Tag: credit score

Buying A House? 6 Things To Keep In Mind While Arranging For A Down Payment

The biggest aspiration of an average Indian family is to buy a house. Though home loans have made it quite easy for people to make the payments over a span of 15 to 20 years, it does not offer a complete solution. Banks fund only 80% of the property value and the borrower has to arrange for the balance on his own. As the property prices are soaring high, arranging for this 20% down payment is also an uphill task. It would take a few years to set aside and accumulate funds for the down payment.

Here are 6 things that you should keep in mind while arranging for the down payment

 

Start planning early- As soon as you become financially independent, you must start putting aside a portion of your salary for this purpose. The price of the house you wish to buy, and the amount you can set aside each month will determine the time it will take to collect the required amount. Instead of keeping this fund in a savings account, you may also choose other options that fetch better returns. Investing in debt linked mutual funds through an SIP is a secure way of accumulating the funds. You can also invest in equity if the time frame you have in mind to buy the house is more than 3 years. By starting early and following a discipline financial approach you can easily achieve this goal.

 

You must handle your existing debt responsibly and take care of the factors that affect CIBIL score calculation to ensure that your credit profile is in good shape. Banks are flexible with the amount of down payment they ask the buyer to put forward if he has an excellent credit score.

 

Liquidate existing savings– If you are planning to buy a house very soon, then taking stock of your existing financial resources and then liquidating your investments (Stocks, Mutual Funds, Fixed deposits, gold, bonds) is the most effective option. When you do so, do not forget to keep a portion of your savings for emergency requirements and short term needs of cash.

 

Borrow from relatives- If your own savings are still falling short, you may seek help from your friends and family. Remember to take only the amount that you can easily repay after an agreed upon time. Though this borrowing is usually interest free, it is still your liability and you need to keep your word in order to avoid straining your relations.

 

Other borrowings

Some employers offer soft loans to its employees at little or no interest charges. You can try and explore whether this option is available to you. An amount will be deducted from your income every month as repayment towards this loan.

You may also raise funds by borrowing against fixed deposits, mutual funds, stocks or jewellery, when liquidating them isn’t a wise decision. The loan amount will be only 70% of the savings value but it can be availed at a very low rate of interest.

You can also withdraw money from your provident fund to arrange money for the down payment.

Loan can also be taken against a life insurance policy at low interest rates. This is not an ideal decision, since it adds up to your liability.

A last resort can be to take a personal loan. But this is a very expensive option as the rate of interest can be as high as 20%. These loans can put a severe strain on your budget and hence they should be avoided as far as possible.

 

Calculate down payment amount correctly

 

As mentioned earlier banks finance upto 80% of the property value. However for property worth less than Rs 30 lakhs banks may even finance 90% of the value. Some banks may reduce it required and offer a greater amount of loan if the borrower has an excellent credit score. So check the loan to value ratio offered by your bank to estimate the down payment amount that you need to arrange.

If your credit score is low you may even be asked to put in a greater percentage of down payment. Find out the factors that affect credit score calculation and work to improve your CIBIL score to avoid such a situation.

When banks offer home loans, they do not include the stamp duty and registration charges in this amount. These expenses have to borne by the buyer completely. So make sure you are clear about the amount that you need to arrange.

 

Be sure of your capacity to pay the EMIs

Even though you can take a home loan for 80% of the property value, you don’t necessarily have to. Make sure you can pay the EMIs comfortably before taking on the liability. If you think that EMI will put too much strain on your monthly income, then you may want to postpone your plans so that you can arrange for a bigger down payment and reduce the loan amount.

With proper planning, budgeting and a disciplined approach you can ensure that the down payment amount is readily available when you need it to buy the house.

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Top 4 Education Loan Schemes in India

Quality education usually comes at a high cost. Fortunately, meritorious students don’t have to give up on their dreams due to the lack of finances as long as we have excellent student loan schemes in India.

The following are the top 4 education loan schemes that you can check out:

  1. United Bank of India Student Loan

United Bank of Indian offers student loans for those who want to pursue higher studies in India or abroad. The requirements for education loan are that you must have Indian nationality and must have passed the qualifying exam for the institute you wish to enroll in.

You can get an education loan up to Rs. 10 lakh for Indian institutes and Rs. 20 lakhs for institutes located abroad. The interest rates are as follows:

  • MCLR-Y+2.20% i.e. 10.95% for loans up to. 7.5 lakhs
  • MCLR-Y+2.15% i.e. 10.90% for loans above Rs. 7.5 lakhs

You can also enjoy a 1% concession during the moratorium period contingent on you servicing the interest monthly and regularly during that period.

  1. Punjab National Bank i.e. PNB’s Saraswati

PNB offers student loan in the form of PNB Saraswati product for approved courses like CA, CFA, etc. Just like other loans, to apply for Saraswati you must be Indian national and have cleared the qualification examination to a higher education course you are interested in. The maximum loan tenure allowed is 15 years.

The following are the interest rates for the PNB Saraswati education loan:

  • MCLR-Y+1.10% i.e. 9.25% for loans irrespective of the amount where 100% tangible collateral security is provided
  • MCLR-Y+0.60% i.e. 8.75% for loans for education from premium foreign universities or the ones covered under the PNB Udaan Loan (up to Rs. 7.50 lakh)
  • MCLR-Y+0.10% i.e. 8.25% for other types of education loans
  1. State Bank of India’s Student Loan

SBI offers a variety of education loans at attractive interest rates. You can, in fact, get even better rates if your free CIBIL score rating turns out to be excellent.

SBI offers education loans up to Rs. 10 lakhs for higher education in Indian institutes and up to Rs. 30 lakhs for institutes located overseas.

One of the benefits of SBI student loan over others is that you don’t have to pay a processing fee.

The following are the current interest rates:

  • 00% for loans up to Rs. 7.5 lakhs
  • 75% for loans above Rs. 7.5 lakhs

Note: Girl students get 0.50% concession on the interest rate

  1. Cent Vidyarthi

If you have already secured a seat in a good college and have an attractive free CIBIL score rating, then the Cent Vidyarthi student loan could be the right product for you.

Cent Vidyarthi scheme is offered by the Central Bank of India under which you can get an education loan up to Rs. 10 lakhs for studying in India and up to Rs. 20 lakhs for studying overseas. However, if you secure the loan with 100% collateral then you can get an even bigger loan.

Cent Vidyarthi Loan repayment begins after 12 months post the completion of your studies or 6 months after getting a job.

The following are the interest rates for the Cent Vidyarthi scheme:

  • MCLR+2% if you are a male student
  • MCLR+1.50% if you are a female student

You can get a 1% interest concession during your study period if you service the interest on time.

How to get good Interest Rates?

Student loans can often be challenging when it comes to repayment. Thus, it helps to get the best interest rate possible.

The following are some of the best tips that can help you in securing the most attractive interest rates:

  • Check your credit report. If your CIBIL score is average, then you can improve it to get a better interest rate.
  • If your academic performance has been quite good, then also you can try to negotiate with your bank to get a better rate.
  • Most banks offer interest rate concession to those students who are punctual with their interest service during their study period. So, you can enjoy a better rate in this way as well.

Always remember to check your credit report before applying for any type of loan. If your report is not satisfactory then not only you won’t get a good interest rate, it’s possible to lose the very chance of getting the loan itself.

Till Debt Do Us Part: Credit Tips for Newlyweds to be taken

You have great plans for your life, same goes with your married life as well. Those days are gone where the girl used to look for a dream boy who would come in a horse to ask for her hand for marriage or vice versa for a guy. In today’s world marriage is complicated and it is really important to understand your spouse’s financial status and also understand their spending and saving patterns. This is the reason why these young people seek their parent’s permission to understand their partner better before they get married.

Let’s take that you got married and you both are working class, you make financial budgets for every month and also make investment strategies and allocate responsibilities for who pays what bills. You will find difficult to comply such budgets, especially when you were financially independent and used to take such decisions on your own when you were single.

As a couple it is really important to exercise this activity for a healthy relationship and also to help improve cibil score of each other, so that in future you are planning to get house of a car you do not face any issues with speedy approvals.

The following tips will help you to make your financial life great when you are newly married,

Know both your credibility

It is important to understand both your financial status, opt for a credit bureau report initially and see how the scores look and try working out together to upraise the cibil score. if your partner has an existing debt or interest which is supposed to be paid, pay it off so that you do not face any inconvenience while opting for a fresh line of credit.

If there is no cibil score of your partner that is your partner has never opted for a loan in their entire  life, try getting a loan without cibil check and start making your way to a good and healthy credit score.

If there are some lines of credit left which you need to repay, make sure you have all the repayment dates in your mind, so that you do not skip any monthly installments which would lead to a bad cibil score.

Do not close any preexisting line of credit

Many newly married couples make this mistake, immediately after getting married they understand each other’s spending habits and if one of them is a spendthrift, the other partner will ask to close a credit card or two. Closing a credit card won’t help you to control your spending habits or help you save money but instead it will make an adverse effect on your credit score. Yes, if you close a line of credit, the credit score takes a huge dip which will cause you a lot of problems in future when you are deciding to buy a house or a vehicle.

Always keep your credit card accounts open and instead ask your spouse to control their expenses and do make small transactions on the credit cards to avoid annual fees. This way you will be able to pull off a great cibil score with fewer hassles.

Only apply for a loan when needed

There are some marriages where both the partners are spendthrifts. In this kind of a relationship both spend their money without having any second thoughts and when their heads are sunk under high debts they realize their mistakes and apply for a loan to clear their debts and this pattern continues. Always remember apply for a loan only if you need one. Do not take a loan just for casual sake and end up being in financial crises. Understand your needs and try few traditional options like borrowing from parents, relatives and if nothing is working out go for a loan.

A new marriage demands a lot of things, love, loyalty, integrity and also financial stability. Spend your money well and save a lot because getting married is a huge and your partner will expect a spouse who has financial knowledge and integrity who would lead to a brighter future.