How can you get a subsidy on home loans

Did you know that you could get a home and pay less on your home loan? You can get a home loan subsidy and get a discount on your home loan interest rate. Through the Pradhan Mantri Awas Yojana you can get your home loan at subsidized rates and finally fulfil your dream of owning a place of your own.

The aim of this home loan subsidy is to make easier and more affordable for all Indians to buy home of their own. The criteria for these subsidies on home loans is simple. To avail of this subsidy you or your spouse must not own a property of brick and mortar home of your own. If you’re an adult and your parents own their own home, then you can still avail of this home loan subsidy.

By now you’re definitely interested to know more about these subsidies on home loans, so here are the most crucial things that you should know.

1.       What is the eligibility criteria for this subsidy: As per this home loan subsidy, people who have a yearly income in the bracket of 6 to 18 lakhs can avail of this subsidy on their home loan? Both, online applicants as well as those who go through the traditional route can avail of this subsidy. Everyone who got a home loan on or after 1^st January 2017 and also those whose application was in review are eligible for this scheme.

2.       How much can you get a loan for with this subsidy: This home loan subsidy is bifurcated into three income slabs. If your income is Rs.6 lakhs or below, you can get of a loan of Rs.6 lacs at an interest of 6.5% for 20 years. If your income is between Rs.6 lacs to Rs.12 lakhs, you can get a loan for Rs.9 lakhs at 4% for 20 years. If your income is between Rs.12 lakhs and Rs.18 lakhs you can get a loan for Rs.12 lakhs at 3% for 20 years.

3.       What do you need to get a loan: One requires an AADHAAR card, pan card, a bank statements to get house loans? Apart from that to avail of the subsidies on home loans, you need to prove that you do not have an existing flat or home. Salaried people find it easier to get home loans because it is easier for them to prove they have steady income but business people can avail of this scheme.

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Home Loan EMIs – Five Ways To Maintain And Repay In The Best Way

Home loan EMIs are a big part of your life once you buy your home with a housing loan. A borrower can spend as many as 20 to 30 years of his life repaying home loan EMIs and thus it is very important to do it the right way.

A home loan EMI calculator is essential for anyone who is seeking a home loan. You should be well informed about your EMIs so that you can prepare yourself for this expense every month. Missing even a single home loan EMI can have bad repercussions on your credit score.

Here are some tips on how to manage your EMI payments like a pro.

1. Schedule your EMIs wisely: Always schedule your EMI payment close to when you get your salary credited to your account. That way you can ensure that you always have sufficient funds when the time pay comes. Just like failure to pay your EMIs can reduce your CIBIL score, paying EMIs on time can boost your creditworthiness.
2. Use extra money to repay your loan: If you happen to come into any money, for example if your inherit money or get an insurance pay out or even receive bonuses or a large increment, use that money to repay your loan instead of putting it in savings. This way you can begin your repayment of home loan and even reduce tenure.
3. Choose higher home loan EMIs: Choose higher home loan EMIs for a short period rather than lower home loan EMIs for long period. You may think that a higher EMI is an added expense, but when you pay lower EMIs for a longer period, you end up paying more interest. With higher EMIs you can pay off your loan faster and pay less in interest as well.
4. Income and debt ratio: Always maintain your income and debt ratio. This means that if your income increases, increase your home loan EMIs as well. This will not only help you repay your home loan faster, but will also help in saving more in terms of home loan interest.
5. Pay an extra EMI every year: This may be a struggle at first, but can help you in the long run. If your home loan EMI is 36,000 INR then try to save 3,000 every month and then use that saving to pay an extra EMI at the end of the year.

Why you should buy a property that already has a Mortgage Loan

A mortgaged property is one that has already been used as collateral by the owner, for a mortgage loan that is still unpaid. Buying a mortgage property is often a good deal for both the buyer and the seller. The buyer gets a great deal on a property that has already been verified and evaluated, by a bank or NBFC, when the seller applied for his mortgage loan. And the seller gets a chance to clearing his loan against property or mortgage loan with the money he receives from the sale.

Finding a mortgage property is not a problem, since mortgage loan interest rates are so low, people often opt for this type of loan. But buying a mortgage property or a property against which a loan against property has been taken, can be a difficult task, especially when the buyer needs to get a loan to purchase it. The buyer obviously cannot opt for loan against property for this property, he also cannot get a loan with bank until the seller’s mortgage loan is cleared.

This isn’t as confusing as it seems though, here’s a step by step guide to help you purchase mortgage property of your own.

1.   Get all documents from the seller up front: Ask for all the deeds and stamp duty papers or copies of them, from the seller, to ensure the property is indeed in their name. If the property has be sold and resold a number of times before, you can ask for all the deeds as well. The bank will release the deeds of the current property only when the loan against property is repaid, meanwhile you can make do with photocopies of the same.

2.     Close the ongoing loan: This is where the deal gets a little a tricky. The easiest way to do this is to use your own funds to pay the seller so he can close his ongoing mortgage loan. This possible only if the outstanding loan about is small.

The second way to do this is to opt for a loan with the same bank where the seller has an ongoing loan against property. You ask the bank to close the sellers’ loan against your loan, so in a way you’re taking over his mortgage loan. In both these cases transfer of the property is simple.

The third way to do this is to opt for a home loan with a different bank. You can then close the loan with the seller’s bank by using this money. This process is a little confusing and complicated. You need to get a NOC from the seller’s bank as this loan too will be for the same property.

If you go about it in a systematic way buying a mortgage property can be profitable to both parties.

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Your guide to choosing the right home loan for you

With the property rates in India touching the skies, the only way for one to own a home is by getting house loans. It’s a practice as old as time to buy property as investment and also to take loans to purchase new property. Years ago, our ancestors would take loans from the wealthy men in the village to expand their businesses and provide for their families. Today, that practice has been polished and now we can take home loans from banks, in a sophisticated, organised and official way.

Most people today, prefer to get their home loan online. This is because, like almost everything else, getting a home loan online is easier, more convenient and you can also explore more option in a one place than is possible for you to do in person. You can also find the best housing loan interest rates online and find the loan that suits your needs the best.

The processes of getting a home loan, housing loan tax benefits and choosing the right home loan can be a very daunting task, especially for someone who is a novice at finance matters, hence here’s a guide that will help you choose the right home loan for you.

1.   Eligibility: To get home loans you need to first check your eligibility. Salaried people usually find it easier to get home loans, but that does not mean that self employed people never get them either. If you can provide enough proof of income to satisfy your loan provider that you will repay the loan then your loan will get sanctioned. Another thing is the amount of loan you’re eligible for, this is based on your income, assets and your repayment capability.

2.  Housing loan interest rates: This is perhaps the most important thing that you should know and understand before you apply for a home loan. Housing loan interest rates are of two types, fixed and floating. A fixed interest rate is where you pay interest at the same rate throughout the term of your house loan. A flexible interest rate is when your interest is subject to market changes and can fluctuate due any change in the market.

3.  CIBIL Score: Your CIBIL or credit score is a very important factor to take into consideration when applying for a home loan. When you borrow or even apply for a loan you bank takes in to consideration the your credit score which includes your credit status, your spending habits and your income.

How to save money by opting for home loan balance transfer

Home loan balance transfer is the best way to save on interests. By transferring a home loan to a provider who offers you a lower rate than your existing provider you can save on your EMIs. There has been a dip in the home loan interest rates post demonetization. This happened because a huge amount of cash was deposited in bank accounts across the country. With this surplus of cash banks could afford to lower their interest rates by a significant amount, thus making it cheaper for people to avail of home loans.

Post the demonetization, Home Loan Interest Rates have gone down by as much as 50 basis points. This means that those who apply for home loans now will get much better interest rates than those who have existing home loan. If you’re one of the people who already have a home loan do not fret, you too can avail of the benefits of this dip in rates.

How? By opting for a home loan balance transfer! A home loan balance transfer can help you save a substantial amount of money if you choose a provider who is offering a much lower rate than your current provider. It also only makes sense for you to opt for a transfer if you have a long tenure left to repay your loan.

If you’re considering a home loan balance transfer in the near future, here are some essential things you should know about it.

1.  Savings is the main reason for transferring home loans. But make sure that you opt for a Home Loan Balance Transfer only if the total savings in interest payout is substantially higher than the cost incurred while transferring the loan. Usually, the new lender will charge various fees, such as conversion fee, processing fees and administrative charges during the loan transfer.

2.  Transferring your home loan to a new lender is similar to availing a fresh loan, where the new lender will have its own set of terms and conditions. You can use it to re-set your loan EMI and tenure and top up as well. Opt for a home loan transfer if your existing lender is not allowing you to reset the terms and conditions of your loan.

3.  Usually banks and NBFCs provide top up loans to existing borrowers. These are just like personal loans but their interest rates are lower than a separate personal loan. One may require a top up in case of funds required for an emergency or in case of a home loan for renovations. Transfer your loan only if your current provider is not allowing you a top or if the new provider is offering you a better rate.

NRI Home Loans – Five important things to know

NRI home loans have been made super accessible and instant so that more and more NRIs can now own homes in their country. Previously, this process was long and tedious and required a lot of visits to the bank by the person asking for a loan. That’s one of the reasons why NRIs chose not to go through the trouble of applying. But all that has changed now, and NRI home loans are easier to get than ever before.

Home loans for NRIs do come with a bunch of stringent guidelines though and if you adhere to them you can easily get home loans approved. The first thing to keep in mind when applying is, the person applying for an NRI home loan should have worked in a foreign country for over a year. In the case of a self-employed person, this requirement is extended to three years. There is an income criteria as well. The minimum income for the applicant to be eligible for an NRI Home Loan is different for different banks but on an average, one must have an income of 30,000 USD or 35,000 DHM (for people residing in the UAE).

So, if you too want to invest in your home country, here are some more important things you should know about loans for NRIs.

1.  An NRI is defined by the RBI as a person who holds a valid passport but is immigrating to another country for an undecided period of time, for employment purposes or to carry out a business. Only a person who is employed or has a business outside India is eligible for an NRI home loan.

2.  The amount that is sanctioned to you as a loan will greatly depend on your educational qualifications and overall income. Normally a loan is sanctioned for 80% to 85% but the amount sanctioned will be decided on the basis of your monthly income.

3.  The NRI Home Loan Interest Rates in India for NRI’s is normally higher than the interest rate that is offered to residents. This is due to the increase in risk factors. Normally, the difference ranges from 0.25 to 0.5%. 

4.  The documents required for an NRI home loan are largely similar to the ones required for any other loan. An NRI will additionally require his/her passport, Visa, work permit, employment proof etc.

5.  All payments towards this loan need to be done in the Indian rupee and not the currency of the NRIs current residence.

This Gudi Padwa Know about the different types of Home Loans and choose your best fit

Gudi Padwa just went by, and like every year banks and finance institutes all over the country are offering attractive deals on home loans. This is the time of year when everyone is in a hurry to get their finances in order. With loan rates being favourable, now perhaps the best time to get your housing finance. The financial is coming to an end soon, which means most of us will be receiving handsome bonuses as well. This makes the coming few days the best times for us to invest in new things, be it property, automobiles or any other sort of investment.

For someone who is new to the world of finance or, has recently started earning, understanding home loans and home loan interest rates can be quite daunting. But this knowledge can help you make good financial decisions, in the future if not immediately.

The most basic thing you need to know about house loans is that they have two main types of interest rates. These are fixed and floating interest rates. Banks and non-banking financial companies offer both fixed and floating interest rates. Since home loan interest rates are the most important aspect of the loan, getting it right is the key to repay without any financial stress or default over time.

Here are a few key things that you should know about home loan interest rates.

1.  Fixed rate of interest on a loan means that the equated monthly installments or EMIs are constant over the tenure of the loan. On the other hand, for floating interest rates, the EMIs fluctuate as per the market dynamics as interest rate increases or decreases.

2.  Fixed interest rates are always set higher than floating interest rates, by 1 to 2.5% at the time of the sanction of the loan. This can be both and advantage and a disadvantage. Since these rates remain constant you don’t have to worry if there is a hike in the housing loan interest rates due to the passing of a bill or implementation of a new rule, but at the same time if the rates see a dip, there is no benefit to you.

3.  Floating interest rates are usually lower than fixed interest rates although parameters like inflation and current account deficit are used in calculation of base rate by RBI which can mean an uncertainty and different EMI for each repayment or installment for the loan. This can be difficult to keep track of as each installment may be different.

These are the most basic things you should know about housing finance, there is much more to learn, but as they say, if you’re clear on your basics you should be able to make wise decisions about your finance.

What you should know about home loan interest rates before you get a loan

Gudi Padwa just went by, and like every year banks and finance institutes all over the country are offering attractive deals on home loans. This is the time of year when everyone is in a hurry to get their finances in order. With loan rates being favourable, now perhaps the best time to get your housing finance. The financial is coming to an end soon, which means most of us will be receiving handsome bonuses as well. This makes the coming few days the best times for us to invest in new things, be it property, automobiles or any other sort of investment.

For someone who is new to the world of finance or, has recently started earning, understanding home loans and home loan interest rates can be quite daunting. But this knowledge can help you make good financial decisions, in the future if not immediately.

The most basic thing you need to know about house loans is that they have two main types of interest rates. These are fixed and floating interest rates. Banks and non-banking financial companies offer both fixed and floating interest rates. Since home loan interest rates are the most important aspect of the loan, getting it right is the key to repay without any financial stress or default over time.

Here are a few key things that you should know about home loan interest rates.

1.      Fixed rate of interest on a loan means that the equated monthly instalments or EMIs are constant over the tenure of the loan. On the other hand, for floating interest rates, the EMIs fluctuate as per the market dynamics as interest rate increases or decreases.

2.      Fixed interest rates are always set higher than floating interest rates, by 1 to 2.5% at the time of the sanction of the loan. This can be both and advantage and a disadvantage. Since these rates remain constant you don’t have to worry if there is a hike in the housing loan interest rates due to the passing of a bill or implementation of a new rule, but at the same time if the rates see a dip, there is no benefit to you.

3.      Floating interest rates are usually lower than fixed interest rates although parameters like inflation and current account deficit are used in calculation of base rate by RBI which can mean an uncertainty and different EMI for each repayment or instalment for the loan. This can be difficult to keep track of as each instalment may be different.

These are the most basic things you should know about housing finance, there is much more to learn, but as they say, if you’re clear on your basics you should be able to make wise decisions about your finance.

Your guide to understanding income tax benefit on home loan

Just like property in India is a good investment, home loan India too are a great investment. With property rates soaring, it’s not really possible for the common man to purchase a property of his own without opting for home finance. But with so many taxes that already get deducted from your income can you really afford to pay your monthly EMIs?

Well, the Income Tax Act has made provisions for home loan borrowers, so that they can finally fulfill their dream of having a home of their own. There are three sections in the Act that give you tax benefits on home loan. You should know these because they are handy tax saving calculators. Here’s what they are.

1.  Section 80C: This section states that you can claim tax benefits of up to Rs 1.5 lakhs on repayment of the principal amount of your loan.

2.  Section 24: This section states that you can claim tax benefits of up to Rs 2 lakhs on repayment of interest on housing loan but this is only applicable for a self-occupied property. If you are renting out your property then there is no maximum limit on the tax benefit amount. So, you can claim the entire interest amount as a tax benefit. You can do this even if the amount exceeds Rs 2 lakhs.

3.  Section 80EE: This section states that if you are a first-time buyer then you can claim an extra Rs 50,000 as tax benefits on the interest repayment.

There are many tax benefits on home loan but, there are certain conditions that you need to fulfill to be able to claim them. The first and foremost condition is that you can only start claiming income tax benefit on home, once the construction of your new property is complete. These tax benefits do not apply to under construction properties, even if the borrower has already started paying EMIs. But there is an exception to this rule. You can get a benefit if the construction ends within five years of you taking the loan. Earlier this was only three years. This period has been revised because of the rising number of stalled constructions in recent times.

If you opt for a joint loan, to enjoy income tax benefit on home loan, the second party has to be a co-owner as well as a co-borrower. They can then claim tax benefits on their home loan interest rate separately. They can only do this when their individual share of the property is clearly defined. The ratio of tax benefit is the same as the ratio of the property share.

How the Union Budget has brought relief to Housing Loan Borrowers

The Union Budget for 2018 has been announced and it has brought some relief for those with home loans. This budget has brought with it a number of tax benefits on home loan. This has come as quite a relief for tax payers and has made it a little bit easier for people to become home owners. With financial year winding down, you’re probably wondering how to save income tax. You should also know whether, after paying your Income Tax for the year 2017-2018, it will still be a feasible option to buy that new flat you’ve had your eye the whole year.

Investing in property in India has always been a great way to ensure that you get heavy returns. But with the property rates always soaring, home loans are the only way one can afford property here. Now, the Income Tax Act already has some provisions and tax exemption on Home loans. Like the Section 80C where you can claim upto Rs. 1,00,000 as a deduction for repayment of home loan. But has this year’s Union Budget brought any more relief to home loan borrowers? Let’s find out.

As per this year Union Budget, those who have availed homeloans before April 2016, and are stuck in the older base rate regime, may get cheaper. The RBI has decided to "harmonise the methodology of determining benchmark rates by linking the Base Rate to the MCLR or Marginal Cost of Funds based Lending Rates with effect from April 1, 2018". 

The RBI, in a bid to reduce the burden of home loan interest rates on the borrowers, had introduced a Marginal Cost of Funds-based Lending Rate (MCLR) system with effect from April 1, 2016. This was done due to the limitations of the base rate regime. With the introduction of the MCLR system, it was expected that the existing base rate-linked credit exposures would move to the new system. This effort was taken after huge amounts of funds were deposited into banks during demonetization drive in India. 

Banks and NBFCs have cut their home loan interest rates by as much as 50 basis points. This makes a huge different in the amount of EMIs and the number of EMIs borrowers have to pay. This benefit will mainly affect those who have acquired a home loan after April 2016, but others can avail of its benefits too, by opting for a home loan balance transfer.

If you were waiting for the Union Budget to find out if it offers you any new housing loan tax benefits then you will not be disappointed.

Expand your home with a home expansion loan

Spaces can get cramped easily. We live in a materialistic work where we buy new things almost every week, with every trip to the mall. But new stuff requires new space and that is something we cannot afford. Taking housing loans for a new home is not always possible, as they are a long term commitment. There are a lot of reasons why you may need more space. Some of them are, family expansion, inviting parents or in-laws to live you, or just a lack of space. A two bedroom home may have been okay when your kids where toddlers, but when they become teenagers, they will need their own separate rooms and more space. At this time, instead of buying new property, you can simply expand your existing home.

Home finance has created a lot of tools to help you arrange for money for anything related to your home. You can get a home renovations loan in order to expand or redo your space. This loan can still be taken if you have any existing home loans. You can simply avail of this loan through a top-up. When you take this loan as a top up the interest for this loan gets added to your housing loan interest and this way you only have to pay a single EMI.

If you’re in need of a home expansion and are in the process of seeking a loan, then here’s a guide to help you apply.

1.  What can I do with the loan: A home renovation loan can be used for building additional structures on your existing property, like a new floor, a new garden or a garage and redoing the existing property?

2.  How to apply: If your home is under a co-ownership then you should have your loan co-signed by the other owner.

3.  What about the tenure: The tenure for a home renovation loan is very flexible. You can get loan from anywhere between 12 to 360 months.

4.  What documents do I need: Both you and your co-signee would have to give your documentation, including your KYC, salary slips, bank documents, your house agreement, and the expansion layout that you want to undertake, a No Objection Certificate (NOC) by the municipal/building/ housing board. Make sure all your plans are authorised by your local authority.

5.  What about EMIs: If you apply for this loan as a top-up for your home loans, then the EMI will be added to your existing interest rate and you will have to pay only one EMI.

Why you should get a Top-up Loan for you Home Renovations

Buying a new home is a big moment for anyone. But after living in a new home for a while, a new home can seem a little boring. You can always do it up with a little renovations, but to make any changes you need to spend money and that can be difficult when you’re already paying off home loans. To make it easy for you to keep your home as good as new, banks have introduced home renovation loans. 

A home renovation loan can be taken as a top-up to your house loans or can be taken by itself. When you take a home renovation loan as an add-on, the interest is added to your home loan interest rates. This way you don’t need to pay separate EMIs for two loans. This loan is great home finance tool, it can help you keep your home looking as good as new.

If you wish to avail a top-up loan for your home renovations here’s everything you have to know about it.

1.  Eligibility: Top-up loans can be availed only by someone who has an existing house loan. There are other preconditions too that you need to fulfill before you become eligible for such a loan. Here are some of the criteria that are taken into consideration.

•  Minimum period: You need to have started repayment of your housing loan and paid interest for a certain period before you are eligible for your home loan. This period may differ from bank to bank.

•  LTV limit: Loan-to-value (LTV) is the amount you’re allowed to borrow on your existing housing loan. The LTV ratio is fixed at 80-85% of the present value of your property. 

•  Tenure: The tenure of top-up loan runs concurrently with that of your home loan. So if you have 10 years remaining for your home loan repayment, your top-up loan tenure cannot exceed the remaining term. 

2.  Benefits: The first and foremost benefit of a top-up loan for home renovations is that you don’t need to manage multiple loans when you get a top-up. The top-up amount is simply added to your existing loan amount and the top-up loan interest rates are also paid through a single EMI. There are no restrictions on the usage of this amount. You can use it for whatever you want, however you want.

3.  Other uses: If after a few years of paying interest on you house loan you have a big expense coming that is related to your business or family, you can opt for a top-up home loan, instead of going for a personal loan.