Monday, 27 August 2018

Must To Do List Before Buying a Home


Buying your own house is kind of a big deal for people even today. Even with a lot of loan options available in market, one always stays at the edge when buying a dream home. Many of us make quick and wrong decisions when it comes to getting a property. The mistakes can be short term or long term. Short term includes your transactions with the property developer or the banker and long term may include you making silly mistakes while making the EMI payments. It is really important to understand these aspects before you dive into the property market pool.
If you are in market hunting for a home and do not know where to start, you are at the right place. Today we will cite you the must do list when it comes to buying a home.
  1. Know your credit score
It goes without saying that you will be opting for a loan when you are trying to buy a house and what is the main component when it comes to loan hunting, that’s right! Credit score. A credit score plays an important role when it comes to loan processing. Before you apply for a loan, know your credit score and understand where you stand in front of the home loan lenders.
  1. Start hunting for an ideal lender
There are many options available in market when it comes to home loans. Various banks and non-banking financial companies have different schemes related to home loans. You should know which lender will suit you better. The best suggestion would be to contact your home branch and see if you have any pre-approved loan options. ICICI home loans are the best lenders in the market who have attractive interest rates and less processing fees.
  1. Calculate total cost of the property
You may fall for various offers from the developers and the banks when it comes to buying a house. Many banks may portray that they give up to 95% funding on the house and after you make the 5% you come to know that the 95% funding was on the property price excluding government charges. Before you make the purchase, you should ask for the cost sheet from the developer and confirm what all components are included in the loan so that you do not have any surprises later. It is suggested to do a proper cibil score check to get maximum funding.
  1. Only buy what you are comfortable paying for
Many of us make this mistake. We go for a high value property just because we are eligible of getting the loan amount sanctioned. What about the future? We know nothing what would come across in the future. Before buying the house make a mental estimation stating if this is what you want? And if its worth it in the future to make life simple.

  1. Do a thorough check on the developer
You don’t want to be duped in this property tornado. You must have heard about a lot of examples where the developer has made a fraud and has run away with the money. Always buy property with reputed developers who have well known name in the market so that you minimize your chance o f being duped.
  1. Know the growth of your investment
It’s an amazing feeling of owning a house, but you will have to consider other factors as well when it comes to buying a house. Just make sure the property your buying should give you fruitful returns in the future. The property should be more like an asset rather than a liability.
  1. Pay EMIs on time
Buying a house on EMI is kind of risky, because if you do not pay your EMIs on time you may lose your property to the lender. This will not only affect you mentally but will also hurt your chances of getting a loan in the future.
Do not lose your sight on small mistakes you can commit while purchasing a house. This can cost you in the long home loan run.

Friday, 24 August 2018

Things to Take Care of while Applying for Personal Loan


Personal loan is an instant short term solution for cash strapped individuals. If you just search for “Personal loan” on Google you will get numerous options of lenders willing to offer loans at attractive interest rates. Some advertisements are so appealing that people simply get carried away and take the offer without finding out the important details. Here are some important things that one must take care of while applying for a personal loan.
Purpose of loan- The one key decision that one must make is whether to take a loan at all or not. One must draw a line between essentials and luxuries. While taking a personal loan for medical emergencies, education or repairing a house makes sense, one must not use it to finance a vacation abroad or invest in share market. Personal loan interest rates are usually very high, hence these loans must be take only in times of urgent need.
Research for options- One must not only compare the offers on personal loans provided by different banks, but also evaluate other options like a top up home loan or loan against property. Find out the interest rates, tenures offered, prepayment charges and other terms of various types of loans to get the best deal.
Check your credit score- Banks pull your credit report to assess whether you are a reliable borrower. They reject your application if you have a low credit score or else charge exorbitant interest rate to cover for the risk. It is wise to check your credit score before applying for the loan, so that you know your likely prospects of getting the loan sanctioned. If you have a low score, take some immediate steps like paying off your credit card debt to improve the score by a few points. A high score can be used to one’s advantage for negotiating for a lower interest rate.
Type of interest rate- Find out whether the bank charges a flat interest rate or reducing balance interest rate. Flat interest means that the borrower pays the interest on the entire loan amount for the entire tenure of loan. Reducing balance means that the interest is charged only on the outstanding loan amount. So as the EMIs get paid and the principal amount reduces, the interest payable also reduces. Flat interest rates are typically offered at a lower rate, but that does not mean that your total interest cost is less. Sometime reducing balance rate method results in lower cost of borrowings even if the rate is slightly higher.
Other charges- Apart from the interest rate, one must also find out about the processing fees and prepayment charges that a bank levies. Processing fee is usually 1-2% of the loan amount. Include it in the total cost of borrowing to compare the options you have. If you are struggling with cash flows find out how much late payment fees does the bank charge if you miss the deadline of paying the EMI amount. Prepayment fee is another charge that many banks levy in case you wish to prepay the loan when you have sufficient cash available. If you want to close the loan as soon as your cash situation improves then assess this cost before you make a choice.
Read the terms and conditions carefully- Sometimes the relationship manager hides a lot of things, just so that he can close the deal. Read the terms and conditions yourself before you sign the dotted line. You must know what you are agreeing to as the agreement becomes legally binding.
Avoid add on offers- Sometimes banks try to sell additional products with the loan like life insurance policies. Don’t believe them when they say you do not have to pay anything for it. It’s just that you do not pay anything upfront. The premium for such policies gets added in the EMI amount.
Borrow only what you need- Personal loan is a very expensive form of debt. Borrow only the amount that you need and not what you are eligible for. Bank executives use various sales strategies to get you to borrow a big amount. Do not give into such tactics. Why pay an interest on the amount that you don’t need?
Make sure you can afford the EMIs- Since personal loans usually have a shorter tenure and a high interest rate, the EMIs put a strain on one’s monthly budget. Do an honest assessment and borrow money only if you are sure of your capability to service the EMIs. Any missed or delayed payment will not only attract penalty but also pull down your score.

Friday, 3 August 2018

How to use the Compare Option to Decide on Best Car Loan

Abhishek wants to buy a new car, this being his first car he is very excited and wants to take the decision after careful consideration. As he began to compare the various brands and models he realized that there are so many factors that require attention. He did not get bogged down and did manage to find what he wanted and also something the fitted within his budget!
Just like buying a car is a decision that requires careful comparison between options, so does choosing the right lender too! You need compare the loan options available before choosing the right one.
Comparing Car Loans to Choose the Right Option:
If you are looking for car loan you would know that there are numerous lenders in the market that can be approached. So how do you decide which is the best option for you? Here are a few factors that can help you make decision:
  • Interest Rates:
Needless to say interest rate is the first and usually the most crucial factor when it comes to choosing a lender for any kind of loan. So do look at the rates at which car loans are offered by various banks/NBFCs before you choose one. Interest rates range from 9-5% to 14% depending on which FI you approach. It is important to mention here that if you have a good credit score then you have an edge. You can approach any lender without being worried about your loan application being rejected due to a low score and you can negotiate a good deal for yourself too if you have a good rating.
  • Processing Charges:
Processing charges as is obvious from the name are charges that are levied by the FI for getting the loan application processed. They are not similar across board, some may charge a flat rate irrespective of the loan amount, and some may charge it as a percentage of the loan amount while other may not charge any fee at all. Obviously you would like to approach the one who does not charge any amount as this fee could burn a hole in your pocket but bear in mind that other aspects also need to be considered when making this decision.
  • Loan to Value Ratio:
Loan to value ratio is the amount of loan that you can get as a proportion of the asset value. This again varies across lenders. LTV defines the maximum loan that you can get as a percentage of the car value, the rest you need to pay from your own pocket. Thus you should have the rest of the amount saved to make as a down payment. If you have a larger amount saved you could opt to take a loan lower than the LTV ratio too, this will reduce your overall interest cost. If you have no savings to make a down payment then there are few FIs that offer 100% finance but you will have to meet the car loan eligibility set by the lender in order to get the loan sanctioned.
  • Prepayment Charges:
Prepayment charge is an amount that may be charged by the lender in case the borrower chooses to pay the loan amount before the term ends. These are mentioned in loan agreement and may be also mentioned in product details. It is a good idea to have clarity about these and compare the charges that would be levied by various lenders before choosing one. While some banks may not charge anything at all for a prepayment, some may not charge anything after some time has elapsed while others may charge an amount as percentage of the outstanding amount.
So buy your dream wheels but before doing that compare the various options available before choosing one.