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Home Loan

Difference Between a Land Loan and Home Loan

Are you looking to buy your dream home or acquire a piece of land in a prime location in the city for investment purposes? One of the quickest ways to put your ideas in motion is by getting a loan. This article discusses land and home loans to help you make an informed choice. If you want to buy a property, you will likely cross paths with these two types of loans. But how to differentiate one from the other? Let us explore and understand. [B-01] Home Loan Vs Land Loan Home and land loans typically have the same terms and conditions and the application process. However, a few fundamental differences exist between the two. Definition You can avail of a home loan for ready-to-move properties, properties under construction, to be self-constructed. Land loans, also known as plot loans, are offered for purchasing a plot of land. However, the plot must specifically be for residential use. Eligibility Criteria Both resident and Non-Resident Indians can avail of home loans. In contrast, a land loan is strictly offered to Indian citizens only. Plot and home loans are offered to salaried and self-employed individuals based on the following criteria: Age Source of income Credit Score Repayment capacity Property Location You can take a home loan for property outside the municipal area. However, any land inside a village or industrial area does not qualify for a land loan. In this case, the plot of land must reside within the municipal limits. In addition, the land in question must be demarcated. Tenure The tenure for home loans is exceptionally high, extending up to 30 years. In contrast, the tenure for land loans is 15 years. However, this is the maximum tenure. Lenders like the State Bank of India provide a tenure of 10 years for land loans. Interest Rate Interest rates on home loans tend to be the lowest in the market. On the other hand, the interest rate on land loans is typically 0.5% to 1% higher than on home loans. Tax Benefits Principal repayment and interest payment for home loans qualify for tax deduction under Section 80C and Section 24B of the Income Tax Act. Contrarily, land loans do not come with tax benefits. Loan to Value The loan to value (LTV) is the percentage of property value a lender can lend to the borrower. The LTV of land loans differs from that of home loans. The LTV can be as high as 90% for home loans. However, in the case of a land loan, a borrower can get only up to 75% of the property value. This limit applies only to loans meant specifically for land purchase. The lenders may fund higher if the borrower avails of a land purchase and construction loan. Remember that 75% is merely the upper limit. Most lenders are conservative in terms of the loan amount and valuation of the property. So, expecting approval on a lesser amount would be wiser. Summary Category Home Loan Land Loan Eligibility Criteria Both resident Indians and NRIs can apply for the loan. Only Indian citizens can apply. Objective The loan is meant for the purchase or construction of residential properties The loan is given for buying a plot of land. Tenure of the Loan Maximum tenure is 30 years. Maximum tenure15 years. However, the upper limit may vary from one lender to another. Benefits of the Taxes The principal amount and interest are both tax-deductible under the Income Tax Act. No tax benefits. Location of the Property No restrictions. Plots in industrial or rural areas do not qualify for the loan. The land should strictly be located inside municipal limits. Maximum Loan-to-Loan Value Up to 90%. Up to 75%. Rate of Interest 7.25 – 7.50% per year. 8.0-10.0% per year. Composite Loans Do you belong to the unique category of borrowers who want to purchase a plot and build a house on it? In that case, go for a composite loan. These loans are given by lenders to buy a plot and construct a house within a specified timeline. Before applying for such loans, note that the time limit is crucial here. Typically, borrowers must begin construction within 3-5 years. However, the period varies from one lender to another. Moreover, the construction-specific part of the loan is disbursed only when you complete the foundation work. A composite loan attracts the same interest rate as home loans. However, you may have to pay slightly higher interest till you do not begin construction. [B-02] Conclusion The application and repayment procedures are the same for home loans and land loans despite their differences. Both have their specific benefits and purposes. The article above has listed down crucial information to help you determine which one suits your needs. However, remember that your credit score is vital for both loans.
08-11-2023
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Business Loan

Complete Guide on How to use Loan Against Property to Start Your New Business

Banks and other lending firms give out loans to new business owners. Borrowers must meet the eligibility criteria and provide proper paperwork. The company loan against property is very easy to obtain. You can use the property as security to secure a loan from a bank/NBFC for a startup firm. [B-01] Key Points of a Property Loan Many benefits make loans against property a better option. Read on to find out how it works and its benefits. A loan against property is more low-cost than a personal loan. Since there are so many cash outflows in a new firm, this decision is important. It will determine the success or failure of the enterprise. A property loan does not entail giving up the building or closing on the business. If you need to use your home as collateral for a business loan, you and your family can still live there. Getting a loan against property to start a business is very simple. The financial institution giving the loan will be assured with the mortgage asset. Lenders can take your property if you default on payback. Because of this, getting a loan against property to start a business is much less of a hassle. A mortgage loan against your home can provide you with a larger sum. It is way better than getting through a personal loan or any other type. Loans against property are available up to Rs. 3.5 crore by many lenders. They prefer to give a loan-to-value (LTV) ratio of 75%-90% of the property’s current market value. Business Eligibility for a Loan Against Property There are a few things to get a loan against property to start a business. Property loans can be obtained by both paid and self-employed people. Keep reading to find out if you meet the requirements to apply for a loan against property for new business. If the applicant is salaried A multinational corporation or a reputable private company must hire salaried workers. The only salaried borrowers eligible for a loan against property for business are those living in Tier-I cities like all the Metro cities. If the Applicant is Self-Employed Those who work for themselves must be able to prove their employment. They should have proof of reliable income. It will help them qualify for a loan against property to start a business. Only residents of Tier – l and ll are eligible for the loan against property for company owners. Documents Required The paperwork needed for a loan against property will also vary from one person to another. Salaried Employees Any official identification issued by the Indian government, such as an Aadhaar card, voter ID, PAN card, etc. An official form of identification with a current Indian residence address, such as an Aadhaar card, voter ID, passport, ration card, utility bill, etc. The most recent salary slip given by the company to which you belong Statements from your checking and savings accounts covering the past three months Current and prior year tax returns To secure a mortgage loan, you’ll need to provide legal papers of the property you intend to use as security. Self-Employed Individuals One of several forms of official identification issued by the Indian government, including an Aadhaar card, passport, voter ID card, etc. A government-issued form of identification or proof of residencies in India, such as an Aadhaar card, voter ID card, or utility bill. Six-monthly bank statements To secure a mortgage loan, you’ll need to provide documentation of the property you intend to use as security. How to Apply for a Business Loan to Get Started? Business owners can quickly and easily get a loan against property. All they have to do is visit the websites of banking institutions or go offline. Once your loan is authorized, the funds will be transferred to your account quickly. Learn more about how simple it is to get a loan against property for a new business. Provide your personal information (such as your name, address, date of birth, and contact details) in an online form. After you’ve filled out the basic form, you’ll need to provide information about your income so that you can be matched with the most suitable loan offers, given your credit history. Once the loan application form has been submitted, a representative from the financial institution will call you to verify your identification and property. Why Prefer Loan against Property for New Business Meeting the requirements and submitting the application for a loan secured by real estate are both very quick processes. When you’re first starting, every second counts and these procedures move quickly. Several costs must be incurred in a new business. Creating an office and employing manpower plus other assets are just a few costs associated with new business. If you take out a loan against commercial property, you’ll have the flexibility to use the money. It can be for whichever purpose is most pressing. Lenders typically don’t get involved in such details. Repayment terms that can be modified to match your needs. Having a repayment term that can be adjusted to fit your needs will reduce the pressure you feel to increase profits to pay down your debt quickly. With a loan repayment term of up to 20 years, you can focus on growing your business without worrying about how to make loan payments. The interest on a loan secured by collateral is typically lower than that on unsecured debt. Compared to other loan options, such as personal and company loans, the interest rates offered with a loan against property for business owners are fairly cheap. [B-02] Conclusion Although the property is one of the best financial assets, its value can be increased. The property’s value can be used as collateral to secure a cheaper interest rate and a larger loan. There are a lot of costs for new business owners to consider while getting their venture off the ground. Taking a secured loan can make sure you can do all of this without going into serious debt. Visit The Piramal Finance website for more details.
08-11-2023
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Home Loan

Here’s a complete guide on home loans: Know how it works

What is a home loan? Want to know how it works? Purchasing a home is the dream of every person. Applying for a home loan is an exciting first step toward getting the house of your dreams. With our step-by-step guide to the home loan process, this doesn’t have to be hard to handle. Buying a house is one of the most important choices a person can make. With the arrival of affordable home loans, many people are now able to buy a home. Buying a home costs a lot of money, so many people in India and all over the world get a home loan to help pay for some of the costs. Before there were home loans, people would save for years. Then borrow money from unknown lenders when they need it. But as consumers’ needs change and as rules and regulations get stricter, a lot of things have gotten better in the industry. [B-01] What are home loans? A home loan is money that an individual borrows from different banks or non-banking financial companies (NBFCs) to buy a home. How to apply for a home loan, step by step Here is a step-by-step guide to the process of applying for a home loan, which will help you get started: 1. Fill out the form. This is the first step in the process of getting a home loan. In this step, you send in the loan application with your basic information. At this step, the following information is needed: ● Personal details. ● Details about income, such as annual income ● Education details ● Business/Employment details ● Property details like residential or commercial addresses, etc How much the property in question is expected to cost? How is the property being paid for now? Different lenders may ask for different kinds of information at this step. In addition to the information you send in with your application, you need to send in documents to back up the information you send in with your application. At this point, you need the following documents for your housing loan: ● Proof of identity ● Proof of income ● Age proof ● Proof of address ● Proof of employment ● Proof of education 2. Details about a house: Pay the fee for the process. After the housing loan application has been sent in, it is important to pay the loan processing fee. Again, processing fees can be different from one lender to the next. Processing fees for home loans are usually between 0.25 and 1 percent of the loan amount. The processing fee is the amount that the lender charges the customer to keep track of the loan account. This amount may also include the agent’s commission. You can always talk to the lender about the processing fee to get a better deal. Even though banks and NBFCs have a set way to figure out the processing fee, there is no harm in asking for the fee to be lower. If the lender doesn’t charge a processing fee, compare the interest rate, duties, and other fees that will make the loan more expensive. 3. Talk to the bank about it. At this point, the bank has checked the documents that were sent in, and the lender and the customer have a formal conversation. If the paperwork is in order, it usually takes one to two working days or less. Some lenders want you to come into the branch to talk about the housing loan, the terms, and other details. Some lenders feel more at ease talking to the applicant in person about these details and getting more information about them. But some modern lenders don’t require you to go to the branch for anything. The online process and door-to-door service from start to finish make it easy and comfortable for our customers. Wait for the documents to be checked. It’s important to know that many people apply for home loans every day. To speed up the time it takes to process your application, make sure your paperwork is in order. At this point, the lender checks the information that the applicant provided. Most of the time, the lender checks the following documents: ● Residential address ● Employment details ● Credentials of the employer ● Number to call at home ● Number to call at work These details are checked to make sure that the applicant gave the right phone numbers and other information. 5. Get approval This is the most important step in getting a mortgage. It is when the lender decides whether or not to give you the loan. This is called the loan application being approved or sanctioned. Before giving the loan, the lender checks the application carefully for the following things: ● Who is applying and how old they are ● Information about the applicant’s business or place of work ● How much money the applicant makes ● ability to pay back the loan with the interest that was set 6. Get the letter from the court: The lender should send a “sanction letter” after looking over all of the documents that the applicant has sent. 7. Submit your property documents. After the lender accepts the offer letter, it’s time for the lender to pay attention to the property in question. Even if the applicant hasn’t decided on a property yet, the lender may give them some time to do so. 8. Make sure there are technical checks and a site estimate: Since a home loan is a secured loan in which the house itself is used as collateral, every lender is very careful to check all the technical details of the property to give it a fair value. The lender can check the property by sending an employee, a civil engineer, or an architect. 9. Close the deal on the loan: After all of the technical checks are done and the lender is happy with the property for which the housing loan is being given, the final registration of the deal is the next step. The lender’s lawyer should finish up the paperwork and get it stamped in the right places. 10. Sign agreements: After all the paperwork is in order, both parties need to sign the papers. The lender signs the papers first at this stage. When the applicant has to sign and send in the paperwork. He or she is expected to send in post-dated checks for the amount of time that was agreed upon by both parties. Wait for the loan to be paid out. This stage is the last step. After all of the paperwork is done, the housing loan is given out. The lender may ask you to show proof that you have saved up for the down payment. Most of the time, the seller or builder of the property being bought is the one who gets the money from the loan. [B-02] Summing up This article’s goal is to provide clarity about the home loan, how it works and its step-by-step process . Before going for a home loan. You should have the proper and relevant knowledge about home loans and its process. Home loans are a great way to purchase a home for those who don’t want to take any risks to make money. As time goes on, the returns increase because of a process called “compounding.” FDs are flexible because investors can take some or all of their money out early. Pay attention to the information mentioned before while making any decisions. Take your decisions wisely. Also visit, Piramal Finance for more in-depth, educational articles.
08-11-2023
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Personal Loan

Here’s the complete guide on how to get a loan against a fixed deposit

During a financial hiccup, different funding options come to the rescue. Out of various funding options, loans are one of the most preferable options. It helps you during a crisis without putting much financial burden. People tend to go for both secured and unsecured loans, based on their needs and credentials. However, many cannot go for an unsecured loan because of a lack of credit score. In that case, secured loans come to the rescue where you have to use collateral to get a principal amount. Some people use their property as collateral to get a loan, while some use their shares and savings to do so. Fixed Deposits or FDs are a great way to have a loan that can help you during a financial crunch. A loan against a fixed deposit is an effective and time-efficient way to bridge your short-term crisis. Since this is a secured loan, there are some additional benefits that the borrower gets from the bank. Do you also want to apply for a loan against FD but are confused about how to? Well, the answer to your dilemma is here. Read on to learn everything about loans against fixed deposits and how to apply for them. [B-01] What is a loan against a fixed deposit and what is its significance? A loan against a fixed deposit is financial aid that you take from a lender to cover your needs during a crisis. Here, you have to use your fixed deposit amount as collateral or security to get the loan amount. In return, the lender charges you a specific rate of interest for a fixed period which you are expected to repay within a stipulated time. This is a better way to opt for instead of breaking your fixed deposit prematurely. It will help you cover your requirements during a crisis for a short duration. In India, for a loan against FD, you can get a loan amount of about 90% to 95% of the total deposit amount. The loan amount solely depends on your fixed deposit amount and the offer that your bank provides. Besides looking for a loan against fixed deposits, you also have the option to choose a credit card against fixed deposits. Using a credit card against a fixed deposit will also help you to build a credit score over time. What are the minimum eligibility criteria to apply for a loan against fixed deposits? Now that you have known the significance of a loan against a fixed deposit, let’s find out the minimum eligibility criteria that are required. You must possess a fixed deposit account to be eligible to apply for a loan against fixed deposits. The loan amount you borrow from your lender must be less than the fixed deposit amount. If the fixed deposit which you are pledging is in the name of a minor, you are ineligible to go for a loan against FD. The repaying tenure of the loan cannot be more than the tenure of the fixed deposit. How should one apply for a loan against a fixed deposit in India in 2022? The process to apply for a loan against a fixed deposit is quite easy and to the point. You can apply for it in both online and offline modes, depending on your convenience. You don’t have to break your fixed deposit to apply for a loan, you can use it rather. Like every other loan, for a loan against a fixed deposit, you have to submit an application form with all your details filled in. You have to submit all the legal documents that your lender asks for while applying for the loan. For the proof, you have to show your Fixed Deposit receipt to your lender if your lender asks for it. What are some of the benefits of applying for a loan against fixed deposits? There are several benefits of applying for a loan against FD in India and they are: Low rate of interest: Since, a loan against fixed deposit is a secured form of loan in which you pledge your FD to get a loan amount, the rate of interest is comparatively low as compared to unsecured loans. No requirement of credit score: For most of the loans you apply for, you are expected to have a good credit score to prove your creditworthiness to your lender. However, that is not applicable in the case of a loan against a fixed deposit as its eligibility is independent of the credit score. This also helps a lot of borrowers to avail of a loan who have poor credit scores. No prepayment charges: Many banks charge a prepayment penalty on the borrowers, but in the case of a loan against fixed deposits, you don’t have to pay any penalty. You are eligible to pay the entire loan amount before the tenure of the loan without bearing any extra costs. [B-02] Wrapping it up As fixed deposits are a very good investment option that yields significant benefits, they can also act as security for availing of a loan. To bridge your short-term financial crunch, loans against fixed deposits are the best way to look for. Their interest rates are nominal, there is minimal documentation and no requirement for a good credit score. You can get up to 95% of the loan amount in most cases, which is another added advantage. But, since you are opting for a loan, you should make sure that the loan is utilised to cover emergency expenses rather than meeting personal requirements like trips and shopping. In case you want to gather more information regarding loans against fixed deposits, you should visit Piramal Finance.
08-11-2023
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Personal Loan

Higher Education Loan: Apply for Loan Against Property for Higher Education

Most loans act as a massive facilitator in covering your diverse needs. Not only will you have the monetary leverage, but you will also have the financial liberty and independence. Using them, you can buy a house, or car, plan a family trip, make a down payment, cover your education-related expenses, etc. When covering education-related expenses, a loan against property is sometimes preferred over a higher education loan. These loans are readily available and can help you cover all your educational expenses. As suggested by the name, in a loan against property, you must pledge your property and keep it as collateral to get the principal amount. In return, you are charged a rate of interest, and the lender keeps the property until the loan is repaid. But is it wise to use a loan against property instead of a higher education loan? Let’s find this out in this article, as it focuses on loans against properties and how they can help you fund your higher education. [B-01] What is a loan against property, and for what purpose is it applied? A loan against property is a type of loan in which you use your property as collateral to get a loan from a lender. These loans are secure, and you can also get a huge loan. As the financing institution does not dictate the usage of the loan amount, you can use this loan for a variety of reasons. However, in most cases, these loans are taken to cover big-ticket expenses like investing in your business venture, financing higher education, etc. What are the benefits of taking a loan against property for financing higher education? There are several benefits of opting for a loan against property instead of going for an education loan: Higher loan amount: Most banks and NBFCs allow a high amount to the borrowers to cover their big-ticket expenses. And in the case of higher education, you might need a lump sum to meet all the expenses like admission fees, dormitory, course fees, etc. Banks allow a loan amount of up to 65% of the total market value of your property. This is a huge benefit compared to a higher education loan, as the loan amount can be subsequently higher. The loan amount can be even higher if your property has a higher market value. Low rate of interest: As this is a secured loan with fewer risks, most lending institutions charge a minimal interest rate. The Bank’s interest rate starts from 8% per annum for most property loans. This rate is also variable and depends on the individual’s credentials, the property’s market value, etc. Proper utilisation of the property: A loan against property is the right way to finance higher education because it properly utilises your property. Instead of selling your property at a compromised rate, which might be worth more in the future, it is better to use it as collateral and regain ownership by paying the instruments. Selling a property is irreversible, so a loan is a convenient option. Higher loan tenure: Though the loan tenure of most higher education loans is high, it is even higher in the case of loans against property. While most education loans can be taken for 15 years, property loans can be taken for 20 years or even 30 years in many cases. From a tenure perspective, a loan against property is a much preferable option compared to a higher education loan. High Flexibility: As you pledge your property to get a principal, you get high flexibility benefits. You can choose the loan type, period, and repayment method. Flexi facilities allow you to repay the interest on the amount you use instead of repaying the entire principal amount. Should you choose a loan against property instead of a higher education loan? A loan against property might provide you with many benefits, but a higher education loan has more grip on tax benefits. Education loans are taxable and give the borrower the privilege of experiencing tax benefits under section 80E of the Income Tax Act, 1961. In addition, education loans have comparatively lower interest rates and associated benefits for students. But from the perspective of tenure of repayment, a loan against property is a much preferable option. Since long tenure ensures a low EMI amount, it puts less stress on your monthly budget. The loan amount is also higher than an education loan which is another added benefit of going for a property loan. If you don’t have a property to use as collateral and pledge for a loan, then a higher education loan will help you with that. Also, property loans are mostly taken for investing in a business, as the loan amount is high. [B-02] Conclusion When it comes to choosing a loan for education, both these loans have significant benefits and demerits. If you are at a higher loan amount for a longer period, then a loan against property is the right option for you. But if you are someone who doesn’t have a property to pledge and wants more tax benefits, then a higher education loan might be the correct option for you. It depends on your monetary planning, the aim of taking the loan, and the financial muscle to tackle the interests and EMIs. If you want to know more about loans against properties, home loans, personal loans for education, education financing options, etc. you should visit Piramal Finance.
08-11-2023
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Know More

Here are the top 6 advantages of two wheeler loan that make your life easy

Two-wheelers have significantly made our lives easy and convenient. Besides being a popular travel pick, they give high mileage and cause fewer emissions compared to big vehicles. Nonetheless, buying them for everyday movement for groceries, office, colleges, etc., is a worthy investment. However, saving money from your monthly expenses to buy a two-wheeler might cause financial trouble. A two-wheeler loan might come to your rescue in such a scenario. A two-wheeler loan gives you the exact loan amount you need to buy a bike. A two-wheeler has a lot of importance in our day-to-day life, and something that has high significance in our lives is worth every financial risk. However, with advanced features and services provided by banks and NBFCs, getting a two-wheeler loan is even more convenient than a personal loan. In this article, you will learn about two-wheeler loans, their comparison to a personal loan, and six of their advantages. [B-01] What is a two wheeler loan, and what is its significance? A two-wheeler loan is financial aid from a lending institution, whether a bank or NFBC, to purchase a two-wheeler. These lending institutions charge you a specific rate of interest based on your credentials and loan-repaying capacity. You can opt for monthly instalment options to repay your loan amount. You must ensure you pay your EMIs on time throughout the loan tenure. Two-wheeler loans can only be obtained for purchasing a bike. You can’t apply for it to cover other needs. During festival seasons, banks offer heavy discounts on interest rates and elevate the loan amount for the customer’s attention. This is the reason why loans for two-wheelers were popularly applied for. In India, people opt for two-wheeler loans instead of personal loans to purchase a bike. Now that you know about two-wheeler loans and the purpose they solve, let us find out some advantages of them. What are the six advantages of applying for a two wheeler loan to purchase a bike? There are more than six benefits of going for a two wheeler loan over a personal loan to purchase a bike. They are: Compelling rate of interest: Banks and NBFCs charge a lower interest rate to borrowers for purchasing a bike. This helps you lower your equated monthly instalment amount to a great extent. In addition, it allows you to make fewer compromises on your financial aspect and, as a result, puts less stress on your budget. In India, most financing institutions charge an interest rate that starts from 7% per annum. However, some lending institutions even charge much less than this, often that starts from 1 per cent per annum. If this rate is compared to a personal loan, a two-wheeler loan is a preferable option. High-Value Financing: While opting for a two-wheeler loan, you can get as much as the total amount you require to purchase a bike. Unlike other types of loans like personal loans, you can get 100% as the loan amount for financing your two-wheeler. Most financing institutions spend at least 90% of the money you need to purchase a bike. Flexible tenure: The tenure of the loan plays a huge role in deciding whether or not the loan is preferable. A flexible tenure allows you to have ample options and choose the one that suits you the best. So, in the case of a two-wheeler loan, the tenure of repayment ranges between 12 months to 48 months. So, a flexible tenure helps you to decide and plan your finances wisely. Easy EMI options: Equated monthly instalments also play a decent part when applying for a two-wheeler loan. The easier the EMI options, the easier the repayment capabilities. Most lending institutions provide diverse options when opting for a loan for a two-wheeler. This helps you choose the best for you and manage your budget. Easy and Quick approval: In a two-wheeler loan, there is involvement of lesser paperwork with minimal documentation. This helps you prevent unnecessary delays and get your amount reimbursed way sooner. However, in some cases, it might take 3 to 5 days to get your loan amount disbursed. Compared to a personal loan, the disbursement period is comparatively lower than the mentioned period. Boosts credit score: Credit scores are a fundamental requirement for bigger loans like personal and home loans. So, a two-wheeler loan helps you build a good credit score. If you opt for a loan for a bike and repay it with smaller EMIs throughout a more extended period, your credit score will increase simultaneously. [B-02] In Conclusion Though two-wheelers are one of the most popularly chosen vehicles in recent times, buying them with personal finance might be tough. A two-wheeler or personal loan might help you get through the buying procedure. A two-wheeler loan has many benefits like easy approval, flexible tenure, lesser EMIs, etc. While choosing a loan, you must focus on the parameters like interest rates, EMI and tenure. Increasing your tenure might decrease your EMI but increase your overall interest payment. Decreasing your tenure might lower your net interest payment but increase your EMI and cause financial distress. If you want to know more about two-wheeler loans, home loans, personal loans, etc. You can prefer to visit Piramal Finance.
08-11-2023
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Home Loan

Home Loan FAQs, Questions Related to Home Loan

Do you have questions regarding home loans? The home loan FAQs discussed in this article will answer all your questions and help you learn. 1. What are the many types of mortgage loans offered by banks, and which would be the best fit for you? Most banks provide a variety of mortgages for house purchases, including loans for land, building loans, completed homes, properties suitable for immediate occupancy, loans for non-resident aliens, etc. To select a suitable home loan programme, you need to have a firm grasp of how it works. Check whether you need a home loan to buy a new house or a loan to refurbish your existing one. [B-01] 2. What factors are considered while granting a home loan? The banks check your monthly income, the availability of a co-borrower, the price of the property, the downpayment you will pay and other factors to understand whether you can repay the mortgage instalments on time without hassle. 3. What role does my CIBIL (credit) score have in determining the interest rate I am offered? If you want a mortgage in the amount of your choice at a reasonable interest rate, a credit score of 750 or more is ideal. This means it’s crucial to talk to a lender about the mortgage interest rate you may get based on your credit score. Let’s say you have a steady job and a monthly salary of more than Rs 1 lakh. You plan to apply for a home loan of Rs 4 crore and have a credit score of 680. The bank may charge you 12% interest. The same bank may charge a different interest rate to another person with a slightly higher monthly income and a credit score of 750 and above. 4. Have a fixed or adjustable interest rate on your mortgage loan? A slight shift in interest rates may significantly affect borrowing money and the cost of keeping up with payments. Find out if the interest rate on your home loan will be fixed or variable and if the APR will be constant or variable. Choices in mortgage interest rates include: A home loan with a fixed interest rate means your monthly payment will never change. Interest on mortgages with both fixed and variable rates is often fixed at the outset and then goes variable. Save up for other priorities and check out the interest rates given by several banks before applying for a house loan. 5. Which loan term best suits your needs? Lenders often provide payback periods from one to 30 years. An adjustable-rate mortgage’s term length can be adjusted according to the borrower’s age, income, and other factors. Your home loan’s monthly payments (EMIs) will vary depending on the term you choose, so it’s a good idea to find out from your lender what options you have. The EMIs are lower for a longer-term loan and higher for a shorter-term loan. An EMI calculator inputs data about a loan, such as the principal, interest rate, and payment schedule, into a mathematical formula. Every single loan has the same interest rate and payment schedule. 6. How much does it cost to execute a home mortgage application? Depending on the financial institution, the processing fee could be anywhere from 0.50% to 2.50% of the total loan amount. The mortgage application processing fee is often relatively small, but it might add up if you need more preparation. It would help if you inquired with your lender about the mortgage processing fee. 7. Mortgage prepayment penalties You can pay off your mortgage balance in full if you get a raise, your company does well, or your financial situation improves in another way. Most financial institutions will assess a small prepayment fee if you close your home loan account before the term is up. Know the prepayment fee amount before you decide to foreclose on your loan. A mortgage might need to be more on its own, and other forms of financing might be necessary. Many lending institutions, including banks, will insist that you have homeowners or life insurance before disbursing your home loan funds. Having no choice but to pay off your mortgage when the time comes is a sobering reality. Find out if your mortgage loan requires this coverage and how much the premium will be by talking to your lender. 8. Can two people each apply for a mortgage? You can apply for a mortgage with a co-applicant if you cannot meet the requirements alone. Consult your bank or other financial institution about the possibility of submitting a home loan application with a co-applicant to increase your chances of approval. 9. Can the bank reject my mortgage paperwork? You must confirm with the lender the comprehensive paperwork they expect to see to process your loan application. The lender may reject your application if you apply for a home loan but provide false or insufficient documentation. You must double-check your mortgage paperwork before sending it to the lender. [B-02] 10. If you apply for a mortgage, what extra services can you expect from the bank? The market for home loans is more competitive than ever due to the influx of new banks and NBFCs. The extra money you save by taking advantage of these perks is yours to spend as you see fit. Being aware of these advantages will help you plan. Suppose you have more concerns or questions about the home loan application process. In that case, you may inquire whether a specialised home loan representative will be available to assist you. Save the email and phone number of your mortgage lender’s customer service department in a safe place, and consult more on Piramal Housing Finance’s website.
08-11-2023
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Home Loan

Home Loan vs Loan Against Property

Do you like to live in a lovely home with your family? Do you still feel perplexed by the many home loan available to you? Do you want to learn more about home loan and loan against property? If this is the case, you have come to the right place. A home loan is a mortgage in which consumers borrow money from banks to purchase their primary residence. It might also be used to construct a home from the ground up. A loan against property is one in which the borrower uses their property as collateral to get funds for personal purposes. [B-01] What exactly is a home loan? A home loan may be used to purchase an existing house or to put down a deposit on a new one. Home equity loans may be utilized for either commercial or residential real estate. On the other hand, a secured loan is often utilized to assist a firm in obtaining more funds. There are two methods to get a loan against real estate. The transaction may be as simple as a home loan, in which case the borrower would get a lump amount secured by real estate. A credit line may also be configured as a high-limit overdraft facility. This restriction would be determined by considering the borrower’s financial status as well as the market value of the property. What is a loan against property? Taking out a loan against property is acceptable for personal reasons such as paying for your schooling or a wedding in your immediate family. If you cannot get a typical mortgage for whatever reason, such as a title error, you may borrow against the value of your house to purchase another piece of property. It might be a house or a company when utilizing the value of the real estate as collateral for a loan. A house mortgage loan guarantees the lender on the property, but a loan against property guarantees the lender on another piece of real estate. The basic difference between home loan and loan against property A home loan is used to purchase a completed home, a property currently under construction, or a plot of land on which a home will be constructed in the future. You may be required to submit a down payment when applying for this kind of loan. This is because home loan is a secured loan from entities such as banks or home financing businesses. To repay the loan, the buyer makes recurring payments to the lender. The interest rate on a loan may be constant or variable, depending on the lender. The borrower will legally own the house after all the EMI payments have been made. However, the lender will remain the formal owner of the home. If the borrower fails to pay the EMIs, the lender may auction off the asset to recoup any lost funds. In common parlance, a loan secured by real estate is referred to as a “ loan against property.” A borrower’s existing real estate may be used as collateral for a loan of up to a specific percentage of the property’s current market value. Because he must provide the lender with the deed to the property while repaying the loan, he often repays it in EMIs, much like a mortgage. The lender may sell the collateral if a borrower fails to repay a debt. Rate of Interest The annual interest rate is one significant difference. Secured loans, such as home loan, can have higher interest rates than unsecured loans. This is often the case because banks and other lenders assume that loans that aren’t secured by anything tangible are more likely to be defaulted on by the borrower. The government and the RBI also work hard to maintain housing expenses within reach of everyone. For example, they work hard to reduce mortgage costs. Usage Home loan can only be used for a few items, although they are often used to purchase homes, land, and real estate that has already been constructed on. On the other hand, a loan against property may be used for everything from expanding a company to funding a child’s college education. You may utilize the funds from this loan for whichever purpose you see fit. Collateralizing your land asset secures your LAP. Loan-to-Value (LTV) Ratio: home loan may occasionally provide access to up to 90% of the value of the property being used as collateral. However, most typical loan against property only provides access to 60%-80% of the property’s worth. Tenure Most of the time, a mortgage provides a longer loan term than a LAP. Most loan against property span twenty years, while some lenders provide loans with maturities as long as thirty years. However, the maximum loan period for most collateral-backed loans is 15 years, which is still a considerable time. Optional fill-in Most home loans provide for additional funds or a “top-up,” if necessary. As a result, you will have more flexibility in your life and be able to employ the same kind of loan for various financial demands. Depending on your research, certain banks and lending institutions may be able to provide you with a comparable service, although this is not normally included in a mortgage loan. Documentation process You may acquire a house loan in as short as 15 days if you have all the papers. Generally, a home loan takes longer as lenders require time to appraise the property and gather and verify the information. Tax benefits That one loan may assist you in saving money on taxes may be the most significant distinction between the two. On the other hand, loan against property may provide tax savings in the form of Section 24 deductions for mortgage interest paid and Section 80C deductions for the actual principal borrowed. [B-02] Conclusion So, if all you want to do is purchase a property, a home loan is the best option. Loan against property is the best approach to get funds for company growth or other uses. A loan with payment is the quickest method to receive cash. To choose the greatest solution, one must first determine what one desire. If you need additional information or assistance, please get in touch with Piramal Finance.
08-11-2023
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Education

How to Prevent Yourself from Falling to Types of UPI Frauds in India

Online transactions have become a convenient way of handling expenses nowadays. With just a few taps and clicks, you can do your daily shopping, pay bills, and even transfer funds. A Unified Payments Interface (UPI) is one of the most common ways of carrying out online transactions. But, as with all great things, there is often a downside—you risk being scammed. As UPI is still a relatively new payment method, there are many aspects of it that people are unaware of. Let’s learn more about how frequently UPI frauds occur and how to avoid them. [B-01] Types of UPI Frauds Phishing Phishing occurs when a scammer sends an email or an SMS with illegal links to commit fraud. If you click on the links in such emails and SMSes, you will be routed to your phone’s UPI app, which can start an auto-debit from your bank account. In addition, these links can also introduce malware or viruses to your device. Unverified Links You do have to scan QR codes or click on links to receive money using UPI. Many UPI frauds trick you by sending a bogus payment link. These links can steal your money. Remote Screen Tracking Many apps nowadays request your personal information, such as your email address and date of birth, after installation. If you download applications from a third-party source, be cautious while giving your UPI ID and pin. Make sure you only download software from reliable sources. False Calls Fraudsters will call you, pretending to be bank officers, and request your UPI pin or make you install a third-party application for verification. It will give them entry to your personal data and account details. Deceptive UPI Handles Nowadays, social media is a major source of many UPI frauds. Many sites have the same handle names as the genuine ones, and people fall for them. These scammers may use screenshots to carry out their schemes, and before you know it, they will have taken your money. As a result, avoid displaying any UPI-related data in public or on social media. Dos and Don’ts to Prevent UPI Fraud Don’t give anyone your bank account details, debit or card details, PIN, or OTP. If you are asked to provide such information by someone posing as an official spokesperson from your lender or the mobile app, request that they send you an email for the same. Do not share your email address, since they should have it if they are genuine. Also, only reply to emails from the authorised domain of your bank or payment app. Remember that you do not need to “pay” or insert your UPI pin to accept funds on your UPI app. Installing third-party apps that allow screen sharing should be avoided unless absolutely necessary. Always use the customer service number of your bank given on your card, chequebook, or passbook. Do not use the numbers taken from the Internet, as these may not be valid. Never call back or entertain unverified phone calls, even if the person calling sounds very genuine. Always install mobile banking apps and UPI apps from authorised online application stores. In fact, as most banks include UPI in their phone banking applications, there is no demand for you to install or utilise any third-party banking or UPI apps. How To File a Complaint For UPI Payment Fraud? Here’s what you should do if you are a victim of UPI fraud. Raise a dispute with your bank directly. Notify your bank regarding the UPI fraud payment by calling customer service. Make a note of the complaint number. If calling does not work, send an email or a letter to your bank’s branch manager. Contact your UPI payment portal. Call Google Pay, Paytm, PhonePe, and other UPI app systems to register a complaint. File a complaint with the cybercrime police. Contact the National Cyber Crime Helpline at 155260 in under 2 hours of a UPI fraud. After more than 2 hours, file a complaint with the National Cyber Crime Reporting Portal. Insert all the theft information. The investigating authority will look into this issue and attempt to return your money. You could also register an FIR at the closest cybercrime office. Tips for Using UPI Safely for Digital Exchanges Ensure a full-screen lock. A display lock with a strong PIN or password is suggested for your UPI apps. You must not use commonly known details about yourself as your password or PIN, such as your phone number or birth date. Do not share your PIN. A personal identification number (PIN) is required for UPI verification. Anyone who knows your PIN can access and use your UPI app to transfer money. So, do not share your PIN with strangers or even family members unless the situation demands it. If you believe your PIN has been compromised, change it right away. Do not tap on unfamiliar links or answer spam calls. If you are not sure how genuine the call you received from the bank was, do not entertain it again. Also, do not reveal confidential information to such callers, as they might use the data to access your UPI app and steal your money. Such callers can pose as officials of a business you use and request confidential information. Banks never ask customers for personal information such as an OTP, password, or PIN. Ensure that you regularly update your UPI app UPI app creators continue to send alerts with new safety attributes to clients who use the service. It’s a great way to keep your UPI software on your phone up-to-date and auto-downloaded. [B-02] Conclusion Online transactions have become a very common way of managing regular expenditures. However, one should use online payment platforms carefully, as many frauds and scams also take place through these apps. Always download valid applications from verified sources and avoid entertaining calls and other communication from unknown callers and numbers. Also, never disclose your personal information, such as your PIN and bank account number, to anyone, as these are not required by a third party when you make a UPI payment. To know more about UPI frauds, visit Piramal Finance for related blogs and explore their products and services.
08-11-2023
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