The various benefits of using an EMI Calculator.

The costs of properties have increased tremendously in recent years. Thus, there are a lot of people who find it difficult to buy a place of their own. But thanks to the home loans provided by banks and NBFCs (non-banking financial companies) people can make use of it and purchase their ‘dream house’. Other than that, people can also make use of these loans for home extension or to refurbish any of their existing property. One of the major benefits of the home loans provided by banks and NBFCs (non-banking financial companies) is that they charge lower interest rates when compared with traditional financiers and loan sharks. There are also a number of special discounts given on interest rates for women borrowers. They are offered home loans at 0.05% lower interest rates when compared with the interest rates of male borrowers. The financial institutions also offer an EMI Calculator to ease the repayment process.

There are a lot of benefits of making use of home loans. A few of them are here as follows:

1) The tenure time given for repayment of home loans is generally longer when compared with other types of loans. You can opt for a maximum repayment of 30 years, which is given by most of the banks and NBFCs (non-banking financial companies).

2) The repayment of these loans is done in the flexible form of EMIs (equated monthly installments); thus, you can easily plan and pay all of your future repayments. The banks and NBFCs (non-banking financial companies) have also started providing EMI Calculator on their online website. Thus, you can simply make use of it by having an online connection and a suitable electronic device (laptop, computer, tablet, etc.).

3) The financial institutions have also started offering transfer of balance option. Thus, people can make use of this feature and switch from one financial institution to another. This helps you to re-negotiate on the applicable interest rates.

But the best tool provided by financial institutions is indisputably an EMI Calculator. This calculator has got a number of benefits to making use of them.

A few of them are here as follows:

Free-of-cost: This calculator is free for your use. Meaning, you don’t have to pay any money to financial institutions for making use of them. There are a number of banks and NBFCs (non-banking financial companies) which have started providing this tool on their online website.

Easy to make use of: This calculator is extremely easy to make use of. Each and every person can use this calculator. You don’t have to be a technical wizard to make use of this tool. You only need a few details such as your principal amount, repayment tenure you wish to opt for, and you can get the desired results.

Multiple outcomes: The biggest benefit of making use of an EMI Calculator is that it gives out multiple results. Thus, you can get multiple variables by entering different principal amounts and tenure.

Thus, these are the following ways in which a calculator is useful. Hope this article will help you understand the various benefits of making use of an equated monthly installment calculator.

Repay your home loan quickly in few steps.

Buying a home in this skyrocketing property prices is easy and exhaustive, now you must be thinking how an easy thing would be exhaustive, right? Let’s explain you this in details, in this article. Purchasing a home is easy in this market of expensive property prices owing to the various home loans available for the potential buyers. It is exhaustive because of the long repayment tenure. Though the long home loan tenures help you get affordable EMIs but it can raise the interest cost you pay on the loan. So home buying can be easy and hassle free if you plan the venture beforehand and squirrel away some amount of money from the beginning of your career.

If you have a good credit score, impressive bank statement and good financial profile; then you can expect your home loan to get disbursed within a week or two once the required documents are scrutinized & verified. With the aforesaid factors you can expect to get maximum of 70-90% of the property value, depending on the price slab. They can also help you to get affordable interest rates, which are nearer to the lowest rate the concerned lender is offering.

Once your home loan is approved, the exhaustive phase of the venture starts.It is the debt repayment phase, because it absorbs almost 20-30 years, depending on the type of loan you have taken. Experts advise borrowers to repay the loan amount sooner to avoid unnecessary increase in the interest cost. There are certain steps, which can help the borrower to repay the housing loan sooner, like:

• Avoid taking any other loans while you are in the home loan debt phase. Analyze the outlets of hemorrhage money, cut short the unnecessary expenses and try to save maximum amount, so that you can repay your loan before the tenure.
• Replace the unnecessary expenses with necessity. It’s is better to save now and repay the debt, than spend now and end up paying the extra interest cost for the long tenure.
• As soon as there is salary hike or increase in the monthly incomes, don’t forget to increase the EMI cost, this can speed up your debt repayment by reducing the number of installments.
• Save the extra EMI cost, in case the interest rates come down in case of the adjustable rate of interest.
• Invest in life insurance policies, stocks & bonds early, so that it can give you high maturity amount after certain period that can help you to repay the loan amount.

The above mentioned few points can help you repay the housing loan quickly. Before taking the loan make sure that your lender doesn’t penalize your repayment with certain percentage on the balance money after the fixed lock in period.

Though getting an affordable loan for purchasing a home is not a difficult tax anymore, but debt is a debt. It is better to pay off the loan sooner, without hampering your existing financial commitments towards your family’s health and children’s education. After considering your affordability and other essentials like job profile and future, go for the prepayment of the loan for your home.

Things to consider before taking the loan

If anything goes parallel with home loan then it is marriage. Both involve huge finances, emotions and a long time commitment. Don’t let this push your thought train to frenzy.  Just like the marriage with an ideal partner can turn out to be the best decision, similarly investing in a property can. From the various lending institutes sprawled in the nook and corner of the city, borrowers choose different institute depending on the interest rates offered, loan tenure and the terms and conditions. It is not necessary that the same loan is applicable for all borrowers, depending on the eligibility of the borrower and the type of loan he or she selects, the lender they choose it varies.

Before applying for home loan, consider the following:

Are you in a situation for long time commitment?

Taking a loan is not the only thing that matters, repaying the monthly EMIs are most important. It calls for a long time, at least a decade. Evaluate your current source of income and its efficiency in fulfilling the EMI commitment. Plan your budget accordingly and start saving immediately.

Will the loan commitment affect other responsibilities?

Investing in a property is important but it’s a part of the dream. There are other responsibilities which is more important like education of your child, health of your family, etc. these are large and important expenses. Take the decision of going for a long tenure after considering your duties towards your family.

Is the loan offer luring?

There are various loan offers available in the market which appears lucrative to the potential customers. The loan market is a competitive market and various institutes attract customers with various offers to stand out in the market. The prudent borrowers will dive deeper into the surface and would not be misguided by the enticing figures, which appears too good to be true. Grab the offer only after you are sure about the associated charges and caveats.

Did you researched and taken experts advice?

Research about the loan can reveal facts, which will help you take a confident decision by negotiating better. In this competitive and ever changing time, it is better to view things from refreshed prospective. More updated your research, more it will be helpful for you. In this digital market era every information, expert advice and reviews from existing customers is available in your fingertips. This will help you frame your process.

The organizations offer you the home loan for buying properties under construction, a ready flat from the listed builder or a plot of land. Loan is even given for extension of present construction or renovating a property. With the basic eligibility criteria, your credit score is a deciding factor for loan sanction, amount of loan and the rate of interest. Try to maintain a good score. When going with the home loan, try to clear all pending debts so the loan burden does not pull you down. Investing in buying property calls for a good deal amount of financial attention, so it’s better to clear this debt first, before going for some other loan. EMI payment will take away a major portion of your salary and saving so it’s better to clear this debt first for hassle-free loan tenure.

Make your home loan journey smoother with EMI Calculators.

They say tomorrow belongs to those who plan for it today. It’s a quote that stands true in all walks of life, including your journey as a home loaner. As you may know, taking out a home loan isn’t a decision to be taken blindly; it involves a lot planning and future foresight. And so after you’ve fixed on property you want, the amount you need and probably the financial institute you wish to borrow from, the last and most vital component of planning your repayment remains. Physically jotting down and calculating your repayments is a tedious task to say the least, but there is an easier, more convenient way to do this, the home loan EMI calculator. This article will look at what a home loan EMI calculator is, how it works and what are the benefits of using a home loan EMI Calculator.

So what is a home loan EMI Calculator?
In the not so distant past, one would calculate his or her EMI using a pen and paper or using formulas on Excel. This allowed for a margin of human error and provided an EMI that was, albeit close to the actual EMI, but not 100% accurate to an EMI the bank required you to pay. So as to make this calculation easier for user, most banks and non-banking financial institutes have introduced home loan EMI Calculators in their website. This tool generates an accurate EMI based on your preference in regard to the loan amount you wish to secure, the tenure as to which you wish to take the loan for and the interest you can afford to pay.

How does the home loan EMI calculator work?
Unlike the mentally racking procedure of physically calculating your EMI or using tedious formulas on Excel, leading financial institutes allow you the comfort of arriving at your EMI by just feeding in few details pertaining to your loan on their website. Most home loan EMI Calculator take into consideration the loan amount you wish to secure, the tenure for which you wish to take the loan and the interest you are most comfortable paying to arrive at the EMI you will end up paying. Some institutes might also take into account the processing fee you are comfortable paying. Put in these details into theEMI calculator and an algorithm does the back work to form an EMI amount based on the variables you’ve fed into the calculator. Aside from the installments, leading financial institutes have designed their home loan EMI calculators to provide additional details such as the breakup of the payable amount and the quarter by quarter graph of loan payment estimates.

What are the advantages of using a home loan EMI calculator?
The obvious advantage with an EMI calculator is that you know the accurate amount you’re expected to pay. Braced with this knowledge you can make plans to set aside funds to repay your loan without stressing your wallet. Another salient advantage is the higher approval rate, because of the sound calculations, you can apply for the loan within your financial reach, and seeing this, financial institutes are more comfortable issuing you a loan. The home loan EMI Calculator not only helps calculate EMIs and plan your finances, it also provides you with an element of complete peace of mind.

Now that you’re armed with the precise knowledge procured from the home loan EMI Calculator, all that’s left for you to do is to approach the financial institute of your choice, apply for a loan and enjoy the comfort of your dream house which is now closer to reality than ever.

8 Home Loan Charges You Should Know.

When you plan to buy a house by availing a home loan, the biggest cost component you are worried about is the interest amount. But apart from interest charges, you will have to pay for a plethora of other charges as well. Here’s a list of fees banks levy on home loan borrowers: 

1. Application fees

This fee is charged by the bank for processing your application. It will be charged upfront irrespective of the fact that whether your loan application is accepted or rejected. It is non-refundable and can go up to 1% of the loan amount. Make sure that you do your research before applying for home loan as this fee is non-refundable.

2. Processing fees

This fee is charged by banks to verify your documents as the process involves people effort and legal charges. The processing fee varies from bank to bank and usually ranges between 0.5% and 1%. 

3. Legal fees

Generally, external lawyers are appointed by financial institutions to verify the documents submitted by you. The fee charged by the lawyer is passed on to you by the financial institution. However, for those properties which have already been approved by the bank, it may not charge the legal fee.

4. Conversion fees

It is the fee that you need to pay to reduce the interest rate. Suppose, you availed home loan at 11% in 2012 and now the bank has reduced the interest rate to 10.25%. So, in order for you to benefit from the drop in interest rates, you will have to pay a conversion fees that will range between 0.5% and 1.0% of the loan amount.

5. Memorandum of deposit of title deed

When you avail a home loan you have to sign an undertaking stating you have deposited the documents of the property with the bank at your will to secure financing from the bank. Government levies stamp duty on this document to register the same and depending on the state you are buying the property in, the duty can vary between 0.1% and 0.2% of the home loan amount.

6. Document retrieval charges

When you avail a loan you have to deposit all your documents for home loan such as the sales deed and the sale agreement with the bank. The bank keeps these documents in a central safe repository which is generally managed by a third party. The central repository may not necessarily be located in the same place as the bank branch. Therefore, when you close or pre-close the loan, the bank charges you document retrieval fee. These charges are generally part of processing fees.  

7. Prepayment penalties

Although no prepayment penalties are charged in case of floating-rate home loans but the penalty is levied on fixed-rate home loan. If you decide to make a prepayment towards your fixed-rate home loan, you will be charged a prepayment penalty by the lender which is usually about 2% of the prepaid amount.

8. Switching charges

If you want to change from floating-rate home loan to fixed rate or vice versa, you will have to pay switching charges. These charges vary from bank to bank and typically range between 1% and 2% of the outstanding loan amount. 

It is imperative that you know these charges. In fact you should ask about any fee or charge that is levied by the lender on you. By doing this you can avoid being over-charged.

{Source: www.paisabazaar.com/home-loan/articles/3683-8-home-loan-charges-you-should-know/}

Why Should You Calculate the EMI before Taking a Home Loan?

Deciding the amount of the loan depends on the affordability of the emi.  Every financial institution will first check how Much Emi An applicant can afford paying and on the basis of the amount of the loan is decided and the home loan is sanctioned.  Thus it is recommendable that the applicant should also check the emi he will have to pay to the bank every month using the home loan Emi calculator.  This will not only help him in checking the Emi That Is payable but also he can check the amount he is eligible for.

Aspects that affect the Emi

Mentioned below are the three main factors that help in deciding what can be the Emi on the loan. 

Income:

Income plays an important role depending on the income the lending institutions render loan to an individual. The emi amount should not be less than 40% of the monthly income of the individual.  This is to make sure that the loan applicant has enough money to meet his expenses. Even though an individual is optimistic about the rise in the income he should also take into consideration factors like the inflation rate, job security and the emergency requirements. The emi should not exceed 40 % of your income. An individual should have at least 15% in his hand to save and use for other purposes.

Changes in the rate of interest:

When you calculate the emi using the home loan emi calculator the interest rate plays an important role.  Though low home loan interest rate might attract you to avail for a huge home loan amount it is not advisable to do so as an individual needs to have some money to be used for emergency purposes.  Also the choice between the fixed and the floating interest rate will help you in saving and you can save on the Emi. If you opt for floating interest rate the percentage of the interest will depend on the market fluctuations and thus the interest paid is generally low.  But for fixed interest rate the interest rate remains fixed throughout the repayment tenure of the loan.  Generally if a person wants to cut down not the interest rate he can opt for floating interest rate.

Expenses related:

 While an individual decides to jot down the expenses it is very important that he needs to calculate the emi using the home loan EMI calculator along with this he can also calculate the monthly expenses that occur for him during a particular month. This will help in planning the month without creating any financial burden on him. Thus, he can make sure that he has enough necessities while he dreams to own a house.

Why is necessary calculate the EMI?

Calculating the emi with the help of the home loan EMI calculator helps in determining the loan amount which is to be borrowed. It is essential to calculate the tenure of the loan to check the affordability of the loan.  It is also necessary to compare the pick the best home loan offered lending institutions which has additional benefits like the lower home loan interest rates

The home loan emi calculator is different from the other types of loans. Thus when an individual is planning to apply for a home loan he needs to decide and make use of these online home loan emi calculator to avoid the further confusion. Earlier the emi was calculated manually which has manual errors. But now a person can simply visit the website and calculate the emi he needs to pay for the next 18 years.

HOME LOAN: No, it’s just not a house loan!!

Home loan is the loan which is given to people who wish to purchase or construct a home. The property for which loan for home has been taken is mortgage to the bank as a security deposit till the loan is paid. Since it’s not a desirable ride as it’s quite thorny and for initial years it’s hard to feel at home. If a ” picture perfect home” is your next call then be geared up to face the harsh realities of the financial world out there :

Preliminary rejection trouble

Many of the loans for home applications do not even sail through the preliminary verification process because of the incompatibility between the borrower’s qualifications and lender’s requirements. Non-compliance of some of the standards facilitates rejection of your application; there are a number of criteria to be taken care of like income criteria, age criteria, lack of proper documents.

Cost of applying: Is it Refundable or Not?

Yes along with every application for home loan you are asked to shell out around 0.25% to 1% of the loan amount as demanded by the respective bank which is generally “not refundable “.

To obtain the certainty about the refund you need to get that in writing from the authorities concerned, which can be a tiresome job again.

Desirable loan may still be a myth.

Even though you get through all the verification process and your application fees is even intact

The bank hardly works to provide you a desirable sanction.

The amount that can be financed typically depends on the status of the borrower (resident/non-resident), type of loan for home (renovation, property purchase, property extension) and the financial institute. It is generally offered for up to 80-85% of the cost of the property.

The amount of loan sanctioned is subject to the repayment capacity of the borrower. Several factors are clubbed together ranging from your monthly income, financial history, credit card usage history, bounced checks (if any) to nature of your employment to define your credibility. In case your eligibility falls short than the required then you are left with three options, one of forgetting about the loan for home or wearing your convincing shoes and ask people to be your co- borrower or just bid off your NSC’s , provident fund, LIC policies ,funding home renovation etc as collateral.

The common fix about the interest rate regime?

The two famous loan regimes of the financial world are” simply puzzling”. Every borrower has an option of either going for a fixed rate or floating interest rate. Moreover after deciding on the regime the underlying meaning of the contract may create undesired havoc.

Moreover the fixed rate regime is not a safe bet, it pitches you against a fixed rate that can be changed in every 2 years. So ironically you can call it ” the volatile -fixed rate” because all the catches lie in the fine prints of these contracts.

Bridging the gap

The banking experts evaluate the value of the property according to their predetermined standards. The amount evaluated by them may lag behind the actual market price that pushes you to eventually shell the difference from your own pocket.

Dread of the down payment.

Already the processing fee and evaluation difference might have created a whole in your pocket but that’s not the end, because an initial down payment formality still awaits you. For a loan for home of 10 lakh this could mean anything between 1-2 lakh, ready availability of this amount is a prerequisite for a smooth sanction.

{Source: https://www.loanadda.com/article/home-loan/home-loan-more-than-house-loan-a-dream}

5 steps to follow when your home loan is rejected.

Are you one amongst the many in India whose home loan has been rejected? Well, there’s no reason to be dejected as it is not going to help matters. When your home loan application reads as “no”, you need to read it as “try again”. There is no reason to feel dejected as you are just an approval away from purchasing your dream home. Below are 5 crucial steps that can help you get that dream home after your home loan lender has said no.

Dig into the details

Usually, the letter sent by the home loan lender conveying the rejection is a generic one. Do not let the cloud of disappointment blur your thinking. Instead, you must try to learn the reason for your home loan being rejected. If the letter does not specify the reason, call the concerned officials and try to understand the precise reason for the lender rejecting your loan application. This is very important as it helps you prepare better when reapplying for the loan.

Reduce the loan amount

While assessing your loan eligibility, a strong possibility of the lender rejecting your loan application is because your monthly income is not sufficient to support the required home loan amount. In such cases, it is recommended to rework the loan amount so that the debt servicing ratio can be corrected, which feel make the lender feel more confident in your loan repayment ability.

Pay off existing debts

If you already have multiple loans, the chances of your current payment obligations getting in the way of the home loan are high. This is because it leads to a higher debt to income ratio. Simply put, this means that your debt obligations and repayment commitments are higher than your existing income. And the lender feels that more debt obligations will increase the chances of your defaulting on the payment. The best alternative here is to pay off a few of the existing debts to rectify the situation.

Work on your CIBIL score

Lenders rely on CIBIL score and CIBIL report, as it helps them understand your credit behaviour and credit history. A delay in repayments and defaults result in negative impact on the CIBIL score and a poor score is most often the main reason for home loan rejection. In such cases, obtain a copy of your CIBIL score and seek professional advice on how you can improve it. Remember, it takes time for the revised scores to reflect, so the better you begin to improve your CIBIL score, the more favourable are your chances of getting a home loan approved.

Adjust to make it work

The home loan amount, rate of interest and loan tenure are the main factors considered when it comes to home loans approval. Your EMI is calculated on these factors. Now, for the EMI to be worked out for your income; either the home loan can be decreased or the loan tenure can be increased. Consider all available alternatives too such as another property that is more affordable or other home loans that offer better interest rates.

When applying for a home loan, the key lies in understanding the home loan lender’s requirements and working towards meeting it. A little bit of patience, financial discipline and determination is all it takes to get your home loan sanctioned with minimal effort.

{Source: https://www.indiabullshomeloans.com/blog/5-steps-to-follow-when-your-home-loan-is-rejected/}

Personal Loan EMI Calculator.

Use the interactive home loan EMI Calculator to calculate your home loan EMI. Get all details on interest payable and tenure using the home loan calculator.

Tips for Getting a Home Loan.

Use the interactive home loan EMI Calculator India to calculate your home loan EMI. Get all details on interest payable and tenure using the home loan calculator.

A Guide to Secured Loan For Home Owners

When you're looking for a loan, it can often be difficult to decide what sort of loan you should get; after all, there are a number of options available. Unfortunately, not all of the options that you might find will be appropriate to your needs; if you own a house, then you might be best served looking at some of the available secured loan for home owners.

By considering secured loan for home owners, you might open yourself up to lower interest rates and better loan terms than you previously thought possible. Best of all, you'll likely be able to find some secured loan for home owners that will give you a good rate regardless of any credit problems that you've had in the past. To assist you in your search, here are some basic facts about secured loan for home owners that should help you to better understand how these loans work and how to find your best deal.

Why Is Home Ownership Important?

Obviously, when you're looking for secured loan for home owners it's important that you actually own a house. The reason for this isn't that lenders are trying to be elitist, but instead that they offer specialized loans which are based upon the value of the equity you've built up in your house. If you don't know what equity is, don't worry; it's simply a measure of how much you've paid into your mortgage in relation to the total value of the house. Because of the higher value of equity in comparison to many other forms of collateral, lenders are generally able to offer loan rates and deals to individuals who would otherwise not be able to get them.

Does the Mortgage have to be paid in Full?

No, your current mortgage doesn't have to be paid in full for you to qualify for secured loan for home owners. The loan is based only on the equity, instead of the full value of the house... and your equity is only representative of the amount of your mortgage that you've paid. When you take out an equity loan, you likely won't be able to borrow more money than you have equity built up for this reason. If you borrowed more, then you would be borrowing against value that was already tied up in the mortgage.

Do Interest Rates Vary Among Lenders?

Yes, interest rates can vary greatly among different lenders who offer secured loan for home owners. This is the reason that it's important to take your time and select a lender that's truly right for you, meaning that they offer you a good interest rate and flexible loan and repayment terms so as to keep your payments low and manageable. When taking out larger loans or using high-value collateral such as equity, it's important that you always take a little bit of extra time to search for the best loan that you can get.

How Do You Find the Best Loan?

In order to find your best loan, you'll have to shop around at a variety of different lenders and request quotes for secured loan for home owners. Visit several different banks, mortgage lenders, finance companies, and even online lenders, and begin comparing the different quotes that you've received based upon the interest rates and loan terms that each offers. This will likely show you a range of loan offers, and you'll be able to easily pick the offer that has the best rates for you and your new loan.

{Source: http://ezinearticles.com/?A-Guide-to-Secured-Loans-For-Home-Owners&id=1138930}

Tax Benefits Associated With Housing Loans

Multiple benefits - how?

EMIs (elementary monthly installments) consist of two parts - the interest portion and principal amount. Interest paid is allowed as a tax benefit under section 24(b) (subject to restrictions), while the principal amount repaid is allowed as a deduction under section 80C.

Maximum ceiling on tax benefit

Maximum tax deduction for repayment principal component of home loan can't exceed Rs 1, 00,000 under section 80C. One should keep in mind that other investments/contributions are also allowed as a deduction under section 80C, and this limit of Rs. 1, 00,000 applies to all of them put together.

Housing loan interest deduction, on the other hand, is allowed up to a maximum amount of Rs 1, 50,000 under section 24(b). However, the acquisition or construction of the house property should be completed within 3 years from the end of financial year in which loan was taken; otherwise, the amount of interest benefit allowed is only up to Rs 30,000.

Furthermore, the above tax deduction limit u/s 24(b) is applicable only for self-occupied house property. In case of let-out or deemed to be let out house property, interest is deductible without any limit.

Starting date for claiming tax benefit

Some say that deduction on principal component of home loan under section 80C is allowed as soon as one starts repaying the home loan. Some say deduction is allowed only once the construction is completed. The law isn't clear on the matter; hence the ambiguity remains.

Interest deduction on housing loan under section 24(b) is allowed only on acquisition or completion of the house property. However, interest deduction for pre-acquisition or pre-construction period is also allowed but only after acquisition or construction is complete. It is allowed in 5 equal annual installments. But even after including the above, the total deduction should not exceed Rs. 1, 50,000 per annum.

Source of home loan

Unlike section 24(b), Section 80C doesn't allow tax deduction for home loans taken from friends and relatives. For claiming tax benefit on principal component of the home loan under section 80C, you need to borrow only from the lenders specified in that section. There is no such restriction under section 24(b) of the IT Act for claiming tax benefit on interest component of the housing loan.

Purpose of housing loan - Home purchase / construction vs.

Home improvement Deduction under section 80C for principal portion of the housing loan EMI is not allowed if the home loan borrowing is for the purpose of reconstruction, renewal or repair of house property. Put simply, tax benefit under section 80C is only allowed for buying or constructing a new home. In contrast, deduction for Interest is allowed under section 24(b) even for the loan taken for the purpose of repair, renewal or reconstruction of existing house property but subject to the limit of Rs 30,000 in case of self-occupied house property. In case of let out house property, actual interest is allowed without any ceiling.

Payment Basis - Due Basis vs. Cash Basis

Tax benefit u/s 80C can be claimed only when the actual payment is made. Interest deduction u/s 24(b), on the other hand, is allowed on accrual or due basis. Put simply, unlike principal portion, interest deduction can be claimed even if not paid.

Restriction on sale of house property

The tax benefit under section 80C is allowed subject to the condition that the said house property should not be sold before a period of 5 years. If you violate this, the deduction will be discontinued and the entire tax deduction claimed in earlier years under section 80C - for repayment of principal component of the home loan - will be deemed to be your income in the year in which you sell the property. However, the same doesn't apply on the housing loan interest deduction claimed under section 24(b).

Home loan prepayment: Original loan vs. Subsequent loan

Tax benefit on interest component of the home loans u/s 24(b) is allowed not only for original home loan but also for subsequent loan(s) taken to refinance the first loan. In other words, if the new housing loan is taken to pay off an existing housing loan, tax benefit under section 24(b) is allowed. However, unlike section 24(b), there is no specific mention under section 80C for prepayment of existing home loan by taking a fresh home loan.

So what it means is that when you repay the balance outstanding principal component of your existing home loan by taking a second home loan, you'll be entitled for tax deduction under section 80C but within the overall limit of Rs one lakh. Further, when you subsequently start repaying your second housing loan, you'll be entitled for tax benefit only on the interest portion u/s 24(b) and not on the repayment of principal component u/s 80C.

{Source: http://ezinearticles.com/?Tax-Benefits-Associated-With-Housing-Loans&id=6743691}

An online guide to simplify your home loan emi calculation

Use the interactive Home Loan EMI Calculator to calculate your home loan EMI. Get all details on interest payable and tenure using the home loan calculator.

Can You Purchase A House With A Low Credit Score?

Can you get a house if you have bad credit? To be honest, getting approved for your mortgage loan can be very difficult for people with a bad credit score. Most lending companies have strict credit requirements and if your credit score is unhealthy, your loan application might be immediately rejected.

However, it is really not impossible to get financed when you can obtain a subprime mortgage lender. Yes, there are certainly lenders in the market today who cater to the bad credit market. Some of those lending companies offer special loan programs for customers with bad credit history.

Is there a catch? Not all bad credit loan offers in the market are legitimate. It is important to make certain that you happen to be working with a reputable and licensed home loan company before submitting a home loan application. You have to be prepared to pay more if you're planning to make application for a low credit score home loan.

Bad credit loans carry much higher rates of interest than regular loans. Finding an affordable low credit score house loan deal can be difficult so you need to be willing to do a little research. You have to be also ready to submit a bigger down payment as most lenders would require no less than 20% payment for bad credit loans. Whenever you can pay more than 20%, you may be capable to negotiate a lesser rate.

Why Mortgage Is Worth Waiting For

Is it possible for you to wait for at least half a year or perhaps a couple of years prior to buying your home? When you can delay you want to obtain a home, you can be in greater position to acquire a home loan when your credit has improved. First of all, you will have ability to access better loan deals. It will be much better to get approved if you have good credit score.

One other good reason why you must hold back until your credit score improves is that you could be financially prepared to handle loan repayment. Give a little time to work towards credit restoration. You can perform this by paying all of your debts and staying current with your repayments.

Examine your credit status after six months to make certain that all of your payments have been accurately reported. If you discover errors on your report, you should immediately send a letter of dispute towards the bureau that issued your report. If negative remarks older than 7 years still can be found in your report, you must request the bureau to have those stripped away from your file. Such errors can badly hurt your credit ranking.

When you see a significant progress on your credit history, you should decide whether you want to proceed with your plan or give yourself some more months to further improve your credit score. In the end, a good credit standing will probably be your best asset when obtaining a home loan. When you're ready, spend some time to evaluate your options and compare mortgage loan deals.

{Source: http://ezinearticles.com/?Can-You-Purchase-A-House-With-A-Low-Credit-Score?&id=7062552}

Tax Benefits of Home Loan

Use the interactive House Loan EMI Calculator to calculate your house loan EMI. Get all details on interest payable and tenure using the home loan calculator.

Should you invest your money or use it to prepay home loan?

If you have an outstanding home loan, and happen to have just received an annual bonus or any other lump sum payment, should you use it to prepay your loan? Or, should you invest it to meet some other goals? Assess the following conditions to arrive at the right decision.

The first variable to be considered is psyche: some people may not be comfortable with a large housing loan and to reduce their stress they may want to get rid of the loan burden at the earliest. For them, settling the question of how to use their bonus is simple: just pay off the loan. Gaurav Mashruwala, Sebi-registered investment adviser, categorically states: "You should pay off the home loan at the earliest. Several unfortunate happenings— job loss, death of the earning member, serious illness, etc—can cause trouble during the 10-15 year loan period. Treat it as a mind game and not a numbers game."

Tax benefit is the next variable. If a home loan does not seem like the sword of Damocles hanging over your head, it makes sense to continue with the regular EMI schedule. This is because of the tax benefits that a home loan offers. The principal component of the EMI is treated as investment under Section 80C. The interest component is also deducted from your taxable income under Section 24. The annual deduction in respect of the interest component of a housing loan, for a self occupied house, is limited to Rs 2 lakh per annum.

You won't be able to claim deduction on interest paid above Rs 2 lakh. So, if your annual interest outgo is higher than Rs 2 lakh, it makes sense to prepay the loan, and save on future interest payment. For example, the annual interest on a Rs 70 lakh outstanding loan, at 9.5%, comes out to be Rs 6.65 lakh. After taking into account the Rs 2 lakh deduction under Section 24C, the interest component will fall to Rs 4.65 lakh, and bring down the effective cost of interest from 9.5% to 8.64%, even for the people in the 30% tax bracket.

You can, however, optimize the tax benefits if the loan has been taken jointly, say, with your spouse. "If joint holders share the EMIs, both can claim Rs 2 lakh each in interest deduction," says Harsh Roongta, Sebi-registered investment adviser. In case of joint holders, there is no need to prepay if the outstanding amount is less than Rs 40 lakh.

There is no cap on deduction in lieu of interest paid on home loan, if the property is not self-occupied. "Since there is no cap for interest on loan against second or rented out homes, there is no need to prepay it," says Naveen Kukreja, CEO and Co-founder, Paisa Bazaar. Bear in mind, by prepaying your loan, you may also forego future tax benefits. For instance, if by prepayment, you bring down your outstanding loan amount to Rs 20 lakh, your annual interest outgo for subsequent years may fall below Rs 2 lakh. Thus, you won't be able to avail of the entire tax-deductible limit and, in such a scenario; prepayment may not be a good strategy. Also, building an emergency fund, if you don't have one, should take a priority over prepaying the housing loan: "Make sure that you have a contingency fund in place before opt for prepaying your home loan.

The third key variable is returns from investment of the lump sum at hand. As a thumb rule, you should go for investment, instead of prepayment, only when the post-tax return from the investment is likely to be higher than the effective cost of the housing loan. For investors in the 30% tax bracket, and whose outstanding home loan balance is less than Rs 20 lakh, the effective cost of loan is only 6.65%. Since there are several risk-free, tax-free debt options such as PPF, Sukanya Samruddhi Yojana and listed tax-free bonds, which offer higher annualized return than this, it makes sense to invest in them.

All the debt products mentioned above are long-duration products. If your risk-taking ability is higher and time horizon is longer, you can consider investing in equities, which can generate better returns "It's sensible for long-term investors (five year-plus holding period) to go for equities, provided they are savvy and understand the risks involved there.

There are some home loan products that provide an overdraft facility of sorts and help you maintain liquidity. All you have to do is to park the surplus money in these products and not bother with whether it's a prepayment or not. It's like prepayment with the option of taking out that money, in case you need it in future for personal use or for investment purpose. The strategy of maintaining the housing loan interest close to Rs 2 lakh per annum can also be managed by these special loan products. And even if you are going to invest, the SIPs can go from this account.

"I park my bonus and do SIPs in equity from the loan account," says Kukreja. Most banks charge more for these special loan products. "Though the stack rate differential is more, you can bring it down by bargaining with the banks.

{Source: http://economictimes.indiatimes.com/wealth/plan/should-you-invest-your-money-or-use-it-to-prepay-home-loan/articleshow/52161038.cms}

Qualifying for a VA Home Loan

Use the interactive home loan EMI calculator to calculate your home loan EMI. Get all details on interest payable and tenure using the home loan calculator.

High Risk Mortgage Options

Use the interactive house loan EMI calculator to calculate your home loan EMI. Get all details on interest payable and tenure using the home loan calculator.

Home Loans Offer 5 New Ways to Get Your Dream Home

Use the interactive home loan EMI calculator to calculate your home loan EMI. Get all details on interest payable and tenure using the home loan calculator.

6 uncommon reasons for home loan rejection

After years of search and brainstorming, Delhi-based Amit Khanna finally zeroed in on his dream home in Gurgaon and subsequently applied for a home loan. However, as Khanna waited for the approval came the bad news that his application had been rejected. Khanna couldn't believe it because apart from having a high-paying job, he had never defaulted on any loan and even the housing project was being developed by a reputed builder. So why was his home loan application rejected?

Well, there may be many reasons for a home loan rejection - some common and some not so common or lesser known. Let's take a look at six uncommon reasons:

1. Builder not approved

This is one of the most common but unexpected reasons for the rejection of a home loan application. Not all banks give loans against the property of builders. It is, therefore, critical to understand from the builders themselves which banks have approved them and which have not.

"It's possible that when you approach a bank or a housing finance company for getting a home loan, you might come to know that the very builder is not approved by it. If that is the case, then you might not only get the shock of your life, but it will also make it impossible for you to get a home loan from the concerned bank and you may have to go to a different bank for the same," says Parth Pande, co-founder of Finance Buddha, a marketplace for retail lending products.

2. Builder approved but property not approved

This is another unexpected reason for a home loan rejection. A builder, for instance, may figure in a bank's list of approved builders, but a specific project launched by him may not have been approved by the concerned bank. In addition, there are likely to be cases where particular phases of a project (if it's a large one) may not have bank approval. Thus, to avoid unexpected home loan rejections, it's important to check that apart from the builder, the entire project - including its different phases - has got the necessary bank approval.

3. Valuation-related rejections

Imagine a scenario where one is buying a house in the resale market. Both the buyer and the seller mutually decide the price of the property and the buyer decides to go for a home loan to fund the purchase.

"The bank or the housing finance company, however, would sanction the home loan on the basis of the valuation of the property as ascertained by it rather than the price decided by the buyer and the seller. If the valuation amount is higher than the mutually-decided price of the property, then there is no issue. However, if the value of the property is lower, then the bank may choose to give a lower loan amount than required, or may even reject the home loan application altogether," informs Pande.

4. If previous tenant was a defaulter

Many housing finance companies (HFCs) these days blacklist both the defaulter and his residential address. Therefore, if you are staying in a house which is in a bank's defaulters' list because of the previous tenant who defaulted on a loan or credit card payment, there are high chances of your home loan application getting rejected. However, even if a particular address is not in the defaulters' list, then there is a possibility that the very locality is not in the good books of the banks/HFCs because of some other reasons. Your loan application may get rejected in such a case.

5. Credit history issues

Many people do not check their credit scores and are mostly oblivious to the same. For instance, a survey conducted by credit health improvement company Credit Sudhaar sometime back had revealed that more than 85% of the respondents were unaware of credit bureaus, while a whopping 92% didn't know their credit scores. No wonder loan rejection because of credit score issues comes as a surprise to many loan takers.

Surprisingly, even people with a credit score of 700 and above (out of 900) are sometimes denied credit because of past mistakes. For example, there may be some old payments or charges missed by them which they have forgotten about, or they might have settled a loan long back. But the same can have a negative impact on one's credit history and this alone can lead to the rejection of a home loan. It's very important, therefore, that customers regularly check their credit scores and fix issues, if any, around their poor credit history immediately.

6. Unstable employment

Lenders place a lot of importance on job stability and certain banks even insist that an applicant needs to be employed with a concern for three years or more to be eligible for a home loan.

"Lenders are very meticulous about the stability of an applicant's job. Before sanctioning a loan, a number of lenders insist that one should have a stable job and also be a permanent employee in a company. If these conditions are not met, then one's application for a home loan will get rejected," says Manish Shah, co-founder & CEO of financial services advisory platform BigDecisions.com.

Conclusion

It is clear that there are many uncommon/unexpected reasons for the rejection of a home loan application, and one can't be 100% sure of getting a loan even if one is earning a handsome salary or maintains a good credit score.

{Source: http://economictimes.indiatimes.com/wealth/borrow/6-uncommon-reasons-for-home-loan-rejection/articleshow/53428011.cms}