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?]