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Home Loan

Complete Guide on How to get Home Loan in India

Whether or not to buy a home is one of the most important decisions a person can make. Because there are now affordable home loans, buying a home is possible. Home loans are a common way for people in India and around the world to get some of the money they need to buy a home, which requires a big investment. Before home loans are available, people must save for years and take out loans from unknown lenders when needed. But many things have improved in the sector because consumer tastes have changed and laws have become stricter. You can now get a home loan at one of the lowest rates in the industry with a lot of openness and trust. But it’s important to know how home loans work in India before you apply for one so you can make the best choice. [B-01] What is a Home Loan? A home loan is money that a person borrows from different banks or non-banking financial institutions (NBFI) to buy a piece of real estate. Send the application This is the first step in getting a loan for a house. At this point, you have to send in the loan application and some basic information. At this step, you need to know the following: Information about you, like your name, home address, phone number, etc. Information about income, like annual income Information for education Information about business and jobs Details about the property, like whether it is a home or a business. How the property is currently being paid for, and how much is expected to cost. At this point, lenders may want to know different things. Along with the information you provided as part of the application process, you must include supporting documents. Here are some of the documents that must be submitted: – Proof of employment Proof of education Details about a house Proof of identity Proof of income Age proof Proof of address Charges for Processing After the loan application has been sent in, it is important to pay the processing fee. Again, the processing fee could differ from one lender to the next. Home loan processing fees are usually between 0.25 and 1% of the loan amount. The processing fee is the amount the lender takes out of the borrower’s account to keep the loan account open. You could also add the agent’s commission to this amount. The processing fee is always something that can be talked about with the lender. Even if banks and NBFCs have a set formula for figuring out the processing fee, there is no point in asking them to lower it. Discuss with the lender At this point, the bank has reviewed the paperwork and has had a formal conversation with the borrower. Usually, it only takes 1-2 days of work if the paperwork is sent correctly. Some lenders require you to go to the branch to discuss the loan, the terms, and other details. Some lenders feel more comfortable asking these questions in person or learning more about the application. Wait for the documents verification It’s important to know that many people apply for home loans daily. To speed up the application process, it is important to submit paperwork in the right order. At this point, the lender checks the information the applicant gave. Most of the time, the lender checks the following documents: Information about jobs Employer qualifications The employer’s address. Get acceptance This is the most important step in the process of getting a mortgage. It is when the lender decides whether or not to give you the loan you asked for. This is called the application for a loan to be approved or sanctioned. Before giving the loan, the lender carefully looks at the following parts of the application: Age and qualifications of the applicant Details about the job or business of the applicant Information about the person How much money the applicant earns The ability to pay back the loan at the interest rate set by the lender. The lender confirms the most it can lend based on an analysis of the application that uses the earlier criteria. In some cases, the lender will set conditions the applicant must meet before the loan can be paid out. Get the letter of the sanction After looking at the paperwork that backs up the application, the lender is supposed to send a “sanction letter.” In a certified offer letter, the lender usually tells you the following: The most money a lender will let you borrow. The interest rate is used to figure out how much of a loan to give Interest rates can be fixed, or they can change. The duration of the loan’s availability. EMI is a monthly payment from the borrower to the lender. Finish the loan contract. The contract is finally registered when all the technical tests are done, and the lender is happy with the property on which the loan is being given. The lender’s lawyer must finish the paperwork and stamp it correctly. Sign agreements Both sides need to sign the papers now that everything is in order. Most of the time, the paperwork is signed first by the lender at the stage before. When the candidate signs and applies, they must include checks for the period that both parties have agreed on. After this step, the original documents for the property are sent to the lender. This is done after the loan agreement is made to protect the lender. [B-02] Conclusion The first step in getting a home loan is looking for the best banks or financial institutions. Also, you need to know a lot about the different terms to compare different institutions to find the best home loan programmes. You can stay on the right track if you know what’s coming up, like home loan interest rates, types of interest rates, processing fees, how to figure out interest rates, loan duration, and EMIs. To buy a house successfully, you need to know how to apply for a home loan and have a strong plan for paying it back. If you want more information, you should go directly to Piramal finance.
08-11-2023
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Home Loan

Complete Guide: How Can You Apply for Rural Housing Loan Online?

Making your dream home a reality is not simple. Housing loans can help you achieve this dream. There are various rural housing loans available at very nominal interest rates, and these loans have many perks. Before applying for a housing loan, you need to understand all the details of the loan. This article will provide you with every detail you need to know when applying for a rural housing loan. [B-01] How does a rural housing loan help? Home purchases in rural and semi-urban areas can be financed by rural housing loans. Rural housing loans assist people in purchasing or building a home because of finances. The loan can be repaid over a period of up to 25 years. You have to pay a nominal interest rate of 11.00% per annum. What are the pros of a rural housing loan? There is no charge or a very low charge to process the loan application. Some lenders will also provide insurance coverage for the property at no extra cost. The payback schedule is better than that of other loans, making the loan more affordable for many. Most lenders do not charge any penalty for the early closure of a rural housing loan. This is beneficial if you receive a large profit from your business. What are the interest rates for rural housing loans in 2022? Loan LimitInterestA loan of up to 35 lakhs11.00 % p.a. (starting limit)A loan of between 35 and 70 lakhs 11.00 % p.a. (starting limit) Know that the interest rates for loans more than ₹70 lakh are different. How do you use a rural housing loan? It can be used to acquire a home that is under construction, already completed, or for sale in rural and semi-urban locations. It can be used to expand an existing house or property by constructing additional rooms or buildings. It can be used for many home improvements, including new interior and exterior plaster, flooring, paint, etc. It can be used to build property on urban and rural residential lots, whether owned outright or leased. What are the eligibility criteria for a rural home loan? The eligibility criteria for a rural home are as follows. You should be 21 years old or older. You should have a stable source of income. If you apply with a co-applicant (i.e., a parent, spouse, friend, or child), you should provide their income proof. You need an NREGA job card. You need to provide a National Population Register letter with your name and photo. Your CIBIL score will also be checked when applying. Farmers, business owners, independent contractors, salaried workers, and professionals can apply for the loan. What documents do you need to provide for a rural housing loan? You can select an identity proof from the list given below. Applicant’s passport Election proof card UIDAI card (Aadhar) Permanent Account Number (PAN) Card You need to submit income proof as follows if you are employed. Election proof card Bank statements for the recent six months Salary slips for three months Latest IT returns Form 16 You have to submit income proof as follows if you are self-employed or a business owner. IT returns of the last two years CA Audited Financials Bank statements of 6 months (latest) You also have to provide the documents for the property. The following documents need to be attached. No Objection Certificate (NOC) from the society or the builder Allotment letter or stamped sale agreement Certificate of Possession What is the tenure of a housing loan? Loan amounts can vary from INR 5 lakh up to INR 75 lakh for 25 years. Income also determines the interest rate and payback period. What are the advantages of using a rural housing loan? It is a loan tailored specifically to the needs of farmers in the agricultural, horticultural, plantation, and dairy industries. It will help you acquire either a newly constructed or an existing residence in a rural or urban location. The loan can be used for residential buildings on rural and urban freehold or leasehold land. It can be used for interior and exterior painting, plastering, and tiling. It’s also handy for expanding a home by building new rooms. It can be used as a token when you purchase a residential plot in a rural area. It can also be used to make down payments for any renovation contractors. Many lenders do not ask for collateral. Agriculturists seeking rural housing finance are not required to submit federal income tax returns. Home loans allow you to save a great deal on tax returns. Under Sections 24, 80C of the Income Tax Act, you can claim 1.5 lakhs in tax deduction. It includes the principal amount, registration cost, and stamp duty charges of the housing loan. You can choose an EMI and pay off the loan based on your income and budget. Home loans are quite flexible, making the monthly instalments well within your reach. You can choose a repayment term of 25 years or longer. [B-02] Conclusion It is very important to have a place of your own. To help you with your dreams, banks and NBFCs are always ready to assist you with quick and easy loans. Housing loans are available at a very nominal fee. The easy process and quick availability will help you own your own home. These home loans are customized according to the needs of the applicant. Furthermore, these loans have tax benefits that you can claim when you file your income tax returns. These loans are accessible to all. However, application acceptance does depend on a few criteria. Piramal Finance provides housing loans at affordable interest rates. Visit the Piramal Finance website for more details.
08-11-2023
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Education

How to Plan Finance for an Early Retirement?

In India, early retirement planning is not fashionable at present. Many individuals think retirement means being old. They think it is tough to plan finance and retirement with a stable income. But nowadays, youth are planning their retirement in their early 30s. The imbalance between lifestyle and workload is making people retire in their 50s. You can also plan finance in the right direction. It helps with a safe and early retirement. You can live a stress-free life with your family without worrying about money. Passive income generation is most important in retirement planning. Mutual funds and property can help you to plan finance. [B-01] Personal Financial Planning in Five Smart Steps for Retirement If early retirement is your goal, consider these small yet simple steps. These steps will help you save and generate money easily. Start planning early. You must start planning today if you’re considering retirement in your 40s. Plan finance at the right time to stay in the loop with opportunities. Don’t waste time like others by planning late and taking the wrong approach. You can explore the options available and choose wisely. Use expert financial advice and research, keeping your details in mind. Inflation is an important subject in calculating your corpus. Inflation reduces the money’s value with time. Include your family details and personal finance activities in the corpus calculation. Estimate your expenses and savings. Your savings amount in retirement planning must follow the 25-times rule. The rule says you must have 25 times more money than your annual spending when you stop working. For example, if you spend Rs. 1 lakh a year, you must have Rs. 25 lakh as your retirement money. This amount must be in your account when you stop working. Consider inflation and your risk tolerance when saving. It will help if you manage your expenses smartly. Follow the retirement corpus to make decisions. It will make you independent. You must follow this path to never run out of money. Adjust your current income. You can manage your current income easily. Make a smart budget plan for food, bills, transportation, and extra spending. You can eat at home, use public transport, and apply for subsidies to save money. Early retirement plans need 50% savings in income. It would help if you had multiple incomes to save more money. Maintain your credit score for low-interest loans if needed. It will help save taxes. Choose a long-term growth investment. Simply put, early retirement planning allows for less time to save and more time to spend wisely. It would help if you spent in a way that made your savings valuable. Consider investing in long-term investments as passive income in personal financial planning. Compare and invest for the best return with a great portfolio. Watch your approach to money and save as much as you can. Health Insurance Personal financial planning with health insurance is a great step toward early retirement. When you grow old, your body will need regular check-ups. The cost of routine checkups can be taxing at times. The premium amount for health insurance rises in the 40s and 50s. It would help if you bought health insurance at a young age. When you buy at a young age, it extends your cover. Compare and choose the best health insurance for the long term. You can assess the amount and save smartly for health. Healthy eating habits will also save you from extra expenses. You may include your point of view in planning. You should make an official list with expenses and income. It will give you a clear picture of retirement planning. Why Should You Plan Retirement at a Young Age? Early retirement may seem odd to some individuals. But it’s a great chance to learn about your future. The idea of retiring in your early 50s gives you financial freedom. Let’s check out why we should plan early retirement: The uncertain future may bring anything. As a result, saving money would be beneficial. Early retirement gives financial independence to individuals. Life expectancy has improved in India. So, after retirement, people survive for 10–20 more years. Retirement planning helps the individual survive. Expensive health care is becoming a burden for individuals. You can save on expenses and invest in your health. Health insurance and a healthy lifestyle are the best ways to stay fit. Retirement planning gives you self-confidence. Why Should You Choose Mutual Funds? Mutual funds are long-term investments in reputed company shares. Anyone can buy shares with investors for long-term returns and dividends over profit. You can buy the shares legally for retirement planning. However, make sure you get some financial advice from someone who knows about investing before you jump in. You may consider the following reasons for choosing mutual funds in your retirement planning: Tax Efficiency Long-term investments do not generate much tax. You can save on tax expenses by investing in high-return mutual funds. Effective for inflation Inflation is rising and increasing people’s living expenses. So, you must invest in funds that also increase with time. Growing mutual funds are best for inflationary situations. Easy on the pocket Mutual funds do not need big investments. A small EMI amount is more than enough. The monthly amount is between Rs 500 and Rs 1000. You should choose a fund with limited entry, exit, and management fees. Easy Liquidity It would help if you chose without lock-on period mutual funds. It helps you withdraw money whenever you want. You may invest in 3-5 year lock-in period mutual funds for liquidity. [B-02] Conclusion Early retirement is easy with smart planning and investments. It would help if you had more income than expenses. Check the steps given above for an idea. When you start early retirement personal financial planning, you get the chance to change. It helps you cherish your present and future. You may seek guidance from experts. Explore the best mutual funds for long-term investment plans. Compare and select the best with caution. Visit Piramal Finance for similar blogs and look at their products and services.
08-11-2023
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Credit Score

Difference Between Credit Score and Cibil Score

If you’ve ever applied for a loan or credit card, you’ve likely come across the terms credit score and CIBIL score. Many people use them interchangeably, which often leads to confusion. So, is credit score and CIBIL score same? The answer is not exactly. While both relate to your creditworthiness, there are some important differences you should understand. Credit Score vs CIBIL Score What is Credit Score? A credit score is a three-digit number that reflects your creditworthiness. It is calculated based on your credit history, repayment behaviour, credit utilisation, and other factors. The score typically ranges between 300 and 900, with a higher score indicating better credit health. Multiple credit bureaus in India generate credit scores — such as CIBIL, Experian, Equifax, and CRIF High Mark. Hence, the term credit score is a general category that includes scores from any of these bureaus. What is CIBIL Score? A CIBIL score is a type of credit score generated by TransUnion CIBIL, one of the major credit bureaus in India. When people refer to the CIBIL score, they are specifically talking about the score given by TransUnion CIBIL based on your credit information report (CIR). So, while all CIBIL scores are credit scores, not all credit scores are CIBIL scores. Difference Between Credit Score and CIBIL Score Let’s break down the key differences in the table below: Feature Credit Score CIBIL Score Definition General term for your creditworthiness rating Specific credit score by TransUnion CIBIL Issued By Multiple bureaus (CIBIL, Equifax, Experian) Only by TransUnion CIBIL Score Range 300–900 (varies slightly by bureau) 300–900 Usage Used by all financial institutions Widely used and most recognized in India Data Source Based on credit report from the issuing bureau Based on Credit Information Report by CIBIL Uniqueness Can vary depending on the bureau Fixed calculation method by CIBIL Reputation in India All are valid, but may vary in weightage Most popular and trusted score in India Hence summarising the above table, credit report is a generic term that refers to your overall creditworthiness whereas CIBIL report is a specific credit score given by TransUnion CIBIL. Furthermore, classifying the difference as follows. Issued By Credit Score: Can be issued by any authorised credit bureau in India such as: CIBIL (TransUnion) Experian Equifax CRIF High Mark Each bureau may calculate the score slightly differently based on their own models. CIBIL Score: Is exclusively issued by TransUnion CIBIL. It is not a general term — it refers only to their calculation of your creditworthiness. Difference Between Score Range Both types of scores typically range from 300 to 900. Higher score = better credit health. While CIBIL and other bureaus use the same range, the actual score may differ slightly for the same individual due to different scoring algorithms. Credit Score Vs CIBIL Score Usage Credit Score: Used broadly by financial institutions and lenders. Depending on their preference, they might refer to the score from any bureau. CIBIL Score: Most commonly requested score in India. Many banks and NBFCs have long-standing partnerships with CIBIL, making it the go-to score for most evaluations. Difference Between the Data Source Credit Score: Based on the credit report maintained by the respective bureau. Each bureau pulls data from lenders, credit card companies, and financial institutions to build their report. CIBIL Score: Based on your Credit Information Report (CIR) maintained by TransUnion CIBIL, which is updated monthly with your credit activity from member institutions. Method of Calculation Credit Score: Since each bureau uses different scoring models, your score may vary from one bureau to another, even with the same data. CIBIL Score: Uses a specific and consistent algorithm by CIBIL, so there’s only one CIBIL score per person at a time. Reputation in India All bureau scores are valid and accepted, but some lenders may give preference to one over the others. CIBIL Score: Has the strongest brand recognition in India. It was India’s first credit bureau, and over the years, it has become the most trusted and widely accepted credit score. How Can I Check my CIBIL Score? You can check your CIBIL or credit score online for free from various platforms. Here's how: To check your CIBIL score: Visit Piramal Finance CIBIL score page. Enter your mobile number and captcha. Click on ‘Get Your Free Credit Report’. Verify the OTP sent on your mobile number. Enter your PAN card details and basic personal information. View your CIBIL score and report. To check your credit score from other bureaus: You can also check credit scores from other bureaus through Piramal Finance like: Experian India Equifax India CRIF FAQs What is a good CIBIL score? A CIBIL score of 750 or above is generally considered good. It improves your chances of getting loans approved at better interest rates. What is a good credit score? Just like the CIBIL score, a credit score of 750+ from any bureau is considered healthy and creditworthy by most financial institutions. What is considered while getting a loan – credit or CIBIL? Lenders consider both terms — but what matters is the credit report from a recognized bureau, most commonly CIBIL. Factors include: Repayment history Loan utilisation Credit mix Recent credit inquiries Length of credit history
08-11-2023
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How To?

Derivatives Definition, Types, and Trading

Derivatives are financial instruments that investors use to transfer asset risks to other willing investors. The derivatives definition is such that it allows for a financial contract to exist between two parties. Each party has something to offer to the other one, and this is laid out clearly in the contract. For instance, if you have a stock that might devalue in the future, you use a derivative to transfer this risk to another party. [B-01] Derivatives Meaning By definition, a derivative is a financial contract. Its value depends on an underlying asset or a group of assets. This contract is entered into by two or more entities that can trade with each other. Derivative trading can be done on several assets, each with its individual risks. The fluctuations in the prices of the underlying assets determine the derivatives’ price. Derivative trading can give you access to certain markets. You may also trade them to hedge against risks. Depending on the types of derivatives, they can mitigate risk or assume risk. The former is called hedging, while the latter is called speculation. Experts consider derivatives as an advanced form of investing. In this regard, the most commonly used underlying assets are bonds, commodities, stocks, interest rates, currencies, and market indexes. Types of Derivatives The derivatives definition becomes even more clear if you understand its different types. Depending on the contract, there can be four types of derivatives – Options: The derivative definition for this type is that you can sell or buy an underlying asset at a fixed price in a given period of time. The buyer of the derivative, however, is not obliged to exercise the option. Option derivatives usually come with an expiry date. In the Indian market, options expire within weeks or months. Future: Also called future deliver, this type of derivative allows you to buy or sell assets at an agreed-upon price on a specified date. These are standardized contracts whose values are marked to market on a daily basis. This implies that the profit or loss incurred by you or the other party is calculated and adjusted in their margin amount daily. Future contracts also have an expiry date which is typically a month in the Indian market. Forwards: These are custom derivatives where the two parties decide a future date for the contract settlement. The buyer of the contract is under obligation to fulfil it. This renders it a similar derivative meaning as future contracts. Forwards are available over the counter (OTC), and are not marked to market. The risk involved for both parties is greater in forwards that in any other type of derivative. Swaps: With a swap contract, you can enter into a cash flow exchange with another party. It allows you to facilitate cash flow exchange at a future date using a pre-planned formula. Swaps, however, are not traded on exchanges and are only available over the counter. Derivative Trading Derivative trading simply means buying and selling derivatives. It allows you to buy a large number of underlying assets as an investor by paying only the margin. Margin is the initial amount of money you would pay to buy a derivative. Through derivative trading, you can buy or sell stocks, commodities, or currencies. Trading in the Derivatives Market Now that you are clear about the definition of derivatives, take a look at how derivative trading works. To start, you will need, A Demat and trading account. Add enough money to the Demat account to match the margin required to buy and sell derivatives. Derivative trading mainly involves four players – Hedgers take part in derivative trading to eliminate future price change risks. Speculators and traders predict future price changes. Arbitrageurs exploit price gaps between multiple markets. Margin traders use margins to increase their stock holdings. Advantages and Disadvantages of Derivating Trading If you engage in derivative trading by understanding the types of derivatives, you can benefit significantly. But there are also risks involved that you should be aware of. Pros The benefits of derivative trading are, Reduced market transaction costs: Unlike debentures and shares, the cost of derivative stock trading is much less. This is because derivatives act more as risk management tools. Risk management: Changing asset prices are associated with high risks. Derivatives can be used to mitigate this risk. Arbitrage: Derivative trading helps to achieve market efficiency by ensuring underlying assets reach their right prices. Asset price determination: Different types of derivatives are used to determine the prices of underlying assets. Transferable risk: Derivatives allow businesses and investors to transfer the risk associated with underlying assets. [B-02] Cons Derivatives by definition are good. But there are critical demerits attached to derivative trading – High-risk trading: The prices of underlying assets are subject to market fluctuations. This makes derivatives a high-risk contract. Counterparty default: Derivatives that are sold over the counter bear a high potential of counterparty default as they are not regulated by market controls. Speculative: Derivatives meaning is speculative. Derivative trading requires research and building in-depth knowledge about market assets. If you are interested in knowing more, then follow the Piramal Finance blog for information on related topics.
08-11-2023
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Banking

Can a Savings Account be Converted into a Current Account

An eligible person can open an account with the bank. They can choose between a savings or a current account to keep their money with the bank. There are some fundamental differences between the two types of accounts. A savings account encourages the owner to save funds by using the formal banking channel to preserve their income. A current account, on the other hand, is mostly meant for business purposes. The requirements for KYC and supplemental documentation are different for the two. While it is more straightforward in the case of a savings account, a current account usually involves an in-depth process. Due to this fundamental difference, the Reserve Bank of India has laid down certain regulations in this regard. It is not possible to convert a savings account into a current account due to these. For any reason, if a customer wishes to make the transition, they can close their existing savings account and open another current account. [B-01] What Is The Eligibility For A Current Account? A current account is a business account. Usually, only businesses are allowed to open a current account with the bank. The following points highlight the eligibility criteria for opening such an account. Individuals must be either of the following: Resident individual Hindu Undivided Family (HUF) Partnership Firm Sole proprietorship firm Private company Limited liability partnership Trust Association of persons Club or society If a customer is eligible to open a current account with a bank, there are many benefits that they can avail of. What Are The Benefits Of A Current Account? Since it is not possible to convert a savings account into a current account, a customer can opt to open a new current account. There are many benefits that they can enjoy by opening such an account. Here are a few of them. A customer is likely to receive a premium banking experience. Customers receive overdraft facilities. Due to this, they will never run out of funds. The bank considers your credit score to estimate the overdraft facility for a customer. For one year, customers can avail of free ATM transactions. Afterwards, ATM transactions are charged with an annual fee. Customers can avail of multi-city chequebooks along with a nomination facility. A current account can be transferred to branches of other banks. Customers can also obtain monthly statements. So even though it is not possible to convert savings to a current account, one can always open a new account and avail of the above-mentioned benefits. Moreover, the procedure to open a current account is quite simple. Let us take a look at the steps involved in opening a current account. How To Open A Current Account? You can follow a few simple steps to open a current account with a bank of your choosing. Here are the steps involved. Visit the nearest branch of the bank. Request them to provide an account opening form. Fill out the form with all the correct details. Also, make sure to attach the relevant documents along with the form. To make your account more accessible and flexible for use, make sure that you opt for all facilities, including internet banking, mobile banking, SMS and more. Submit the application form along with the initial amount required to open the bank account. The bank will verify the details filled in by the customer. Once the process is complete, the account opening process will begin. The customer will receive the relevant account details via post. Since it is not possible to convert a savings account into a current account, a customer can open a new current account and close their savings account. It is no hassle to close a savings account. The customer will need to visit the bank branch in person and fill out an account closing form. The bank will verify all the details, after which the savings account will close. But what if someone does not want to close their savings account? Well, a savings account has some great benefits as well. What Are The Benefits Of A Savings Account? Even with a savings account, you can avail several benefits. Savings accounts are instruments of financial planning. They encourage savings and investments along with the organisation of finances. Customers can earn interest on the balance in a savings account. Customers can use their savings account to build an emergency fund. This keeps their money secure, earning a fixed rate of interest. The money can be withdrawn easily from the comfort of the customer. A savings account can be used to conduct offline as well as online transactions. Customers can also make cash withdrawals using their savings accounts. [B-02] Conclusion Both accounts carry their own set of benefits. So, a customer can fall into doubt about what to do. We have already seen that a customer cannot convert their savings account into a current account. They have to look for another way out. Customers can opt to maintain both accounts with a bank. This will ensure that their incomes and expenses remain different for both. From an accounting perspective, this can be very beneficial. A current account can help a customer get an accurate picture of their business operations. Another benefit of maintaining a current account is that a customer can write off their business expenses against their income. This can help save taxes for them. But the same would not be possible if the same expenses were incurred through a savings account. Thus, a customer must identify their banking needs. This will help them determine which account they must operate. For more such vital insights into the world of finances, visit Piramal Finance. It is a premier financial institution where you can get every update related to banks.
08-11-2023
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Home Loan

Home Loan Document List For Self-Employed Individuals

Understanding the intricate details of the home loan process can be overwhelming, especially for self-employed. But it doesn’t have to be. This is a comprehensive guide to documents required for home loan for self-employed individuals. It will provide you with all the information you need to make a well-informed decision about obtaining a loan. [B-01] Documents Required for Home Loan For Self-Employed Home loan applications have a lot of documentation requirements. There are, however, a couple of documents that are usually required in every loan application. These documents include the following: Credit Report: A credit report is a document that has all the details regarding your credit history and credit score. A credit report will show your credit history and give a general idea about the amount of risk you pose to the lender. Credit reports are generally needed for most kinds of loans and are used to determine the interest rates of a loan. Statement of Financial Information: The Statement of Financial Information (SOFI) is a document in which you provide details about all your assets, liabilities, and income. This document is needed for many types of loans and can be used to decide on the terms of your loan. The lender will use this document to check if you have enough money to repay the loan without being a risk to them. These are the documents you can submit: Income Tax Returns with calculation for the last two years P&L and Balance Sheet with all annexures (must be audited and certified by CA) Account statement for the current account for the last six months Your savings account statement for the last six months Proof of Other Financial Obligations: Lenders will also want to see proof of your financial obligations, such as any existing debts you have. To prove your debt obligations, you’ll need to provide: Mortgage statement Car loan statement Any other loan statements Identity Proof: This is yet another important document required for home loan. This document includes one or a few of the following: Voter Card Aadhar Card Passport with validity Driving License Credit Card with photo Government-issued Photo ID card Identity verification letter with a photograph from a recognized public servant or figure (less than a month old) Address Proof of Residence: You will also need to submit proof of your address to the lender. You can submit one or more documents from the following list: Voter Card Aadhar Card Valid Passport Letter from a recognized public authority or public servant verifying your residential address Latest Utility bill Rent agreement on stamp Paper Bank Statements reflecting your address of any commercial nationalized bank Credit Card Statement (not older than 3 months) Life Insurance Policy Copy of Sale of the property (residence), if you own it Address Proof of Business: Apart from address proof of your home, the same for your business is also a document required for home loan. You can submit a copy of any of the following: Shops & Establishment Certificate Trade License Certificate SSI Registration Certificate PAN Card/ Sales Tax/ VAT Registration Certificate Partnership Deed (for firms) or MOA for companies Export-Import Code Certificate or Factory Registration Certificate Professional qualification Certificate and Degree Certificate for Professionals SEBI Registration Certificate The registration number issued by ROC Tips for Preparing Home Loan Documents It is important to submit complete, accurate, and genuine documents while applying for a home loan. Here are a few things you can do to prepare the complete and accurate documents required for home loan: Gather all the relevant documents: Collect all the documents that are relevant to your loan. If you don’t have the documents, then you will have to take them from the previous business or homeowners. Make sure to request genuine and legal documents from the previous owners. Submit original documents: Make sure to submit original and genuine documents. Don’t submit photocopies of the documents since the lender will reject these documents. Scan documents and store them in a secure place: Make a scanned copy of all the documents and store them in a secure place such as a cloud storage or a password-protected folder. You can also store them on an offline hard drive. How to Choose the Right Home Loan for You Pick the right type of home loan by keeping the following things in mind: – Budget: Before applying for a home loan, make sure that you have a budget that is realistic and tailored to your specific situation. Credit Score: Make sure to check your credit score before applying for a loan. If your credit score isn’t very high, you can consider applying for a loan with a lower interest rate. Rate: Choose a home loan that has a lower rate when compared to all other loan types. Make sure to check the different types of interest rates that each loan type has to find the best one for you. Term: A home loan term is the length of time for which you take the loan. Make sure to choose a long-term home loan since short-term loans have higher interest rates. Repayment: Choose a home loan that has a flexible repayment plan since most self-employed individuals may face difficulties in making monthly repayments due to their fluctuating incomes. Down Payment: Choose a home loan that has a low down payment since having a high down payment can make it difficult for you to apply for a loan. [B-02] Conclusion Instant Loans and Instant Funds are a quick, simple, and stress-free solution to supplement your current Home Loan. Given this, it’s an excellent solution for covering any unexpected or urgent monetary demands.
08-11-2023
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Home Loan

Complete guide on how to reduce house loan interest rate

Do you have a home loan or plan to get one? If yes, you would know that interest rates on housing loans are a crucial aspect that influences your decision. Any change in loan rates affects your monthly payment as well as your overall loan cost. Thus, any option to reduce the house loan interest rate would help ease your monthly burden. [B-01] Ways to reduce a housing loan interest rate Below, we discuss a few ideas that will help you reduce the house loan interest rate and the loan cost. Opt for a shorter loan term. Your Equated Monthly Instalment (EMI) depends on the principal, interest rate, and loan term. A longer tenure will reduce the EMI as you have more time to repay your loan, but it will increase the overall interest cost as you pay more interest during the loan term. Balancing the loan term and the EMI you can afford is crucial when you choose the tenure for housing loans. Lenders offer lower interest rates for loans with shorter terms when compared to loans with longer terms. Use an EMI calculator to pick the most suitable loan term for you. Consider making prepayments. For floating-rate housing loans, you can make small prepayments from time to time or in larger chunks if you have spare funds. Lenders do not levy any prepayment penalties for floating-interest home loans. In the initial years, your EMIs cover more interest than principal. The prepayments will help reduce the loan principal and the overall interest burden. For a fixed-rate loan, check with the lender about the prepayment charges before you prepay your loan. Research well before you choose a lender. Many banks and non-banking finance companies (NBFCs) offer housing loans, so you have a wide range of lenders from which to choose. You can go through lender websites or check various websites that let you compare home loan offers. Thorough research can help you find the lowest home loan rates. When comparing lenders, pay attention to other expenses like processing fees and legal and technical charges, as these also raise your overall loan cost. Keep a lookout for special deals. Often lenders come out with special rates for a small window or a select group of borrowers. If you are planning on taking a loan, keep an eye on these deals that can help you avail of a loan at a lower rate. In some cases, banks may offer special interest rates for women or employees of a particular sector or organisation. If you work for an organisation, they may have a special arrangement with a lender to offer a lower house loan interest rate. You can take advantage of these special arrangements to reduce your interest rate. A home loan balance transfer can help. If you have a running home loan and feel that your current lender is charging a higher rate, you can consider the balance transfer option. In this option, the new lender takes over the unpaid part of your housing loan, and your loan with the current lender is closed. Instead of paying EMIs to the existing lender, you pay them to the new lender. A balance transfer makes sense in the initial years of your loan. Though a balance can help you reduce your loan interest rate, it may involve some costs. Consider all the expenses you may incur and compare them with the savings you will make due to the lower interest rate. Focus on your credit score. Lenders look at your credit score before they sanction a loan. When you apply for a housing loan, the lenders seek your credit report from the credit rating agency. This is the first step in your loan application assessment; a low score could lead to an outright rejection, or you would have to borrow at high rates. A high score indicates a good credit history and a low-risk assessment; hence, lenders are willing to offer house loan interest rates. Pay more as a down payment. Another way to reduce your housing loan interest rate is to make a larger downpayment. When you apply for a loan, the lender offers a proportion of the house’s value as a loan. The remaining part you pay from your savings, which is known as the downpayment. A larger downpayment reduces the lender’s risk; hence, the lender is willing to sanction a loan at a lower rate. Paying more as a downpayment also reduces your EMIs; however, it could reduce your liquidity. Consider this aspect before you make a decision. Negotiate with the lender. Apart from all the above tips, pure negotiation with the lender can also get you lower rates. Even a minor reduction in the rates can help you reduce your EMIs, and the overall loan cost considerably, as housing loans usually run in the lakhs and last for almost 15 to 25 years. Meeting the eligibility requirements, having a good credit score, and having a lower debt-to-income ratio are all factors that can help you negotiate a lower interest rate. If you already have a relationship with the lender, you can get a better rate. You can use your negotiation skills to get a better deal. Increase your EMI annually. In floating-rate housing loans, banks offer you the option to increase your EMI. As your annual income grows, you can afford to pay a higher EMI without burdening yourself. You can increase the EMI by 5 to 7% yearly; this will allow you to repay your loan faster and lower your overall interest burden. Check with your lender to explore this option. [B-02] Conclusion Housing loans help you fulfil your dream of owning your own home. A few simple tips can help you reduce your house loan interest rate or the overall interest on the loan. Be a well-informed borrower, find the best home loan deal after careful research, and enjoy your new home.
08-11-2023
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Guide

Certificate Of Deposit (CD): Meaning, Features & Advantages

To meet the financial needs, our nation’s government needs to have money. For this, the government of India needs to approach the common public to raise funds. The money is raised by making tempting offers that are both long-term and short-term. But very few investment options for the money market for short-term investors. Such an option for the short term is a Certificate of Deposit. A certificate of Deposit is also called a CD. Here the role of retail is little. It is due to the need for more knowledge about this space. One can check out the post office FD rate. To know more, one can read the article further. [B-01] What is meant by a Certificate of Deposit? The CD is an agreement. It is between the bank and the depositor. The deal is done for a given period. It has a certain amount of money, and the bank needs to pay interest. It can be redeemed at the time of maturity of that investment. CDs get issued with the help of dematerialised forms. A money agency like a bank issues this promissory note. Federal Deposit Insurance Corporation, i.e., FDIC, is the one who insures it. The RBI, i.e., the Reserve Bank of India, regulates it. The rules are laid by RBI. Post office FD rates are tempting, and one can check them out. During the time of maturity, the depositor gets 7 days to decide the amount of maturity. The maturity amount is again invested if one fails to withdraw it in 7 days. But one can start the amount after 7 days by paying the penalty. One can check out post office fixed Deposit if they are willing. However, the actual investment cannot be redeemed in any way. In 1989 the certificate of Deposit first came into use. This was done to increase the size of the money market. What are a CD and an FD? CD and FD are not very distinct. They are almost the same. Fixed deposits are known as time deposits or CDs by many banks. The term period is the same. They also have basic needs for deposits and have high-interest rates. The only contrast is that the CDs can be freely negotiated, but FDs cannot be. One can check out the post office FD rate. The Certificate of Deposit: Features Eligibility: RBI chooses a few selective financial agents and banks for issuing CDs. They establish quite specific guidelines. Banks issue CDs to pension funds, insurance, trusts, mutual funds, and individuals. Maturity Period: Banks issue a CD for tenure ranging between 7 days to 1 year. But financial agencies give a CD for some other date of maturity. The CD can be from 1 year up to 3 years. Minimum Investment: The CDs get issued in multiples of Rs. 1 lakh. Also, Rs. 1 lakh is the smallest size for the investment. Transferability: Electronic credit of Deposit is transferable. It can be done with the help of delivery or endorsement. However, Demat account certificates can be transferred based on the rules of the Demat securities. A loan is taken against CD: The certificate of the Deposit does not have any lock-in period. It is the reason banks do not grant loans to them. The bank cannot repurchase CDs before maturity. Post office fixed deposit rates can be checked out by one. Discount available on CD: CDs are issued at a discount on the face value. Based on the flotation rate, banks and financial institutions gives the certificate of Deposit. The floating rate is set based on market research. Post office FD rate can be checked out by one who wants to invest. Advantages of Certificate of Deposit in India Security: The CDs or FDs, even during market volatility, do not eat up any capital. The money invested is safe. Just like traditional insurance, it has an assured amount during maturity. Without any risk of suffering a loss, the money being put given in the CD keeps growing at given rates. One can check out the Post Office FD rate. High-interest rate: A lot of investors get attracted towards CD due to the number of benefits it provides. The interest rate is relatively high. It can even go up to 7.8% on a massive deposit than the traditional savings account with almost 4%. Flexibility: One can choose monthly or annual payouts. They can also withdraw a large amount on the maturity of the CD. One can decide the price and time of the investment. But it has to be based on certain parameters. These are usually set by the bank. The CD is just apt for one, to meet their needs. Post office FD rates are quite great for someone interested. Very less maintenance cost: In the market, there are several fees charged by brokers. The costs usually include selling the shares, buying and delivery. Mostly no extra costs are merged with the certificate of Deposit. With some banks, one has to pay only what they invest. [B-02] Conclusion Is someone willing to invest for the short term? Then certificate of Deposit is the answer. Hopefully, the above guide was helpful for the ones in need. It has let people know the meaning, the different features and advantages of CDs. One can now get that they should invest in a CD to have a secure future. A Demat account needs to be opened before starting any process. Such an online account is needed to hold securities, just like a CD. One can check out the post office FD rate if they want. Does anyone need a financial option? Then “Piramal Finance” is a good personal loan/financing option for buyers.
08-11-2023
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