How to utilise your mortgage loan

September 01, 2008

The home is a valuable asset that most home owners acquire over time. Trading it for cash with a mortgage can be a less expensive way to avail of a loan, but it should not be used lightly. It makes sense to shop carefully for mortgage loan quotes before borrowing, and to prioritise the use of the mortgage loan. After all, a mortgage loan uses the property as collateral, so it should only be used to finance purchases that are worth that risk.

In general, a mortgage loan should be used when the following conditions are met:

* The purchase is long-term in nature.
* Loan quotes show a distinct interest rate advantage compared with other methods of financing.
* A repayment plan has been carefully budgeted.

Given below are some examples of possible utilisation of your mortgage loan:

* Debt consolidation: This is a common reason why a mortgage loan may be availed of, since such loans generally carry lower interest rates than other loans like personal loans. Debt consolidation allows borrowers to pay less interest by securing their debt with their home.
* Home improvements: With the festive season around the corner, home improvements can be a way of adding value to a home or increasing its marketability. Using a mortgage loan to add space may be cheaper and involve less hassles than taking an unsecured loan. As in unsecured loan The term of repayment for an unsecured loan is shorter, as compared to mortgage loans, which in turn results in a high EMI.
* For your children's higher education: While not investing in the house itself, money from a mortgage loan can be utilised for your children's higher education because it represents an investment that has long-term benefits and should produce an eventual financial return. Mortgage loan financing rates compare favourably with most types of private education loans. However, there are many forms of subsidised or assisted financial aid for college, so it would be wise to compare mortgage loan quotes with other education loans before committing.
* Starting a business: Banks and finance institutes offering business loans are notorious for the number of hoops they make borrowers jump through with regards to higher rates of interest and short durations. Mortgaging a property, if available, can be more feasible in terms of the rate of interest and the repayment term. Of course, you should put together a business plan before attempting entrepreneurship; receiving a mortgage loan to start a business is likely to take much less time, because valuing a home is easier than evaluating a business.
* For medical treatments: With the cost of medical treatments going through the roof, even the well-insured can be hit with more than they can handle -- many treatment centres today want a significant portion of payments to be made up-front. A mortgage loan may be the best way to get top-rated care sooner for a serious condition.
* Down payment for property investment: Finance for the down payment of an investment property is a good option, as a boom in the property market can give good returns on the investment made at this point, while paying low interest rates.

As a general rule of thumb, the best matches for long-term financing are long-term purchases. It may be anything from a boat to a medical procedure, as long as the home owner has reasoned that the item justifies using the home as collateral. Easyfinance.in provides information on home loans, car loans, personal loans, mortgage loans, education loans, business loans, term loans & project loans in India.





Easyfinance.in provides information on home loan, car loan, personal loan, mortgage loan, education loan, business loan, term loan & project loan in India.

5 things to know before applying for a car loan

August 13, 2008

How often have you thought of buying a car but put those thoughts away for want of basic information and things you need to keep in before applying for a vehicle loan?

While there are scores of banks and financial institutions that will help you get that loan there are some finer details that you need to watch out for.

If you too have applied for a vehicle loan or are planning to apply for one, then here are a few things you must know:

1. Shop online

Shopping for auto loan online is a great time saver. You can get almost all information at a click of a mouse and pick the best deal by comparing offers from different sites. The application process is also easier.

2. Know thyself!

You must know the basic criteria for applying for a loan. You must be above 18 years of age. Best is if you earn at least Rs 20,000 per month and have your six-month bank statement ready for your lender's perusal. This will help your lender understand your spending and saving habits better and may help you in getting loan at a cheaper rate of interest. Also needed is a proof of your residence and employment history.

3. Get approved first

Don't make the mistake of looking for a car before getting a bank's approval. Get your loan approved first from your lending bank or finance company. Then get a sanction letter from them to know the amount of loan approved. Doing this will save you frustration and disappointment later.

4. Down payments

This varies from lender to lender, and some don't even require you to make a down payments. But typically it's about 10 per cent of the price of the vehicle you want to purchase.

5. Interest rates

Interest rate is not fixed as most people think, but it can surely be negotiated. If you have good negotiating skills you can bargain for a lower interest rate. But some factors are way out of your control such as the state of the economy. If interst rates move up � like they are doing now � the rate at which you borrow money to finance your vehicle will also go up.

Finally, it is always better to ask an authorised dealer or loan official for their advice. They are there to help you. If there is something you don't understand, ask them NOW or you may face headaches later.

Easyfinance.in provides information on home loan, car loan, personal loan, mortgage loan, education loan, business loan, term loan & project loan in India.

6 facts you should know about your home loan

ugust 11, 2008

It really is a tough time for home loan borrowers. Interest rates on home loans -- be they fixed or floating -- are going through the roof, and so is the equated monthly installment, EMI, throwing monthly budgets out of gear.

What should you do in such a situation? Here are a few things that every home loan borrower must remember now that home loan rates are expected to increase further.

1. Is it worth switching from a floating to a fixed rate home loan now?

Switching your current floating home loan to fixed home loan is not advisable as there are not many banks that offer genuine fixed rate loans anyway. Once the interest rate is fixed on genuine fixed rate home loans the banks from which you borrow cannot change the rate of interest.

Fixed home loans are not available for less than 14 per cent rate of interest today and also, the borrower has to pay a fee for changing from 'floating' to 'fixed' home loan rates which is 1.5 per cent to 2 per cent of the outstanding loan amount. This means that the equated monthly installments (EMIs) will go up immediately.

2. Are fixed rate home loans really fixed?

Now ideally as it should be, we assume that once you select fixed rate plan for your home loan the rate of interest will remain unchanged over the entire tenure of the repayment period irrespective of any subsequent increase in the same. But actually this is not the case.

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All banks include the reset clause on fixed interest rate in their loan agreement. So if you have taken a loan @ 10.5 per cent for 15 years it does not mean the same rate will be applicable through the tenure of your loan.

Banks have introduced a clause according to which they have the right to revise the fixed rate home loan after two years or five years of disbursing the loan. This clause is called the Force Majeure Clause

The statement included in the loan agreement will say:

Provided further that from time to time, the bank may in its sole discretion alter the rate of interest suitably and prospectively on account of change in the internal policies of the bank or if unforeseen or extraordinary changes in the money market conditions take place during the period of the agreement.

Don't let yourself to be misled by the term 'fixed rate'. For that reason, it is significantly important to go through the contents of your home loan agreement meticulously. Most of us see the home loan agreement as a mere formality. Well! This can be the biggest pitfall.

It is a contract twisted towards the lenders through different legal clauses presented in fine quality paper. You should not take things for granted. Always ask the lender bank to make you understand the agreement before you sign it. Also, ensure to bring these uneven and twisted clauses to the notice of your housing finance company and suggest the changes you need in co-operation with the lender bank.

3. What about shifting to other lenders offering a lower floating rate?

This can be a good idea especially if another lender is offering a floating rate which is at least 0.5 per cent or 0.75 per cent lower than what has been offered by your existing lender, and, more importantly, with the balance tenure of not less than 7-8 years.

There are banks that charge high rate of interest from existing customers and low rate from new customers. Therefore, shop around the market and get informed regarding the same to avail the best deal.

4. What forces banks to increase EMIs on existing home loans?

The rising interest rates in the country today has brought this debt trap to your household. In the past few years, the floating interest rates on home loans have shot up to 12 per cent from 7.5-8 per cent.

Rate of interest and principal are two basic components involved while calculating EMI payment for any loan. In the first few years of your loan repayment tenure, a major part of the amount goes in paying up the interest. The trend reverses after a few years -- after you have paid much of the interest -- and the principal repayment increases.

Today, when home loan interest rates are high everywhere, banks have to increase tenure up to a certain point. If the interest rate continues to go up, the EMI you pay fails to cover the loan amount.

Moreover, increasing the time period is not seen as a solution to cope up with the rising interest rates. Hence, banks are forced to increase the amount of EMI.

5. What are the options to reduce the EMIs?

If you have extra money, it is recommended that you pay a part of your loan to keep the EMI at the same level. Since most banks do not charge part pre-payment penalty, it can be an excellent option.

In case you find the increase in EMI unfeasible, you should check whether your bank is ready to increase the loan tenure while keeping the EMI at the same level.

However, banks generally do not increase the tenure beyond the retirement age which is 60 years for salaried people and 65 years for self-employed.

6. Is it the right time to buy a home?

Interest rates are likely to go up further, which could affect demand, putting property prices under pressure. However, if you want to buy a house for your own use, this could be a good time.

The value of borrowed amount is depreciating (decreasing in value) because of inflation. If the value of the property you are buying does not depreciate, your investment will give you handsome return. Of course, that is a big IF.

Inflation to come down to 5-6 pc in 12 months

Chennai, Aug 7 (PTI) Inflation, which has crossed the psychological 12 per cent level, would come down to 5-6 per cent in the next one year while the economy is expected to grow at nine per cent, a Finance Ministry official said today.
"In the next 12 months, inflation, which is at 12.01 per cent now, may be expected to come down to 5 to 6 per cent," Chief Economic Adviser Arvind Virmani told reporters on the sidelines of a CII meet on the state of Indian Economy here.

Measures taken by the government would control the price rise, he said.

Virmani expressed confidence that the country's GDP growth would also increase to a considerable level as per the 11th Five Year Plan. "Currently it is prevailing between 8-8.9 per cent but I am absolutely confident of 9 per cent growth." Replying to a query, he said media was focusing only on the expenditure of the country than the income generated.

"When the country makes huge expenses, media projects the expenditure but what about the income. I do accept that in some areas the expenses do affect, but the income in the form of investments has also increased," he said.

The country's growth has accelerated in last five years on account of the investment made while the consumption growth remained robust, Virmani said.

"The telecom, construction and manufacturing sector were the major contributors for the growth,"
Press trust of India

If you have booked a flat better read this

You are likely to get possession long after you have been promised, as study warns of likely delay in projects. Only your agreement can save you from a financial loss, say experts

If you have booked a flat in Mumbai recently, this could be bad news. There is a big chance you may not get possession of your flat on the date you were promised. Worse, you will end up paying more, if your EMI (Equated Monthly Installment) payout has begun. The double whammy is, if you also have to pay rent until you get your dream home.
"About 70 per cent of these upcoming projects are in north Mumbai, from Andheri till Vasai and Virar," said a real estate expert.

The immediate fallout is for those burdened with home loans. "Most people have booked flats and their EMIs have begun. Any delay in a project means they end up paying more," a banking expert said.
"A number of medium-sized and small real estate developers could face a liquidity crunch in the months ahead. Many such developers have stretched themselves operationally, and borrowed heavily, to benefit from the real estate upturn of the past three years," says a report by Credit Rating agency Crisil, released yesterday.
According to the report, there would be delays in many ongoing and planned real estate projects, thereby leading to the possibility of sale of projects or even enterprises. "Large builders are currently insulated from this crunch," Akash Deep Jyoti, head, Corporate and Government Ratings, Crisil, told MiD DAY.
Increasing real estate prices over the last three to four years resulted in a large number of developers acquiring land at high rates in anticipation of a further increase in prices, and scaling up their operations multifold.
The current situation exposes the pitfalls of such a strategy, says the Crisil report. There has been a slowdown in the sale of real estate projects. In particular, residential projects have been severely hit by the slowdown in bookings. Further, the sharp increase in the cost of land and construction materials (primarily steel and cement) has pushed up costs by 20 to 30 per cent over the past two years, hitting developers hard.
How to protect yourself
For those planning to book homes, ensure that your agreement with the builder mandatorily includes a clause, which safeguards your financial interests if there is a delay in the project. "Most buyers do not read the clauses carefully and end up facing mental and financial agony, especially if they are faced with delayed projects," says an expert.
For existing buyers, if this clause does not exist, they may approach the builder and insist on including it in the agreement. Option two is to approach the Consumer Court.

RBI must take immediate steps to control runaway inflation

Inflation at 11.05 per cent for the week ending June 7 on the wholesale price index is a shock in double digits. A higher than two percentage points rise in the inflation rate will push the government further to the wall than it already is on how to handle the raging fire in the economy.

The stock market reacted sharply, falling by over 500 points to end a dismal week of performance. The current inflation is clearly caused by the global spike in oil prices. Indicators point to the fact that fuel prices led much of this rise. If anything, the food index has gone down by 1 per cent and the non-food index is only marginally higher.

We know that the current inflation is essentially imported. But we have to tackle it the best we can at home. There is a need for stringent demand side and monetary measures. It is time for the Reserve Bank to use all possible tools it has at its disposal to douse the fire. As an immediate step, it may be a good idea for the central bank to let the rupee appreciate a bit.

That would ease import prices of crude as well as some other commodities. An appreciation of the rupee could help in containing inflation also by mopping up some excess liquidity in the system, though it is not a solution without attendant risks.

An appreciated rupee can help bring down landed prices of imported items, thus boosting supply at lower prices. But a more expensive rupee will affect exports. Besides, selling dollars to help the rupee rise is a suggestion that the RBI might argue would lead to other negative effects. Nevertheless, we will have to live with the side effects because controlling inflation must be the central bank’s top priority now.

Along with this, other tools should also be used. Interest rates are effectively negative today, given the rate of inflation.

Tightening money supply is now necessary despite the restraints it might cause in the economy’s growth. Inflation at current levels hurts people, creates economic instability and even political disruption, and is therefore a bigger threat than a slowdown in the pace of growth.

Runaway inflation is an unannounced and painful taxation on people. This time around, it may not be the government’s fault. Indeed, most of it is imported and is hurting economies around the world. But our monetary managers must take urgent domestic action to minimise inflation’s nasty aftereffects . Which means that the RBI will soon have to take some hard decisions.

RBI must take immediate steps to control runaway inflation

What is reverse mortgage? How is it beneficial? http://www.easyfinance.in/

In a reverse mortgage, http://www.easyfinance.in/ the property is pledged with an end goal of liquidation. The lender pays a monthly EMI to the person who has taken the reverse mortgage for a fixed pre-decided period of time. http://www.easyfinance.in/ At the end of these payments, the property belongs to the lender. The concept of a reverse mortgage is not prevalent in India. http://www.easyfinance.in/ This product is extensively sold in developed countries to ageing individuals who own property. http://www.easyfinance.in/ There are variants available which provide payments till the individual is alive, as against a fixed time period. Such products benefit elderly people who have no steady sources of income for their expenses, but own lien free property. http://www.easyfinance.in/

What is reverse mortgage? How is it beneficial? http://www.easyfinance.in/

In a reverse mortgage, http://www.easyfinance.in/ the property is pledged with an end goal of liquidation. The lender pays a monthly EMI to the person who has taken the reverse mortgage for a fixed pre-decided period of time. http://www.easyfinance.in/ At the end of these payments, the property belongs to the lender. The concept of a reverse mortgage is not prevalent in India. http://www.easyfinance.in/ This product is extensively sold in developed countries to ageing individuals who own property. http://www.easyfinance.in/ There are variants available which provide payments till the individual is alive, as against a fixed time period. Such products benefit elderly people who have no steady sources of income for their expenses, but own lien free property. http://www.easyfinance.in/

Consumers want to get rid of mortgage http://www.easyfinance.in/

People apply for a mortgage http://www.easyfinance.in/ for their dream home only to get rid of the mortgage loan as quickly as possible after obtaining one. The media and banks are in some cases responsible for making the public believe that a mortgage is the solution not only to your home desires but also to any financial problem that consumers are struggling with. People in search of money for a new car or a home upgrade loan are encouraged to take out a second mortgage or to refinance their current mortgage, borrowing more money in the process. http://www.easyfinance.in/ But what can consumers to do get rid of their mortgage quickly and is it wise to do so? Figures show that in the past year more and more people who borrowed money have started to look for ways to pay off their debt. Financial advisers http://www.easyfinance.in/ suggest remortgaging if your current mortgage if consumers are paying for a so-called PMI in addition to their mortgage. http://www.easyfinance.in/ A PMI is an often high priced life insurance policy that was taken out at the same time as the mortgage that people are paying off. This type of policy is a decreasing term type of loan and the payments of this life insurance generally benefit your lender as the mortgage sum is covered by the policy in case of death.If consumers want to make sure that they can enjoy a risk-free rate of return on their mortgage, http://www.easyfinance.in/ paying off a mortgage sum is the equivalent of investing money in any type of risk-free investment. Examples of these investments are treasury bonds and the term of these bonds can be equal to the length of the remaining mortgage loan. There are ways for people to get rid of their overpriced mortgages with expert help. http://www.easyfinance.in/

What Forces Banks to increase EMI on home loans? http://www.easyfinance.in/

A new shift has taken place in the India home loan sector. The rising interest rates in the country today have brought this debt trap to the threshold of households. For the past few years, the floating interest rates on home loans have shot up to 11 per cent from 7.5-8 per cent. Covering the interest component would have become a little difficult for the home loan borrowers if banks and other financial institutions had not increased the e quated monthly installment (EMI). http://www.easyfinance.in/
A home loan consumer who cannot afford paying high EMI will theoretically end up paying in perpetuity. This has reasons:
Rate of interest and Principal are two basic components involved in an EMI payment for any loan. Talking about first few years of loan repayment, a majority of time goes in paying up the interest, which seems bothersome to all borrowers. As for the latter half of the payment part, when a borrower has paid much of his interests on loan, the principal repayment increases. http://www.easyfinance.in/
Today, when home loan interest rates are high everywhere, banks have the ability to increase tenure up to a certain point. If the interest rate continues to increase, the EMI becomes deficient to cover the loan amount. Moreover, increasing the time period has not also been a solution to cope up with the rising interest rate on home loan. For that reason, banks are forced to increase the amount of EMI all in all. http://www.easyfinance.in/
As per the current scenario, inflation has emerged as one of the leading factors encouraging banks to increase rate of interest on home loans thereby bringing a drop in number of home loan shoppers. The solution is for municipalities and states to allow more residential development on the land. This will bring more legal colonies, strong infrastructure, and the citizens will find themselves in a better position to buy houses. Asset inflation will be under control and prices and EMIs will become affordable. http://www.easyfinance.in/
However, this is the case when significant reforms will be pushed by the concerned authorities. Meanwhile, the lay man will continue to suffer and pay high EMI and interest rates on home loan by cutting on everything. http://www.easyfinance.in/

Should You Prepay Your Home Loan? http://www.easyfinance.in/

Most home loan http://www.easyfinance.in/ borrowers opted for floating rate loans in the past five years. Unfortunately, banks increased the rate on these loans three to four times in the one and a half years. Now, the borrowers are feeling the heat of increased rate of interest. http://www.easyfinance.in/
Those who thought themselves to have sailed safely by buying floating rate loan at 7% in 2003 are now highly tensed. Most banks are charging around 11.50% interest rate. http://www.easyfinance.in/
Let?s take a case supposing home loan amount to be Rs 10 lakh and the tenure as 20 years. With the increased rates, the EMI changes from Rs 7,753 to Rs 10,000 or if one wants to keep the EMI amount same, the tenure would increase by more than 10 years. http://www.easyfinance.in/
Kind of Options Available http://www.easyfinance.in/
It is always adviseable to pre-pay any loan, including the best home loan, if you have extra cash available with you. Most people think that the principal amount outstanding has not reduced even after paying EMI for three to four years. http://www.easyfinance.in/
Considering the above example again, if the borrower prepays at the end of fourth year, the outstanding principal is still around Rs 9 lakh. The borrower is repaying a higher proportion of interest in the initial EMIs. The interest can hover anywhere around 80% in the beginning. http://www.easyfinance.in/
Interest component falls down and principal component goes up as a proportion of the EMI with the loan tenure. For that reason, many of home loan borrowers assume not to prepay an apt way, say, after half way through the loan tenure, because the interest falls. http://www.easyfinance.in/
The interest outgo as a percentage on outstanding principal will remain same every time. As home loan rate is evaluated using reducing balance method, the interest rate is always evaluated on the remaining outstanding principal. http://www.easyfinance.in/
Now, the interest which requires to be distributed accordingly in the remaining tenure would also be low, resulting in lower interest amount component. However, there would come no change in the rate of interest which will remain same at both the periods. http://www.easyfinance.in/
Your home loan tenure should not be a driving factor for you to narrow down on the option of prepaying the loan. It should largely depend on current interest rate and the amount of spare cash with you. http://www.easyfinance.in/

Manage Soaring Interest Rates on Home Loans http://www.easyfinance.in/

How is the prospect of changing from ?floating? to ?fixed? rate home loan? http://www.easyfinance.in/
Shifting from floating home loan rate http://www.easyfinance.in/ to fixed is not advisable as there are not many banks that offer genuine fixed rate loans anyway. They are the loans which eliminates the need of a document featuring any clause that allows the bank to change the ?fixed rate? of interest.
These loans are not available for less than 13% rate of interest. Also, the borrower requires paying a fee for changing from 'floating' to 'fixed' Home Loan http://www.easyfinance.in/ rates. This means that Equated Monthly Instalments (EMIs) will go up immediately. http://www.easyfinance.in/
What about shifting to another lender offering a lower floating rate loan? http://www.easyfinance.in/
This can be a good idea especially if another lender is offering a floating rate loan which is at least 0.50% cheaper than what has been offered by the existing lender with the balance tenure of not less than 7-8 years. There are the banks which charge high rate of interest from existing customers and low rate from new customers. Therefore, shop around the market first and keep yourself informed regarding the same to avail the best deal. http://www.easyfinance.in/
Do I have any other better options? http://www.easyfinance.in/
If you have extra money, you are recommended to pay a part of your loan to keep the EMI at the same level. Since most banks do not charge partial pre-payments, it can be an excellent option. In case, the borrower finds it unfeasible, he/she should check whether the bank is ready to increase the loan tenure along with keeping the EMI at the same level. As such, banks generally do not increase the tenure beyond the retirement age which is 60 years for salaried people and 65 years for self employed. http://www.easyfinance.in/
And, the ultimate best option is to increase savings and compromise on non - essential items thereby managing the monthly budget within the monthly income. http://www.easyfinance.in/

Be watchful of major pitfalls in your Home Loan Agreement http://www.easyfinance.in/

Home Loans make it easier for you to move in as soon as possible without breaking your bank and disturbing the budget. 'Look before you Leap' is the strategical rule of thumb while shopping for the home loans and narrowing down on the best. A little ignorance in home loan agreement can bring nasty surprises later.
Most of us see the home loan agreement as a mere formality. Well! This can be the biggest pitfall. It is a contract twisted towards the lenders through different legal clauses presented in the fine quality paper. Let us help you to scout among these legal tactics thereby making the agreement easier for you to understand.
Outlined below are some of the clauses that are generally found side with the most Housing Finance companies (HFCs): http://www.easyfinance.in/
Reset Clause on Fixed Rates: http://www.easyfinance.in/ Many home loan borrowers are nowadays seen to go with fixed rate loan. The interest rate surge is the obvious reason behind their choice. In spite of being fixed interest rate, the latter is not locked at a specific per cent for the entire tenure. This is what a reset clause introduced by banks in their home loan agreement says, which allows the lender to modify the interest rate in future.

The clause is applicable to fixed rate home loans http://www.easyfinance.in/ as well. Don't let yourself to be misled by the term 'fixed rate'. For that reason, it is significantly important to go through the contents of your home loan agreement meticulously.

Force Majeure Clause: http://www.easyfinance.in/ This clause allows the banks and HFCs to unfix the interest rate on loan and increase it under exceptional circumstances. And, what are those circumstances is certainly difficult to differentiate. It will help you to prevent falling for semi fixed rate loans that are often advertised as fixed rate loans.

Defining a Fault: http://www.easyfinance.in/ For a common man, the term 'Fault', as far as home loans are concerned, may not mean more than non payment of one or more loan installments. But, banks and HFCs http://www.easyfinance.in/ do not consider the same meaning. The excerpts from the home loan agreements http://www.easyfinance.in/ of two known banks will themselves shed light on the prevailing facts thereby making the picture clearer.What does Citibank's home loan agreement means by a 'Fault'-(i) "where the borrower, or where the loan has been provided to more than one borrower, any of the borrowers is divorced or dies (applicable in case of an individual)"(ii) "if the borrower or any of the borrowers is/are involved in any civil litigation or criminal offence."

Security cover at the time of Falling property rates: http://www.easyfinance.in/ Despite of paying you Equated Monthly Installments (EMIs) http://www.easyfinance.in/ on time, you may be asked to provide security over and above your home loan. This is generally what banks and HFCs do when properties witness a fall in rates. The clause that gives such a power in hands of banks reads:'The bank may declare all sums outstanding under the home loan (including the principal, interest, charges, expenses) to become due and payable forthwith if the value of the property or any security (including guarantees) created or tendered by the borrower, in the sole discretion and decision of the bank, depreciates entitling the bank to call for further security and the borrower fails to give additional security.' The bank or HFCs can consider you a defaulter or raising an error if you do not give the additional security as demanded.
You should not take the things for granted. Always ask the banks to make you understand your agreement before you sign it. Also, ensure to bring these uneven and twisted clauses to the notice of your HFC and suggest the changes.

Pros and Cons of Reverse Mortgage Loan Scheme http://www.easyfinance.in/

Reverse Mortgage Loan (RML) http://www.easyfinance.in/ scheme comes as a new hope for the senior citizens in India. Generally, retired people become dependent on their meager pension or family members to sustain. Considering the same and to resolve the issue, NHB, a subsidiary of the Reserve Bank of India (RBI) and its regulatory authority for the home loan, drafted the norms for this scheme.
Any person above 60 years can ask for RML and it is applicable for only residential properties. Since, senior citizens require liquid assets to pay for their daily needs; they have the option of mortgaging http://www.easyfinance.in/ the house they live in as titleholders to a bank or any financing institution. Now, the responsibility of making the payments falls with the lender. Whether he pays the amount in lump sum or periodically, it depends on the agreement signed between the lender and borrower. The tenure can be 15 years or till the death of the borrower, whichever comes first.
Complying with the guidelines released by RBI, most banks have already brought the scheme into effect whereas some are in the process of executing it.
Punjab National Bank http://www.easyfinance.in/ has adopted the scheme and named it as ?PNB Baghban?. Other prominent banks including ICICI, HDFC, Bank of Baroda, Oriental bank of Commerce, LIC Housing Finance are planning to introduce their respective schemes soon.
The biggest advantage that the scheme brings is that it eliminates a need for senior citizens to service the loan during their lifetime. The lender recovers the entire loan, including accrued interest on the death of the borrower by selling the property. The remaining amount is returned to the heir of the deceased borrower. However, the spouse of the borrower can continue to live in the house even after his/ her death. Also, the borrower has the option to repay the loan at any time. http://www.easyfinance.in/
As far as the amount of the loan is concerned, it largely depends on market value of residential property, as estimated by the lender, and the current rate of interest. Also, the age of the borrower will be another determinant. http://www.easyfinance.in/
Senior citizens can also earn good amount without selling their property. However, it depends on the lender to agree on to a deal with the borrower (senior citizens), as their requirements are focused and the scheme specific.
Let?s now check out the kind of problem with RML which pertains to the taxation rules. The central board of direct taxes (CBDT) has not issued any specific directives on how it will treat the loan amount sanctioned to the senior citizens. However, not everyone sees it as a serious issue. The payments will only be from a capital resource and not from any other income source. Moreover, it cannot constitute income to recipient. Income will only arise only from the sale, as capital gain. In case, the property is claimed by any legal heir by discharging the lenders, there would be no income to consider. http://www.easyfinance.in/

Are fixed rate home loans really fixed?http://www.easyfinance.in/

Once you decide to avail a home loan, http://www.easyfinance.in/ the next thing that storms your brain is choosing between fixed and floating rate of interest. And here is where you are caught in a catch 22 situation. Usually, when news media splashes reports on banks increasing home loan interest rates in India http://www.easyfinance.in/ and their impact on Equated Monthly Installment (EMI), you deem it better to opt for fixed home loan rate. In fact, your banker may also advise you to go for the same.
Now ideally as it should be, we assume that once you select fixed rate plan for yourself the rate of interest will remain unchanged over the entire tenure of the repayment period irrespective of any subsequent increase in the same. But actually this is not the case.
Here we demystify the nature of fixed interest rate housing loan transaction for you so that you could make an informed decision over the matter.
All the banks include the reset clause on fixed interest rate in their home purchase loan http://www.easyfinance.in/ agreement papers. So if you had taken the loan @ 10.5 per cent for 15 years it does not mean that the same rate will be applicable all across the period.
India’s largest public sector bank State Bank of India (SBI) has introduced a clause as per which it has right to revise the fixed rate home loan after two years. Similarly, Canara Bank and Corporation Bank also have similar provisions to revise the rates after 5-years of disbursing the loan.
Private sector banks and Non Banking Financial Corporations (NBFCs) are also following the same policies and the rates too are revised from time to time.
Force Majeure Clause http://www.easyfinance.in/
So, while you read your home loan agreement papers, you can spot statement like this:
“Provided further that from time to time, the bank may in its sole discretion alter the rate of interest suitably and prospectively on account of change in the internal policies or if unforeseen or extraordinary changes in the money market conditions take place during the period of the agreement.”
This is called Force Majeure Clause that enables the lender to undertake appropriate modifications in the interest rates on home loans they sanction to their borrowers.

How to Choose the Best Home Loan Lender http://www.easyfinance.in/

Buying a home loan can seem complicated but if you go systematically, you will soon be holding the keys to your own home!!! The first step towards your loan is choosing the best housing finance company http://www.easyfinance.in/ which can guide you through the entire procedure.
Given below are the tips to choose the best home loan lender: http://www.easyfinance.in/
Always Choose the Lender After Finalizing the Property: http://www.easyfinance.in/ Shopping for the home loan comes after identifying the property. While most banks offer finance for ready to move in properties whereas some banks lend for a property that is being self constructed or a property under construction. Therefore, finalize your property first and shortlist the financing options thereafter.
Be Sure About Your Loan Eligibility: http://www.easyfinance.in/ Banks follow different criteria to calculate loan eligibility. In case, loan eligibility based on your income is an issue, you should talk to different banks to find out which bank can provide you with the maximum amount. There is also an option of clubbing your own and your spouse?s income to increase your loan eligibility.
Be Ready to Loose Your Processing Fee: http://www.easyfinance.in/ Banks charge some processing fee to get any loan application on roll. The fee is generally around 0.50% to 1.00% of the total loan amount. Paying the processing fee does not ensure the clearance of the application but it ensures that your application will be seen. Moreover, processing fee is non refundable. Whether your loan is sanctioned for a higher or lower rate, you will not get the processing fee back. Never trust on the verbal promises made by any bank representative. Get everything in writing.
Fixed or Floating Rate of Interest: http://www.easyfinance.in/ In case of the fixed home loan rate, rate of interest does not remain fixed for the entire tenure but for a certain period of time. The lender has a right to arbitrarily change the rate further. On the other hand, if you are opting for the floating rate loan, be sure to check whether the rates of your chosen lender had floated down over the last couple of years.
A Stitch In Time Saves Nine: http://www.easyfinance.in/ Never haste the shopping process. Cost of your loan largely depends on how you negotiate. Home loan lenders primarily take your income and personal profile into consideration. Apart from rate of interest, what points you should take into account while choosing the best financer are processing fee, legal charges, pre-payment charges, valuation fees, and other hidden costs

finance & investment: How to Choose the Best Home Loan Lender http://www.easyfinance.in/#links#links

How to Choose the Best Home Loan Lender http://www.easyfinance.in/

Buying a home loan can seem complicated but if you go systematically, you will soon be holding the keys to your own home!!! The first step towards your loan is choosing the best housing finance company http://www.easyfinance.in/ which can guide you through the entire procedure.
Given below are the tips to choose the best home loan lender: http://www.easyfinance.in/
Always Choose the Lender After Finalizing the Property: http://www.easyfinance.in/ Shopping for the home loan comes after identifying the property. While most banks offer finance for ready to move in properties whereas some banks lend for a property that is being self constructed or a property under construction. Therefore, finalize your property first and shortlist the financing options thereafter.
Be Sure About Your Loan Eligibility: http://www.easyfinance.in/ Banks follow different criteria to calculate loan eligibility. In case, loan eligibility based on your income is an issue, you should talk to different banks to find out which bank can provide you with the maximum amount. There is also an option of clubbing your own and your spouse?s income to increase your loan eligibility.
Be Ready to Loose Your Processing Fee: http://www.easyfinance.in/ Banks charge some processing fee to get any loan application on roll. The fee is generally around 0.50% to 1.00% of the total loan amount. Paying the processing fee does not ensure the clearance of the application but it ensures that your application will be seen. Moreover, processing fee is non refundable. Whether your loan is sanctioned for a higher or lower rate, you will not get the processing fee back. Never trust on the verbal promises made by any bank representative. Get everything in writing.
Fixed or Floating Rate of Interest: http://www.easyfinance.in/ In case of the fixed home loan rate, rate of interest does not remain fixed for the entire tenure but for a certain period of time. The lender has a right to arbitrarily change the rate further. On the other hand, if you are opting for the floating rate loan, be sure to check whether the rates of your chosen lender had floated down over the last couple of years.
A Stitch In Time Saves Nine: http://www.easyfinance.in/ Never haste the shopping process. Cost of your loan largely depends on how you negotiate. Home loan lenders primarily take your income and personal profile into consideration. Apart from rate of interest, what points you should take into account while choosing the best financer are processing fee, legal charges, pre-payment charges, valuation fees, and other hidden costs

What Forces Banks to increase EMI on home loans? http://www.easyfinance.in/

A new shift has taken place in the Indian home loan sector. The rising interest rates in the country today have brought this debt trap to the threshold of households. For the past few years, the floating interest rates on home loans have shot up to 11 per cent from 7.5-8 per cent. Covering the interest component would have become a little difficult for the home loan borrowers if banks and other financial institutions had not increased the e quated monthly installment (EMI). http://www.easyfinance.in/
A home loan consumer who cannot afford paying high EMI will theoretically end up paying in perpetuity. This has reasons:
Rate of interest and Principal are two basic components involved in an EMI payment for any loan. Talking about first few years of loan repayment, a majority of time goes in paying up the interest, which seems bothersome to all borrowers. As for the latter half of the payment part, when a borrower has paid much of his interests on loan, the principal repayment increases. http://www.easyfinance.in/
Today, when home loan interest rates are high everywhere, banks have the ability to increase tenure up to a certain point. If the interest rate continues to increase, the EMI becomes deficient to cover the loan amount. Moreover, increasing the time period has not also been a solution to cope up with the rising interest rate on home loan. For that reason, banks are forced to increase the amount of EMI all in all. http://www.easyfinance.in/
As per the current scenario, inflation has emerged as one of the leading factors encouraging banks to increase rate of interest on home loans thereby bringing a drop in number of home loan shoppers. The solution is for municipalities and states to allow more residential development on the land. This will bring more legal colonies, strong infrastructure, and the citizens will find themselves in a better position to buy houses. Asset inflation will be under control and prices and EMIs will become affordable. http://www.easyfinance.in/
However, this is the case when significant reforms will be pushed by the concerned authorities. Meanwhile, the lay man will continue to suffer and pay high EMI and interest rates on home loan by cutting on everything. http://www.easyfinance.in/

All about home loan insurance plan

It's hard to miss the HDFC Standard Life home loan insurance advertisements on television these days, "Mr Kumar rahe na rahe, Kumar Sadan hamesha rahega."http://www.easyfinance.in/
However, unlike the fictitious Mr Kumar, there are many individuals who worry that about the adverse impact of the home loans if something happened to them. This is where a home loan insurance product comes to the rescue.
Home loan insurance plans, also known as mortgage redemption plans are policies that cover your home loan liability. Though there are some minor variants, most plans offer a sum assured that reduces as your outstanding home loan comes down every year. http://www.easyfinance.in/
In such plans, it is not your home but your loan that is covered should something happen to you. For instance, if you have taken a home loan of Rs 40 lakh (Rs 4 million) and covered this through a home loan insurance. If after a year, your outstanding loan comes down to Rs 39 lakh (Rs 3.9 million), then your sum assured also comes down to Rs 39 lakh. In short the sum assured is adjusted against your home loan liability. http://www.easyfinance.in/
This insurance is much like the term plan or pure risk cover plans that are available from various insurance companies. There are exceptions like ICICI Bank (through their tie-ups with ICICI Lombard) home insurance loan where the sum insured remains constant.
And in the event of death of the life assured, the outstanding home loan is cleared off and the rest is paid to the family. Some characteristics of such plans include:
Low premiums, high cover http://www.easyfinance.in/
No maturity amount on survival of the term http://www.easyfinance.in/
Choice of one time premium or regular premiums http://www.easyfinance.in/
However, the cover in term plans available in India are level term plans where the cover remains the same whereas in the case of home loan covers, the amount keeps falling as the home loan liability decreases.
Also it is important to know that while most term plans can be bought till the age of 55, home loan insurance plans can be bought till the age of 60. However, the medical underwriting is stringent and it is only after adequate tests that these policies are issued at the higher age band.
If one opts for a joint application then the premium is double. And if any of the joint applicants die, the loan is paid off by the insurance company. The premiums are calculated based on the medical underwriting, based on your age and medical record. The conditions are:
Age of the life insured: The premium increases with age. Medical tests increase with age and are mandatory above 40 years. Below this age, a simple declaration is good enough though this depends on each insurance company. http://www.easyfinance.in/
Your medical record: If you are in good health, the premiums will be regular but if the insurance company's prognosis about the life assured is at higher risk, then the premiums will be higher. A past family history of early death or critical illness will also increase the premiums.
Loan tenure: The premium will increase with the duration of the loan. A cover of Rs 50 lakh (Rs 5 million) for five years and a cover of Rs 50 lakh for 20 years will attract different premiums, with the latter being more expensive. http://www.easyfinance.in/
Since this is a life insurance plan issued by an insurance company, the premiums paid towards life insurance schemes are eligible for deductions under Section 80C. However, if the premium is clubbed within your equated monthly instalment of the home loan, then you will not get the Section 80C benefit. http://www.easyfinance.in/
Most banks have tie-ups with insurance companies for the issuance of such policies. There is always the question that whether it is better to take a term plan and insure the life that is going to repay the home loan or go for home loan insurance. http://www.easyfinance.in/
A factor that tilts the argument in favour of term plans is the cost, which is much less and remains constant as well. http://www.easyfinance.in/
However, a majority of the people should get thorough needs analysis done and not just cover their home liability but other liabilities as well, dependent goals (financial needs of children) and dependent income goals (monthly needs of family if you were to die) as well. http://www.easyfinance.in/
After this, take a term plan for the requisite cover needed. For those who cannot undergo this exercise, opting for the home loan insurance cover might make sense.
http://www.easyfinance.in/

How to save enough money, age no bar

How to save enough money, age no bar

You might have read W. Somerset Maugham's classic short story, The Ant and the Grasshopper. In the story, Maugham, the master storyteller, turns the wisdom from an Aesop's Fable on its head.
The fable talked of how an ant that labours through the summer preparing for winter ends up a winner instead of the grasshopper who does nothing to prepare for the harsh months ahead. In Maugham's short story, Tom, the carefree but proverbial black sheep of his family, constantly gets into trouble only to be bailed out by his hardworking brother George.
Tom beats his brother's predictions of ending up in a gutter when he marries a rich lady, who, on death, leaves him a fortune, making him a winner and his brother a perpetually sulking loser. When it comes to real life, especially saving for the future, we all know that it is the fable's moral that works. The boring, but diligent, Georges triumph in the end.
How much should you save? http://www.easyfinance.in/
Whether you save regularly or irregularly, a question often comes visiting: "Am I saving enough?" Saving the right amount is crucial for at least two major reasons.
First, it is only when you save money that you can invest in options such as fixed deposits, public provident fund, stocks, mutual funds, real estate and gold to create a future income for meeting small and large requirements, such as the education and marriage of your children and your retirement.








Second, while it is necessary to prepare for the future, current needs also have to be taken care of. Equally important, we would like to have a life and enjoy it with our families.
But the problem is that beyond a point, the more you live it up, lesser are the chances of accumulating enough savings for a minimum decent standard of living in the future.
Clearly, drawing a balance between the present and future holds the key. The good news for you is that the balance is achievable if you follow certain rules that we present here.
We, at http://www.easyfinance.in/, crunched numbers to give you an indicative idea of how three kinds of people -- those who start early, in their 20s (Early Birds), those who begin in their 30s (Late Bloomers), and finally, those who first reach for a piggybank in their 40s (Final Chargers) -- should save at various life stages.

The savings thumb rules http://www.easyfinance.in/
The Early Birds. When it comes to savings, the early birds have an advantage over those who are off the blocks late. They manage to save a decent pile for all their requirements with much lesser fuss. If you start saving from the age of 25, when you are likely to be in your first job, you can begin with saving 10 per cent of your net income (post-tax income) till the age of 30, by which time you are likely to be married.
If your savings horse proceeds even at a canter in this period, marked often by the absence of familial responsibilities, you will need lesser abstinence to save later, when responsibilities increase.
Step up your savings to 20 per cent in your 30s, 30 per cent in your 40s, and finally, to 50 per cent in your 50s. With this, you would have clocked a very healthy 30 per cent since age 25. Not a bad deal, is it?
Our assumptions for this as well as other categories are: income is net of taxes; partial withdrawals are made from savings for house down payment, education and marriage of children and for lifestyle needs; and average salary increments of 15 per cent take place.
Importantly, 30 per cent of the income at the time of retirement is earned in the 60s, after retirement, from jobs or assignments, and work life finally ceases at the age of 70, something already happening in urban India.
We have also assumed that the entire corpus is invested at 7 per cent and the surplus of the resulting income flow over current needs is reinvested in index funds that return 12 per cent a year.
Another assumption is that the corpus is liquidated at the rate of 6 per cent per annum starting from age 70. This gives a cushion if the person lives till the age of 90, or leaves an inheritance for the next generation.
The retirement money will be reinvested at 12 per cent per annum and will not be used fully till the expected life of 90 years. A portion of it will be left as a cushion, or for bequeathing.
Late Bloomers. Life is not rocket science. Circumstances might have prevented you from keeping your promise to yourself to start the savings journey early -- a super specialisation qualification that had to be completed, or a doctorate that took too much time, younger siblings who needed your support, or simply failure in meeting the right person to get married.
Such people need to start their savings vehicle in the second, if not the third gear. Assuming you start at age 35, you can begin this game of catch up by saving 30 per cent of your post-tax income till 40, zoom up to 40 per cent in your 40s and press the gas pedal further by saving 50 per cent in the 50s, till the chequered flag of the retirement finishing line looms up. You end up saving 42 per cent of your net income during the period.
Final Chargers. If you haven't been saving till age 45, you better hear the last and final call for the savings flight. Till age 50, you will have to jet at 40 per cent of your net income, followed by 50 per cent of net income in your 50s.
This will enable you to clock an average savings rate of 47 per cent, or almost half of what you get during this period.









Why you need to step up savings with age. The savings rates are higher for people who start saving later in life because the early risers get the benefit of compounding. This also spares them the agony of denying themselves in the present in order to provide for the future.
At the same time, you need to step up savings as you move on in life. At the beginning of your work life, you do well to even cover your expenses. At this point, a small but consistent amount of savings is crucial. Often, taking some practical steps is all it needs.
By the time you get married, your income has risen, but so have the costs, as you get down to setting up your own establishment, which, among other things, often involves taking loans for big-ticket items such as cars and consumer durables.
This stage typically lasts till your mid-30s or early 40s, after which your income simply pulls away from your expenses. The reason is that expenses don't grow as fast at this stage and, in many cases, the growth slows down. This is also the time when your savings should be the maximum and get invested.
In your 50s, you could have to bear big expenses such as higher education and marriage of children, besides relocation preparations for retirement. But the rise in your income with salary increments and investment income will let you continue saving.
You can also step on the gas when the big-ticket expenses get over and reinvest the residual savings.
Why saving enough is half the job done http://www.easyfinance.in/
You can save a lot and yet be forced to be miserly when you need money. This slip between the cup and the lip can happen if you haven't invested your savings in the appropriate order to give it the right opportunity to grow.
On an average, Indians are saving more, but the savings are getting invested in lower risk-lower return options such as FDs and mandatory retirement funds such as provident fund and life insurance. Some investments of this sort happen by default. Employees' Provident Fund is a case in point, where 12 per cent of your basic pay gets stashed away every month.
Besides, the risk averseness of many Indian investors, lack of awareness of options that bring higher returns, absence of quality financial advice and, sometimes, simply lethargy makes people invest money in their savings account in fixed deposits of the same bank.
This is despite the fact that equities have been found to be providing the best returns among all asset classes -- 18 per cent compounded annual growth rate (CAGR) since 1979. For instance, if Rs 1 lakh (100,,000) was invested in the Sensex, a PPF and a 5-year bank fixed deposit in 1982, today you would get Rs 55.12 lakh (5.512 million), Rs 7.69 lakh (769,000) and Rs 15.07 lakh (1.507 million), respectively.
Thumb rules for equity investing http://www.easyfinance.in/
Thumb rule No. 1: (100 minus your age). If equity is the best bet for brisk growth of our savings, then the logical question is how much should we invest in them either directly or via mutual funds?
The standard rule of thumb to determine your ideal equity exposure is a simple formula that suggests you subtract your age from 100. For example, if you are 35, then 100-35 or 65 per cent of your portfolio should be exposed to equity.
While this can be taken as an indicative formula, it would not, of course, be applicable to everybody at every point in their lives. For example, if you are a 30-year-old and part of a double income family with one young child, you could put in 70 per cent of your investments into the market.
However, if due to a sudden turn of events, you also have to provide for dependent parents and siblings, you should change your allocation and tweak down your equity exposure.
Thumb rule No. 2: Keep debt-equity proportion constant. If the age-based thumb rule does not apply to you, use a tactical allocation thumb rule. Here, you start off by investing, say, 60 per cent in equities and 40 per cent in debt, and continue keeping the ratio constant at all times.
If you find at the end of the year that equities have done well, you should trim your equity exposure in the next year, the assumption being that there is likelihood of a market downturn. However, in times of a long-running bull market, like the one we have been witnessing, this strategy may not be ideal.
Thumb rule No. 3: Factor in the trend. This thumb rule on trend-based asset allocation is the opposite of the previous one. The assumption in this one is that if the stockmarkets are going up, then that is the trend of the cycle, and you should enhance your equity exposure for the next year. Of course, trends could change and you might be trapped with a high equity exposure in a falling market.
How to follow the thumb rules. Since the thumb rules tend to contradict each other, you can adopt the following approach. Use the '100 minus age' formula if there is nothing exceptionally different in your profile and the assumptions fit you.
Keep that as the guiding number, and tweak it upwards or downwards depending on your specific circumstances. If you are in your mid-30s and single, you could invest more than 70 per cent in equities. If you are 60 and do not see yourself retiring for another eight years, you could invest more than 40 per cent.
How many mutual funds are enough? http://www.easyfinance.in/
Once you decide how much money you should place in equity, you need to figure out how much to keep in equity mutual funds and how much in stocks, if at all. Then, you will also have to figure out how many equity funds and stocks to buy.
The truth is that there is no magic number, though the number of funds in your portfolio should give you adequate diversification without making your returns suffer. Let's first examine mutual funds and then stocks.
How many mutual funds? You can target up to about 10 equity mutual funds. Apart from 10 being an easy number to track, academicians like J.L. Evans and S.H. Archer have shown in their research that most of the risk reduction due to diversification takes place in an aggregation of 8-10 securities.
Which categories of mutual funds? Typically, if you're venturing into equities for the first time, you can start with an exchange-traded fund (ETF). ETFs are low-cost cousins of index funds and invest in all the securities that lie in their benchmark index in the same proportion in which the index has them.
ETFs don't have risks associated with fund managers. They aim to give you returns in line with the market, so you don't lose or gain more than what the market does. Says Mumbai-based financial planner Jayant Pai: "It's not possible for active funds to outperform the market on a continuous basis. ETFs ensure that your returns are at least in line with the market." One ETF tracking a large-cap index like Nifty or Sensex should do fine.
Diversified equity funds. One ETF in your equity portfolio can be supplemented by a couple of diversified mutual funds, including equity-linked savings schemes. This will form the core of your portfolio and provide a baseline of expected growth.
As diversified equity funds invest in around 30-50 or in an even higher number of scrips, chances are the same scrip will feature in more than one fund if you have too many funds in your portfolio. Also, ensure that these schemes are different in styles. For instance, Franklin India Bluechip and SBI Bluechip are similar in objectives, so it does not make sense to have both in your portfolio.
Mid-cap funds and thematic funds. You can supplement your core funds with higher growth investment options. One of them is mid-cap funds. Though there are 26 mid-cap funds in the market, almost all of them target the same universe of stocks and there are negligible differences among them.
Then, there are thematic funds that invest according to a theme, such as infrastructure. You can invest in one mid-cap and one thematic fund.
How many stocks are enough? http://www.easyfinance.in/
After gaining equity experience through equity mutual funds, you can invest directly in stocks. Financial planners believe there isn't much merit in holding top-line equities as they would be anyway present in your mutual funds.
"Target some good, small companies that your funds may not have," says Pai. Although Nifty has 50 scrips and Sensex has 30 scrips, you don't need to hold as many, as tracking would be a problem then. Here, too, 10 sounds like a decent number. "Ensure that these 10 scrips are from different sectors," adds Pai.
Winning the savings game is about succeeding in providing for the future without losing out on your present. It is here that thumb rules serve as great guideposts. They show a happy middle path that lies between the ways of the ant and the grasshopper. In the end, you still win.

Six easy steps to a home loan in http://www.easyfinance.in/
Applying for a home loan may seem like a Herculean task, but it need not be so.
We list six easy steps on how to go about applying for a home loan.
Step 1: Submission of loan application
The first step involves filling up the application form of the housing finance company (or bank) along with the required documents. A one-time processing fee will also have to be paid at this stage. For applying now logon to http://www.easyfinance.in/
Income documents needed: http://www.easyfinance.in/
If you are employed http://www.easyfinance.in/
Verification of employment form.
Latest salary slip/salary certificate showing all deductions for at least the past six months.
Form 16 from your employer for the past three years.
If your job is transferable, permanent address needs to be provided.
If you have been in your present employment / business or profession for less than a year, mention details of occupation for previous five years, giving position held, reasons for change and period of the same. http://www.easyfinance.in/
If you are self-employed http://www.easyfinance.in/
Balance sheet and profit and loss account of the business/profession along with copies of individual income tax returns for the past three years as certified by a chartered accountant.
A note giving information on the nature of the business/profession, year of establishment, present bankers, form of organisation, clients, suppliers, et cetera.
Your net worth as an applicant/co-applicant.
Step 2: Submission of property documents http://www.easyfinance.in/
Title deeds of the builder/land owner for a period of at least 13 years.
Development agreement between the builder and land owner if applicable.
Power of Attorney executed in favour of the builder, if applicable.
An encumbrance certificate for the past 13 years. An encumbrance certificate is report issued by registrar of assurances or sub-registrar's office after due verification of the relevant documents certifying that the property in question is free from all encumbrances such as mortgages, leases, easements or restrictions.
A khata certificate. This certificate is the basic document indicating ownership of property as entered in the register of the government authorities.
Up-to-date tax paid receipts of the property.
A sanctioned plan and licence.
Step 3: At the housing finance company branch http://www.easyfinance.in/
An agreement for sale and a construction agreement with the borrower.
A comprehensive legal scrutiny will be done.
Pre-sanction inspection of the property will be carried out.
Credit appraisal and personal interview.
Following this, a sanction letter will be issued.
Acceptance of sanction letter. Administrative fee to be paid at this juncture.
Step 4: Final documentation for the loan http://www.easyfinance.in/
Tripartite agreement between the borrower, builder and the housing finance company to be submitted.
Proof of investment of margin money to be submitted.
Loan papers to be signed by the applicants.
Your guarantors should execute the guarantee agreements.
The original documents executed with the builder to be submitted.
Step 5: Disbursement of the loan http://www.easyfinance.in/
Inspection of the property will be carried out to ensure progress of work done.
Following this, there will be a release of loan amount directly to the builder to coincide with the progress of work done as per the agreement with the builder.
No objection certificate from the builder to mortgage the property in favour of the housing finance company to be obtained.
No objection certificate to be obtained from other housing finance companies if the builder has availed a project loan, to release the mortgage right over the flat to be financed by the company you are securing the loan from.
Step 6: After release of the loan amount http://www.easyfinance.in/
Receipt to be obtained from the builder for the amount released.
The sale deed, duly registered, must be obtained.
In addition to this, an up-to-date tax paid receipt would be sought.
An encumbrance certificate will be deemed necessary.