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How To?

Tips To Reduce Your Home Loan EMI

If you have already taken a home loan, your EMIs must be debited every month. If you don’t have an existing loan and are planning to apply for a housing loan, it is important to know that you will be liable to make monthly EMI payments until your loan is completely repaid. For many people, EMIS takes up a majority of their monthly budget. In this article, we will have a look at how you can reduce your home loan EMI most efficiently. Tips To Reduce Home Loan EMI You can reduce the EMI of your housing loan in many ways. Here are 6 effective ways to reduce your monthly home loan EMI. Transfer Your Loan To a New LenderThere: Several banks and lending institutions offer home loans. These lenders offer different benefits, such as home loan interest rates, tenure, fees, etc. So, if you have an existing home loan with a lender who charges a very high interest rate, you can transfer your home loan to a different lender that offers a lesser interest rate. Reduce home loan interest rate to pay lesser monthly EMI. Most home loans are offered on a floating interest rate basis and have no penalty on transferring your loan. So, the only cost that you will have to bear is the fee that is charged by the new lender. Change From Fixed To Floating RateIf you opted for a housing loan with a fixed interest rate, you are more likely to pay a higher home loan EMI than required. So, opt for a floating interest rate as lenders usually charge about 1% to 2% higher with fixed interest rate home loans. Extend Your TenureIf you are not in a financially sound position to pay high EMIs, you can opt for an extension of your tenure. This can help you stretch out your payments over a longer period of time. It can also help lift the pressure of paying higher EMI and provide you with some relief. For example, if you have to repay ₹40 Lakhs at an interest rate of 7.5% over a period of 10 years, then your EMI would be higher when compared to a tenure of 20 years. With a tenure of 10 years, you would have to pay ₹47,481. Whereas, with a tenure of 20 years, you would only have to pay ₹32,224 every month, which is ₹15,257 less than the EMI you have to pay on a 10-year tenure. Make Use of Loan RestructuringThe Reserve Bank of India (RBI) provides the option to restructure loans. This initiative was introduced during the pandemic when many could not pay their EMIs. In response, the RBI allowed borrowers to opt for a moratorium, with which they could waive their home loan EMI for a certain period of time and restructure the loan accordingly to a suitable repayment schedule later. Switch to External BenchmarksThe Reserve Bank of India introduced external benchmarking to bring in a more transparent and standardized methodology. All banks are mandated to adopt external benchmarking when it comes to retail loans and MSME loans. However, banks also have the option to extend the method of benchmarking to other loans, such as home loans. Switching to a bank that follows external benchmarking for home loans can help you avail of a floating interest rate and save on your financial expenditure. [B-02] In Conclusion While availing of a home loan, it is important to be consistent with your home loan EMI repayments. If your EMI payments are high, there are plenty of ways to reduce your home loan EMI. It is wise to research before choosing a home loan so that you can pick one that offers the best home loan interest rates so that your EMI payments stay affordable. If you are looking to apply for a home loan, Piramal Finance can help you plan your home loan.

08-11-2023

How To?

How To Get Commercial Loan?

Starting a new business is an enormous task but sustaining in the market is even more difficult. Ensuring the flow of the capital required for the functioning of the business can take a lot out of you. A commercial loan for business is a great enabler for business owners to fund their capital requirements arising because of a variety of reasons. Whether you are planning to buy new machinery, looking for funds to cover the unexpected operation costs, or planning to expand your business. Whatever be the need, a commercial loan can aid you in taking care of the expenditure. In this blog, we will discuss how to get a commercial loan to fulfil the business cash flow requirements and the benefits of getting a commercial loan. But first, let us understand what a commercial loan is and how it works. [B-01] What is a Commercial Loan? In simple words, a commercial loan is a loan given to a business by a lender. A lender can be a bank or a Non-Banking Financial Corporation (NBFC) in India. A business owner can be anyone looking to grow their existing business or planning to start a new business. A commercial loan is given to a business entity and not an individual. The entities that are eligible for a commercial loan are a Limited Liability Partnership, Sole Proprietorship, Public or Private Limited Company. Benefits of a Commercial Loan There are several benefits of availing commercial loan options to fulfil your business capital requirements. Here are some of the key benefits Grow your business – The next best thing to starting your own business is when you decide to expand it. A commercial loan can aid small and medium business owners to take this step without worrying about the fund requirements. Expanding your business requires capital apart from the working capital required for the existing setup. A commercial loan supports those small and medium business owners with limited capital to grow and reach out to their audience while ensuring the smooth functioning of day-to-day operations. Buy new machinery – A commercial loan can be availed for a variety of purposes. If you are in a manufacturing business you might need to buy a new piece of machinery or to upgrade the old one to maintain smooth operations and to increase production. An equipment financing option as a commercial loan can help you in getting the right set of machinery to help you maintain the smooth operations of your business. Manage inventory – Small and medium businesses usually work on a need basis but sometimes when your business gets a big order it is best to have raw material readily available to meet the deadlines. A commercial loan can help you get the funds required to buy essential inventory. Increase working capital – Working capital is the amount required to take care of the day-to-day fund requirement of the business. A commercial loan helps you maintain the capital required for daily activities and to meet unexpected expenditures. How to Get a Commercial Loan A commercial loan can be easily availed online through web portals of banks or NBFCs. Any business entity with a good turnover is eligible for a commercial loan. The definition of good turnover can vary based on the lender. Applying for a loan has become much simpler these days; the majority of financial institutions require very little paperwork. All you have to do is visit the lender’s office or fill out an application form online. Based on your application and eligibility, most lenders approve loans within a few days. The commercial loan interest rates depend upon the creditworthiness of the business, cash flow, bank or NBFC, turnover of the company, etc. The commercial loan interest rates tend to vary based on the risk assessment done by the lender. [B-02] Conclusion The number of entrepreneurs in India has risen over the past few years. The entrepreneurial spirit is on the rise, and so is the number of new companies being registered around the country. One thing that is vital for any business to survive and flourish is the capital required for running the business. A commercial loan gives easy access to capital to meet your fund requirements. Whether you are just starting your business or planning to grow an existing one, a commercial loan can help you meet your capital requirements.

08-11-2023

Tips & Advice

Top 6 Mistakes To Avoid While Taking A Business Loan.

One of the most important requirements to run a business is capital. Finances are required to fund the different requirements of a business and ensure that it remains operational without any hassle. Small businesses, in specific, have a greater need for finances to bootstrap their business. Most often, small businesses have lesser funding and thereby require greater support in the form of a business loan. Business loans can be beneficial to fund different financial needs such as operational costs, expansion, scaling, buying equipment, furniture, renting out an office space, providing salaries to employees, and others. [B-01] While applying for a business loan, it can be beneficial to verify the eligibility criteria. Different lenders may have different eligibility criteria. So, it can help to check for these requirements so that you can ensure that you adhere to them. In addition, it can also help you improve the chances of having your loan application approved. Another aspect to check for is the interest rate. Understanding the different rates of interest offered by different lenders can help you compare the options and arrive at the most suitable option for you. Having a lower interest rate can help reduce the financial burden during your loan repayment process. While checking for these aspects can be beneficial, there are certain mistakes that you should avoid. 6 Mistakes to Avoid While Opting for Business Loans There are a few mistakes that you should avoid while applying for a business loan. Let us have a look at the 6 most common mistakes that you should avoid. Minimizing Expenses and Inflating IncomeBy inflating your income and minimizing your expenses, you would be providing a false sense of business finances to the lender. So, ensure that you accurately provide your cash inflow and outflow to the lender so that they get an accurate picture of the flow of finances in your business. Many business owners tend to mix up their numbers thereby reducing their chances of getting the amount of capital that they require. Applying for the Wrong LoanIn many cases, business owners tend to apply for incorrect loan. Given that there are a variety of loans available for small businesses, it is natural for people to get confused. Small business loans may suit some companies while it may not be the best choice for the others. So, it is key to research the available loans and identify the best fit based on the nature of the business, interest rate offered, tenure, fees and charges, terms and conditions, repayment options, and others. Incomplete DocumentationThe documentation requirement is one of the most important requirements that has to be fulfilled accurately. In general, loan applications can be lengthy. Each loan application has a certain set of documentation requirements for an individual based on their employment, age, and others. Submitting incomplete documentation can prolong the loan process and delay the disbursement. Having Poor Credit Score While applying for any type of loan, one of the key aspects verified by the lender is the credit score of the applicant. Having a good credit score can help you avail a business loan with the required capital. Missing DetailsNot providing all the relevant and required details can delay the loan application and verification processes. All of your business information has to be thorough before submission. Many lenders may require more than just a business plan in order to understand your growth. So, have a thorough set of documents. Lack of CollateralWhile applying for a business loan, it can be beneficial to have collateral. In case the capital you require is beyond a certain level, it can help to provide a collateral to receive this capital. [B-02] In a Nutshell A business loan can provide you with the required finances and help your business thrive. You can apply for an online business loan by starting an application form and submitting the required documents. It can be beneficial to have all of your business details, documents, credit score information, and other documentation ready.

08-11-2023

Tips & Advice

10 Important Tips To Consider Before Taking A Home Loan

Buying Home Loan Property is a valuable asset that can provide you with a variety of financial benefits. Whether you want to buy a property for investment purposes or to discover a new home, the financial sector offers a variety of lucrative and useful lending options. If you’re short on cash or don’t want to liquidate your savings, a housing loan is a terrific way to get some help. [B-01] Financial institutions assist you in realising your dream of owning a property by offering low monthly payments and the flexibility to choose your repayment term. But, before you apply for a house loan, consider these helpful home loan tips that could make the application process go more smoothly and simplify loan repayment. Financial institutions assist you in realising your dream of owning a property by offering low monthly payments and the flexibility to choose your repayment term. But, before you apply for a house loan, consider these helpful home loan tips that could make the application process go more smoothly and simplify loan repayment. 1. Investigate your loan options Make an effort to perform extensive research on the possibilities available in the market before applying for a home loan, especially now that information is readily available on the internet. Your study should also contain the three most important aspects of a loan: down payment, EMIs, and repayment period. By conducting research on these three aspects before to submitting your house loan application, you will be able to select a suitable home loan from a better lender with lower interest rates. Home loan amounts are also typically higher than other loans, so make sure you look into all the specifics and uncover all the nitty-gritty before, during, and after the application. 2. Strive for Cost-Effectiveness While there are many different types of home loans to pick from, you should keep in mind that affordability is a major element to consider before applying. Consider overhead charges in addition to the EMI you choose to pay each month, and keep a consistent income outflow in case of an emergency. Hence, while you may always choose to buy a house that you want in a location that you prefer, being able to finance the home loan is as critical. 3. Spend with caution The affordability requirement is immediately followed by the monthly expenditure clause. Once you have a home loan to repay, sticking to a strict budget to meet your equated monthly instalments is preferred and suggested. To preserve trust and avoid an overdue or increased interest rate, you must pay your EMIs on time. Avoid spiralling into non-payment of a house loan by directing your resources into regular and timely loan repayment in order to achieve complete ownership of your home. This includes being cautious with your money and deferring any non-essential expenditures. 4. Select the Most Appropriate EMIs The amount of the equated monthly instalment is determined by you. Banks provide a variety of EMI choices to meet the needs of different borrowers. EMIs are also greatly influenced by the amount of money you put down on a house when you buy it. The lower the stress of the outstanding amount being converted into EMIs, the larger the down payment. 5. Tenure of Repayment The length of time it takes you to repay the loan is referred to as your repayment term. The repayment period and your EMIs are inextricably linked. While choosing a longer term may result in lower EMIs, it also raises the interest rate charged, causing you to pay double or triple the original loan amount due to high interest. If you have a steady and increasing income and stick to a strict budget, a short payback period with higher EMIs is preferable. The interest rates on these types of loans are much lower to encourage rapid payback. Banks can provide appealing interest rates to customers who choose a shorter repayment period. 6. Keep your CIBIL score up to date Maintaining a good credit score is a must when applying for any type of loan in the banking industry. Regularity pays off, whether it’s a cyclical credit card payment or a loan payback. If your CIBIL Score is above 750, you may be able to get even better interest rates on your home loan. This is accompanied by a much larger likelihood of faster loan processing and disbursal. 7. Understand the Foreclosure Norms Keeping a close eye on the shifting RBI rules could be beneficial to you on a number of levels. You avoid paying any additional fees by foreclosing your home loan by repaying the outstanding amount sooner than the agreed-upon time. The sooner you pay off your debt, the better your credit score will be. 8. Checking Your Eligibility for a Home Loan Before applying for a house loan, it’s critical to double-check your eligibility. The value of documents relevant to your credit history cannot be overstated. Many institutions, such as Piramal Finance, provide home loan eligibility criteria on their websites. 9. Charges Not Included Aside from the EMIs, banks may charge borrowers administrative, processing, or service fees at the time of loan application. Make sure you discuss this with the lender before applying for a loan. Check whether the charges are one-time or monthly; if they are monthly, they must be taken into account with your EMIs, and your monthly budget must be arranged accordingly. 10. Please take time to read the documents thoroughly Examine the agreement papers thoroughly to gain a thorough understanding of the loan application. We offer aided loan services at Piramal Finance. However, for your satisfaction and long-term mutual trust, it is required that you read all required documentation before signing the loan contracts. [B-02] In A Nutshell With property prices soaring and the market’s high interest rate regime, purchasing a home becomes an important decision for many of us. As a result, choosing the correct house loan product on the market becomes vital in order to avoid any unpleasant surprises later on.With all of the aforementioned considerations in mind, obtaining a house loan becomes a lot easier.

08-11-2023

Guide

Fast Business Loans: The Top Pros and Cons You Must Consider

If you need a business loan and need it fast, you may be considering a fast business loan. This type of loan can help you get the money you need quickly, but there are some things you should know before applying. In this blog post, we will discuss the pros and cons of fast business loans so that you can make an informed decision about whether or not this type of loan is right for your business. Let’s get started. [B-01] How Long Do Fast Business Loans Take? The time it takes to receive a fast business loan varies by lender but is generally much quicker than a traditional bank loan. Some lenders can provide funding in as little as 24 hours, while others may take a few days or longer. The key is working with a reputable lender who can quickly and efficiently get you the funds you need quickly and efficiently. Pros of Fast Business Loans 1. Easy Application Process The application process for a fast business loan is usually very simple and hassle-free. Most lenders have an online application that you can fill out in just a few minutes, and you will usually get a decision on your loan within 24 hours. This is a huge benefit if you need money quickly to cover unexpected expenses or take advantage of a sudden opportunity. With a traditional bank loan, the application process can take weeks or even months, so you could miss out on opportunities if you’re unable to get the funding you need right away. 2. Fast Funding The most common reason many business owners seek fast loans is the quick influx of cash. When you have an opportunity to seize or an unexpected expense pops up, having access to funding can mean the difference between success and failure. In many cases, you can get the money you need in as little as 24 hours. This means you can take advantage of opportunities as they arise and keep your business moving forward. 3. Lenient Requirements One of the main advantages of fast business loans is that they tend to have lenient requirements when compared to traditional bank loans. This means that if you have bad credit or a limited amount of collateral, you may still be able to qualify for this type of financing. However, it’s important to remember that even though the requirements may be lenient, the interest rates on fast business loans are often higher than those offered by banks. MSME loans for a start-up business are perfect for small businesses to take advantage of.Also Read: All About Small Business Loans In India 4. No Collateral is Necessary One of the main advantages of fast business loans is that they don’t require collateral. This can be a major advantage if you don’t have any extra assets to put up as collateral or if you simply don’t want to risk losing your personal property in case you can’t repay the loan. Additionally, fast business loans can be used for a variety of purposes, including working capital, inventory, equipment purchases, marketing campaigns, and more. You can also choose the option of a business loan to apply online. Cons of Fast Business Loans 1. Fees The fees associated with fast business loans can be quite high. Sometimes, you may end up paying an origination fee, a processing fee, and a funding fee. This can add up to quite a bit of money, so it’s important to factor this in when considering taking out one of these loans. 2. Limited Lenders One of the top cons is that there are limited lenders. This can be frustrating because you want to ensure you get the best possible deal. When it comes to fast business loans, there are only a handful of companies that offer them. This means you’ll have to do your research to find the best one for your needs. 3. Higher Interest Rates One of the main cons of a quick business loan is that they typically come with higher interest rates. If you’re not careful, this can end up costing you a lot more in the long run. However, if you can make timely payments and manage your loan responsibly, the higher interest rate may not be as big of a deal. Another con of fast business loans is that they can be difficult to qualify for. Lenders typically require you to have good credit report and a strong financial history. If you don’t meet these criteria, getting approved for a loan may be difficult. 4. Low Borrowing Amounts A major con of fast business loans is that they typically have low borrowing amounts. This can be ideal for small businesses that may not need a lot of money to get started or keep their operations running. Low borrowing amounts also mean that you’ll have an easier time qualifying for a fast loan and lower interest rates. [B-02] The Bottom Line There are both pros and cons to taking out a fast business loan. It’s important to consider all your options before making a decision and to make sure you understand the terms of any loan you take out. Fast business loans can be a helpful tool for businesses needing quick funding, but they also come with some risks. Make sure you research how to get a business loan and talk to a financial advisor before making any decision. This will help ensure that you make the best decision for your business.

08-11-2023

Guide

Business Loan vs. Personal Loan: Which One Is Right for You?

When starting a business, one of the first things you’ll need to do is get financing. There are many different options out there, and it can be tough to decide which is right for you. In this blog post, we will compare business loans and personal loans. We’ll discuss the pros and cons of each option, so you can make an informed decision about which type of loan is best for your business. Let’s get started. [B-01] An Overview of Personal Loan A personal loan is an unsecured loan that does not require any collateral. This loan is typically used for major expenses such as consolidating debt, paying for medical bills, or financing a home improvement project. Personal loans usually have fixed interest rates and monthly payments. Personal Loan Advantages Minimal Documentation One of the primary advantages of a personal loan is that it requires minimal documentation compared to a business loan. A personal loan only requires your personal information, such as your ID, proof of income, and bank statements. Easy to Apply Unlike business loans, which can often be quite complicated and time-consuming, personal loans can usually be applied online in just a few minutes. Best Source of Emergency Cash A personal loan is the best source of emergency cash for small business owners. It is easy to get, and you can use it for any purpose. Therefore, if you have a small business, you can use an MSME loan only for specific purposes like buying raw materials or machinery. You have to repay the loan within a short period. No collateral needed One of the main reasons to take out a personal loan is that you don’t need to put up any collateral. If you can’t make your payments, you won’t lose any property or assets. Personal Loan Disadvantages Need high credit score to be eligible Since no collateral is involved in this transaction, interest rates are higher. Compared to company loans, the amount of loans is considerably less. An Overview of Business Loan A business loan is a loan that is specifically given to a business rather than an individual. The loan terms will vary depending on the lender, but they can be used for things such as working capital, equipment purchases, or expansion projects. Business loans often have variable interest rates and are paid back in instalments over time. Business Loan Advantages Tax Benefits The interest paid on business loans is often tax-deductible. This can lead to significant savings come tax time. Lower Interest Rates Business loans often come with lower interest rates because businesses are seen as less risky than individuals, so lenders are more willing to offer better terms. Different Options are Available A business loan is designed specifically for businesses and usually has more options, including standard and term business loans. Business Loan Disadvantages Exhaustive documentation lengthy application procedure It’s possible that you won’t get the desired sum. To be eligible for a business loan, you must have a solid business plan. Personal Loan Vs. Business Loan Both personal loan and business loan have their pros and cons. Below is a detailed comparison of both to help you decide which one is best for your small business: Ease of Application A personal loan is easier to apply for than a business loan. This is because a personal loan does not require collateral and has fewer eligibility requirements. On the other hand, a business loan can be difficult to obtain because it requires collateral and a good credit score. Interest Rates The interest rate on a business loan is usually lower than the interest rate on a personal loan. This is because businesses are considered to be low-risk borrowers. Business loans also have longer repayment terms than personal loans, so you’ll have more time to pay off the loan. Collateral Collateral is an asset that can be seized and sold by the lender if you default on your loan. This gives them some security and peace of mind if they cannot repay the loan. Businesses usually have more assets available for collateral than individuals, so this is one factor to keep in mind when considering a small business loan. Eligibility Criteria The most crucial step in deciding whether to apply for a business loan or personal loan is understanding the eligibility criteria for each. To qualify for a small business loan, you will generally need to have been in business for at least six months and have a minimum credit score of 680. For a personal loan, you’ll need to meet the lender’s income and credit requirements, which vary by lender. Tax Benefit One of the most important things you must consider when choosing between personal and business loans is the tax benefit. The personal loan interest is not tax-deductible, while the business loan interest is. You will have to pay more taxes if you choose the personal loan. Loan Tenure Tenure or repayment period is one thing you need to remember when taking out a loan. A business loan usually has a longer tenure than a personal loan, anywhere from two to seven years. On the other hand, personal loans typically have a shorter repayment period of one to five years. [B-02] The Bottom LinePersonal and Small business loans are viable options for financing your small business. The key is understanding the difference between the two and choosing the option that best suits your needs. A small business loan may be the better option if you need a large sum of money quickly. However, a personal loan may be a better choice if you have good credit and can afford to make monthly payments. Ultimately, the decision comes down to what will work best for your situation.

08-11-2023

Know More

Benefits Of Applying For Home Loan In Current Time

Golden Age for home buyers: Over the last ten years, the market for home loans has been increasingly generous to the budding home buyers of India’s rising economy, with low interest and increasing housing loan benefits. Supply in the private housing market has been high along with 1 crore new houses being built under PM Awas Yojna (to provide low cost affordable housing for the urban poor with subsidised credit). The situation has nudged housing companies to give immense home loan benefits along with interest rates that have hit record low in the last ten years, sometimes as low as 9%. Mood of India’s rising youth India’s middle class professional youth no longer wants to be limited and meek when it comes to their choice of homes. They want their residence to reflect their growing social status and confidence and the time has never been more right for them to lock into a grand investment. Unfortunately, many new home-buyers feel afraid when buying a home, primarily due to the risk of unforeseen expenditure. In this situation, home loans become the key to transform such a high-value financial strategy into a smooth and logically structured process. Once the structure of the investment becomes clear, fear automatically reduces. Problems of buying a house without home loan In simple terms, there are two ways to own an expensive house without taking a home loan: Set aside a portion of your income (and perhaps invest it in deposits, shares, securities etc.) for several years until you gather enough money to buy the house of your choice.Downside: No guarantee that at the time of buying, a house will be available, that too at an affordable price. Besides, it’s better to start enjoying the comforts of your own home now and not five years later. Take out a large lump-sum amount if your current savings are enough.Downside: You lose a lot of cash, thus exposing your family to unforeseen expenditure, especially medical emergencies. Advantages of home loan: In case of home loans, you can avail the comforts of your own house today at a favorable price, without having to part with a large chunk of cash in one go – any unforeseen expenditure thus becomes easier to absorb. Organizations like Piramal Finance also allow you to restructure your EMIs as per any change in your investment plans eg: you may increase the payback period and decrease the EMI when needed. Living in a secure home with better amenities increases your productivity – your income, lifestyle and financial security thus actually improves. Therefore, it is much better to take a home loan and get the house of your dreams today than to wait indefinitely or risk it all for the same. [B-01] Time to strike is now! The golden age for home buyers may not last forever. According to a recent S&P Global Market Intelligence Report, COVID-19 has made people realize the importance of owning a secure home – the demand for homes has thus been picking up. As per the same report, the collective inventory of houses have fallen from the record high of 700,000 in 2014 to less than 4.5 lakh in 2021. It is therefore expected that prices might start steadily increasing soon. Favorable locations can have multiple advantages such as lower pollution, lower transport costs, less walking to and from markets, living closer to friends and family and even lower pollution. So if you are looking for a home to call your own at an enviable price, better start looking for the required finances now!

08-11-2023

What is Pradhan Mantri Awas Yojana (PMAY)

Whether big or small, a roof over the head has always been considered a distant dream and a valuable possession for individuals from economically weaker classes. A Pradhan Mantri Awas Yojana is a big step toward making this dream of owning a home come true for these Indian citizens. What is Pradhan Mantri Awas Yojana? Pradhan Mantri Awas Yojana (PMAY) is an Indian government initiative launched by PM Narendra Modi in June 2015 and is based on the concept of “housing for all”. The idea behind this initiative is to provide affordable housing to the urban and rural poor of the country. The government proposed building over 2 crore homes in urban areas by 2022 for citizens who come under economically weaker sections and low-income groups. The tenure for loans under the PMAY can go up to 20 years. This scheme also focuses on making housing affordable for demographics such as women, scheduled castes, scheduled tribes, and minority groups. Depending on the region it caters to, PMAY is divided into two parts Pradhan Mantri Awas Yojana Urban (PMAY-U) Pradhan Mantri Awas Yojana Gramin/Rural (PMAY-G/PMAY-R) Pradhan Mantri Awas Yojana Urban (PMAY-U) The PMAY-U scheme launched in June 2015 addresses the housing shortage issue among the Economically Weaker Sections (EWS) and Middle-Income Groups (MIG). Listed below are the three phases of PMAY-U, which are envisioned from start to completion of house construction. Phase 1 – April 2015 to March 2017, 100 cities and union territories Phase 2 – April 2017 to March 2019, 200 more cities and union territories Phase 3 – April 2019 to March 2022, remaining cities to be covered. Pradhan Mantri Awas Yojana Gramin/Rural The PMAY-G scheme, Indira Awas Yojana until 2016, is administered by the Ministry of Rural Development. This scheme focuses on providing affordable housing to citizens living in rural parts of India. Houses are provided to people who do not own a house or those living in kutcha houses. Eligibility Criteria for PMAY The important conditions to be kept in mind while applying for a loan under the PMAY scheme are The maximum age limit for beneficiaries is 70 years at the end of the loan repayment period. Family income limit based on different classes eligible for the PMAY scheme is Classes Family income limit EWS (Economically Weaker Section) ₹3 Lakhs per annum LIG (Lower Income Group) ₹6 Lakhs per annum MIG-1 (Middle Income Group-1) ₹6-12 Lakhs per annum MIG-2(Middle Income Group-2) ₹12-18 Lakhs per annum Anyone from the LIG, EWS, and MIG groups who owns a home or property in their name or their family member’s name in any part of India is not eligible for benefits under this scheme. To be able to buy a home under this scheme, the applicant should not have availed of a subsidy under any other central/state government housing scheme. PMAY benefits can not be availed for already-built houses. Benefits of PMAY Some of the key benefits of the PMAY scheme are mentioned below Ground-floor house accommodations are preferred for senior citizens and differently-abled citizens. Subsidized home loan interest rates are provided to the eligible applicants for 20 years. In-situ rehabilitation of slum dwellers by providing them with concrete residences. Affordable housing for people from all walks of life. Environment-friendly homes are built under this scheme Documents Required for PMAY Listed below are a few documents required while applying for a loan under the PMAY scheme Properly filled and duly signed loan application form Identity proof document (Aadhar card, PAN card, voter ID card, or Driving license) Address proof document (Aadhar card, Passport, voter ID card, or Rent agreement) Property allotment letter or any property-related documents Proof of income Bottom Line With its mission statement “housing for all,” the PMAY scheme has played a vital role in making housing affordable for people from all walks of life. If you have ever dreamt of having your own home and meeting the eligibility criteria for the PMAY scheme, now would be the right time to apply for a housing loan and fulfill that ever-distant dream.

08-11-2023

COVID-19

Impact Of Covid-19 On Housing Finance.

In any economic crisis, some segments fare better than others. When it comes to COVID-19, however, almost no segment came out unscathed. This impact has been felt in the housing finance sector. Who, exactly, is included in this sector? [B-01] What is the housing finance sector? This is a sector of the country’s economy including all of the non-banking financial companies that are engaged in the business of financing the construction and acquisition of houses. This sector is also involved in the development of plots for the construction of fresh properties. This sector is heavily reliant on a functional economy and was therefore struck quite intensely by the pandemic. Impact of Covid-19 on Housing Finance COVID-19 resulted in central banks all over the globe using three key tools to make the most out of the housing situation: Open market operations, interest rates, and reserve requirements. RBI (the Reserve Bank of India) also came out with slashed repo rates, reaching a two-decade low at 4.4 percent. Additionally, the RBI slashed the reverse repo rate to 3.75 percent and the cash reserve ratio to just 3 percent. Additionally, ‘Targeted Long Term Repo Operations’, abbreviated to TLTRO 1.0 and 2.0 were also introduced. Essentially, with each of these policies, the government was attempting to make home loans more affordable during a time of crisis where job security for most sectors was not guaranteed. The public received the housing loans policy changes mandated by TLTRO 1.0 relatively well. However, this plan seemed to benefit AAA-rated Housing Finance Companies the most. An AAA rating implies that the services offered by these companies have the lowest possible degree of risk regarding timely servicing of financial obligations. It is usually ascribed to larger well-established companies. Noting this unfair advantage, TLTRO 2.0 was announced by the government. This plan was targeted to offer financial support to smaller companies, particularly providing support to smaller Non-Banking Financial Companies (NBFC), Housing Finance Companies, and Microfinance Companies in India. However, this TLTRO 2.0 received a tepid response from the public. The general consensus has been that the pandemic improved the strength of companies that were already well-established, while micro-companies suffered much more. Moving onto real estate: a sub-sector that is among the largest contributors of GDP in India. This segment of housing finance has gone through its fair shares of troubles in the last decade. Two interpretations overshadow the consensus of how the ongoing pandemic has impacted real estate. One approach cites the fact that the lower economic strata has been most affected because of the lockdown. Ultimately, this has resulted in lower demand for affordable housing. On the other hand, there has simultaneously been a clampdown on discretionary spending, particularly from high-income groups, in addition to a flight to a value. This outcome has led to a somewhat notable increase in demand for affordable housing when it comes to the lower and middle segments. With migrants wanting to return to villages, the non-availability of the workforce is an immediate concern. To add to this, new housing projects require a lot more time, with builders mobilizing their resources to ensure completion. Hence, the general outcome has been somewhat negative yet optimistic when it comes to demand. [B-02] Is there a silver lining? Working from home is the new office. This is touted as a silver lining resulting from continual lockdown. Most companies have been seamlessly able to transition to working remotely. Housing customers found it much easier to connect with lenders. Alternatively, lenders too were able to reach out to a large number of customers within a shorter time frame. This has been credited to the high penetration of smartphones, social media, and online work.

08-11-2023