Upwards trend of Home Loans

Home holds a special place in the hearts of the Indians. The satisfaction of owning a house has a lot of attention. People invest in a home as they consider it a secured investment. The value of the property was never immune to the market demand-supply mechanism. These elements played their roles in the fluctuations that the prices had gone through and where they are right now. Even after the prices touched the sky, people didn't hesitate much while buying gold.

The price of properties has leaped over the past few years. Since the people have realized its worth, they started investing in it with an expectation of reaping enough yield in the form of capital appreciation.

Satisfaction is not the only fascinating thing about home objects. The satisfaction of owning a house is highly valuable and liquid. The liquidity of this property has made it even more attractive for buyers. People buy a home as an investment, use it as a hedge against inflation, and many times they pledge to fund their immediate needs. It is an excellent way of obtaining funds without any troublesome procedure.

The home loan or loan against the home is a secured form of a loan. It is guarded by the collateral, which in this case is home. Being so worthy and liquid does give it an edge over other types of collateral. The lending institutions (banks and non-banking financial companies) are not very hesitant while lending funds under home loans. Also, Home Loan processing fee is very easy and can be done online.

The reason why borrowing individual or entity prefer this loan facility because of the following reasons:

• The credit facility provided against the property is provided at a meager interest charge making it affordable for individuals and entities.
  

• The costs associated with the facility, such as the processing fee, inspection fee, and delay fee. These charges are levied by the lending institutions (banks and non-banking financial companies) to cover up their administration cost, but these are almost negligible in this case. Most of the lenders do not levy any such charge.
  

• The documents required are minimal, leading to a short and sweet procedure. Borrowing an individual or entity has to present only the KYC documents. The borrowers can avail of funds at the earliest. No excruciating details are involved in this credit facility.

Rising property prices led to a higher home loan rate. The area and location of the borrower's collateral are of the essence here. It allows the borrowing individual or entity to have a more massive credit.

The loan-to-value ratio has now been increased to 90% by the Reserve bank of India (central bank). Usually, it is between 70% to 80%. The increase in the loan-to-value ratio helps in availing a higher loan amount. The ratio is used to determine the amount of the collateral to be sanctioned as the advance amount. The borrowing individual or entity can apply for the credit by an online platform. For instance, the Axis Bank Home Loan policy has the option where the borrowers can get nuisance-free funds via their laptops or mobile phones.

The requirements can differ for the lenders, but mostly it remains the same for various policies. The borrowers must attach the documents dutifully to the form and submit them to the lending institutions they choose. The laws formulated are the practice that helps people understand how the entire procedure will take place.

The points discussed above are some of the key factors contributing to the home loan's upward trend. The market for this credit facility has substantially expanded. The demand is increasing due to the benefits that this facility brings along for the borrowing individual or entity. Every year, financial organizations mark a new high for the demand for home loans. Managing a home can be an asset, and at the same time, it can be a liability. The lending institutions have kept this option very simple so that the borrowers can have the earliest monetary assistance.

Details To Check Before Taking A Home Loan

A home loan is a type of credit in which the applicant/borrower requests a loan amount to purchase a new house or renovate an existing one. The lender checks the borrower's eligibility criteria and credit report to determine the loan amount and interest rate.

After the Home Loan Interest Rate is approved, the borrower is expected to repay the loan amount plus the additional interest rate over the loan tenure, which can be up to 30 years.

Bank of Baroda offers special schemes on home loans for its customers. There is a concession of 0.25% on the interest rate for a home loan if they already have taken a car loan. The Bank of Baroda Home Loan for customers with Savings Bank accounts is even more beneficial as the applicant's with an SB account do not need to pay any additional interest rate for the home loan, and the recovery of the EMI will be automatically made from the savings account that is linked with the home loan. The loan tenure is also flexible and can go up to 30 years.

The following are the tips and factors that need to be considered while applying for a home loan-

• Interest Rate:

The variable interest rates and offers provided by the banks and NBFCs should be checked and evaluated first to narrow down the best lender and deal. Several lenders offer lower interest rates on home loans, but all might not be credible and trustworthy. You should opt for those lenders that offer lower interest rates and flexible tenures. It is also crucial to study the type of interest rate method applied on loan, Floating rate, or Fixed rate method. The EMIs remain constant throughout the loan tenure in the case of the fixed-rate process. At the same time, for the floating rate method, the EMI is computed using the Home Loan EMI calculator after the borrower deposits each installment. The latter approach can prove beneficial as the rates keep falling and the financial burden keeps reducing as time passes.

• Credit score:

Having a decent and respectable credit score and report is much more important than it may seem. The credit report and CIBIL score are a reflection of your financial strength and credibility. If you have a credit score of 750 or above, then it is almost certain that the loan will be approved after fulfilling the eligibility criteria and submitting documents. The interest rate can also be lowered if you have a good credit score.

• Processing fees:

Usually, banks and NBFCs charge a processing fee of 1% of the loan amount. But if the loan amount is Rs. 50 Lakh, the processing amount can be very high and be an instant troublemaker even before the loan begins. Therefore it is better to look for those lenders who are willing to waive off or reduce the processing fee.

• Down payment:

Banks may need you to pay around 15% of your overall loan amount as a down payment when the loan tenure starts. This is an excellent method to reduce the EMIs as the loan amount reduces and proves to be fruitful in the future. Therefore, before applying for the Home Loan, you must secure some funds to immediately make the down payment and clear off a part of the amount.

Conclusion:

It is also critical to read the loan agreement line by line to avoid missing any details about any prepayment or foreclosure penalties that the lender may impose. You should also consider your budget while asking for the loan and thinking about the long-term goals. Try to avail of maximum benefits and schemes offered by the lender to make the home loan experience carefree instead of cumbersome.

What should we do if you can not pay the personal loan ?

If you are finding yourself in financial straits and cannot simply repay the Personal Loan, you also need a plan of action. There are some of the best steps you must take to address the problem.

Simply call your lender:

Before you miss any of the payments, the first step calls the lender. This may be the last thing you wish or want to do, but this is an essential part. Only the lender can simply tell you about any available options. For example, they can be willing to defer payments for months. They can simply accept the partial payment, forgive some of the fees, or offer a different program to help you get caught up. If the lender does suggest this type of solution, stick with any deal you also make. Although the call can be uncomfortable, missing a single Personal Loan payment will also drop the score. How much depends on the credit history and how you are simply managing some other debt.

Refinance your debt:

If you have not missed any payment and the credit score remains strong or good, always consider refinancing the loan but only if you can simply afford to make the payments on the refinanced amount. If the late or missed payments have already dinged the credit score, consider taking out the secured loan. These Personal Loans are not secured, meaning they provide any collateral. In return for lending money without any types of collateral, the lender charges a little bit higher rate. Whenever you simply provide collateral, the lender typically offers a very cheap rate. However, if you default on the payments. Do not put anything of value up as collateral if you doubt whether you can simply make payments. If you are confident the financial problem is temporary and will easily or soon improve.

Sell some of the things:

If you have any of the things of value like a piece of art, jewelry, or any of the things sell this. The idea is to do whatever you must to stay on top of the Personal Loan payments. Whenever you are at it, sell any of the things you no longer enjoy owning. If you do some of the things then you can simply repay the Personal Loan if you sell that of things like gold, jewelry, or other things. This is the best method to repay.

Take in the roommate:

If you have any of the room to spare, having a roommate immediately lightens the financial load. You not only save on the rent or mortgage payment but the portion of the utility bills also gets slashed. That's some of the extra money in the bank account every month. Also, ask anyone who has hit a financial road about the step they simply took.

Conclusion:

If any person does not have a very good credit score, then people can simply take some different methods to apply as well as simply get the Personal Loan, Indian Bank Personal Loan is the best choice for you while avail loan. And in this bank, one of the methods is by applying with the help of any of the people who has a very good credit score and high CIBIL score. That person is later known to all the guarantors. In this bank, you never need to worry about the loan because their interest rate, CIBIL score, or other things are good only if you have to see if your criteria are eligible or not. And Indian Bank you need to maintain your CIBIL score not very much only 700 is less but other both they need a 750 CIBIL score.