Tag: home loan interest rate

How to choose the right home finance company?

Owing to the rising prices of property, availing a home loan is one of the crucial steps when you plan to build your dream home. A lot of comparative analysis goes around when you consider factors governing the decision to choose the right bank or financial institution.

While you finalise a residential property and search for a lender to back your purchase, it is equally important to have a clear picture of your financial state in your mind. Your CIBIL score undeniably plays a significant role in your loan approval. In case you find that, your cibil score is low; the first step would be to search for a home finance company that offers home loan despite poor credit history.

While there is no denying the fact that you should compare the deals by different lenders before making the decision, there are several other aspects you need to keep in mind.

Loan Amount: With robust credit score you can avail loan for up to 85 percent of the property cost. The lender would consider your disposable income, property value, age, occupation, credit history, and number of dependants before finalising the loan amount. The more the lender approves, the lesser would be your down payment, but it would attract a higher EMI. If higher EMI is not a concern and you do not want to spend too much from your pocket as down payment; choose the lender that approves a higher loan amount.

Rate of Interest: Home loan interest rate is something that would influence your monthly instalments. Conduct a methodical online survey for rates and select the most competitive one. Have a proper understanding of the Retail Prime Lending Rate (RPLR) before sealing the deal. For banks, the lending is higher than or at the base rate as they cannot lend lower than the base rate. The housing finance companies give a discount on the RPLR. Understand it carefully and pick the right lender.

Consider the hidden costs: Most of the times applicants overlook the hidden costs like processing charges, document charges, administrative fees, repayment charges, switch fees and verification charges. It is important to collect all information about the charges before choosing the HFC.

Property type and location: There are HFCs that do not fund in specific localities and they even do not fund every property type. Confirm if the lender you finalize authorises loan in the locality of your choice.

Loan span: To increase your eligibility, banks offer home loans for up to 30 years. Housing Finance Companies generally do not grant a 30yrs loan.  Confirm the loan span while applying.

Disbursal & Processing Speed: It is important that you choose a Housing Finance Company which rule out the possibilities of delays when it comes to approving a home loan application. With right documents and verification reports, it should not take more than 10 working days to process the home loan application. An additional 3 working days generally for the disbursal of the sanctioned amount.

Reliability of the HFC: Home Loan is a long term commitment. Furthermore, you have your title deed mortgaged with the lender. It is, therefore, exceedingly essential that you choose a reliable lender. Reliable HFCs would always offer good customer support and flexibility. Confirm the dependability of the financial institution if you do not have a preceding relationship with the organization.

Credit history and records

It would be to some extent difficult to get hold of a housing loan in case your credit history is not up to the mark. Searching loan for low Cibil score is always a challenge. However, all doors are not closed. There are few housing finance companies that agree to offer housing loans despite your poor credit record. If you have a poor score first try to improve it so that it doesn’t affect the interest rate. Banks are too demanding in authorizing housing loan to an individual with poor credit history. The loan for low Cibil score not only attracts high interest rates but lenders put restrictions on loan period and guarantors.

You are recommended to go through all these aspects and keep these pointers in mind as you move forward to choose the best lender for your home loan. Do not hurry things up. Remember repaying a housing loan is a big liability and you should do your homework carefully beforehand to keep away from future hassles.

Want to increase your Home loan eligibility?

Planning to buy a house? After accumulating all your savings still find it difficult to buy your dream home? Try considering home loans. They give you a helping hand buying your dream space. So how will you prepare yourself for a home loan?

Here are a few points to consider when considering a home loan;

Clear existing loans and credits

If you are applying for a home loan you should first try clearing all your outstanding debts and increase your savings on paper. This will give you a helping hand in terms of increasing your home loan amount and get the maximum out of it.

For Example: if you have a car loan running on your name chances are, that your EMI will be around five to ten thousand rupees. When it comes to a this loan the EMI structure ranges from 900 to 1200 rupees per lakh for different banks like ICICI Home loans, or HDFC home loans or DFHL Home loans. If you’re clearing your car loan while applying for a home loan, you will be automatically appreciating your loan amount to at least five to ten lakhs.

Reduce Credit Utilization

Try not to spend money while considering taking this loan. It can be one of the critical points when it comes to credit worthiness. Put your savings in place, if you find difficult to save money try investing in fix deposits and other financial products. This will give the bank or the financial company an understanding on your financial status and your spending patterns. The more you save the more you have chance to gain trust of the bank.

Avoid Job Change

When you apply for a bank loan the bank not only checks your financial status but also checks your employment patterns. You will be asked about your employment status and the total years of experience. You need to be in a particular company at least for a couple of years when considering home loan .If you have switched multiple jobs in short span of time it’s likely to get your application rejected.

Consider all incomes

If you have multiple incomes which you can show in your bank statement like freelancing jobs, existing property rents etc. try showing all your incomes and gains so that you can boost up your chances of getting a loan and also increase your eligibility for a maximum amount. It can help you be one step closer to your dream house or else you will have to shell out some more money as down payment.

Pool in your spouse
I
f you do not have multiple incomes coming in, you can always take help of your spouse or any earning family member. Many banks consider your spouse’s income as well when sanctioning the loan. There is a fixed pattern behind this, either it should be husband and wife as co-borrowers or it can be father and son. Sibling’s as co-borrowers are not allowed in many cases.

Increase tenure

As we all know these loans are a long commitment, considering government subsidies and offers of low interest rates is always suggested to opt for a long tenure. A long tenure helps you reduce monthly EMIs and live an easy life. If you opt for less tenure the EMI range will increase and that means you will have to work harder for meeting your EMI amounts.

Have a good cibil score

A good cibil score is built when you pay all your dues on time and are financially sound. When applying for this loan if your cibil score is bad then the bank will deny your loan. There are many non-banking financial companies who provide home loans for low cibil score people but the interest rate will be high compared to market standards. Maintaining a good cibil score takes a lot of dedication and cautious moves, so take the steps wisely and maintain the same.

Have good terms with the bank

It is always suggested to do a thorough research on the banks you have shortlisted for a home loan. Always consider that you owe to bank first where you get your salary or keep the savings in. If you are in good terms with your bank, the process gets easy and the home loan sanction is done in no time at all. Choose your banking relationship manager wisely and keep good relations with them.

Taking a home is a huge step in one’s life and loans are one of the ways to achieve what you dream for. You will have an amazing time through the process of getting the loan sanctioned if you adhere simple steps today!

Documents to check before buying an under construction property

Creating a property is a Herculean’s task for a first time property buyer. Whether it is for residential purpose or commercial purpose, one needs to keep a complete check on various factors. Right from buying to construction of a property, one needs to be vigilant enough to ensure that everything is being followed as per law and order.

Property documents is one of the most important factors that you should pay heed to before any real estate deal. A propertshutterstock_81526456y with complete and genuine documents is valid tender otherwise you might waste a lot of time and energy in getting the required papers later on. Sometimes the entire project under construction meets a crippled fate due to documents.

If the documents are clear you can easily get home loan too. Besides your CIBIL score, complete documents also ensure if you would get a loan or not.

So, let’s know about the documents to be checked before buying an under construction property.

Under Construction Property Land Record

The property’s land record basically defines ownership, title, obligations, rights and mortgage attached with it. With this paper attached you get to know if the under construction property’s title is clear or not. So, it is very important to check land records with the builder.

To ensure the validity of the document provided by the builder, you can also obtain a copy of land records online from the state government or the concerned authority. RTI can also be used to get the information. Land record is a very important document and should not be missed at any cost.

Certificate to define the land use type

Next, it important to check out the land use certificate. The land use certificate will ensure clear status of the property– commercial or industrial zone. For under construction properties too, it is important to check out the land use document from the concerned authority. Many a times, builders start a project without the required certificate and the construction haults later on.

Even if your property is under construction, the clear title entitles you to a home loan. So the property buying is for building assets. Create assets with clear status always.

Construction certificate

Now by checking construction certificate you can be rest assured if the builder has got several other clearances like title and layout plan. Without a commencement certificate a builder cannot begin the construction as per the law. The commencement certificate is issued by the development authority or town planning department. So always check this document thoroughly too.

Building / Layout Plan Approvals

It is very important to check out layout plan approval. Without building approval, never go ahead with the purchase. By merely looking into building/layout plan approval document you could be rest assured about a simple fact that the final project and promised project would not vary. Many times builders’ preliminary layout plan changes multiple times till the concerned authority grants approval. Thus always buy a property based on approved plan and not the proposed one.

No Objection Certificates (NOCs) and other important Clearances

No objection certificate or NOC’s from various departments is essential for constructing properties. Here is a quick list of a few.

  • NOC from the fire department- This NOC is important to ensure the safety and security of life in the property.
  • NOC from state pollution control board- This is important as the board ensures if the concerned project would not harm the environment in any form.
  • NOC from Wildlife boards- it is very important too. In Noida several under construction projects are haulted from years due to failure of obtaining NOC from a bird sanctuary.
  • NOC from the Airport Authority would also be required

An NOC from the builder on their letter head should also be provided for transfer of the ownership.

After verifying the documents mentioned above you should also ask for a copy of booking form, allotment letter and BBA.

You should also ask for a letter from the builder to clearly state that the latest progress of the construction project. Next you need an agreement of purchase with the builder. It needs to be duly stamped and registered.

However when property’s registration is pending, you can ask for original documents including copy of agreement with builder and money receipts by Sub-Registrar.

An acknowledgement copy on authority letter where in applicant writes to Sub-Registrar is also required.

There should also be proof of own contribution to the property.

With all these documents in place you would not have any trouble in buying an under construction property.