Prepaying Home Loan – Benefits

Buying a home is a cherished dream for a large number of Indians and most people take home loan to accomplish this dream. It is quite a fascinating irony about home loan that anyone who aspires to buy home he/she want to avail home loan at the earliest. However, once the person gets the loan, the first priority in his/her life is to repay the loan. If you have availed home loan, prepaying the amount would be one of the most crucial decisions you would make in your life. 

Some of the important pros of repaying the home loan before the actual duration are discussed below:

• One of the most important benefits of prepaying the home loan is that you get cutoff on your interest payment. Not to mention, prepaying home loan would also result in quick reduction of your outstanding principal amount. This in turn, leads to the reduction of the interest accrued on the loan account. For instance, if you have availed home loan for Rs. 10 lakhs at the interest rate of 10%, you would be required to pay Rs. 1 Lakh (approximately) interest per year. If you prepay the loan by Rs. 1 lakh, your interest would reduce from Rs. 1 lakh to Rs. 90 Thousand. Thus, you would save Rs. 10 thousand every year for the whole duration of the loan. 

• If you wish to prepay your home loan, the housing finance companies generally give you two options. You can either reduce the number of installments you pay or you can reduce the monthly installment amount but keep the number of installments same. For example, if you want to prepay your home loan by Rs. 1 Lakh, you can opt for one of the following options:

a) If your original EMI payment is Rs. 10,000 for 120 monhts, you can reduce the tenure to 110 months and continue to pay Rs. 10,000 per month. 

b) You can keep the original duration as 120 months, but reduce the monthly EMI amount to Rs. 9,500. Thus, you get a saving of Rs. 500 every month.  

Most of the financial experts suggest the home loan applicants to opt for the second option because it helps the families to lessen their monthly cash outflow and ease the budget. The cash you save every month can be further used to prepay the loan. 

Indiabulls Housing Finance Limited is one of the leading housing finance companies in India that offers wide range of home loan schemes to suit the budget constraints of different individuals. If you have availed home loan from Indiabulls on floating rate basis, you would not need to pay any prepayment charges for full or partial pre-payment. However, if you have availed a loan on Dual interest basis (fixed and floating) you would have to pay 2% prepayment fees for prepaying any amount during the fixed interest period.

Knowing the Eligibility Criteria for Home Loan

Every year a large number of Indians apply for home loans, however, not everybody’s application gets approved. This is mainly because the housing finance companies in India have various eligibility criteria. Some of the important factors that the lenders in India consider before approving the home loan are discussed below:

• Financial credentials of the applicant

One of the most important factors the housing finance companies consider while processing the home loan application is the financial credential of the applicant. The lenders consider the total value of your assets and past debt/loan repayment records. If you are applying for home loan with a co-applicant, the lender would assess the finance profile of both the applicants. The housing finance companies assess your financial credential to determine your ability to pay back the loan.

• Annual/Monthly income of the applicant

The total monthly income of you and your co-applicant would have a significant impact in getting your loan application approved. This is because your income determines your capacity to repay the EMI (equated monthly installment). Usually, the housing finance companies in India require your monthly income to be about 30-40% more than the EMI. If you have any other monthly installment to pay, the chances of your home loan application getting approved may decrease.

• Age of the applicant:

Your age plays a vital role in getting home loan approved. Most of the housing finance companies in India have a minimum age limit to qualify for home loan. You need to be at least 18 years of age to be eligible for any kind of loan. The lenders are also apprehensive about approving loans for old aged people or people who are nearing their retirement age.

• Profession:

This is another important factor that is taken into account by the lenders before sanctioning the home loan application. The housing finance companies consider which profession they applicants are into so as to determine their repayment capacity. If you are working in an organization, you would have better chances of the loan application getting approved than if you are running a business.

If you are a first time borrower, you need to do your research well about the eligibilitycriteria of the lending institution and get all the papers ready in advance to avoid delay. If you have applied for home loan with Indiabulls Housing Finance Limited, we would guide you at every step and understand the eligibility requirements.

Knowing the Steps involved in Availing Loan against Property:

LAP (loan against property), as the name indicates is a special loan facility that is taken by pledging a commercial or residential property as security to the lending institution. The lender takes over the property as a security cover against the amount disbursed to the applicant. The lending institution owns the ownership right of the property pledged until the borrower repays the loan amount completely. Availing loan against property is a systematic process, if you are a first time borrower you must know the steps involved. The steps are discussed below:

Sending the application form:

The first step to avail loan against property is to approach the lender and fill the application form. Make sure that you fill the form correctly and provide the details required. Once you have filled the form, submit it to the lender so that they can review the same and process the application further. 

Processing of Application:

This is the next step. When you submit the application form, the executives at the lending institution carefully review the form and check the details. They review the income details, the loan amount applied for and the duration of the loan. Depending on the details you fill in, the executives at the lending institution would call you to further discuss the loan disbursement. While going for the discussion with the lender it is advisable that you take all the original documents to provide evidence of your income. 

After the discussion is over, the lender appoints a special team to investigate and verify the authenticity of your financial documents. Some of the important documents that you would require to submit are proof of income, papers relating to the property that you wish to mortgage and age proof. At this stage, you would need to pay the vendor the processing fees. 

Issuing a sanction letter:

After the lending institution verifies your financial credentials and is satisfied with it, the lender would send you a loan offer. The offer letter contains all the important details of the loan including the maximum amount of money the lender is willing to offer, the rate of interest applied, duration of the loan, type of interest applied and other terms and conditions. When you receive the offer letter, it is completely your prerogative to either accept or reject the offer. 

Verification of the property:

Once you accept the offer, the lending institution appoints a specialist team to investigate the legal validity of the property that you want to mortgage. During the verification process, it is better to keep your documents ready so as to avoid delaying of the disbursement. 

Forwarding the amount:

Once you submit all the essential documents and the lender is satisfied with the credibility of the property and your income, the lender pays the amount through demand draft (DD) or through a cheque. 

If you are availing home loans or loan against property from Indiabulls Housing Finance Ltd, our executives would work closely with you and guide you through every step. We take pro-active measures to help you get the required funds at the earliest. 

Basic Home Loan Terms You Must be Aware Of

Every month a large number of Indians apply for home loans. However, not many people are aware of the basic terms associated with home loans. If you are planning to apply for home loan, you must be aware of the certain important terms that are discussed below:

1. EMI (Equated Monthly Installment)
EMI refers to the amount of money the home loan borrower needs to pay each month to the lender as part of the repayment process. EMI amount includes both the principal amount as well as the interest. The amount you pay as EMI remains constant during the entire duration of the loan. For instance if you have availed a home loan for 5 years with an EMI for about Rs. 4,500, you would have to pay this amount to the home loan lender for 60 months. 

2. Down Payment
The housing finance companies usually lend only about 80 to 85% of the actual value of the property. The remaining or the balance amount has to be funded out of your own pocket. This amount you pay for the property is known as down payment. You need to pay the down payment upfront before applying for home loan. 

3. Sanction Letter
It is a letter issued by the housing finance company to the home loan applicant stating that his/her application for loan is approved. The letter contains the terms and conditions of the loan including:

• The total amount of loan sanctioned
• The rate of interest applicable 
• Type of interest – variable or fixed interest
• Duration of the loan
• Monthly installment amount (EMI)
• Details of the loan scheme (if the loan is offered under any special scheme)

4. Processing Fees
This is a fee that you need to pay to the lender upfront while submitting your loan application form. As the name suggests, it is a fee taken to process your application. 

5. Acceptance Letter

This is a letter sent by the loan applicant to the housing finance company. Usually, the applicants eagerly wait to fill this letter up. When you receive the sanction letter from the lender, you need to send them an acceptance letter stating you are willing to accept the loan offer. You need to send this letter within 1-3 months from date of receiving the sanction letter. 

6. Administrative Fee

This is a mandatory fee that home loan applicants have to pay to the lender. Generally, this fee is non-refundable and the amount you pay would vary from lender to lender. Generally, it is about 1-2% of the loan amount you apply for. 

When you apply for home loan with Indiabulls, we assist you to understand all the important terms relating to home loan and provide the right guidance to avail home loan. 

Tips to Improve Your Chances of Home Loan Getting Approved

Buying a home is an important decision in decision in life. If you have decided to buy a home, you may have to make arrangement for the finance required. The best way to get the funds required for your home is to apply for home loan. Several people struggle to get home loan because of their bad credit ratings. If you are pro-active in your loan application approach, you can get your home loan approved. The following tips will greatly help you:

Check your credit score

Before you start looking for lenders to avail home loan, it is advisable that you take your time to assess your credit history. You need to assess if your credit rating is good enough to meet the eligibility criteria of the home loan lender. If your credit score is over 620, you may well qualify for home loan. 

Try to improve your credit rating

Once you are aware of your credit score and you know that you the rating is not good enough to qualify for home loan make plans to improve your credit rating. The best way to improve your credit score is to pay off your outstanding bills and debts. As you repay the debts, your credit rating would improve steadily and your home loan would become affordable. It is also advisable to consult an expert financial adviser and get tips on how to improve credit ratings. 

Increase your down payment

While buying your dream home try to pay as much as possible upfront as down payment. The more money you pay for the home, the loan terms would become more favorable for you. If you are able to pay about 10% of the total value of the property you wish to buy, it would greatly improve your chances of home loan application being approved. 

Prepare a list of home loan lenders

The key to get the best deal on your home loan is to look for different lenders that are reputed in the market. You can refer to the website of the lending organizations to know their credibility. One of the trustworthy and reputed home loan lender in India is Indiabulls Housing Finance ltd. 

Apply for loan

Once you have shortlisted the lending institutions send your application for home loan to the lender. Today, with online banking, applying for loan has become an easier process than ever before. You can submit the form online and submit it. If you are availing home loan from Indiabulls finance limited, our executive would contact you to discuss the loan disbursement process as soon as they receive the application. 

The key to get your home loan approved is to do your research well. With Indiabulls, you can be sure that you get all the advice you need on your home loan and we make the process hassle free. 

Knowing the Different Types of Home Loan Interest Rate

No matter if you are looking to buy your first home or looking to move into a bigger home, availing home loan could be your best deal to meet your financial needs. The financial organizations that lend home loan charge a certain percentage of interest on the amount funded. If you are a first time home loan borrower, it may be difficult to decipher the significance of different types of interest rates. The types and significance of different kinds of home loan interest are discussed below.

Home interest rates are broadly classified into two types, namely fixed interest rate and adjustable/variable home loan. 

1. Adjustable interest rate:

This type of home loan interest is also known as variable interest. When you avail home loan, the interest is usually fixed for a certain period then in the long run you may have to repay the monthly installment as per the prevailing interest rate in the market. A major benefit of opting for adjustable rate home loan is that the interest rate during the initial period is much lower as compared to fixed rate home loan. 

If you are looking to avail home loan, it is best advised that you do your research well and apply for loan at a time when the interest rate is low. Lending institutions, like Indiabulls Housing Finance Ltd offer attractive schemes. You can contact the Indiabulls executives to know about the interest rates. 

2. Fixed Rate of Interest:

Majority of the people who avail home loan opt for fixed interest rate loan since the interest amount is fixed for the full tenure of the loan. Fixed-rate home are further classified into 2 types in accordance to the loan tenure. 

• 15 year home loan

This type of loan is ideal for people who have a decent income and wish to repay their loan within a shorter period. The interest amount for this kind of fixed rate home loan is considerably lower than the 30 year old home loan. 

• 30 year home loan

This type of fixed rate home loan gives you the opportunity to avail home loan for a longer duration. People usually consider this type of loan more affordable as the monthly installment is lower than the 15 year loan. The lower monthly installment makes it easier for you to repay the loan.

While Indiabulls Housing Finance Ltd does not offer home loans at fixed interest rate, you can find a wide range of home loan offers to buy your dream home. With Indiabulls you can be sure to get personalized loan to suit your needs. 

A Guide to NRI Home Loan - Knowing the fees

Several NRIs (Non-residential Indians) aspire to buy a home in India. It is more a necessity than luxury to have a beautiful place that you can call home to live comfortably with your family. If you are an NRI and are looking to buy a home in India, you would be delighted to know that there are plenty of financial institutions in India like Indiabulls Housing Finance Ltd that are willing to offer NRI home loans at attractive interest rate.

You can avail NRI home loan for various purposes including:
•    Purchasing a new flat
•    Building/construction a new house
•    Carrying out repairs or renovation work in your existing flat
•    Buying a plot of land to build a new home

Just like other home loans, NRI home loans too have certain fees and charges associated with it. Some of the fees that majority of the lenders in India levy are:

•    Processing Fees
Processing fees are also commonly referred as administrative fees. If you are applying for NRI home loan, you would need to pay this fee along with the application form. This fee is usually non-refundable. The processing fee levied by the lender is usually about 0.5% to 1% of the total amount you wish to avail. While applying for NRI home loan it is advisable to ask the lender if the processing fee includes service tax.

•    Interest Rates
The interest rate applicable on the NRI home loan is usually slightly on the higher side as compared to the home loan for resident Indians. The interest rate usually varies from lender to lender depending on the loan duration, loan amount and assessment the lender makes about the borrower.

•    Valuation charges
This is a charge that is levied by the lender to evaluate the actual value of the property you wish to buy.

•    Late payment fees
As the name suggests, it is a fee that is levied when the lender fails to repay the monthly installment on time. The fee is usually about 2% of the EMI.

•    Prepayment charge:
If you want to repay the loan prior to the actual tenure of the loan, the lender would ask for prepayment charges. The amount of prepayment fee you would need to pay may vary from lender to lender. This is not a mandatory fee as there are plenty of lenders that do not charge prepayment fee.

Indiabulls Housing Finance ltd, is the 3rd largest Housing Finance Company (HFC) in India and we offer attractive home loan schemes for NRIs. With more than 200 customer service walk-in branches spread across the country and with office in International locations we assist NRIs to accomplish the goal of owning a home in India.

Benefits of Using Home Loan EMI Calculator for Buying Your Home

Equated Monthly Installment, which is commonly referred as EMI is the amount you pay back to the home loan lending institution as part of the repayment process of your home loan. Typically, home loan EMI consists of both the principal as well as the interest amount. While you start repaying the home loan, in the initial period, the interest component is higher than the principal. Gradually, the principal becomes higher than the interest.

If you have availed home loan Indiabulls or from any other financial institutions you can use the EMI calculator to determine the exact amount you need to pay each month. While determining the EMI for home loans, the financial institutions use a standard formula and it involves complicated calculations. The major benefit of using the EMI calculator for the borrowers is that this tool applies the same formula and gets you the correct figures. By using the Indiabulls home loan EMI calculator you can be sure that the figures you get are consistent with the Indiabulls lending policy.
 

Before you apply for home loan it is vital that you know how much amount you need and afford to borrow. You need to take your time to assess your current and future financial condition and determine the amount you can afford to repay each month. Applying for home loans that aptly fits within your budget would increase your chances of loan application being approved.

How to use EMI calculator?

The tool is very easy to use. To know the amount you need to repay, you need to enter certain basic details, which are mentioned below:

•  The amount of loan you want to avail

•  The duration within which you would like to repay 

•  The interest rate

Once you enter the details, the calculator would instantly display the exact amount you would need to pay during the entire duration of the loan.

While applying for home loan with Indiabulls Housing Finance ltd, you can easily find the EMI calculator on the website. Using the EMI calculator would surely help in making an informed decision regarding your home loan.