House loan calculator

How to Select a Good Home Loan Product?

Take any middle class Indian couple, who have migrated to a city for professional reasons- owning their own home will be their biggest dream. In addition to giving the assured feeling of residing in your own home, buying a house also gives a sense of achievement to the middle class buyer. No wonder, builders are catering to middle class buyers with different financial appetites, a wide variety of home in all major cities in India.

Selection of Home loans in India is a complicated process. You have to take into account your personal preferences, distance from your work location, distance from schools and hospitals and proximity to daily shopping and weekend entertainment needs. Selecting a home loan is an equally complicated process. While most people spend required amount of time and due diligence in selecting a home, they ignore the selection of the best suited loan product for their financial needs. Considering that home loan EMI will constantly figure month after month in your budget for around 15 to 20 years, means that you should be carefully evaluating every aspect of a home loan before opting for it.

Following are some pointers that will help you select a good home loan product:

1. Compare interest rates judiciously

Banks offer loan products with teaser interest rates wherein the interest rate for initial few years will be lesser, but post that the interest liability on the consumer would be comparatively higher. In a way, it is advantageous to you because in the initial years of your repayment, the interest burden on you will be lower. As years go by, your income should increase as a result of pay hikes and promotions. This will enable you to bear the burden of a higher interest rate. Nevertheless, be aware of the fact that a teaser interest product will require you to pay a higher interest in later years.

2. Negotiate for the lowest possible processing fee

Banks generally charge 0.5-1.5% of loan amount as processing fee. As you will have to pay this amount while applying for the loan, try to negotiate the lowest possible processing fee. Banks tend to offer discounts in processing fee to clients working in corporate sectors and to clients who buy during certain offer periods.

3. Check the bank disbursal process

Home loans in India generally have an easier disbursal process. If you are purchasing a home under construction, builder will demand you to pay as per the stages of completion. So if the banker takes more time and has cumbersome process of evaluating and disbursing the loan amount, it may cause you trouble. Check with your friends or in internet forums about how customer friendly the processes of the bank are before signing the dotted lines.

4. Look out for value additions offered by the bank

Gone are the days when a bank's job was to merely offer you cash for your home purchase. Banks now-a-days offer you assistance in selecting a property, negotiating with builders for bulk deals, doing legal assessment of your property etc. This can save you time and money and give you access to wonderful housing deals.

Good Home loans in India will make your dream of owning a house much easier to achieve. The time and effort you spend in this process will definitely pay you rich dividends over the years.

Article Source: http://EzineArticles.com/7304270

House Loan

5 Things to watch out for When You’re Buying a Home

A home loan can be a great source of finance to purchase your dream house.

Why? A sudden surge in funds is readily available, and you don't need to utilise your savings. Of course, there is some protocol to follow along the way, and a lot of mistakes to be made.

Here are a few of the mistakes you need to avoid to help you progress from the stage of being a loan to a happy homeowner.

Not Checking your Salary

First off, you must be clear on what you can afford. Taking a home that exceeds your ability to pay the EMIs can be stressful on your monthly income.

Make an assessment of your monthly income. For this, you'll have to add all the money you spend on expenses, utility bills, maintenance charges, and basically every little cost that eats away at your salary. Once you've done that, subtract it from your overall salary.

The figure you get will give you a brief idea about the EMIs you can afford to pay, while keeping a portion of your funds aside in case of an emergency.

The lenders might make promises of giving you the best home loan Emi calculator and tell you that it's affordable, but don't strike a deal immediately. Look around for a few more policies and calculate the estimated expenses before taking the leap.

Thinking you know it all

Don't make hasty decisions without consulting anyone. Members of your family and friend group may have some experience dealing with a home purchase before, so it's always a good idea to talk to them for any tips they might have.

If help doesn't seem to be within your social circle, there are always financial experts with the knowledge of how these loans work. They'll be able to guide you through the process by explaining the house loan Emi calculator eligibility and advising you on your loan amount and choice of property. These professionals also excel at networking, which might be useful in finding the right deal.

Ignoring your Credit Score

The lender is going to scrutinize your candidacy for a Emi calculator application, so be ready for it. You don't want your application to be rejected after searching for the ideal home and finding the best deal, do you?

In that case, bring your credit report and submit it to the lender. This document is important as it determines the likelihood of you being able to repay your debt.

Forgetting to Lift the Curtains

If the Emi calculator amount, eligibility documents, interest, and an affordable house are the only things on your checklist, you're missing out on crucial component-hidden charges.

Article Source: http://EzineArticles.com/9370164

Can’t Settle Your House Loan?

A few years ago, you successfully found the most suitable property loan for your condition. Almost everything had gone great and you were able to get the property of your dreams. But, the economic climate experienced some hardship despite the fact that some economic problems were were solved, the fiscal status was never the same. Because of the transformed situations, you are discovering it hard to match your monthly mortgage loan repayment.

It might be very difficult for anybody to be experiencing the same fiscal woes as yours. Failing to meet your mortgage repayments can result to default. Still do not fret as you are not the sole person enduring such a challenge. There's constantly a means to remedy this kind of problem. You only need to fix your focus straight and communicate with the right persons for help.

As fast as possible, you need to call your mortgage lender and get them to give you some help. It may well seem tiresome and no one desires to talk about their House Loan predicament. Even so, if there are people that will help you, they are your provider. They should be able to provide you with numerous solutions. But in the event you find the options they provide unsatisfactory, there's always a choice to switch to a new provider.

The fact that you are unable to make repayments signifies your credit cards may also be into their limitations. You may want to would like to speak to your credit card companies and discover exactly what agreements can be achieved. You might want to obtain a debt consolidation scheme to merge all your debts. Work with an online debt consolidation mortgage calculator to find out if a debt consolidation loan would work to suit your needs.

An alternative choice you have is refinancing. If you need to refinance your active mortgage to look for far better rates, you have to speak to mortgage broker who will offer you a precise step-by-step guide during this process. Many Australian mortgage brokers are offering refinancing mortgage loans. Go to a mortgage broker's website to learn more about refinancing. 

You can also employ a refinance mortgage calculator to ascertain just how much you will be able to save. Talk to your mortgage broker pertaining to the results from the mortgage calculator to obtain a definitive answer.

And finally, there is also the option of employing an accountant or financial specialist when you genuinely worry that you are close to defaulting. They'll give you some tips concerning exactly how you can correctly take care of your financial plans in order to avoid defaulting on your mortgage loan.

[Source: http://www.sooperarticles.com/finance-articles/mortgage-articles/cant-settle-your-house-loan-530116.html]

Home Loan

Taking a loan can win you lender’s trust

Most of us try to be careful about paying dues on time, but the strike rate is rarely 100%. Some late payments have a temporary effect, maybe a one-time fine. But there are others that have short-term as well as long-term repercussions. For example, on a home loan, if you are late in paying the installment, you have to pay a penalty and it affects your credit score in the long run.

Here are a few ways you can ensure that your score remains on the higher side of the scale.

Pay on time

If you are a salaried employee who gets her pay once in about 30 days, then it is easier to schedule loan payments such as for a Housing Loan and an auto loan. But what about those who are away for long periods, say, on a merchant ship? Or those who have seasonal employment?

Know the details

Reading the details will mean you know about grace periods, penalty rates, interest rate calculation and more. Most of this is available in the loan documents and the lender’s website. You can also call the customer service center for help.

Use credit cards wisely

This is probably one of the most common loans that people take. But it is also the least understood.

Many individuals, who have had bad experiences with this product, shun it absolutely. If you had issues with paying your credit card dues in the past, and are wary of using it again, it won’t help your credit score.

Your basket of loans

Your credit profile also depends on the types of loans, i.e., your mix of secured and unsecured loans. Secured loans are those that have collateral attached, such as a home or a car loan. If you default, the lender can take away the ‘asset’. Unsecured loans, such as credit card or personal loan, are riskier for the lender because they don’t have attached collateral.

[Source: http://www.livemint.com/Money/68QAwMldEIeKmOUwye4nhO/Taking-a-loan-can-win-you-lenders-trust.html]

How to Calculate the Proceeds of Your Home Sale

Selling a home takes a lot of hard work on the part of the home sellers especially if they are doing it on their own. A major part of the process involves a lot of calculating numbers from setting the home price, taxes and legal fees to the amount of profit the seller is going to get. But of course, even before the sale is completed, every seller would want to know the net proceeds he or she will get.

The money you will have when by the closing of the home sale transaction will be the total sale price of the property. However, you won't be able to keep the entire amount as you may need to pay for debts, liens and other charges against the property. So, your net proceeds will actually be the total sale price minus the charges which mostly make up the closing costs.

Below are several important fees that are normally paid out of the sale proceeds. Knowing these charges as well as setting a fair market value for your home will help you accurately calculate your potential net profit.

Attorney's fees. Every home seller will need the help of a real estate lawyer. The attorney plays a vital role in the financial transaction not only as an advisor but also as an escrow agent when you need a third party to keep the deposit or down payment. The fee is either a flat fee at a minimum of about $350 or by the hour.

Disbursements. These refer to expenses incurred by a lawyer on behalf of the seller such as the mortgage discharge fee paid to land titles, title search fees, couriers and other charges.

Property taxes. These taxes are paid every year. However, this can be negotiated as to who will should the payment.

Transfer taxes. This is a tax that may be implemented by states, counties or municipalities on transferring real estate property within the jurisdiction. Transfer taxes may range from a small of .01% to 2.2%. It is best that before selling your home, you check your area's rates from the Recorder of Deeds, a title company or a realtor.

Mortgage. The balance of your mortgage will be paid out of the sale proceeds. Unless your mortgage is in good standing, you will also have to pay for mortgage penalty and a discharge fee paid to the lender. All mortgage payments due on or before the possession date will have to be paid by the seller.

Home Loan India. If there's a home equity loan or line of credit secured on your home such as via collateral mortgage or caveat, it must be paid out of the sale proceeds. Also, payment for any home renovation loan will have to be taken out of the proceeds.

Home warranty. This guarantees the buyer that all mechanical and electrical appliances in the home are in good working condition on the day of closing up to the first year of ownership. A warranty costs at a minimum of $350.

[Source: http://ezinearticles.com/?How-To-Calculate-The-Proceeds-Of-Your-Home-Sale&id=1208280]

A Fair Trade against Property

If you need money really bad and if you own your own house then getting a mortgage might be the easiest way out. They then pledge their property as a security against money lent to clear the debts. This option is common in the west where people are keen on buying real estate properties and cannot afford to pay the full amount within a short span of time. Get professional help in understanding your specific mortgage. There are many offerings out there and all are different.

The mortgage company should be authorized and registered before they start handing out mortgage loans. So, before buying a Mortgage, make sure to check the following issues:

1. Through Emi Calculator Housing Loan  a mortgage is a long term relationship. So, make sure you know all there is to know about the background of the issuers. You must find out how strong they have been, and what their rate of interest is. Then you must compare the same with other companies to know who the best is. Also, look at how many years the company been in this field. Good credit ratings are another plus as they reassure the person in need of the loan.

2. After checking the issuing company's background, focus on getting all the information you can lay your hands on. The duration and the rate of interest applicable will matter. Make sure you divulge information pertaining to the other financial commitments you have and the time you might require to pay back the loan. Also check about penalties for delayed payments, or possible options if you want to repay before time. If a company is able to accommodate your needs and provide the suitable mortgage, they are the right choice for you.

3. All promises made to you, including any promises of future flexibility, should be documented. Oral promises are not binding unless proven. If the company refuses to sign a contract, they are not reliable or trust worthy, move on to the next company you find. The written document will be legally valid in case either you or the company defaults at a later date.

4. Other charges that might be applicable from time to time -- If you are able to repay the loan before the stipulated time, the mortgager will charge a redemption penalty, so make sure to have that mentioned in the agreement. In the zeal to make a sale, your agent might actually have "forgotten" to tell you about some specific charges.

[Source: http://ezinearticles.com/?A-Fair-Trade-Against-Property&id=820995]

Property loan interest rate Advice for Loan Applicants

Upon deciding on applying for a mortgage loan it is important that you be aware of the housing loan interest rate that you will be required to pay during the term of the loan. There are times when buyers get too excited about the idea of purchasing their own home that they tend to overlook the interest rate incorporated into the loan. They only begin to notice this after a few years of paying their mortgage, and by this time the rates may be too high, especially if the loan has a variable interest rate. If you are faced with such a situation it is best that you call your mortgage provider and have the contract explained to you in detail. If you feel that it is too high, your loan manager may present you with other options such as refinancing in order to be able to save on your mortgage payments.

It is also important that you understand the principles of mortgage rates or interest percentages before you decide to apply for a mortgage loan with a certain bank. A loan manager will present you with four Property loan interest rate packages to choose from: SIBOR, SOR, fixed interest rate, and variable rate. There are many other interest rate packages that may be offered by banks, however, these four are the most popular among property shoppers. The Singapore Interbank Offered Rate (SIBOR) and Swap Offer Rate (SOR) pegged mortgage interest rates both fluctuate according to the changes in the international market. SOR pegged interest rates tend to fluctuate more because it reacts to the ever changing foreign currency exchange rates. For this reason, SIBOR is deemed as more stable as compared to SOR. However, there are instances when SOR pegged mortgage rates can suddenly drop without any warning and can be even lower than SIBOR pegged rates.

A fixed Property loan interest rate is another popular choice by those who are shopping for mortgage loans because it is not affected by economic changes in the world market. Those who choose this mortgage rate package will continue to pay a fixed rate of interest regardless of how the world market is doing for the duration of the mortgage loan.

The principles of a variable housing loan rates for interest are a little harder to understand because it varies from bank to bank. You may find banks that offer lower variable interest rates than others, while some charge higher than usual. This is because variable rates of interest depend on a lot of factors, including your credit background, your ability to pay, and your standing as a Singapore citizen. It is important that you thoroughly understand the computation before you agree to the terms so as to avoid paying more than what you can afford.

To get a mortgage rate that is most suitable for your financial situation, make sure that you thoroughly research about the current mortgage rates in the market before you start doing your mortgage loan shopping. Patience and determination are also very important because running in and out of banks to meet with housing loan managers can be a tiring and time consuming task. Everything becomes worthwhile however when you are able to land a housing loan rate package that is right for you.

Article Source: http://blogs.rediff.com/homeloanemicalculator/2016/08/25/property-loan-interest-rate-advice-for-loan-applicants/

How to Get Lowest Interest Rates on Your Home Mortgage

Though selling and buying properties is very ordinary, at least for those who are in realty sector, it is still a tedious and time consuming process. This happens especially if you decide to do it on your own. It is good if you have made up your mind to buy a home for your family and are ready to apply for a home mortgage in a bank. Before you do so, there are some important points to consider. It is true that getting a home loan today is much easier in comparison to what the situation was a few decades ago, it is still a once in a lifetime decision as you do not buy a property every few years, do you? It is therefore necessary to do your homework before taking a plunge.

First of all, it is imperative to know the interest rates prevailing in the home mortgage sector. Then, depending upon your requirements, you can easily calculate the EMI that you have to pay to the bank that grants a home loan to you. Now, this interest rate is dependent upon many factors, most importantly upon your credit score.

If you have a decent score, you can even negotiate with the bank to lower the interest rate in your case. However, if you have a low score, do not make a mistake of presenting your home loan application to any bank manager. This is because loan advance managers judge your credit worthiness solely on the basis of your credit score. If your loan application is rejected several times, it becomes progressively difficult for you to secure a home mortgage. This is where experienced brokers working in the field of home loans come into play.

You could actually find that there are dozens of companies working in the field of home loans and refinance. Remember, you are important to them as much as they are to you. Thus, it makes sense to compare the features of the service that these companies are providing. No, you do not need to go physically to the offices of each company. Instead, you can compare the companies from your own home by logging on to the websites of these companies. Just type the amount of money you need and the Emi Calculator Home Loan that you can realistically pay to the lender. Depending young your details, you can get the rates of interest at which these companies can get you home mortgage.

The biggest advantage that these companies have is that they can match your requirements with the best available home loan product in the market. This is something that you cannot hope to achieve on your own. You not only save a huge amount of money in terms of lower rates of interest, you also save on your valuable time and effort. Just make sure that there is no fine print behind the attractive features of the company whose services you are hiring to secure your home mortgage.

[Source: http://ezinearticles.com/?How-to-Get-Lowest-Interest-Rates-on-Your-Home-Mortgage&id=6156792]

Calculating Loan Installments with an Property loan emi calculator

Whether you apply for a car loan, home loan or a personal loan, you have to pay an Equated Monthly Installment. To calculate the monthly payments accurately, people use an EMI calculator. Soon after you decide to apply for a loan, you need to research on available types of loans in the market. Today, financial institutions and banks in India offer all different kinds of loans to fulfill different property buying needs of the residents. As you avail advance cash from the banks to buy your dream house or car, it is clear that you have to pay the borrowed money back. Further, you need to pay some interest along with the principal loan amount to the banks. The loan is to be paid back in equal monthly installments. An EMI calculator makes it easy for the loan applicants to calculate the monthly installments and schedule the payments.

Equated Monthly property loan emi calculator, a monthly amount is to be paid by the loan borrower to the financial institution or the bank from where the loan is taken. EMI is the combination of principal amount of the loan and the interest and is paid until the full loan amount is cleared. The interest and total principal amount is divided by tenure and this sum is generally paid monthly. Normally, the interest and principal amount doesn't change but its proportion might change as times. With every consecutive payment, the loan borrower pays more towards principal amount and less as interest.

Using property loan emi calculator

With an online EMI calculator, the calculations have been further simplified for the loan borrowers. Every bank or the financial institution offers top quality EMI calculators to assist the borrowers to calculate equal monthly installments. There are many benefits of using an online EMI tool.

• With graphical charts and easy to understand graphs, the online EMI calculators assists the loan borrowers to easily calculate the monthly installments.

• Making accurate calculations is possible with a sophisticated online calculator.

• An online calculator assists you to calculate car loan, home loan or a personal loan instantly.

• It is easy to determine monthly payments against interest and principal amount on the loans. With this, you can judge how suitable and affordable a loan is for you.

• Use the calculators to avail quick loan quotes as per the EMI

Calculating the equated monthly installment is simple through an EMI calculator. Simply enter details like rate of interest, period of loan and the principal amount to make instant, accurate calculations. Along with the basic monthly installments, you can calculate the total payable interest and total amount along with interest. The EMI will differ as per fixed and variable rate of interest. The Equated Monthly Installment that you attain gives an idea of personal financial commitments for the future. For example, you can find out whether you can afford personal financial commitments during the period of the loan. With this, you can plan personal finances better and take efforts to fulfill life's requirements.

Article Source: http://EzineArticles.com/7271974

Home Loans and the Meaning of EMI

What is EMI? This is a very common term that is being used very frequently nowadays by everyone. People converse about this term and usually this is used regarding discussions and taking of home loans. The meaning of EMI is "Easy Money Installments". More often this term is used regarding home loans but it can mean about any type of loans. 

Business loans, car loans, mortgage loans, second home loans and just about anything under the sun that can be taken on loan! The loan repayment schedule shows the amount that is termed as the EMI.

Loan for a home can be taken from private lender or government and personal home loan lenders. The total amount of EMI varies according to the loan amount and also the rate of property per square feet in that particular area. It is understood that the company or lender giving loan needs to be assured about the repayment of the loan.

The period for which the loan has to be repaid is also calculated. Monthly installments are to be paid by the individual as process of repayment of home loans. "Easy" installments means a comfortable amount is calculated according to the repayment capacity of the borrower of the loan. This depends upon the individual's financial status, his profession and whether he is going in for fixed interest loan or flexible interest loan for the home.

Usually Emi Calculator Home Loan is according to monthly payments but sometimes they may also be annual that is once in a year. This comes to a bigger amount but it is adjusted according to the individual's professions and financial standing regarding repayment. Many people get annual checks of salary or property rents or investment returns either in a year or in four months that is quarterly. So they can go in for a home loan and come to an understanding regarding EMI's and the repayment of the loan according to their convenience.

[Source: http://ezinearticles.com/?Home-Loans-and-The-Meaning-of-EMI&id=5412994]

What a Home Loan Calculator Can Do For You

Purchasing a dream home has become convenient with many online websites of lending institutions and also advisers regarding the same. With so many options available regarding loans many websites have put up online home loan calculators for the reference and guidance of borrowers. What is the meaning of a home loan calculator, how do these help and what services can be offered by these will be discussed in this article.

Having tough competition among lending institutions and awareness on the part of the borrowers many financial advisors and websites have put up online calculators. These calculators are put up as forms to be filled with details of the borrowers and they get a rough estimate of loan amount that will be available and the monthly EMI amount they will have to pay in order to repay the home loan.

With the form given online the borrower can make the first step of searching websites and understanding finances regarding home loans right from under their own roof in the privacy of their home. Here the individual does not need to publicize or share his idea about applying for a loan, and all information can be got by these loan calculators before taking the decision of applying for a loan.

Having this knowledge helps the borrower to understand his financial repayment capacity and the amount available as loan. The lending institutions have tried to put as much information as possible in these forms in simple manner. One can fill up details regarding monthly salary, age of the borrower or applicant, monthly incoming money and other liabilities or expenses. By stating this financial repayment capacity is judged and how much you can comfortably repay as monthly installments or Emi Calculator Home Loan.

 In the final slot after filling all the details the borrower can get the figure of total amount available as home loan and also the loan tenure for repayment. There are also many options where one can select different loan tenure periods and also fill in different loan amounts by just adding the details in the given slots. Here you can get different options available for repayment schedules and also calculate different loan amounts and the monthly EMIs to be paid.

With these home loan calculators one gets the option to try different modules and consider all repayment options before finally taking the plunge and applying for a home loan. The interest rate is also filled and the borrower can calculate how this interest rate will affect the monthly EMI structure. Once you know different financial loan lending institutions and their interest rates you can fill up the details and get the figures immediately. 

This will prevent wastage of time, energy and other hassles which the borrower has to face by directly approaching financial loan lending institutions before applying for home loans. After getting this figure the borrower can judge regarding the amount available as loan within his financial repayment capacity and status.

Online home loan calculators are a boom for any applicant of home loans. Not only do they give you different options available for repayment of loans but they also save precious time and money spent by making rounds of different financial loan lending institutions for enquiries regarding availability of loans.

Once the figure of loan amount available is got the purchaser of the new home can go about considering only those projects for which they can get a loan and avoid wasting time considering other homes out of their budget. This will help to narrow down your search for a home and also amount available for loan.

Always remember that these online home loan calculators are for reference purposes and only consider them for prior research. The total figures and loan amount given may not be applicable for all lending institutions and also there is no binding for any institution to offer loans on basis of these calculators and the borrower has a guarantee of getting a loan amount mentioned on these home loan calculators.

[Source: http://ezinearticles.com/?What-a-Home-Loan-Calculator-Can-Do-For-You&id=6323615]

What are registration charges?

Owning a home is a dream come true for many individuals. It is the culmination of much efforts and time. Getting across the gauntlet that is securing the appropriate financial measures is only the beginning in what is often a long and arduous process before you finally get to own your home for good.

Owning a property is so much more than simply taking possession of your dream house

 There are a huge number of legal hassles and tedious documentation to get through before you can undoubtedly own your property. You need to have a clear title and other relevant documents of ownership that affirm your ownership of the property.

In the final stages of the paperwork, you need to pay stamp duty and relevant registration charges before you are handed over your documents. With these final hurdles cleared, you are now free to enjoy your home to the fullest extent possible.

Stamp duty is one of those insidious charges that tend to sneak up on you and not make itself known until the last minute. Stamp duty is a kind of compulsory fee payable to the state government. There is a time period within which stamp duty must be paid in full before you can take ownership of your home. The actual rate differs from state to state but usually varies between 5 to 7% of the registration value and not market value (also called transaction value). Until this fee is paid in full, the house will not be transferred to your name and you will be, in all effect, an illegal occupant in the property in the eyes of the government. The stamp duty serves as the charge to maintain your name as the owner of your property in the official records of the government. It also ensures that all government sources and documents reflect you as the proper owner of the property.

After stamp duty has been paid, you need to register your property within four months. This requires payment of an additional registration fee over and above the stamp duty that you have already paid. Registration fee is the charge required to actually register the property in your name and make any transfers from the previous owner (if any). Although these charges vary from state to state, the registration fee is typically 1% of the market value, usually subject to a pre-set maximum. The registration process is typically a painless one that involves you providing documents of personal identification such as copies of photo ID, various other verification documents, and the proof of payment of stamp duty.

While these charges can add up to a huge number, there are some ways to save a bit of money here. Many states offer a lower rate of stamp duty if the property is registered in the name of a female. Also, you can claim a tax deduction on the amount you pay on stamp duty and registration fee. You can also save emi for home loan tax by agreeing to a purchase price that is close to the base price published by the government.

Source: http://homeloanemicalculator.tumblr.com/post/147944128055/what-are-registration-charges

How EMI is calculated!!

I decided to purchase a house in Bangalore (an extremely tough task) and the first thing that struck me is equated monthly installment or EMI. This is the single most important parameter while taking any kind of loan. This is the amount outgo every month from your personal finances which will cover both the principle as well as interest.

I talked to few people and everyone is bit confused on how EMI is calculated. It is really simple and just few steps would enable you to calculate EMI at your end.

So here is a rather simply formula for calculating EMI.

You would wonder why EMI is called "equated", the reason is that EMI is nothing but loan amount plus total interest divided by loan tenure. If that is the case then why this complicated formula. The reason is because as you keep paying EMI, some portion of EMI goes as interest but some portion goes as principal repayment. So if you pay an EMI of Rs10,000 for a house loan, not the entire Rs 10,000 would go as interest payment, but some portion goes as principal repayment, which essentially reduces the principal on which further interest is calculated. It is extremely important to understand what goes for interest and what goes for principal repayment.

It is very clear (for mathematically inclined) that when Loan Amount goes up, so does the EMI. Similarly if the interest goes up again so does the EMI, but if 'n' (loan tenure) goes up, EMI reduces. A note of caution, a low EMI for longer period does not necessary means a good bargain. A good bargain depends on your requirements as well as the total interest you pay over the entire loan tenure.

Another thing to keep in mind is whether the reduction in loan amount happens on monthly basis or yearly basis. Any loan which reduces the principal on monthly basis should be given preference. A monthly reduction implies less interest payment from next month onwards, definitely a huge savings.

Also usually interest rates come in flavors of fixed and floating rates. A floating rate changes based on market's prime lending rate (PLR). A fixed rate stays fixed for the tenure of the loan. For a longer period of loan, my personal preference is always fixed interest rate, even if it is 1-2% higher, at least the monthly outgo is fixed, so planning of your outflows can be planned pretty well. I personally think that similar to rupee averaging for mutual funds, the floating rate almost remains same as fixed rate over a long tenure of home loan interest calculation. [The floating rate will go up and down and hence your monthly outgo]. And for short tenure loan, in a high interest regime, go for floating rate, but in a low interest regime choose fixed rate.

Source: http://www.articles.howto-tips.com/HowTo-Article-Directory/how-emi-calculated

Tips on Taking Home Loans

If you have visited any website that talks about buying a home or taking a home loan; they all glorify the fact that owning a home is a dream for everybody and how this can easily become a reality. But they forget to mention that sadly sometimes you get a rude awakening from this dream!

Why? The answer is: because you overlooked a few simple things. Read on – so that your dream does not remain a dream and at the same time does not give you nightmares.

Useful tips on taking home loans

1. A Pre Approved Loan Helps

Ajay after six months of search found a house that fitted his budget and his requirements. He applied to a bank for a loan and paid the deposit amount to book the house. The bank began its process and after six weeks Ajay was informed that his loan was rejected due to a minor technical aspect. Ajay just had two weeks left before he was supposed to pay the builder failing which he would lose the house and the deposit too. He had no choice but to approach a private bank which promised him a loan in two weeks’ time but the interest rates that they charged were higher.

You do not want this to happen to you. So get a pre-approved loan in case you are planning to buy a house in the near future. You can get better rates, are sure about getting a loan and will not miss the bus when you finally find a house that you like.

A pre-approved loan is usually valid up to six months.

2. Read and Understand Terms Well

For any financial product that you buy it is always advisable to understand the basic aspects well before you even start looking around for the product. In my experience of working at a financial institution I have several times come across customers who come complaining to the bank about how they have been cheated or fooled.

However often it is simple things like not reading the fine print or not understanding a term that is the root of the problem. Do not expect the company representative to educate you; all information is easily and widely available on the internet so spend time and understand terms like EMI, fixed v/s floating rate, fault, BPLR etc.

This will help you in making an informed decision and also in planning ahead and if nothing else it will make you sound wise during a conversation!

3. Buy Home Loan Insurance

Owning a home provides you and your family with a sense of security but you must ensure that asset does not turn into a liability. You must insure your home loan as in case of the death of the primary loan applicant, the insurance company pays up the unpaid loan amount.

Illustration: Mr. Basu bought a home 5 years back and took a loan of Rs. 25, 00,000 for the same. The house was worth Rs. 35, 00,000 at the time of purchase. When he passed away; his wife faced a big dilemma.

Mr. Basu did not have home loan insurance although he did have life insurance; the house was worth almost Rs. 50, 00,000 and she was in fix; she did not want to lose the house which had appreciated in value and could have provided them with the much needed security.

She did not want to use the life insurance money to pay the loan and she could not own the house as it had a huge unpaid loan. Home loan insurance would have saved the day the day for them!

Some companies offer this insurance as a freebie like ING Visa so there is no extra cost involved; it is also a good idea to check about the permanent disability clause where the loan company pays in case of a permanent disability of the insured.

4.  “Fixed” is actually not fixed

When you begin your home loan journey one of the crucial decision you will have to make is about the interest rate type. These rates and types vary across banks and you will most commonly come across terms like fixed rate and floating rate.

Fixed rate theoretically means that the rate remains fixed over the loan duration. Irrespective of what you go for always keep in mind the fact that a fixed rate is not fixed in the real sense of the word which means that hidden somewhere in the fine print is a clause which says the bank will revise the rate after a fixed period or due to some xyz condition.

You cannot change this fact so what should you do? When you take a loan you plan your budget and prepare to pay a fixed EMI every month but be prepared (mentally and financially) that this can change suddenly with a letter sent by the bank.

So spare yourself sleepless nights and keep some money aside for such exigencies. While you take try and adjust to the higher EMI (be assured the bank is rarely/never going to lower the rate) you can use this exigency fund to pay the differential.

5. Compare Deals and Rates

When you start looking for a loan you will realize that there is a lot of variation in the rates of interest; while interest rate is the most important aspect that you must consider when taking a loan it is definitely not the only aspect. You should also look at the loan period, processing fee charged, security cover clause*, free insurance provided by some companies etc. Always negotiate and look for available discounts.

Don’s Stretch Yourself Financially:

Taking a home loan does involve careful planning and cutting down on some expenditure about but do not get overoptimistic about your potential of cutting down your expenses. A bank makes an evaluation about your creditworthiness but you should also take a realistic view of you situation.

Ideally you should reduce your debt burden before you take a home loan and your EMI must not exceed 40% of your salary in hand. Also do not exhaust all your savings when buying a house; keep aside a chunk for situations like an increase in the EMI,(due to interest rates revision),paying additional security, job loss so that you can still pay you emi calculator home loan on time etc.

Conclusion:

Being forewarned is being forearmed so keep the above in kind and get the best deal for yourself. There are a large number of players in the market so getting a competitive and good deal is not difficult as long as you are sure about what you want.

*Security deposit clause gives the bank a right to ask for an additional security deposit in case the property value comes down.

Source: https://www.wisdomtimes.com/blog/tips-on-taking-a-home-loan/

How to Calculate Mortgage Payments

Mortgage in common parlance means a long-term loan financed by the banks to help the borrower purchase a house. The EMI repayments however include interest payments in addition to the principal amount and the property acts as the collateral in the whole process. This information is basic in nature and if you are willing to purchase a house, aided by a mortgage, read on to know the functionalities of a mortgage and how to pay it off.

Once the house is bought and savored with rituals like house warming, furnishing and decorating your living space, harsh reality props at the end of the month in the form of EMIs. To get everything straight and keep your household expenses going along with the monthly installments  make a list of all the investments, mortgages, savings, insurance schemes, EPF and PPF, postal deposits and sometimes even ULIPs. Maximizing the benefits of cash inflow could be the next major step in managing the monthly monies. So instances where you are paying higher interest on investments should be cancelled and channelized to the apparent closing of the home loan.  

In order to repay your debt quickly and not withstanding it for long duration of time three methods can work in your favor.

Partial Pre-payment:

One of the fastest ways to close a home loan by paying the banks from bonus, salary arrears, gifts, profits on shares, property sold, closed deposits, maturing of tax saving investments, closure of savings, giving you lesser returns in comparison to the home loan, etc. can reduce the principal amount in the loan. Leading to a shorter term of EMI payment and reducing the interest rates paid on the entire sum.

Shifting to a lower rate:

The lower interest rate on the principal amount is the smart way to acquire a home loan. This will reduce few years from your home loan emi calculator and a speedy closure on your mortgage. Switching banks to transfer loans with a lesser interest rate will also mean scrutinizing the property and furnishing legal paperwork afresh with a clean track record of the monthly EMIs.   

Increase the monthly installments :

By increasing the amount allotted from your monthly income for EMIs will ensure closing the home loan faster. Adding a little extra on the monthly installment will make a huge difference in the loan tenure reduction.

With a thorough knowledge on loans the next big step would be to invest in real estate that is significantly trustworthy in the business. Adani realty, real estate giant in India with their upcoming projects provide a profiting opportunity for property investment. The Shanti gram Township epitome of smart value homes packed in with modern amenities to make for a healthy and peaceful living experience.

Source: http://www.articles.gappoo.com/2015-Article-Directory/how-calculate-mortgage-payments

Home Loans are Tax Friendly

For most Indians, owning a house isn’t just an investment but pride. ‘Home- Sweet-Home’ is tailored by your tastes and relationships. It is the space of your absolute freedom. Everyone dreams of owning a house but certainly have misconceptions about it. The real-estate boom in India is attracting foreign investors too in this sector. Choosing a flat/property to your tastes is easy because you decide. But, one requires a little financial know-how before planning for it.

With the rise of housing finance institutions, owning a house is now pocket-friendly with a home loan. With the advent of selling flat/property online, the segment has become more competitive but to the convenience of the consumer. Though buying a house is an expensive proposition, growing real estate prices made almost impossible to own a house without a home loan. The home loan is such a credit facility where interest rates are cheaper and tenure is longer. Not only that, it comes with exciting tax benefits too while income tax filing.

The amount that a bank can lend is up to 80% of the property value. This depends up on various factors to check the eligibility. Banks are strict with these checks and otherwise bad loans can become burden for them. Every lender tries to ensure the borrower’s capacity to repay the equated monthly installments (EMIs) in time and repay the principal amount. To do this, they would look up to your credit history, current assets, liabilities and other financial details.

Tax Planning:

The biggest benefit in availing home loan is that one can plan their tax savings after considering all deduction benefits while filing I.T.Return. All home financing companies including banks usually give a provisional certificate at the start of the year which is based on EMIs and break up of principal and interest. This certificate will give you a fair indication of how much principal has to be repaid and how much interest has to be paid for that year. Based on this, you can plan for other investments. At the end of the year, you will get an original certificate based on the actual EMIs paid for that year. This certificate has to be submitted along with the income tax returns to claim the deduction.

Let us now dwell upon various tax benefits on availing home loan:

Any home loan will have two components in it namely, principal and interest. While income tax efiling one can get tax benefits through home loan under two different Sections of Income Tax Act.

Under Section 24– Deduction on interest on home loan for self-occupied property up to Rs 2 lakh.

Under Section 80C– Deduction on repayment of principal amount on home loan up to Rs 1.5 lakh.

Deductions in both components of a home loan are therefore governed by two different sections of the same Income Tax Act.  If the above sections are expanded in detail:

Tax benefit on Principal Amount:

The amount paid as repayment of Principal Amount of home loan by an Individual/HUF (Hindu Undivided Family) is allowed as tax deduction under section 80Cof Income Tax Act while filing I.T.Return. The maximum tax deduction allowed under Section 80C is Rs. 1, 50,000. (Increased from 1 Lakh to Rs. 1.5 Lakh in Budget 2014). The Amount paid as stamp duty & registration fee is also allowed as tax deduction under Section 80C even if the loan is not taken. However it is important to note that tax benefit of home loan under this section for the repayment of principal part of it is allowed only after the construction is complete and the completion certificate has been awarded. No deduction would be allowed for under construction properties.

Tax benefit on Interest Amount:

Tax Benefit on Home Loan for payment of Interest is allowed as a deduction while filing income tax return under section 24 of Income Tax Act. As per Section 24, the income from house property shall be reduced by the amount of interest paid on home loan where the loan has been taken for the purpose of Purchase/ Construction/ Repair/ Renewal/ Reconstruction of a Residential House Property.

The maximum tax deduction allowed under Section 24 of a self-occupied property is subject to a maximum limit of Rs. 2 Lakhs (increased from 1.5 Lakhs to Rs. 2 Lakhs in the 2014 Budget). In case the property for which the Home Loan has been taken is not self-occupied, no maximum limit has been prescribed in this case and the taxpayer can take tax deduction of the whole interest amount under this section.  This is the best part of it because you can avail the same benefit upon all interest paid if you rented your house without you (owner) residing in it.

Using the above sections to the most of our benefit, the following opportunities can be explored:

Taking a joint loan- One can avail home loan with co-borrower as spouse, if working. All benefits under sections 80C and 24 of Income Tax Act can be enjoyed for each borrower. If you take home loan under 50:50 ratio, the overall tax savings of the household can be increased. The spouse earning more should have more portion of the loan to avail maximum benefits.

HRA (House Rent Allowance) Benefit- If you stay in a rented house and paying rent and at the same time availed a home loan for your own home, you can avail benefits of both HRA and home loan. This is subject to your home receiving rental income which is taxable.

Interest Rates on your home loans:

RBI has maintained status quo in the first policy of this financial year and the governor insisted upon monetary transmission of benefits of previous repo cuts.

Many banks have reduce their loan rates by almost 25 basis points as a result of which an interest rate war has triggered which will soon be followed by other lenders too. Most lenders at present can offer home loans at 9-10 percent. This competition would benefit home loan consumers, who have been struggling under high EMIs for years. As inflation is under control, one may expect more rate cuts in near future.

            One can apply for a home loan online with all end to end assistance in documentation and consultation process. To avail home loans hassle free and get best quotes, calculate your EMI’s visit: home loan emi calculator

Miscellaneous Charges of Home Loans

It is a well-known fact, that one takes a Home Loan only once or twice in his/her whole life cycle. Hence, however, well read one may be, it is well near impossible to understand the detailed implications of Charges involved in taking a Home Loan.  There are various charges one has to pay at each stage of a Loan from Application to Loan Disbursement. And well, the charges do not stop there, as even after the Disbursement, there are various other charges that one has to cough up. Read on to know them as the Banks/NBFCs Never highlight them to the Potential Borrowers.

At the time of Loan Disbursement, You are handed over a Booklet containing the list of ‘Terms & Conditions’. The Borrower signs it immediately so as to get the much awaited Loan Amount Cheque in hand. Later, even after having read this list of ‘Terms & Conditions’, the detailed meaning of the fine prints are mostly not understood.

It is only later, when you approach the Lender to Cancel Disbursement, Change Rates, Make Prepayment/Foreclosure etc. that you understand the Implications of the fine prints of the ‘Terms & Conditions’ when you have to Cough Up Certain Fixed Charges for each one of them.

Charges:  Up to Home Loan Disbursement

1. At The Time of Loan Application. Loan Processing Fees up to 0.5% of the Loan Amount or Rs 2,000 whichever is higher plus Taxes and Statuary Levies and Charges, as may be applicable from time to time.

2. At The Time of Loan Application (NRI Loan). Loan Processing Fees up to 1.25% of the Loan Amount or Rs 2,000 whichever is higher plus Taxes and Statuary Levies and Charges, as may be applicable from time to time.

3. Loan Application Cancellation. Forfeiture of Processing Fees, Taxes and other Statuary charges paid.

4. Loan Sanction: Re-Appraisal after 6 Months. Processing Fees of Rs 2,000 for Re-Application plus Taxes and Statuary Levies and Charges, as may be applicable from time to time.

5. Loan Disbursement Fees. (SD/MOD/MOE)

6. Loan Cheque Disbursement Cancellation. Up to Rs 500 plus Taxes.

Charges:  After Home Loan Disbursement

1. Switching Charges.

(a) To Variable from Fixed Rate. Conversion Fees up to 0.5% of Balance Principle Outstanding and Un-disbursed Amount (if any) or a Cap of Rs 50,000 plus taxes whichever is lower.

(b) To Lower Rate from Variable Rate. Conversion Fees up to 0.5% of Balance Principle Outstanding and Un-disbursed Amount (if any) or a Cap of Rs 50,000 plus taxes whichever is lower.

2. Pre Payment Charges/ Foreclosure.

(a) Fixed Rate & Floating Rates.  No charges, if paid from own sources (Own Sources does not Include Loans borrowed from other Banks/NBFCs).

(b) Combined Rates of Interest.

(i) During Fixed Period. 2% of Loan Amount plus Taxes and Statuary Levies and Charges, as may be applicable from time to time on the outstanding amount being so prepaid.

(ii) During the Variable Period. No prepayment charges.

Home Loan Miscellaneous Charges.

(a) Increase/Decrease in Loan Term. Rs 500 plus Taxes and Statuary Levies and Charges, as may be applicable from time to time.

(b) Delay Payment Charges. A Maximum of 18% per annum.

(c) Cheque/ECS Dishonour . Rs 200 per dishonor.

(d) Photocopy/List of Documents. Up to Rs 500 plus Taxes.

Conclusion:

Banks offer loan for home at various Rates of Interest. In most cases they DO NOT explain the meaning of fine prints that are printed in the list of ‘Terms of Agreement’ in detail. The Borrowers only come to start understanding the implications of the fine prints of the ‘Terms and Agreement’ when they approach the Lender for Cancellations/Changes in Rates/Prepayment/Foreclosures of Loans etc. and are asked to cough up certain charges for each one of them. Therefore, it is pertinent that the Borrowers understand the Detailed Implications of the Home Loan Interest Rates and avoid unforeseen/unplanned charges.

Source: http://www.articles.seoforums.me.uk/Europe-UK-US-Article/miscellaneous-charges-home-loans