home loan Archives -

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 »

09 Feb

Refinancing Loans – Significant Considerations

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Tags: finheal, finheal.com, home loan, loan against property, loan tenure, loan transfer
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Are you completely happy and fulfilled with the recent loan that you have?

What is Refinancing?
Refinancing loans of any nature are an outstanding option available for smart borrowers. It typically means uneven an existing loan with a new one under different terms to decrease risks and enjoy more benefits. With this, borrowers can with no trouble improve the terms and interest rate of the loan.

Do you wish to improve your present loan? Do you find the interest too much or the benefits too less? Do you wish to enjoy more funds, but your principal bank isn’t really complying? Would your life become easier and simpler, should your loan tenure were to boost?

If yes, Refinancing or Balance Transfer Top-Up is the best answer available for you.

The Indian financial sector has witnessed a number of loan takeovers by diverse financial institutions. Various schemes are often rolled out by banks to entice clients with good repayment history. They offer better loan amount as well as a lower rate of interest and longer tenure to stand out in the competition.

If the idea of a loan transfer is making you curious now, then the following discussion would be significant for you Of course, it has to be a well considered decision as you don’t want to switch without knowing the complete picture.

Why Balance Transfer or Refinancing is a Good Option?
Although, there can be lots of reasons to choose for refinancing, we have compiled underneath some key cases wherein you might want to choose for it.

To get improved your existing debt for business growth or other personal reasons and your principal bank isn’t ready to provide the funds you need.
To reduce the existing and oftentimes longer tenures.
To significantly reduce the monthly EMI payments.
To enjoy a reduced rate of interest.
To consolidate expensive loans or debts into one.

Things to think Before Refinancing Your Existing Loans
Have a look at some vital tips that you must examine before transferring your existing loan to a different bank.

Calculate Benefits vs. Costs

It is not essential that you will forever benefit from refinancing. Carefully calculate the amount you will save by re-financing your existing loan.

Factor in the penalty plus service tax since you are closing your existing loan without completing the tenure.

Be careful of Heavy Mortgage Charges

You will require mortgaging your assets for refinancing as a security, particularly for home loans or Loan against Property. Although home loans are by defaulting exempted from exit penalties, you still need to issue in the new mortgage charges.

Identify the correct refinancing option with lower mortgage charges. In a healthy scenario, you should be able to recover the costs of switching loans within 2 years.

Rate of Interest

The Interest rate is the vital aspect to recognize and choose a better refinancing option.

It is sensible to choose for re-financing only if the difference between your current interest rate and refinancing interest rate is at least 0.75 – 1.00 %, as well enhancing the present debate. This is because many banks charge exit fee for terminating the existing loan, and in that case you may end up paying more than you gain by interest difference.

Tenure

If you want lesser tenure, decide a higher EMI refinancing option and if you need lower EMI payments, opt for higher loan tenure. This relation between tenure and EMI is always inversely proportional.

If you have a rise in your income and want to repay your loan sooner, but your existing bank is not approving on restriction the tenure, then refinancing may help you a great deal.

Evaluate Loan Amount

When opting for refinancing, know that only the outstanding principal is transferred. Hence, you need to evaluate the outstanding amount of loan and interest paid till now.

Refinancing loans can be fairly risky for those with bad credit history.

Refinancing can be availed on any loan type, including home loan, car loan, and LAP. If you have a brilliant credit history, you can with no trouble apply for refinancing or loan top up.

It is sensible to look at all factors previously to allowing for refinancing, and if you feel that it’s an improved deal in the long run, then go for it.

08 Dec

Home Finance in Delhi with Finheal

Purchasing a house involves more than a few expenses, which are recognized as the acquisition costs. These are classified as assets, expenses and transaction costs, such as taxes, certification, duties, brokerage, and financing costs incurred for availing of the loans.

Three of these expenses are mentioned below

Capital costs

These include land and construction expenses, on-site and off-site infrastructure, space costs, parking, and interior expenses incurred to make the homes set for occupation.

Transaction costs

Properties may be purchased from a civilization, personal development, or community agencies. In addition, these may be resale homes or unique purchases acquired straight or through brokers. Transaction costs include expenses, such as brokerage, documentation, transfer or mutation charges, and stamp duty and registration fees.

Financing costs

If the purchase is funded throughout a home loan, the borrowers require paying finance costs. Some of these comprise interest paid previously to the equated monthly installment (EMI) starts, legal and valuation fees, processing charges, insurance, and administrative costs. Usually, these costs are directly relative to the home loan interest rate and the principal amount.

Funding sources in the Finance sector

Finance companies and commercial banks have different sources for availing of funds. Commonly funding is provided by three types of institutions, which comprise refinancing companies, primary lenders, and the secondary mortgage market.

Primary lenders

Some of these are rural banks, commercial banks, cooperative institutions, and microfinance companies.

Secondary mortgage market

Often include institutional investors.

The most significant funding basis for banks includes deposits at present and savings accounts and securitization. Housing finance companies (HFCs) raise funds through deposits, refinancing from the NHB, and domestic and international borrowings. Cooperatives in the country are most commonly funded by LIC, NHB, and General Insurance Corporation (GCI).

Key challenges for the Finance Sector

The formal housing finance sector in the country is limited to prepared sector personnel and taxpayers. As an effect, a vast amount of this financing requires is met during the casual sector. This is more well-known in rural areas where the right of entry to formal financial support is hard.

Now are five key challenges faced by this sector?

Having access to long-term and low-cost sources of funds

Procuring access to dependable credit histories and land records

Developing technical innovation and standards

Minimizing constraints through state laws

Extending business to low-income group and economically weak borrowers

During the previous two decades, the finance sector has considerably evolved. However, some steps require to be taken to get rid of the challenges faced by this sector. Improvements like creating a reliable database, addressing long-term funding concerns, implementing valuation standards and uniform codes for improved liquidity, product innovations, introducing safety norms, and rising consumer awareness would play a very important role in the enlargement of this sector.

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