer to book the house that the customer desires. Thus the property can be booked even before the actual Home Loan is granted.

Although, getting a pre-approval for the Home Loan does not mean that the actual Home Loan has been granted. It should be kept in mind that a pre-approval is offered for a particular amount only. The bank has all the rights to declare the pre-approval void if the customer books a house of higher price value that the requested amount. Many times people misuse these pre-approvals to book properties of higher price value. Thus, make sure that after getting a pre-approval for a Home Loan, the property is booked within the allowed price only. Read this blog post to know How to invest in real estate.

Getting prequalified for a Home Loan can be Quite a Challenging Task

Pre-qualification before the application of Home Loan should be thoroughly done. Pre-qualification means estimation of your affordable expenditure on the house.

The bank checks your assets and credit before even offering you the preapproval. People should keep a check on their requested loan amount.

People who do not have any prior investments in properties must make sure that their work and asset value complements their loan request. Make sure that your income receipts and asset documents are kept ready as bank officials will do a strong background check even before considering your request for pre-approval.

We should have the following points in mind while applying for a pre-approved Home Loan:

Income Statement:

Verbal words and promises don’t hold any importance. So while, applying for any Home Loan it is advised to keep the income statements ready. It’s always better to maintain a proof of all the updated income and bonuses.

Asset Verification:

Before accepting the request for the loan, the bank needs a proof of all the assets. The bank needs to check if the customer can pay regular down payment hence, they enquire for the proofs. Usually the down payment is fixed to 3.5% while some Home Loans may require 20% down payment.

Credit:

Credit scores determine the Home Loan Interest Rates for the down payment. If a customer has a credit score above 750 then the down payment can be lowered to a substantial amount. Customers with low credit scores require higher down payment. Many times, customers are offered discounts in their down payment amounts if certain an amount is paid. Read this blog post to know how much credit score is needed to apply for a Home Loan

Verification of Employment Verification:

Background checks are a method of verifying the authenticity of the customer. The customers, in their application provide certain contact details that are further verified by the bank. Usually customers are asked to mention the contact details of their employers. If the customer has shifted their job recently, then the contact details of past and the present employer is required. Businessmen are asked to provide some extra paperwork.

Proper Documentation:

The procedure for Home Loan application requires thorough and efficient documentation procedures. Usually government documents such as, driver’s license, PAN card etc. are required during the Home Loan documentation procedure. The application procedure of a house loan may become very lengthy and tedious sometimes.

All the above described points hold utmost priority while applying for a pre-approved loan.

Benefits of Pre-Approved Home Loans

Zero-In On Your Home:

Lenders usually specify the loan amount when they offer pre-approved Home Loans in India. Since you know the exact amount, you can eliminate homes that are not within your budget, and narrow down on the most optimum choices.

You Can Negotiate with Your Seller:

A pre-approved Home Loan will make it clear to your seller that you mean business, and that you have the funds to close the deal. This could lead to your seller providing you with added benefits like discounts, or allowing you to move into your new home as soon as possible.

[Source: https://blog.bajajfinserv.in/how-to-get-a-pre-approved-home-loan/]

The best housing finance for NRIs applicants

Home Loans

Housing loan eligibility norms followed by banks in India

Home Loans

Helpful tips for finding home loan

Home Loan Interest Rates

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/]

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]

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]