Common Reasons why your Loan is rejected

Has it ever occurred to you as to why your loan application was rejected even after regular repayment of your existing debts? It might be a cause of obtaining too many debts or no loans at all. Credit scores are a key element in gathering loans; however, too many loans may be portrayed as “hunger for credit”. On the other hand, no loans depict that you have no credit history. Hence, there is a fine line between too much credit and no credit history.

Delegates from credit rating bureaus state that non application of a loan for a few years in a stretch leads to insufficient information about an individual’s credit transaction activities in the rating agency’s database which means a negative score. Here are a few reasons why your loan application might be rejected:

The credit score provided by CIBIL is computed on the basis of the borrower’s credit history over the past 24 months. Generation of the CIBIL Transunion score requires the borrower’s recent credit history over a minimum period of six months. Hence, an individual who has repaid and closed his home loan and/or credit cards a few years ago and does not possess any existing loans or credit cards post repayment will not get a CIBIL score. His/her credit score will reflect a value of “-1” which indicates that no history (NH) is obtainable on the borrower for generation of the credit score.

Bankers take the NH rating of an individual seriously as a clean history means absence of any available data which leads to increased checks and balances. If an individual does not have a loan history or a credit score, the bank will try to gather more information which makes the loan approval process measured and time consuming. People with o credit history are asked to provide more references so that their backgrounds can be cross checked.

Agencies consider other characteristics while providing your credit rating; for instance, unexpected utilization of all your credit cards when you have been making use of only one credit card for a long time, various unsecured loans and excessive credit utilization. Too many unsecured loans are viewed as risky behavior which indicates that the individual has too many contingencies. Hence, your potential to repay the money on time is questioned.

If you are planning for a home loan or a car loan, it is advisable that you clear your debts well in advance preferably within six months to a year. If you have incurred too many personal loans, you can apply for one big loan that will help in settling all other dues. However, you need to ensure that the installments are being paid regularly and within the specified deadlines. Loan application in this case might be rejected if you are unable to make timely payments.

Clearances of dues like bouncing of an earlier cheque are essential. The amount to be repaid might be infinitesimal, but reflects poorly your loan-taking ability.

Loan applications by Young adults with little or no credit history might be rejected in which case it is advisable to have a parent with active credit movement to be a co-applicant to incur the loan.

[Source: https://www.creditsudhaar.com/blog/2015/10/24/common-reasons-why-your-loan-is-rejected/]

Charges on home loans that you may be unaware of

Buying your first property is perhaps the most important decisions you are called upon to take in life. And if you are opting for a home loan on it, it requires you to conduct a thorough research before you decide which the best home loan is for you. Most people tend to think that merely comparing home loan rates is enough to find out the best home loans in India.

But did you know that knowing all about home loan interest rates is far from adequate while checking out the right home loan for you? For starters as a prospective home loan borrower, you should be aware of the host of other charges that you are expected to pay while taking a home loan. Here are some of the charges you may not be aware of.

Processing and Administration fee

In most cases, it is 1-1.5% of the total amount of loan being sanctioned to you. Other lenders may not take a processing fee upfront, but may charge you an “administrative” fee once the loan has been sanctioned and disbursed. This amount tends to be higher than the processing fee. Not only should you check out the processing/ administrative fee of the lenders you have shortlisted while comparing home loan rates, you can also negotiate with the lender to waive off this fee. This will however depend upon the amount of loan you have applied for, you income bearing and your credit score. If you have made a conscious attempt to improve your CIBIL score and maintain a CIBIL score of 850 or above out of 900, you may even be able to insist upon a complete waiver.

Technical evaluation and legal fee

Some lenders may carry out two evaluations before arriving at the true valuation of the property you have chosen. The fee that is associated with this evaluation is absorbed from you as the borrower. Rarely, the lender may pick up the tab for the technical evaluation of the property. The other part of the evaluation is the scrutiny of your legal documents.

Franking fee on sale agreement and loan agreement

Real estate charges vary from state to state in India. Therefore, in some states you may be expected to pay a stamp duty on the property agreement you enter with the builder that is around 0.1% of the cost capped at ₹ 20,000. Additionally, in some states like Karnataka and Maharashtra you need to pay a franking fee of 0.1-0.2% of the total loan amount sanctioned to you.

Indemnity Cost

By charging you the borrower for indemnity, the developer safeguards his interests. By agreeing to indemnify the lender, you are in effect agreeing to bear the monetary risk of the loss or unavailability of an important document, the non- receipt of any important approval from a concerned authority. This is usually a few hundred rupees varying from state to state.

[Source:https://www.creditsudhaar.com/blog/2016/12/09/charges-on-home-loans-that-you-may-be-unaware-of/]

Basics of a Home Loan

Home Loan

Home Loan Best Option for our Basic Need

Home Loan

Home Loan without Documents

Secret of No Document Home Loans –

First of all, one has to understand what does “No Doc Home Loans” mean?

These can be defined as the no asset; no income and no employment verification offers from the financial institutions to borrowers to get their home financed or simply get a home loan.

But, the truth is that no lender can sanction any money without doing the verification. Yes, banks and NBFCs lend the money with few documents but there are other factors and complications involved in it.

One has to pay the high rate of interest for home loan with few documents. The lenders charge high rate of interest because less documents means more risk involvement.

Another noteworthy factor is lenders take some time to approve the home loans; say at least 3 days or more is required for the sanctioning of home loans. No institution approves home loan in 5 or 10 minutes. Sanction letter can be issued in few minutes. So, in this context, it is necessary to understand the meaning of home loan sanction letter. This is not something which implies the disbursal of loan. It means the applicant is eligible to a home loan from the lender. So, in simple words, this establishes the eligibility for home loan of the borrower only. Many lenders issue the sanction letter, on the basis of the information provided by the applicant but detailed verification from their sides are done at the later stage.

So, let’s dig deep enough to understand the truth behind “No document home loans”

No Document Home loans can be segregated into 3 major types and each one of that is unique in itself. So let’s explore these one by one

1. No Ratio Home Loans – Here, the home loan seekers do not have to disclose their income details to the banks and NBFCs. So, lenders can’t find out the debt to income ratio. Generally self-employed people apply for this type of home loan. And interestingly, this loan is available on a very limited basis.

‘No Document home loans’ can be classified on the –basis of income of the applicant also

3. Unorganized Sector Home Loan – Here the basic difference is that this type of home loan is suitable for those who have gone bankrupt or have bad credit score history. Keeping into consideration the requirements of varied low income group people, whose incomes are even not stable; lenders issue this type of home loan. Here, one can maintain maximum privacy and showcase very less information but has to bear higher rate of interest.

In case of ‘No Document Home Loans’, total home loan amount is calculated and sanctioned on the basis of -

Earnings of last 2 years of borrower (may be estimated or substantiated through any other record)

Bank statements or Income tax returns (ITR)

So, whenever our eyes glanced on alluring advertisements - we must remember nothing comes for free in any case. Lots of factors and complications are involved with any offer.

One has to carefully tap the right and suitable offer for him/her and, figure out what works best in the particular situation and then take the decision accordingly.

IIFL Home Loans cares for the needful. To fill out the demand and supply gap, it brings forth its unique product, “20 year affordable home loan scheme” that would touch the lives of millions and millions of people. Apply to open the door to owning your own home.

[Source: http://www.iiflhomeloans.com/iifl-blogs/Home-Loan-without-Document]

Top 5 Reasons to Refinance your Home Loan

1. To shorten the term of your loan

With interest rates at a record low, you may find that repayments on a 20 year mortgage are not much more expensive than a 30 year mortgage. If you’re able to meet the higher repayments, refinancing to a shorter loan term will make you pay your loan off quicker and save you money over the life of the loan.

2. To lower your interest rate

Refinancing your mortgage to a lower interest rate could mean drastically reducing your payment and saving thousands of dollars in interest. Lowering your mortgage payment can also save you hundreds of dollars per month that could be saved or invested.

3. To change from a variable rate to a fixed rate loan

If you currently have a variable rate mortgage, now may be the perfect time to refinance to a fixed rate loan. If interest rates rise again during the fixed period of the loan, you can save on interest repayments and a having a fixed payment is easier to plan and budget for.

4. To cash out home equity

Refinancing your home loan can be a great way to access home equity so that you can invest in a rental property or shares. This is called ‘gearing’. Alternatively, you can use your equity to renovate, for home improvements or any other worthwhile purpose.

5. To consolidate debt

Rather than paying off personal or car loans at a high rate, it might be worth consolidating your personal loans into your home loan so you can pay off your debt at the lower rate. This enables you to pay the debt off faster and potentially save thousands of dollars in interest payments providing you maintain you repayments at current levels.

[Source: http://www.beyondbank.com.au/blog/2013/12/top-5-reasons-to-refinance-your-home-loan/]

6 Tips Getting A Home Loan

Home Loan

Why You Would Refinance Your Home Loan

Why you would refinance your home loan Most people refinance for one of the following reasons: · You want to modernize your home · You want to pay off debts earlier and cheaper by rolling them into your home loan · You want to get a cheaper interest rate, even if it means giving up a few loan features · You want to raise hard cash for an acquisition ·

You have money earning interest and you want a home loan that will apply that money to your loan - an "all-in-one" account · You are currently paying a high interest rate - for instance, if you arranged a low-start, rising-rate loan from your home builder · You want to Swap from a fixed rate to a variable rate of interest, perhaps because you can accept the risk of elevated repayments · You want to switch from a variable rate to a fixed rate, perhaps because you need the certainty that your installments will stay the same for the next four years

How to approach why you would refinance your home loan refinance you should start your refinancing with clear goals, whether they be to cut your repayments, free up cash or improve your home. Experienced loan brokers say that many refinance troubles start with borrowers who are refinancing without knowing why they're doing it.

Don't be afraid to refinance your home loan! Confident home loan owners content to refinance. Home loan borrowers are confident when looking at refinancing options and will happily shop around for better rates.

The lack of awareness amongst these groups towards refinancing could stem from a perception that it involved paperwork, research and additional costs. Customers don't seem to realize that now is an optimal time to consider refinancing. It is a highly competitive lending environment right now and banks are working really hard to win borrowers' business." Having a refinancing strategy is key. Have a clear idea why you want to refinance - whether that is to simply get lower rates or to take advantage of a loan's features, research the home loan market online and see what rates are available. If you don't have a clear objective, you might end up with paying more than your original home loan. Investment Property Calculator has developed a free Mortgage Home Loan Refinance Calculator to help home loan owners. The free Mortgage Home Loan Refinance Calculator allows you to set the expected total savings from refinance.

[Source: http://www.sooperarticles.com/finance-articles/loans-articles/why-you-would-refinance-your-home-loan-858121.html?]

2 Benefits of A NRI Loan

There are a number of Indian residents who have travelled and settled abroad for better career and job opportunities. For them, a property back home not only gives them a sense of security, but also an attachment closer to home. Through the NRI home loan, there are several opportunities to invest in the real estate in India. In this article, we give the benefits of an NRI loan which can be used to purchase the dream home.

There are certain government rules and regulations when it comes to investing in such options. NRIs are allowed to invest in residential and commercial projects, but cannot invest in any agricultural project. The process to apply for this kind of financial aid is more or less the same as the application of the local home finance credit. However, there are certain criteria's that the NRI must satisfy before he can proceed with the investment process.

Various institutes have different criteria which can range from educational backgrounds, annual income or to the amount of experience one must have. The documents that are required for this process include the standard set of documents, which must be attested by the acceptable authorized figure. Now days, you need not travel to home country to submit these documents but you can submit them at selected offices within the country. The repayment period will take anywhere between 2 to 7 years and mostly with Indian rupees. However, there are several account options which have the rupee denomination facilities that allow the holder of the account to withdraw in the Indian rupee.

Investing in a Project

With the NRI loan you can easily purchase a land or property and keep it for a future project. Although real estate has a high value for purchasing the asset of land is more profitable option. Several aspiring NRI's are now trying to purchase a land so that when the time is right, a profitable project can be undertaken. This project can range from a house to a multiple storied building, depending on the permissions and regulations that have been passed. With the NRI home loan, you can also build a home this is for self-usage.

Protecting your Future

A NRI home loan is an ideal investment to build and protect your future. Many NRI individuals have always wanted to travel and work abroad, but have a house in their home loan country. As NRI funds provide more benefits than the local currency, it is more beneficial to invest with a foreign currency than a local currency. With this form of NRI loan, you can easily build the perfect dream home during your stay abroad and when completed, you can return back.

[Source: http://www.sooperarticles.com/finance-articles/2-benefits-nri-loan-1372793.html?]

How much loan can you avail for your dream home?

Home Loan

Manage Home Loan with Easy EMI

Home Loan is a Secured loan offered against the security of a house/property which is funded by the bank, the property could be a personal property or a commercial one. It is a loan taken by a borrower from the bank issued against the property/security intended to be bought on the part by the borrower giving the banker a conditional ownership over the property i.e. if the borrower is failed to pay back the loan, the banker can retrieve the lent money by selling the property. Home loans are an attractive and popular means of buying a dream house for most people. In India, the demand for home loans has increased manifold in the last decade. Every day numerous people apply for home loans to own a perfect abode for themselves. The fact that home loans come with added advantages (like tax benefits) is the icing on the cake.

Interest rates on home loans for new consumers have come down by around four per cent since September 2008 but consumers who had the misfortune to take their loan before that have only seen their rates drop by around 1.50 per cent to 2.25 per cent.

Home loan India can primarily be classified into two categories on the basis of interest rates i.e. fixed rate and floating rate of interest. There are very few lenders in India who offer pure fixed rates where the rate of interest remains constant for the entire tenure of the home loan, while most lenders have a reset clause of 3-5 years. In floating home loan type, the rate of interest on such loans is subject to change whenever there are changes in the repo rates announced by RBI or any changes in base rate of the bank. Borrower should opt for fixed interest rates only if she/he is certain that the rate of interest is the lowest in the interest cycle.

Home loans in India are provided by the lenders up to maximum of 80% (90% for loan amount below Rs 20 lakhs) of the agreement value of the house. In case of home loan for resale flats, most lenders get the property valued independently and they will provide the housing loan based on their value rather than the cost mentioned in the purchase agreement. Frequently, the valuation as determined by the banker's valuer for the purpose of home loan is significantly lower than the actual cost and hence the requirement of the borrowers for down payment for the loan goes up. Also note that banks do not consider other charges like Stamp Duty, Registration Charges, etc. while considering the home loan amount eligibility.

Home loans are repaid through monthly installments (EMI) spread over up to 20 years. Some of the banks provide housing loans even for a tenure extending up to 25 - 30 years. The maximum tenure of any loan and home loan specifically is also restricted by the borrower's age at the end of the tenure so as to ensure that the loan gets fully paid by or before the retirement age.

[Source: http://www.sooperarticles.com/finance-articles/loans-articles/manage-home-loan-easy-emi-1330564.html?]

Things to know about interest rates

Home Loan

A loan that will help you achieve your housing dream

Home Loan

Home Loan

Home Loan

Here's how MCLR linked home loan works

All bank loans, including home loans, taken after April 1, 2016, are now linked to the bank's marginal cost of funds based lending rate (MCLR). Earlier, they were linked to the bank's base rate. So now when you approach a bank for a home loan, make sure you know these four important things about MCLR.

*MCLR rate: Banks publish overnight, one month, three months, six months, one year, two years, three years MCLR rates each month. Home loans are typically linked to 12-month MCLR of banks.

*Mark-up on MCLR: Banks may or may not lend at MCLR. They may ask for a spread.

*Reset loan period: If the loan is linked to the bank's 12-month MCLR, the next change will happen after 12 months.

*Home loan with a fixed vs floating interest rate: In a falling interest rate scenario, it helps to choose the latter, but potential borrowers may benefit out of the former if the rate cycle turns.

MCLR and home loan rate

Currently, the 12-month MCLR for most banks is in the 9.05-9.45 per cent range. After the mark-up (spread), the actual home loan rate on an average is around 9.35 per cent, or could be higher too.

Considering the heavy emphasis the regulatory bank has been laying on liquidity, a rate of 9.35 per cent is still extremely high. Until and unless the MCLR drops down to sub-9 per cent levels, we will not see a large enough movement in terms of loans that will provide the necessary shot in the arm for various sectors, especially real estate which has been facing a considerable liquidity issue."

MCLR mark-ups

The actual home loan interest rate can be equal to the MCLR or have a 'mark-up' or 'spread', but can never be lower than the MCLR.

Reset period makes floating rate fixed for a year

In the base rate era, when the Reserve Bank of India (RBI) reduced the policy rate, the expectation for a home loan rate cut emerged for both existing and new borrowers.

Conclusion

Under MCLR, do not, therefore, expect the EMIs to fall immediately after the RBI cuts repo rate. Instead, have a systematic partial prepayment plan in place to lower interest burden on the home loan. After all, the earlier you finish your home loan, the higher will be your own equity in the house.

[Source: http://economictimes.indiatimes.com/wealth/borrow/heres-how-mclr-linked-home-loan-works/articleshow/54971266.cms]

Home Loan

Why buy to let (BTL)? Property is great for increasing your income

Buy-to-let properties mean guaranteed, sustainable income well into your later years. That’s why many contractors are putting their hard-earned savings to work by investing in the property market.

A buy-to-let investment could guarantee you a source of revenue when contracts are few and far between, or help you build up a hefty retirement income. Improved lending conditions and rising property prices mean this investment is ideal for contractors. You could even discover that the long term profit potential is life changing.

However, there are costs involved, so it’s important to ensure that you know how to get the maximum return on your purchase, buy Home Loan. Here we share some expert advice to show you how you can make the most out of the buy-to-let market and continue earning big money long after retirement.

Can I make money from buy-to-let? - Multiply your income now!

The buy-to-let market used to be available only to the privileged few. However, a combination of more innovative mortgage products and rising entrepreneurialism has seen many contractors successfully try their hand at becoming a landlord.

What is the stamp duty charge on buy-to-let?

Unfortunately, the buy-to-let boom hasn’t gone unnoticed by the Government, which has raised stamp duty land tax (SDLT) rates for additional property purchases.

What expenses can be offset against rental tax?

Rental tax is another outgoing you’ll need to be wary of, though it’s only due on the profit made from renting out the property.

How save tax on buy-to-let – find out how you can maximize your returns!

If you’re feeling adventurous, you might opt to run your property portfolio through a company. You can do this the same way you would open a contractor limited company, and there are potential tax advantages.

For one, companies are still able to offset mortgage interest against rental tax in full. In addition to this, rent is only taxed at the 20% corporation tax rate, regardless of your personal income. These two factors combined could result in huge cash savings.

Where can I get expert advice on property investment?

Entering the property market is admittedly more involved than simply investing in stocks or a pension fund, but it’s also ultimately far more rewarding? There are initial costs involved, but soon enough you’ll find that a buy-to-let property pays for itself.

[Source: http://www.contractorcalculator.co.uk/why_buy_let_property_great_increasing_your_income.aspx]

NRI’s can now opt loans for dream project in India

As an Indian while staying abroad, we all aspire to own a dream home in our homeland. Either you plan to shift back home in India, once your dream project is completed or you may opt to come back to your motherland once retired from work life. But the dream is always cherished in our hearts. In prior days, people used to work extra hard to accumulate the requisite amount to purchase any residential property in India. But, thanks to the ever emerging and modernized policies lead by Government and private sector banks and financial companies that you can now apply for NRI loans and get money to finance long awaiting dream of own house in India.

According to the definition of the Foreign Exchange Management Act, 1999 (FEMA), an NRI (non resident Indian) is the one who resides outside India for “employment, carrying on business or vacation in circumstances as would indicate an intention to stay outside India for an indefinite period.  Those Indians who stay less than 182 days during the preceding financial year will be considered as NRIs.

NRI citizens can now avail  NRI loans for the purchase of property ready for possession or under construction, construction of a property on an owned plot or for home improvement or extension, purchase of plot and home furnishings & consumer durables to the existing property. Buying of plot also comes under home loan application except agricultural lands. You can only opt for one property at a time.

There are some leading banks in India who offer interest rates as low as 9.45 %  to 9.90  on a floating basis with a processing fee of 1.25% or 11,500/-which is the maximum. You can qualify for a loan amount of around minimum Rs 5 lakhs to 10 crores. The repayment tenure will range from 10 to 15 years. In certain professional cases it may go up to 20 years.

NRI home loan to purchase dream home has been one of the best ways to secure your land purchase in India. Although, the procedure to avail loan remains more or less same like resident India, however, there are few rules that can alter at some stage of loan application.

Apart from relevant document for applying home loan some additional important documents for NRI home loan would be: Copies of the passport, work permit and valid visa, contract of employment, salary certificate, work experience certificate and bank statements of NRE/NRO accounts. Your salary certificate has to be attested from the embassy if the salary is not credited to a bank. For those residing in the Middle East, a copy of the employment card is also required.

The income and education qualification of an NRI citizen also play vital role in deciding the loan amount you get qualified for. NRI’s need to complete pre-requisites for  the loan sanction like qualifications, current job profile, past experience, probability of continuing abroad for the loan tenure and probability of servicing the loan with an extended tenure in case of return to India.

NRI also needs to provide General Power of Attorney (POA) in favour of a local relative as per the draft of the bank which should be duly attested by the Indian consulate in the country of his or her residence. If the borrower is in India, POA could be locally notarized. Banks demand for POA to ease the process of dealing with NRI borrowers. Banks sanction up to 80% of the NRI loans amount that includes your registration and stamp duty charge. It is advisable, before approaching a bank you should be well prepared upto 15 to 20 % of the remaining amount for applying loans.

Home Loan Emi Calculator