How to manage your finance with the property

            Loan Against Property

How Loan Easy Simplifies Online Loan Comparison & Calculating Home Loan EMI

We hate online login/registration as much as you do. All known websites gather user data by voluntary submission of personal details. However, some of the existing Loan Comparison Portals require you to mandatorily key-in all your personal contact details before revealing any valuable information. EMI Calculation and Home loan comparison is devoid of any login information from the end user and is completely based on self-solicitation.

There are very few inputs required in reality, to give a comprehensive loan comparison across all banks. Loan Easy is simplifying the process in to a three input method:

First Input – Net Monthly Income

This is your monthly take home salary or the in-hand salary. The field works out your Loan Amount Eligibility and EMI Repaying Capability, and then presents a comprehensive list of Loan information for all banks and the related Rates of Interest.

Second Input – Existing EMI

This input captures one’s ongoing loan repayments for any other loans like Personal, Educational & Auto Loans. Your loan eligibility is affected by existing installments/EMIs. Banks only consider a part of the Salary minus Existing EMIs, as your repayment capacity. If you do not have existing EMIs, Well Done!

Final Input – Select Loan Period

The retirement age is considered as 60 Years. If you subtract your present age from the retirement age, you arrive at the maximum loan tenure available to you. Pensioners are considered till 70 years of age. The longer the tenure, the lesser is the EMI. It is advisable to select longest tenure and to plan for early repayments.

How to Interpret the Given Data

1). Estimated Home Loan EMI

This information Calculates home loan EMI payable to the bank on a monthly basis. You can compare loan offers from all banks; sort them from lowest to highest EMIs, using the arrow buttons. The EMIs vary due to different interest rates of banks. It is advisable to choose an EMI amount that best suits your pocket and your requirements.

2). Interest Rates

The current Property Loan Interest Rate of all banks is displayed with the option of sorting the lowest from the highest. The calculated home loan EMI is worked out on the average of minimum and maximum interest rates across all the banks. What the banks market and actually offer to individuals depends solely on their credit history. Each case is then allotted a personalized interest rate.

3). Processing Fee

Processing fee is charged by banks for sanction or approval and credit history checkup. Processing fee varies from 0.25-1% of loan amount or not exceeding predefined capped value. Using the table above you can compare lowest to highest processing per bank. Negotiating with banks always brings down the processing fee. The banks will not bring the processing fees down if you don’t ask for it.

[Source: https://loaneasy.in/emi-calculation-home-loan/]

More and more Indians with loans against property are failing to pay back on time

A new bad-loan problem is brewing in India.

Borrowers in Asia’s third-largest economy who have taken loans against property are increasingly falling behind repayment schedules. Over the next four quarters, these delinquencies could rise by as much as by three times over those in fiscal 2014, according to a study by India Ratings and Research, a credit-ratings agency.

The delinquency rate—the portion of loans on which interest or principal payments are due for more than 90 days—could inch above 5% over this period, the study added.

The loan against property (LAP) is a high-risk segment for most banks and non-banking finance companies (NBFCs). The size of the loan is usually bigger than a traditional one, and the Property Loan Interest Rate is significantly higher. People who typically borrow do so to expand their business or to start one. Most borrowers use LAPs during distress to pay off another loan or to meet urgent expenses.

The LAP market is worth some Rs2.5 lakh crore, and a large chunk of borrowers comprises micro, small, and medium enterprises (MSMEs) with limited financing opportunities. The delay in payments may well be a result of the cash-flow crunch these enterprises are currently facing. Some 1,000 MSMEs holding debt of less than Rs10 crore, which India Ratings investigated, had single-digit revenue growth in fiscal

Meanwhile, lenders are also being increasingly careless, the study indicated.

To meet targets, many lenders are accepting non-residential properties as collaterals—these assets are valued lower at the time of liquidation, compared to residential properties. Besides, property valuation is often outsourced to a third-party value and, hence, may have discrepancies.

Already most Indian banks are battling bad loans, which are eating into profits. Former Reserve Bank of India governor Raghuram Rajan had introduced a framework to free the banking system from these toxic assets. But there’s still a lot left to be done. This new problem among NBFCs and banks alike will simply add to the burden.

[Source: http://qz.com/802023/more-and-more-indians-with-loans-against-property-are-failing-to-pay-back-on-time/]

Are you eligible for a home loan? Top 4 points to know

ACQUIRING a home loan can be an arduous task as each lender has its own criteria for evaluating a loan application. Here are a few factors that almost all lenders consider.

Disposable income

Your disposable income is one of the most important parameters for vetting your home loan application. It is derived by deducting your statutory deductions, monthly expenses and existing EMIs from your gross income. A lender will expect your loan EMI to be within 40% of your monthly disposable income. However, some lenders consider your gross income for judging your home loan. If your disposable income is comparatively low and you wish to opt for a higher loan amount, you may consider adding working members of your family, like your spouse or children, as co-applicants.

Credit history

Lenders judge your creditworthiness through your credit score. A low credit score may reduce the chance of getting a home loan or can lead to a higher interest rate. Don’t apply for loans with too many lenders within a short period as it can pull down your credit score. CIBIL classifies a credit score of over 770 as a good credit score. However, other credit bureaus may have different scoring patterns and yardsticks for a ‘good credit score’.

Compliance with legal norms

Lenders verify details of the property for which you are taking the loan. They provide loans to house properties that have been cleared by local authorities and have clear and valid title. Some banks offer special loan packages on properties listed in their database of approved projects. Properties in their database are considered reliable as they do the due diligence of the projects themselves.

Occupation stability and continuity

Lenders prefer to give home loans to people with a stable job or income source. They also consider how long you have been working with your present employer. Switching too many jobs during your career may create a negative impression. Government and PSU employees are the most preferred ones followed by doctors, chartered accounts and employees of top private-sector companies.

Age of the applicant

Your age plays a major role during the approval process of the home loan. Although home loans carry maximum tenure of 30 years, banks prefer borrowers to finish repayment by the time they are 60–70 years of age. Thus, people in the 25–45 age groups are preferred as they have more than 20 years of their working life to pay off their home loans.

Generally, public sector banks are the most stringent when it comes to loan approval process. However, their Property Loan Interest Rate is also the lowest. The reverse is true for housing finance companies and other NBFCs. Approach the NBFCs if bigger banks refuse to finance your home purchase. You can transfer your home loan later. While most of the factors that banks consider have to do with you, the legality of your house property is something that is beyond your control.

Thus, always ensure that the property has all the required clearances before making the final decision.

[Source: http://www.financialexpress.com/personal-finance/are-you-eligible-for-a-home-loan-top-4-points-to-know/414658/]

Checklist for first-time Buyers

Buying one’s first home can be a trying experience. Getting confused or feeling lost is only natural, unless you have a ready reckoner close at hand. Today we take you through all the information you need to have when you are buying your first home.

Get online

In this highly digitized world, the search for everything from groceries to gadgets happens online and real estate is no different. Most buyers in the 25-35 age group begin their search online. Has made it easy to filter searches according to your requirements, budget, and location preferences. It is a good idea to go through all of these portals and shortlist properties that you would like to see personally.

Once you have zeroed-in on the properties that you would like to visit, probe further and read up on the developer, its reputation.

Check out things like delivery time, payments, and delays it has been responsible for. Use your networking skills to reach out to recent buyers in the properties that you are interested in and get their opinion as well.

Making the choice

While visiting the shortlisted properties do a thorough check of the neighborhood.

If you have young children or hope to have a family in the near future, check out education facilities in the area. Proximity to hospitals, schools and colleges, market areas, amusement and entertainment options should be considered. The other important factor to consider is the distance from your workplace, railway stations, and airport.

Budget requirements

The first things you need to remember while buying your first property is that you should not under any circumstances overshoot your budget.

Its human nature to be aspirational, but make sure that your loan does not become a burden for the rest of your life. Ideally if you are planning to buy a house, you should have been saving up for its down payment at least three to five years ahead.

For young people who harbor dreams of owning a home, start investing in equities in order to get the best inflation adjusted returns. If you do not have the time or expertise to invest in equities by yourself, it is best to take the mutual fund route and link your investments to a goal like down payment of your first home. This will keep you focused on your goals and help you make disciplined investments towards reaching your aim fruitfully.

While saving or investing for a house, you also need to bear in mind that you need to maintain a good credit history as your credit score will be taken into consideration, when the lender assesses how credit-worthy you are.

Maintain a good track record of servicing your previous or current loans and make it a habit to repay all your credit card outstanding within the billing cycle.

EMI factor

Further, when you are taking a home loan, make sure that its EMI does not exceed 40-45 per cent of your monthly income. Aim to increase your EMI repayment over the tenure of your loan as your capability rises with an annual increase in your salary.

Maintain a contingency fund that will take care of your Mortgage Loan EMI for at least 3-6 months in case your cash flow is interrupted by an emergency.

Paperwork

Once your financing needs are taken care of, it is time to be aware of your rights as a prospective home buyer. The recently passed real estate Bill safeguards your rights as a consumer and ensures efficiency in all property-related transactions with the mandatory registration of all projects with local governing bodies and the establishment of the Real Estate Regulatory Authority (RERA) that is expected to ensure timely completion and hassle-free handover to the end customer.

[Source: http://www.thehindu.com/todays-paper/tp-features/tp-propertyplus/checklist-for-firsttime-buyers/article9170022.ece]

Loan Against Property

Criteria banks use to evaluate home loan applications

Buying a dream house is an aspiration most individuals wish to fulfill in the course of their lives. The process involves a huge commitment of time, energy and, most importantly, funds. To make such a large-scale investment, proper research and preparation needs to be done.

Home loans help in making such an investment and, in the process, making the dream of owning a house come true for many. Therefore, it is important to understand how credit institutions evaluate home loan applications and what is required to ensure easy access to the loan.

Documentation

The first thing a lending institution seeks from you is the document detailing the house you are looking to buy. The institution wants to know whether the property you have chosen has all the requisite clearance from the local government. Once that is established, you will be required to furnish proof of income, at least six months' salary slips, last three years' income tax returns documents and other details like date of birth, present address, PAN, bank’s statements, among others. Make a checklist of the requisite documents and keep their copies ready along with the originals.

Income to Debt Ratio

It is important for you to declare if you are paying EMIs (equated monthly installments) on any other loan at the time of application. This is one of the deciding factors for your loan application. To understand how a loan application gets reviewed, here are two scenarios.

Credit Report and Score

To sum up, while a high credit score, strong credit history and high income will help in loan approval, they, by no means, guarantee one. Property Loan Interest Rate Having manageable debt levels also plays an important role. Lenders are always keen to provide loans and credit cards to disciplined consumers who have a high credit score and a healthy credit history.

The credit score works as a first impression for the lender, the higher the score, the better is your chance of the loan being reviewed and approved. However,

One must remember that the decision to lend is solely dependent on the lender and the credit information agency does not decide if the loan should be sanctioned or not.

It is crucial for every individual to improve their credit score and maintain it to ensure he or she gets credit when needed. One should pay all one's credit card dues and EMIs on time to avoid having a poor credit score and report. Not paying the dues on time can eventually lead to a bad score and your application for a loan stands a high chance of rejection.

[Source: http://economictimes.indiatimes.com/wealth/borrow/criteria-banks-use-to-evaluate-home-loan-applications/articleshow/53539534.cms]

Home loans: Additional Rs 50,000 tax benefit for first-time home buyers starts

Home loans: First time home buyers from Friday will get additional tax benefit for purchase of residential properties of value up to Rs 50 lakh. The Finance Bill 2016, which is likely to be approved by Parliament during the second half of the Budget session, provides for up to Rs 50,000 tax benefit on loan up to Rs 35 lakh taken for residential house.

The government's proposals coming into force from Friday is aimed at promoting its ‘housing for all’ scheme and bolster the real estate sector which is facing a huge slowdown for last three-four years. "In furtherance of the goal of the Government of providing 'housing for all', it is proposed to incentivize first-home buyers availing home loans, by providing additional deduction in respect of interest on loan taken for residential house property from any financial institution up to Rs 50,000,

This incentive is proposed to be extended to a house property of a value less than Rs 50 lakh in respect of which a loan of an amount not exceeding Rs 35 lakh has been sanctioned during the period from the April 1, 2016 to March 31, 2017. "It is also proposed to extend the benefit of deduction till the repayment of Loan against Property continues

The proposed deduction is over and above the limit of Rs 2 lakh provided for a self-occupied property under section 24 of the Act. The tax incentive will encourage first-time home buyers and increase the demand significantly.

After the Finance Bill is passed by Parliament, the amendments in this regard in the Income Tax Act will take effect from April 1, 2017 and will, accordingly, apply in relation to the assessment year 2017-18 and subsequent assessment years.

With a view to incentivize affordable housing sector as a part of larger objective of 'Housing for All', the Bill also propose to amend the Act so as to provide for 100 per cent deduction of the profits of an assessed developing and building affordable housing projects if the project is approved before the March 31, 2019.

[Source: http://www.financialexpress.com/photos/budget-gallery/231529/home-loans-additional-rs-50000-tax-benefit-for-first-time-home-buyers-starts-april-1/6/S]

3 Reasons Why a Loan against Property is Beneficial

The Reserve Bank of India (RBI) always keeps a tight check on the loan against property segment of the lending business. And rightly so. It is the reckless borrowing and lending in this segment that happened in the US that brought the world to the brink of economic disaster. However, in India, the case is different. A 30%-35% margin requirement ensures that lenders are safe and prevents asset bubbles from brewing. It is with such policies that a loan against property becomes an asset for the responsible borrower. Here are the reasons why this is so.

Benefits of Loan against Property

It is cheaper: A secured loan is always cheaper than an unsecured one. The obvious reason is that the lender has recourse to tangible property if you default. This is why loan against property can save you a lot of money in interest costs.

A 2%-3% drop in the interest rates can save you close to Rs5,000/- to Rs7,000/- per month (assuming a principal amount of Rs50 lakhs). You could use these lower interest rates to get rid of some of the expensive overdraft facilities or factoring for your business or for personal reasons like a marriage in the family.

It is versatile: A loan against property is available for almost any purpose that you may desire funds for. The lender will not ask too many questions about the usage of funds. This also reduces the amount of paperwork required by significantly. You may have to declare your intention about using the funds, but it is neither mandatory nor legally binding. In most cases, it is just for the lender's knowledge, a mere formality.

It is easily available: When a lender has a tangible security backing their loans, they have very little to worry about. No wonder a loan against property is available at express speed. It usually takes less than a week from your first point of contact to having the funds in your loan account. Professional lenders may do it over a couple of nights.

However, here is a word of caution for prospective borrowers. A Property Loan is a good way to borrow at lower interests if you are in control of your finances, i.e., you are sure that you will be able to make the payments even in the worst conditions. Failure to make these payments can have very unpleasant consequences. Just like all financial instruments, it is a tool, use it wisely!]

[Source: http://www.sooperarticles.com/finance-articles/loans-articles/3-reasons-why-loan-against-property-beneficial-578802.html?]