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.

4 Things That will help you Pay your Home Loan even During Financial Crisis

What happens if a borrower is unable to pay his/her home loan EMI? This is a question that arises in the mind of every home loan seeker, but they’re too afraid to know the answer. Getting a home loan is a big step in everyone’s life. But what if, due an unforeseeable circumstance you find yourself in the middle of a financial crisis and are unable to pay your home loan EMIs? Will you immediately be termed as a loan defaulter? The answer is no. The process of becoming a defaulter is a long one. If a borrower is unable to pay his or her home loan instalment once, due to an unforeseeable expense or a financial emergency, the bank will not immediately term him or her as a defaulter. If you miss one EMI the most a bank can do is send you a reminder mail regarding the same. The bank may also call the borrower to ask about when the payment will be made.

The trouble begins if a Home Loan borrower fails to pay his EMI three months in a row. The bank will send him/her, a number of reminder mails and finally a legal notice. This is when the borrower is termed as a loan defaulter. The term can severely affect one’s CIBIL score, making it difficult for them to borrow in the future. If the borrower fails to respond to all of these notices and calls and still fails to clear his/her dues, the bank will send an officer to their residence to affix a notice on their door or even print a notice in the newspaper. In three months after this, the bank will declare the property as a non-performing asset. In two months after that, the bank will take possession of the property and if the borrower fails to clear his dues in six months the bank will auction it off.

No one wants to be in this situation, but the future is a tricky thing and the only thing you can do to arm yourself for whatever it throws at you is to be prepared. Here’s how you should handle your Home Loan EMIs while going through a financial crisis.

1.  Get in touch with bank and inform them about your problems, they may be able to give you some leeway or at least wave off the late charges on your EMI.

2.   Re-negotiate your loan by increasing the tenure, so you can pay smaller EMIs.

3.  Get home loan insurance in advance, so you don’t need to worry about your loan repayment.  

4.  Spend wisely, keep track of all your expenses, avoid unnecessary expenses and save up to pay your EMIs.

Advantages for woman home loan applicants

If you live in India right now or are an Indian citizen, then let us tell you that there couldn’t be a better time for you to invest in property in this country. The real estate market is rife right now and with all the cash inflow that the banks saw during the PM’s demonetisation drive, they have decided to slash interest rates significantly on home loans. But if you’re a woman seeking a home loan in this country then you’ve got an added advantage. There are a lot of schemes and subsidies exclusively available to women seeking home loans. Here are the benefits that women receive on applying for a housing loan.

1.      Lower Interest Rates: Home Loan Interest rates are a huge deciding factor when it comes to choosing a home loan provider. People usually choose their loan provider on the basis of who’s offering them the lowest interest rates. Since a housing loan is a huge amount, even a slight variation in interest rates can make a huge difference. Woman applicants usually get lower interest rates or interest subsidies on their home loans. But these are applicable only when the woman is the sole or primary applicant for the home loan.

2.      Lower Stamp Duty Rates: The stamp duty rates for new property are decide by the state government and differ from state to state. In many states the stamp duty for women is lower than that for men. Women usually receive a concession of one or two percent on stamp duty while purchasing property. This makes a huge difference to loan amount borrowed. For example, it could mean a straight price cut of Rs. 2 lacs for a house that costs Rs. 1 crore.

3.      Higher Approval Chances: Women who are primary applicants for a housing loan are more likely to get their loan sanctioned than men. This does not mean that a bank or NBFC will overlook their other criteria for women. They will still study their eligibility and credit score, but it is a common perception that women are more likely to repay their loan on time and are more reliable and hence their applications are more likely to get approved than those of men.

4.      Special Schemes: Like banks offer special account facilities for women, they also offer special schemes when a woman is the sole or primary applicant for the home loan. In addition to these some developers and builders also provide certain time bound financial schemes for women to encourage them to invest in property. 

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