4 points to consider while taking a home loan

The amount of home loans taken against property right now is valued at Rs.2.5 trillion, and that amount is on its way to becoming Rs.5 trillion by 2019, with a 22% projected growth in the next 4 years. If you’re planning on taking one of these, here’s four things you should know:

Interest rates and tenures. Home loans and loans against property are secured loans. This means you have to mortgage your property with the lender in order to get one, thus considerably reducing the risk level of the bank or NBFC that’s giving it to you. A reduced risk means lower interest rates, of between 9% - 15%, depending on a lot of factors including your current employer, income, CIBIL score and market value of the property pledged. You can have tenures as low as 5 years and up to even 30 years depending on your earning potential, loan amount required, stability and patience.

Loan amount. Banks and NBFCs typically only give you between 50% - 65% of the market value of your property as a loan. Lenders consider your repaying capacity as the difference between your income and current EMIs, and decide how much you can pay back on a monthly basis after interest and in the tenure you choose. Loans can be sanctioned from Rs.2,00,000 to a few crores depending on your ability to repay and the tenure you want.

                                           Image Source: https://goo.gl/Jl4hKV

Charges. Lenders take a sizeable chunk under what’s called a “one-time processing charge” which can range from 0.50% to 5% (in addition to a 14% Service Tax) and can be entirely avoided depending on your negotiating and offer-leveraging skills. Processing charges are sometimes deducted from your sanctioned loan amount. Another common charge is the “pre-payment” charge, which is levied if you wish to clear off your loan before the tenure ends. There are also charges in the form of penalties which will be charged if you don’t make payments on time or default on your loan, which vary between lenders but are generally in the range of around 3% - 8%. These penalties hurt you in multiple ways, as they will also negatively impact your CIBIL score. Stamp duties and other charges are levied as per state laws.

  Documents required. When applying for a home loan or a loan against property, you’ll need the following documents: Photo proof of identity. Proof of residence. Proof of income through salary slips (for the last 6 months) or bank statements. Form 16. Income tax returns. Profit and loss account statement (for self-employed persons). Taking a home loan is as dangerous as taking any other kind of loan. If you miss payments and become a defaulter, the bank will take your property and levy crippling charges and penalties on you. Choose wisely, and ensure you have a regular income and sufficient funds to repay your loan EMIs as and when they become due. Shop around, better deals are around the corner. Try the eligibility calculator and home loan comparison tool on BankBazaar.com to find the best deal for you.

Deepika Padukone Signs On as Axis Bank’s Brand Ambassador

Out of 18 private sector banks in India, Axis Bank ranks third (with ICICI and HDFC a few steps ahead). With a huge trade track of around 12,000 ATMs and 2,400 branches in the country, it witnessed a phenomenal growth in a span of 20 years. This is certainly inspiring. Popular media houses like Economic Times and The Brand Equity have awarded Axis with the ‘Most Trusted Brands’ and ‘Most trusted private sector bank’ respectively. Never one to shy away from experimenting, Axis bank has roped in Deepika Padukone (no introduction necessary!), to whip up a special cocktail, which would bring in that pep factor.

Why Deepika?

This question can be answered with only another question. Why not? A popular face, an envied career graph with only blockbusters to her credit and the exuding coolness – perfectly in sync with the bank’s energy and their brand slogan of ‘Badhti Ka Naam Zindagi’ or ‘Progress On...’. The actress who has amazed everyone with her jaw-dropping performances is indeed the perfect choice to endorse Axis bank home loans . She said that role of a bank in any individual’s progress cannot be ignored and it is a great honour to be associated with a bank as reputed as Axis.

Campaign Design

Axis bank’s home loan endorsement is designed by Lowe Lintas + Partners, which is one of country’s biggest, incomparable and most sought-after marketing company. The philosophy of progress, according to them, should be multidimensional and universal. They maintain that progress is futile if it is not holistic. And this is why all the related ads highlight Axis’ legacy as a consumer centric bank. Yes, definition of progress differs from person to person. In fact success and all that excess all come down to happiness one derives out of it. Axis ad campaigns capture this spirit beautifully.

Overall mood of the Ads are kept pleasant and relatable. Goes to show that a good ad needn’t ram the brand name down the viewer’s throat, yet it leaves a lasting impression.   

Gauri Shinde, the woman behind (ahead!)

As a reputed ad and movie maker of the time, Gauri Shinde is known to have explored the idea of progress from unconventional angles in all her previous works (English Vinglish, Tanishq Ad). A dab of emotion that comes with success is carefully etched in. And this is what makes her Axis bank ads too exemplary.

Axis bank home loans

They say ‘Home is where the heart is’. Thanks to the mounting property prices, owning a house (albeit small) is becoming a distant dream for many. Even if one manages to build a house, the life-sapping interest rates prevents him/her from sleeping peacefully in their ‘own’ house until all the mortgages are paid off, which can take years.

Axis Bank offers their customers reasonable yet flexible house loans with competitive interest rates and nominal processing fee. ‘Accommodating’ every budget, requirement and taste, one can easily find the most suitable home loan, be it at a fixed or floating rate.

Comparison of HDFC and ICICI home loans

A home of one’s own’ remains one of the few aspirations of every Indian customer and very often than not, a home loan offers them an easy way to finance this inspirational purchase.

When it comes to home loans, there are many banks and housing finance companies that offer loans on easy interest rates and repayment tenures.

HDFC Home Loans:

HDFC, being an early entrant to the area of home finance is by far the largest housing finance company, having helped finance 4.9 million homes over the last three and half decades. They have 366 offices servicing about 2400 cities and towns of India.

HDFC offers a range of housing loan ranging from purchase/construction of new/resale homes, plot loans, home extension to premises for working professionals. They also offer loans to non-resident Indians.

Being a company dedicated exclusively to housing finance, HDFC scores by charging a reasonable rate of interest and a flat processing fee. They also offer a faster processing time for their home loans.

HDFC offers the facility of pre-approved loans which lets the customer knows his eligibility prior to selecting a property to purchase. 

ICICI Home Loans:

ICICI Bank is India's largest private sector bank with total assets of Rs. 5,946.42 billion at March 31, 2014 and profit after tax Rs 98.10 billion for the year ended March 31, 2014. ICICI Bank currently has a pan-India network of 3,845 Branches and 12,012 ATMs.

Entering the home loan segment in early-2000s, the bank has made tremendous strides in advancing home loans. This year, the bank’s home loan grew by 25%over last year.

ICICI bank offers preferential rates of 10.10% to its women borrowers whereas for men it is 10.15%. The bank also doesn’t charge any legal verification fees from its customer if the project is pre-approved.

ICICI Bank also provides insurance cover on its home loans.

In addition to home loans, both the lenders also provide loan against property which allows customers to unlock the value of their immovable assets like houses, plots and buildings.

Both the lenders provide the option of fixed and floating interest rates to their customers and the option to switch from one to another against payment of some fees.

Both lenders also offer the facility to customers to pre-pay the home loans.

Tax Savings on Home Loans:

Indian home loan customers can save tax under various provisions of the Income Tax Act by availing home loans. If both spouses are working and are co-applicants, they may gain from such tax deductions.

A customer can save up to Rs 1 lakh on the principal and Rs 150,000 on the interest of the home loan by way of taxes.

Both HDFC and ICICI facilitate such tax savings by readily issuing home loan statements to their customers and building tax calculators on home loan components in their marketing materials/websites.

Conclusion:

Though both banks offer reasonable interest rates, easy documentation and faster processing time for home loans, ICICI bank may be slightly advantageous for women customers with its preferential interest rate offer of 10.10%right now.

HDFC starts the slide for a Home Loan Run

HDFC (Housing Development Finance Corp) kicks of the low interest rate home loan buzz with the launch of just above 10 percent home loans. Though private banks always have a profit angle to operate with, HDFC yet again show its mettle by launching such public friendly schemes. Considering that just recently the rates were reduced by state run banks, HDFC clearly shows that it is ready for a twin battle against the state run banks as always and its private counterparts as well. No wonder HDFC still runs in the top ranks of the private bank while others have always had a choppy ride.

The slide is further enhanced for the female borrowers and have an even better discount rate compared to the existing offer. Meanwhile the SBI had started the discount trend in the home loan segment with 10.1 percent interest for the women loan applicants for loans till 75 lacs and 10.15 percent for the others. 

HDFC on the other hand will hand out the home loans at a rate of 10.25% for home loans up to Rs 75 lakh but the home loan has to be applied before January 31, 2015 and the participant must clear all the formalities and get the first disbursement amount by February 28, 2014. 

On the ruling from RBI in September, the situation was different after lending rates where spiked by 25 basis points and further topped up by another 25 basis points in October. This led to SBI increasing its home loans from 9.8% to 10%. HDFC also followed suit with addition of 10 basis points for both the new and old home loan customers.

However, in spite of these moves, the spending remains a major concern and hopefully with big players bringing in the offers should spice up the home loan market. Meanwhile the Punjab National Bank too has gone all out by removing the processing charges and offering a lower interest rate as well.

With respect to the low interest in the home loans for women, one must note that the lower interest rate applies if the applicant is only a woman. If the entire loan amount is borne by the woman applicant or if the woman is the first of the applicants in case of a joint home loan, or if the property is under the ownership of the woman. Only then they will get the extended discount in the home loan interest rate.

One might not feel a huge difference in terms of the .5 or .10 percent but if the loan amount is close to 75 lakhs or above the 75 lakh margin, then it surely reflects in the overall savings of the loan amount in the long run.

 
Punjab National Bank is also offering a 'Festival season Bonanza' home loan scheme for the individual applicants or only retail customers. The new home loan is expected to be priced at just 10.25% and this extends for all the home loans up to 2 crore rupees. The icing on the cake is further adorned with no processing fees and zero documentation charges not only for home loans but also for vehicle loans.

Simple process for Home Loans Approval with Bad Credit

Buying a home is measured as an excellent investment in today’s date and as overviewed by real estate professionals, the building market is now much friendlier towards buyers. But bad credit home loans are not that easy to procure. Lenders tend to make funds tighter while shelling out money as loan to bad credit holders.

However, buyers possessing less than perfect credit scores can also get home purchase loans by following the steps listed below.

Check your credit profile & fix errors, if any

First and foremost, you must check your credit record and get a clear idea of where you stand. All banks and every lender would check your credit score before sanctioning you a loan. You can do this beforehand by checking your CIBIL Transunion Score from the CIBIL website by paying a nominal charge of Rupees 470.

By doing this you can fix errors, if any, and take active steps in improving the score through responsible financial behavior prior to applying for a loan. There are several credit repair agencies too which can help you in revamping your credit record so that your credit score is pushed higher and you qualify easily for a low-interest loan.

Although it’s a fact that that almost 80% of loans that are approved go to individuals with higher than 750 credit scores, it’s also true that a score of 620-680 - though not perfect – is still approvable, if the underwriting queries are satisfied.

Choose your home wisely

It is wise to have a realistic attitude towards the home you plan to buy. If you are having a bad credit score its more than likely that you would procure a home loan, if at all, at a higher rate of interest. It’s important therefore that you trim your expectations and settle for a home that’s not too heavy on your budget. Otherwise, repaying your loan back in future would be financially strenuous, and in effect a massacre for your credit report yet again.

In simpler terms, buy what you can afford and choose not to default.

Shop around

To shop around for a home loan is easy these days, more so, because there are finance portals operating in the cyber area that are dedicated towards finding for patrons customized loans in accordance to their suitability. This is a better idea because you don’t need to apply separately to different lenders for getting your bad credit house loan and get denied repeatedly if things don’t work out. That is also supposed to affect your credit report adversely.

Simple filling of a form with required details in a reliable finance portal instead can bring available loan offers your way faster, and from here you can apply right away to lenders who provide bad credit house loans for your credit score.

Before you apply

• Improve your credit score.
• Have explanations and supporting documents ready to clarify instances of default in your credit record.
• Exhibit a steady income to your lender.
• Eliminate all debts.
• Exhibit responsible financial behavior.

Taking a loan jointly with a family member who holds a good credit record is another way of securing a housing loan with bad credit. However, financial agreement of that sort would mandate that person to be named as a co-owner of your home.

Merits and demerits of 30 year tenure on Home loans In India

Currently most of the banks have risen the home loan tenure up to 30 years owing to the increase in the interest rates from last 18 months depicting an increase of 250 – 300 basis points. This increase have led the borrowers into huge financial trouble in order to match up their EMI’s with their paying capacity. Having a look on this increasing trouble, RBI has given a permission to increase the tenure of home loan up till 30 years. And the result is that the most of the banks have increased the loan repayment tenure by 10 years. For some people it is a matter of an advantage but for some other, it is looking more like a disadvantage. So, let’s find out its merits and demerits. Have a look below:

Merits of 30 year tenure on Home Loans:

Decrease in the EMI’s: As a result of increase in the loan tenure up till 30 years, the loan EMI gets reduced by 16% (as per the research). This is because the interest period gets extended and the amount of interest gets distributed for longer period and hence, the EMI’s gets reduced. This has given a benefit for those whose EMI payment capacity is less and to those who feels little bit overburdened with huge EMI’s.

Affordable housing and a sigh of relief: Many of us dream of our own house but the huge prices and high rate of interests on home loans always discourage us to take a crucial step. But, now with the increase in the loan tenure by 10 years, have actually made the housing affordable with less EMI’s and distributed interest amount. Many of the borrowers gets a sigh of relief owing to the reduction in EMI’s and increase in loan tenure.

Increase in Loan Eligibility in terms of loan amount: As the tenure gets increased, people gets more loan eligibility in terms of loan amount. As there is an increase in tenure, it is assumed to have an increase in income of the borrower in future and thus his/her eligibility in terms of loan amount gets increased.

Increase in Loan Eligibility in terms of age of the borrower: Earlier the borrower gets a home loan up to the period of his retirement or 60 years. But, now with an increase in the loan tenure, the borrower can get a loan for the maximum age of 70 years (maximum in case of repayment of loan).

More beneficial to young people getting less salary: People who are getting less salary and who are young can be benefitted the most with an increase in the loan tenure. As people with less salary can afford the low EMI’s and can opt for longer term as they would be capable enough at that point of time to repay the loan, a 30 year loan tenure for younger people would not be more.

In pre closure cases, this option works out fruitful: In case you want to prepay the loan (in any case after certain period), this option works out fruitful as from your pocket less EMI’s would go, rendering no overburden and a financial crunch to you and your family.

Demerits of 30 year tenure on Home Loans:

High amount of interest: Although you are paying low EMI’s but still the total amount of interest that you are paying over a period of 30 years is very high, which is indigestible once you calculate the amount of total interest.

Burden for 30 years: There would be a huge burden on your shoulders till you prepay the loan amount. For 30 years, carrying a stress of debt can render you certain types of diseases like blood pressure, depression and heart problems.

Not relevant for aged people: If you are an old man nearing an age of 40’s and 50’s, then this option will not work out for you. As 30 years will be very high to determine your stable and regular income.

In case of floating interest rates, there is a huge risk of increasing interest rates: Over a period of 30 years, there is a huge risk of increase in interest rates when you are opting for floating interest rates. Such rise with an inflation can dig your pocket so deep, keeping it all empty.

Therefore, these are the merits and demerits of increase in loan tenure up to 30 years. In nutshell, it is a beneficial option for those whose EMI paying capacity is less and those who are young.