Category Archives: Home Loan

30 Jan

What is Home Loan Balance Transfer Process? | Finheal.com

Home Loan Balance Transfer involves the process of transferring existing Home Loan account to another bank or NBFC [Non-Banking Financial Institutions]. People usually go for the Balance Transfer when they come to know, if any other financial institution is offering a lower rate of interest and attractive loan which is easier on the pocket as well as repayment option that suit the needs. Read more »

25 Jan

How to buy a home with bad credit?

Home Loan if Bad Credit

In the present day and age that we are in this world in, it is very significant to have a healthy credit score before you believe of applying for any fresh credit line. Particularly when you are opting for a long-term loan such as a home loan your CIBIL score plays a very significant role. With the Reserve Bank of India having made it compulsory for banks to look at the credit score of an individual as a part of their credit evaluation process, banks must use your credit score as one of the barometers of your credit health. But does this mean that an entity with bad credit cannot dream of purchasing property with the aid of a home loan?

Don’t opt for traditional lenders
If your CIBIL score has curved in below 650 it is best not to go to a customary lender like a bank. NBFCs are recognized to be a little more flexible than banks as they look at other events of creditworthiness such as job profile and scope of future income, and even accept collaterals such as large premiums or gold jewellery, but even then, such loans come at a higher rate of interest that you will find difficult to negotiate if your score is low. The other option is to approach a P2P or a peer to peer lender if you are looking for a loan for a shorter tenure. The advantage of P2P platforms is that it connects the borrower to the lender, because of which you, the borrower, can save the intermediation cost that you would have otherwise paid to a traditional lender. Assessment of this nature enhances your probability of getting a home loan even with a bad credit score.

Opt for a lesser LTV and lower FOIR
The LTV is a significant ratio that is taken into consideration in a home loan. Irrespective of the lender, SBI home loans, HDFC home loans or DHFL home loans, it is the Loan to value ratio captures the amount of loan as a ratio of the total value of the property. According the RBI diktat a bank cannot lend more than 85% of the LTV, but banks more often than not go after their own set of guidelines while deciding the LTV. If you have a lower credit score you can choose for a lesser LTV which will improve your down payment but make you eligible for a home loan at a decent home loan interest rate.

While assessing you creditworthiness, banks also think another ratio called the Fixed obligations to income ratio or FOIR which basically is a calculator of the total amount of “fixed obligations” or expenses you must create in a month (inclusive of your home loan EMI) as against the salary you draw. Banks fix the EMI of an individual in a manner which is lower than the actual FOIR, even when a potential borrower has a good CIBIL score. In case of poor credit score, you could ask for the lender to think an even lesser FOIR, which will then translate into a lower loan amount.

Introduce a guarantor
A bank may have the same opinion to sanction a home loan to you still if you have a bad credit score if you can promise the presence of a guarantor. Pointless to say, the guarantor must have vigorous finances and a healthy credit score. He must also be aware of his responsibilities in case you are not capable to make a repayment on the loan because of some compulsory that you may face later on.

Improve your credit score
If none of the above options seem reasonable to you, you can take a footstep back and make a decision to get better your credit score before making a new application for a home loan. In fact, if you have the alternative to do this, this should certainly be considered seriously. The reason for this being that though a person with a bad credit is eligible for a home loan, he must make cooperation either on the interest rate or tenure front, eligibility ratios and even the lender. A good and healthy credit score and a healthy credit record on the other hand may help one clear the initial obstacle of eligibility and help him admission cheap and appropriate credit. If you are in a similar position and are at a loss about how to improve your credit score, you can always seek the help of credit repair or a credit development agency. Such an outfit will not only help you repair your credit score, but will also put you on a path that will not lead to similar credit related issues in the future.

Deciding to get a home loan to purchase one’s first property is perhaps the largest life altering decision that one is called upon to take in a lifetime. Doing so with a good CIBIL score is a sensible move.

23 Jan

Refinance Home Loan Tips You Need To Learn Now

Tips to Refinance Home Loan

When the base rates decrease, the home loan rate of interest is slowly falls. This is huge news for the new home loan seekers who can avail a home loan at the present at a lower rate of interest. Borrowers who have by now taken a home loan at a higher rate of interest would be at a defeat.

Banks would now try to take hold of a greater market share, by calling to mind new customers for taking home loans at a lower interest rate. But what about the obtainable customers who had taken a loan before the interest rates cut down? Should they refinance home loan or their loan to avail the advantage of a falling interest rate?

Refinancing of a loan fundamentally means restructuring the existing loan, in terms of tenure, interest rate and type. Refinancing home loan involves varying costs such as the pre-payment penalty by the existing bank and the processing fee by the new one. In addition, these charges differ from bank to bank. Therefore refinancing is not always considered a correct decision.

Before making a conclusion, you must check whether the savings made after opting for refinancing are higher that the costs involved in refinancing. If it isn’t, then opting for refinancing is not the correct conclusion.

If the refinancing interest rate is smaller than the current interest rate by 1% or more then you should preferably opt for refinancing. If you expect a reduction in the interest rates, you must refinance your high fixed rate loans. Similarly, if you expect the rates to boost you must go in for a fixed rate refinancing.

The tenure and the interest rate are straight relative to each other. The longer the tenure, the higher the total interest paid and vice versa. So if you obtain a salary increment, refinancing your home loan at lesser tenure is the best alternative.

Refinancing home loan is not always the most excellent bet when the interest rates are low. It could work against you if the costs concerned are higher than the savings made. Work the math and then make a conclusive decision.

02 Jan

Factors that have an affect on Home Loan Tenure

Home Loan Tenures | 10 Years, 20 Years, 30 Years

The home loan tenure and home loan amount are positively connected. So, higher the home loan tenure that you choose for higher is the home loan eligibility, subject to the smallest amount margin necessity relative to the value of the property. So, it makes sense for a borrower to opt for a longer tenure, so as to be able to have higher loan eligibility, as well as the flexibility to prepay it, in part or in full. Most home loans, by default, have a high tenure of 20 years and in some cases even up to 30 years. The tenure of a home loan depends on a variety of factors, which you should be conscious of, before you move toward the lender for your loan.

Age and source of income of the borrower Home loans are known, on the basis of a borrower’s ability to service it and this, in turn, is strong-minded by your income. As a result, the overall loan amount eligibility will depend on your age and the retirement age. For salaried individuals, 60 years are generally taken at the retirement age and thus, the maximum tenure of home loan you would get would be equivalent to the remaining years of service. In case you are self-employed, lenders are eager to treat 65 as the retirement age for professionals and businessmen. Thus, self-employed borrowers, by default, may have higher home loan eligibility. A person who is about to retire, is not usually eligible for a home loan, unless s/he is able to prove that they have another regular source of income.

Age of the property

The age of the building also plays a very significant part, in determining your home loan eligibility. As the house is pledged as a safety for the home loan, it is the only option that the lender has, in case of a default in servicing the home loan. As a result, the lender will not provide a home loan for a tenure that is longer than the remaining life of the property that you intend to buy.

The tenure of a home loan cannot be longer than the residual life of the property. In case a longer tenure than the residual life of the property is granted, the lender carries the risk of losing their safety, in case the property is destroyed or collapses. This is why lenders normally do not finance old and dilapidated properties. Leasehold properties In case the property is constructed on a leasehold land, the home loan tenure cannot be higher than the balance period of the lease, despite the fact that the property may be in good condition, as the lender would be reluctant to risk the possibility of the lease not being renewed. Such cases are uncommon, as land lease are typically approved for a fairly long period. However, this situation may happen for a property, if the lease period of the land is approaching its end.

13 Dec

6 Serious Events at the time of closing your Home Loan

Finheal
Home Loan
Tags: applying for the loan, CIBIL Score, EMI
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Are your creation prepayment of your house loan? Or, are you settle your mortgage with your bank? Keep in mind to do these 6 things at the time of conclusion!

Collect the documents

A person has to offer the original papers of the property while applying for the loan. Make sure that an entity collects the entire original document submitted to the bank after all the EMI’s are cleared. Once a person signs the permission that he has collected all the documents than he cannot responsibly the bank if any one of the documents is left to be collected.

Collect no objection certificate (NOC)

Once loan clean and documents are collected. An entity should get a NOC from the bank. This certificate states that all the dues have been cleared by the customer and no payment towards the loan is missing. The certificate should take in all the particulars of the property against which the house loan has been in use.

Get rid of lien on the property

In some states, the bank may have registered a deed with the registrar for the home loan if the credibility of the borrower is doubtful. Once all the dues are empty by the borrower it is necessary to come to an end the lien. The continuation of the lien will not allow the borrower to sell his property.

Update the CIBIL Score

A borrower of the loan should ask the bank to get his CIBIL score updated. It is necessary to update the CIBIL score because it makes easier to get the upcoming loans if the CIBIL score is good (i.e. 750+).

Obtain a new Encumbrance certificate (EC) from the registrar

Once a person has acknowledged NOC and cancelled the existing lien on the house loan. It is necessary to apply for EC certificate from the bank. This certificate gives detail about the financial transactions carried on the property. This will complete the home closure process.

Make confident you close your loan account and not resolve it.

Remember, if you do resolution with the bank on your awaiting loan amount then you CIBIL score will get impacted. No agency will amend the credit report. CIBIL agency checks the borrower’s credit report. CIBIL agency keeps a check all the way through a DPD i.e. Days past due how many months of payment are still undue. It contain the past 36 months of the credit information of a borrower. So once the sum is done, it will take 12-24 months to improve the CIBIL Score.

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