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Showing posts with the label Loan

The Basics of a Home Loan

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  What is a home loan? A Home Loan is a loan, or financing, that you take for the purpose of buying or renovating your home. The facility of Home Loan makes it easier, and more affordable, to make or buy your dream home.  Most banks and many different kinds of financial institutions offer home loans to the public at fairly low interest rates. Whether it is for the purpose of buying a house or apartment, or constructing one, a home loan can be the simplest route towards achieving your dream. How much can I get? The actual amount of the loan you are eligible for, or can get, varies, and depends upon many factors such as your capacity to repay it, your age, your family income, the number of dependents you are responsible for, and so on. The amount of the loan will also depend upon the tenure of the loan and the current interest rate.  Tenure is the total amount of time that you are given for the repayment of the loan. Most institutions and banks will extend home loans for the purpose of b

CIBIL: Credit Score & Report - How is CIBIL Score calculated?

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CIBIL Score in India is a three digit number. CIBIL score range lies between 300 to 900, which signifies the creditworthiness of an individual based on his credit profile and past repayment track record. All four credit scoring agencies in India; CIBIL, Experian, Equifax and Highmark use their proprietary calculations and algorithms to estimate your best credit score. Banks check CIBIL score before taking a decision to sanction you a loan. Hence, a Good CIBIL Score is one of the most important factors that can help you get the best loan at cheapest rates. CIBIL Score Range What It May Mean For Your Credit Health? 750 - 900 The CIBIL score range of 750-900 shows your exemplary credit history which will help you to get the loan with best market rates.   The score between this range shows your impeccable consistency in repayments made in the past.   With subject to credit report and eligibility, you will easily obtain home loan, car loan and other unsecured loans such as personal loans an

Differences Between a Home Loan and a Land Loan

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Not many know that a bank offers home loans for either apartments or for purchase of land and building a house in it. But many of us have the habit of investing in land since it appreciates significantly with time. It is the Indian way to invest money more in Land and Gold than in other investment venues! So, how does one get a loan for buying just a plot of land as an investment? Land loans are the answer. In general most of the terms and condition of the loan and the repayment modes are very much similar to that of a home loan but there does exist, a few minuscule differences which could be left out in the fine print. Home loans can opt only when the purchase is for a house that has been constructed, or is under construction or is guaranteed to be constructed in the near future. The third condition is the tricky one where banks offer a home loan that requires the person who gets the loan to start construction of a house in the land bought with the loan amount within a particular peri

What to Know About Loans

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If someone wants to take a loan and asks for your advice, you probably are more than willing to help, but do you really know what a loan is, what you should know before plunging into the ocean of loans. Now we all know loans are available for the purchase of houses, consumer electronics, refurbishment, education, marriage, health and many other reasons that are not possible in your current budget. The Big Question This brings us to perhaps the biggest question that needs an answer. That question is- Is it worth taking a loan for vacations if it is paid back? The answer is NO. A loan is meant to make funds easy in the pocket but not for entertainment purposes. A loan should only be used for productive reasons and a vacation is not on the list. A loan should only be used for buying a commodity like house, car or to pay a big utility bill. Point to Consider One should consider taking a loan only if it is really required. After all, there is no sense in paying interest for a long period, u

How Do Banks Decide on Your Loan Eligibility?

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When you apply for a loan whether it is a personal, housing or mortgage loan, the first and foremost aspect banks look at, is your ability to repay. Although, there are other specific criteria to be fulfilled by every applicant, the following are the basic points or rather calculations based on which your loan eligibility is determined. It is not all that difficult to understand how these calculations are arrived at, in fact if you are able to work it out on your own then you can find out what will be the maximum loan you can avail, irrespective of which bank you apply to. 1) IIR- Installment to Income Ratio Banks understand that your loan value should not exceed your repaying capacity. This ratio is 33.33% to 40% of your monthly income. Using the IIR, how much you can borrow as well as repay will be decided by the bank. For instance if you earn Rs.50,000 per month, then your IIR is Rs.16,500. That is, the maximum emi payable by you is not more than 16,500 per month. This determines yo

Loan Against Property or LAP

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A loan against property (LAP) is precisely what its name implies - a loan that is paid out against a property mortgage. The loan is offered in relation to a specific percentage of the market value of the property, which is approximately around 40-60%.  In India, LAP is categorized under the 'Secured Loan' group where the borrower shows his property as security, which can be a self-occupied ownership property or a rented out property (both residential and commercial). It's not necessary for the property to be a constructional structure. It can be a piece of land as well. LAP usually comes with an interest rate of 12-15.75%. In India, maximum tenure offered for a LAP is 15 years. Starting the process If you want to take a loan against property, the first thing you need to do is to shop around for a lender. Use the internet to learn about the eligibility criteria of a LAP and this is likely to vary from one bank to the other. In general, most banks would ask for the following

Transferring Your Home Loan: Things to Consider

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When a bank offers you alluring interest rates that seem better than the bank you've currently availed your home loan from, you may be tempted to transfer the loan. But remember the point that every bank has its own marketing strategy and things may not be what they seem from the exterior.  It is imperative that you know the details of a bank's offer in-depth. There are other important things to take into account than just the interest rates of your loan. The following are the things to consider when you are transferring your home loan. Compare the Total Outflow While a new bank can draw you by its side by offering reduced EMIs and elongating the time period of your loan repayment, you should be aware that this can increase the total amount you are to pay in the end due to the constant addition of interest rates to your outstanding loan amount.  If your current EMI is higher than what the new bank offers, you must compare the total outflow of the two banks before you shift. Unl

Income Tax Benefits on Home Loan India

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If you have an on-going home loan or have taken a home loan recently, then there are certain tax benefits you can avail on the equated monthly instalments (EMIs) paid. There are additional tax benefits that were announced in previous budgets that are still applicable for FY 2020-21. Do keep in mind that for the current financial year, an individual can continue to opt for the old tax regime and claim tax exemptions such as HRA and various deductions under sections 80C, 80D etc. The individual also has the option to opt for the new tax regime which offers lower tax rate without any tax exemptions and deductions. If you have two houses and your second house is empty or occupied by your parents, then interest paid on home loan taken for the second house will also be covered under section 24. Do keep in mind that the total deduction available on the interest paid on home loan for both the houses should not exceed Rs 2 lakh in a financial year. Soni says, "In case of Let out property,