Now that you have taken a home loan, chances are that you could be worried about the home loan EMI. After all, taking a home loan plan is not enough. Besides having the financial commitment to make regular EMI payments, you must also have a suitable financial plan to repay your home loan as soon as possible. To help you decide on a fast home loan repayment, here are the best home loan tips: 1. Increase your down payment: The first of the home loan tips is to make a higher down payment. This will lessen the total dues or the overall loan amount. A reduced home loan EMI payment can mean faster repayments. Experts often suggest making a downpayment between 20% and 30% of the total loan amount. 2. Select a home loan plan with lower interest rates: Before you select the best home loan plan, always try to find a lender with a low interest rate. This will ensure that the financial burden of your home loan EMI is considerably reduced. If you have already taken a home loan plan with a higher interest rate, consider changing it or refinancing it through the balance transfer option with a low-interest home loan provider. 3. Opt to pay higher EMIs: Want to repay a home loan quickly? Select to pay higher EMIs. However, paying a higher loan EMI might not sound like the best idea in the short term. Market experts often suggest this as among the best home loan tips to reduce your debt burden swiftly. Of course, you are paying more now, but doesn’t this mean your debt burden is getting reduced faster? 4. Select to pay shorter loan tenures: This is also among the basic home loan tips to ensure you pay the EMI immediately. By selecting a shorter tenure, you can quickly reduce your debt burden. Remember, a shorter tenure reduces your financial obligation by reducing the overall interest rate. Once you finish your home loan EMI payments speedily, you can also take a fresh loan for any other requirement. Repaying your home loan faster will also enhance your credit score. 5. Think seriously about making part prepayment of your home loan: A home loan plan always allows you to make a part prepayment. If you have not given much thought to this aspect of a home loan, you should do it immediately. Suppose you have taken a home loan plan and choose to make a part prepayment; it will mean that your overall outstanding home loan amount will decrease. This, in turn, means reduced home loan EMIs. Now that your home loan EMI has decreased, won’t you be able to pay them faster? No wonder that market experts say that making part prepayments is among the best home loan tips. 6. Never miss your home loan EMI payments: Once you get a home loan plan, you should never default on your EMI payments. This will adversely affect your credit score and result in the imposition of penalties and fines. Sticking to the regular payment schedule is among the best home loan tips for becoming debt-free quickly. 7. Use your right to get tax exemptions promptly: Did you know that a home loan plan also allows you to receive tax exemptions? Yes, you heard that right. Depending upon your eligibility, you can get exemptions under Sections 80C, 24(b) and 80EE of the Income Tax Act. Consult a tax advisor or carefully review the exemptions and refunds sections in the Income Tax Act. And once you get a refund, use the amount wisely. This will ensure that you can repay home loans quickly and hassle-free. 8. Rent your house: The last among the home loan tips is to rent out a part of your purchased or built house/flat. This would mean a steady and regular income to meet your home loan EMI obligations. [B-02] The Bottom Line Keeping informed about tips to repay the home loan faster can make the crucial difference between financial well-being and a financial crisis. If you have taken a home loan plan, pay attention to each and every aspect of your home loan, including your home loan EMIs.
A Home loan balance transfer refers to the transfer of your current home loan from one bank/lender to another to lower your EMI by availing a lower interest rate and other benefits offered by them. Higher interest rates impact finances directly and can deter your monetary growth. In such circumstances, opting for a Home Loan balance transfer can help save a lot of money. With the recent dip in interest rates, the home loan interest rates have dropped to an all-time low. Are you still paying home loan EMI on the previous rate? It’s time you should consider a home loan balance transfer. Requirements for Balance Transfer A few things that you need to ensure before proceeding with a balance transfer are: Your remaining repayment period exceeds five years. Check if you have any prepayment penalties to pay. According to RBI guidelines, banks should not levy fines for loan foreclosure. You have no history of defaults on EMI payments with the existing loan and have a good credit rating. You have all the documents related to the property ready. The Balance Transfer Process – How it Works? You may consider a home loan balance transfer to a bank or other lender offering a lower interest rate if you’re currently paying a higher interest rate. The Process Steps: For the transfer process initiation, you need to go through the documentation process as described below: Apply to the existing bank requesting a transfer of the balance loan amount. Apply to the bank/lender you have chosen to transfer your balance loan. Once the new bank/ lender approves your application, the outstanding balance will be paid to your existing bank in full. On receiving the outstanding amount, the existing bank will hand over the property documents and issue a clearance certificate to you. You now need to submit all these documents to the new bank. Finally, the outstanding loan amount of your existing home loan has been transferred to the new bank/ lender, and you will henceforth pay the EMIs to the new bank. The home loan transfer process is now complete. The Benefits of Home Loan Balance Transfer There are numerous benefits associated with a home loan balance transfer, as listed below: Reduction in the Interest Rate & EMI: The main reason for opting for a home loan balance transfer is the reduction in the interest rate. It also helps to reduce your EMI, which can save you a good amount of money. Better Loan Terms: Banks/lenders usually vary with the terms that they offer for the loan provided. Sometimes, it so happens that you might have settled for a home loan in a hurry with terms not suitable to you; in such a scenario, you can consider a transfer with lenders offering better terms. Foreclosure and Prepayment Charges: Foreclosure and prepayment charges are the two important charges associated with home loans that lenders often charge you. Although RBI in 2012 lifted foreclosure charges on home loans that are on the floating interest rate, charges apply to home loans at a fixed interest rate. But you can consider a transfer if you have taken a loan at a floating interest rate. All these factors must be considered during the cost-benefit analysis before a home loan balance transfer. Top-up loan: An added benefit is the top-up loan facility. When opting for a balance transfer, you are entitled to an additional amount as a top-up amount in addition to your outstanding amount. [B-02] Key Points Most lenders nowadays offer a home loan balance transfer, and they try to lure customers with various attractive offers and interest rates. Read the terms and conditions of the new bank properly to avoid any hidden expenses. You should also be very cautious, consider all pros and cons, and conduct a cost-benefit analysis before proceeding. Visit our site to apply for the balance transfer from your existing loan to one with Piramal Finance.
Buying a home comes with a lot of financial burden and responsibilities, which, however, is worth every penny you spend behind your cost niche. Home loans come with low interest rates and a duration that you can choose based on your age and other considerations. However, often a mistake that home buyers make is continuing with the payment of home loan EMI or installment amount without even checking or reviewing the amount remaining for years on end. It is crucial that you do so, not only for the sake of budgeting but also for other important reasons that might benefit your pocket. Read on to learn why you should keep reviewing your home loan occasionally. Foreclosure: Foreclosure is often an option that you might want to consider in the case of a home loan, especially if you have a hefty amount of cash ready with you. Foreclosure helps you close the loan while partial payment brings down the amount, reducing the monthly EMI amount, thus being less burdensome on your pocket. To foreclose or make part payments, you are required to review your home loan to check the amount remaining, the home loan interest rates, the charges, tax benefits, and how much you will be saving ultimately and thereby write the application to the bank putting forth your request. Top up: Financial situations do not remain the same all through, and at times, you may find it difficult to pay for the home loan EMI while meeting other needs. To cater to the increased demand for money, applying for a top-up loan with the bank from which you have taken your home loan is prudent. However, to know whether you are eligible for a top-up loan, you need to review your home loan with the same bank or if any other bank offers a top-up along with a home loan balance transfer. Balance Transfer: The financial market is dynamic and is always changing. The interest rates may change. The interest rates may plummet, but there may be better opportunities for home loan borrowers, special offers, and more. The situation may make you opt for better rates in other banks, wherein you may go for a home loan balance transfer. To do so, you must check your home loan and submit the necessary loan documents, proof of income or financial status, a No Objection Certificate from the bank, and other necessary documents to support the balance transfer. Although there is no specific rule on how often to review your home loan, it is advisable to get a check done yearly to note the market rates and other essentials. When you can get your home loan top-up or home loan balance transfer from reputed financial institutions like PCHF, you can rest assured of a hassle-free procedure. [B-02] Summary Buying a home is a huge financial responsibility, and once you have taken out a home loan, it is imperative to review your loan from time to time. Reviewing the loan has many advantages, such as saving by foreclosure or part payment, transferring the balance to a lesser interest rate option, and meeting expenses during financial crunches through top-up. Top-up and balance transfers from financial institutions like PCHF allow you to get the best rates in the market without any hassle.
Your CIBIL score becomes a decisive factor when applying for a credit card or a loan. So, let us know more about CIBIL scores and their importance. What is the CIBIL score? CIBIL score or credit score is a number that represents a borrower’s creditworthiness. Creditworthiness refers to a borrower’s ability to pay back the borrowed money. Credit bureaus determine credit scores after considering several factors, including repayment history, credit utilization ratio, and credit history.The Credit Information Bureau (India) Limited (CIBIL) is the most popular in India. Hence, a credit score is synonymous with the CIBIL score here. CIBIL score is a three-digit number that ranges from 300 to 900. Needless to mention, the higher the CIBIL score, the better it is. [B-02] Importance of CIBIL Score Now that you know what the CIBIL score is, here is how it plays an important role. 1. Role in loan approvals: CIBIL scores play an important role in loan approvals. Before approving a loan to a borrower, lenders look at the borrower’s CIBIL score. This CIBIL score is a good measure for judging a potential borrower. If they have a good CIBIL score, it indicates that they have handled their previous debts responsibly. On the other hand, a low CIBIL score is an implication that the borrower has handled their previous debt badly. Therefore, having a high CIBIL score can help you get loan approval. 2. Access to higher loan amounts: It is not just loan approvals; one’s CIBIL score determines the loan amount. If you have a good CIBIL score, the lender feels confident you can repay their loan. Thus, you will be eligible for higher loan amounts. 3. Credit card eligibility: With every credit card application that banks and financial institutions approve, a huge amount of risk is involved. Therefore, credit card issuers have some eligibility criteria for the applicants. The applicant’s CIBIL score is one of the main ones. With a good CIBIL score, you will be eligible for some of the best credit cards in the country. 4. Higher credit limits and lower rates of interest: You might be eligible for higher credit limits if you improve your credit limit while having an existing credit card. With higher credit limits, the interest rate of your credit card can also go down. 5. Buy products on EMI: Sometimes, buying a phone or a laptop on EMI has its perks. However, eligibility for EMI purchases often depends on your CIBIL score. Once again, having a high CIBIL score helps. Improve your CIBIL score By now, it must be evident how important CIBIL scores become in different aspects. Hence, it might affect you if you don’t have a credit profile or a low CIBIL score. But there are some ways you can boost your CIBIL score. 1. Pay your dues on time: One of the best ways to build up a good CIBIL score is to pay all your dues on time. This includes EMIs of personal loans, home loans, and credit card dues. 2. Don’t be a defaulter: Failing to repay a loan or credit card dues can make you a defaulter. This would significantly bring your CIBIL score down. Hence, make sure to pay off all your existing debts and credit card dues. 3. Low credit utilization ratio: Your CIBIL score also gets hampered if you use your credit irresponsibly. People with a high credit utilization ratio are usually thought to be heavily dependent on credit. Hence, they are considered less eligible for more credit, and their CIBIL score decreases. Your credit utilization ratio is the percentage of the total available credit you use. Keeping this ratio to 30% and using your credit wisely can help you improve your CIBIL score. 4. Don’t have too many debts: Too many debts can also lower your CIBIL score. If you keep closing off your existing debts, your CIBIL score will automatically increase.
Defaulting your home loan EMI payment can be a distressing experience and often out of your hands. Here are some things you could do if you have defaulted on your home loan EMI payment to minimize the damage and prevent missed payments in the future. Types of Defaults on EMI Payments If you default on your home loan EMI payment, your action is slotted into one of two bands, based on the severity. Let’s take a look. 1. Minor Defaults: Since banks do not want to sour relationships with customers over one or two missed EMI payments, they slot customers who have made their previous payment within the last 3 months (90 days) into the ‘minor defaults’ category. This is a minor default if you made your EMI payment in January but missed February. 2. Major Defaults: As you would have come to assume by now, the ‘major default’ badge is given to those customers who have missed payments for the last three months or more. For instance, if your last EMI payment was three, four or more months before the month in question, this is a minor default. The Consequences The consequences could vary based on your relationship with the bank. They might settle for a lesser punishment if you have a good home loan track record and have missed only one or two payments. However, if the bank views you as a liability, the consequences for defaulting on your home loan EMI could be more severe. 1. Negative Effect on your Credit Score Defaulting on your home loan or home loan EMI payment can negatively impact your credit score (CIBIL score), as your credibility towards loan repayment reduces. Using a home loan EMI calculator to plan your home loan EMI payments is best. 2. Fines and Penalties. Banks will want to disincentivize borrowers from repaying their loans, resulting in penalties you might have to pay if you miss your home loan EMI payment. Generally, this penalty is about 1-2% of the EMI, though it can accrue quickly if you miss multiple payments. 3. Recovery and Legal action. Often considered a last resort, a lender might have to take legal action or send a recovery agent to retrieve the funds you owe, which can be a highly stressful experience. Here’s what to do next If you miss your home loan EMI payment, you will likely face the consequences. However, you can take action to ensure you do not default again, thus minimizing the penalties and negative impact on your credit score. Here are some things you can do. 1. Reduce your EMI payments If you cannot meet your home loan EMI payments, revisit the home loan eligibility calculator. Your bank requests that the EMI be reduced by extending the loan tenure or converting the loan into a secured loan by putting up collateral. 2. Part Payments If you have surplus resources, you could make part payments towards your home loan and pay off a bigger percentage to have more leeway. 3. EMI-Free Periods If you find yourself in the worst-case scenario where your income has been affected for an extended period, then you could also request your bank for an EMI-free period. Often granted by banks to customers with temporary unemployment, this allows EMI payments to be paused (usually for 3-6 months) to provide relief. [B-02] Conclusion Applying for a home loan can be tricky, as you have to account for your income in the future as well. If you are looking for a home loan, you can browse the various options on the Piramal Finance website, follow this simple sign-up process, and get loans up to 5 crores, with flexible repayment options.
For credit companies, the primary driver of profit is their lending activities. These include the provision of issuance of home loans, personal loans, or any other type of loan. One may assume that more loans would then mean more profit. However, this is only partly correct. A lender can only make a profit if the borrower can repay the loan, including the interest component. Thus, credit companies have developed stringent guidelines to assess whether a borrower will likely repay the loan. An example is the guidelines you may encounter if you’re trying to determine your home loan eligibility. A home loan often spans over a decade, and a lender needs a basis to ascertain what amount you can repay. One of the most efficient ways lenders come up with to assess this is through your salary. For a home loan or any other loan, the basic premise is that the more you earn, the more you can borrow because the more you will potentially be able to repay. Let’s, however, take a look at how this calculation is carried out so that you can carry out your calculations with or without a home loan eligibility calculator. How home loan Eligibility is calculated You are borrowing money from a lender as part of a home loan. The risk that the lender is exposed to varies based on each borrower. To streamline the determination of a borrower’s eligibility for a home loan, some common base parameters have been set across lenders, regardless of the home loan amount, repayment tenure, or home loan interest rates. Let’s take a look at some of these criteria. Age: To get a home loan, the borrower has to be between the minimum age of 23 and a maximum of 62 years of age. Credit Score: Your credit score is essential to ascertaining your repayment credibility, and much emphasis is placed upon it. Therefore, your credit score has to be a minimum of 750 or above. Salary: To get a home loan, you must earn a minimum of Rs 25,000 per month. Experience: It is also mandated that an individual have about two years of work experience before they can apply for a home loan. Loan-to-Value (LTV)Ratio: Up to 90%. This refers to the percentage of the property value the lender can lend to the borrower. These are minimum home loan eligibility criteria that have to be met. Over and above this, however, specific lenders might have specific parameters you might have to meet, which can be either more stringent or lenient. However, none of these parameters superseded your income level. You are restricted to certain loan amounts and interest rates based on your salary. Typically, you will be eligible for a home loan whose EMIs do not exceed 40 – 50% of your net monthly income. A Home Loan Eligibility Calculator Knowing how your home loan is calculated is undoubtedly beneficial so you do not end up paying extra. However, carrying this process out manually to account for your salary can be time-consuming and taxing. To save time, you could use a home loan eligibility calculator to make your assessments. However, ensure that you are not relying solely on the calculator and understand the specific requirements of your chosen lender. [B-02] Conclusion Taking out a home loan can be a daunting task. You also do not want to overextend yourself as you have to be sure about your income for the loan period to ensure you do not miss payments, and if you want a larger loan, you might have to look for a higher salary as well. Understanding how home loan rates are calculated, and home loan eligibility ascertained based on your salary is important in accurately gauging your repayment capacity, ensuring you take a loan that is comfortable to repay and does not cause you any trouble. If you want a home loan, the Piramal Finance website has several offerings for all income bands, meaning you are likely to find a loan for you regardless of what salary you earn (as long as you meet the minimum requirement). Here’s how you can apply.
In the 1990s and early 2000s, buying a house was considered a necessity. Given the relationship between the average income rates people were earning and the home prices being offered to them at the time, it was not uncommon (quite the contrary) for an individual to be able to purchase a house for themselves using a year or two's worth of salary. Buying a house and starting a family was a fairly simple affair. With property rates skyrocketing the last two decades, however, it has become a distant dream for many to be able to purchase a house for themselves right out the gates, with many spending their entire careers pooling together and saving enough funds to meet the price of a simple one or two BHK (sometimes smaller) in a tier-one metro city, with tier two and three locales quickly catching up. As a result, individuals began looking for the best home loans, as it was the only way they could own a house. However, given the disparity between income rates and property prices, people oftentimes require decades to repay the loan, and banks need to ensure that they are confident you can repay the loan, resulting in several terms and documents required for a home loan. One such condition is that you have to file your income tax returns (ITR) to get a home loan and any subsequent home loan tax benefit. But why? Let’s find out! What does ITR refer to? ITR or Income Tax Return is essentially a form you have to fill that depicts the amount you earned in that year, the subsequent tax bracket you fall into, and, therefore, the amount of income tax you have to pay. Generally, 7 such Income Tax forms and bands are provided by the Income Tax Department. ITR Band Conditions ITR 1 For those earning 50 lakhs or less ITR 2 For those with income other than from “Profits and Gains from Business or Profession,” including income from capital gains, foreign assets/income, and other sources like legal gambling. ITR 3 For those earning 50 lakhs or more, including capital gains, rent, company profits, etc. ITR 4 For those earning ITR 1 + 50 lakhs additional income. ITR 5 For LLPs, associations, firms, etc ITR 6 For companies not claiming exemptions under Section 11 of the IT act ITR 7 For entities that fall under Section 139 (4A), (4B), (4C), (4D). Why do you have to file your ITR to get a home loan? Put, your ITR documents provide proof of your income, allowing banks to assess their risk and set interest rates accordingly. Let’s dive deeper for a better understanding so you can complete the procedure without a hitch and get the best home loans and the additional tax benefit! Some details include Your ITR should show that you have a stable income. This way, banks can rest assured that they have the capacity to repay the loan, allowing for potentially better interest rates. Income statements for the last three years are required as part of the ITR. If your ITR has not been filed, you could miss out on the best home loans and invite legal action from authorities. You will often be requested to provide a ‘net worth statement’ along with your ITR; if you own a business, audited financials will also be required. [B-02] Conclusion Filing your ITR is the first and foremost step in ensuring you are eligible for a home loan. Not only is it mandatory by law, but it also allows lenders to assess your repayment capacity. Providing all the right ITR documents will communicate to the lender that you are confident in your ability to repay. If you wish to apply for a home loan, you can choose from the multitude of options available on the Piramal Finance website. Here’s how you can apply.
A joint home loan is a loan taken by two or more people with the intent of availing a higher loan amount along with equally shared responsibility of repaying the loan. The co-applicant shares the liabilities and benefits of the home loan with the primary applicant. This co-applicant may be the primary applicant’s spouse, parent, child, or friend. There are several pros and cons to applying for a joint home loan: Pros of Joint Home Loan: Eligibility: Factors like credit score, stable income, and other factors affect an individual's eligibility for a home loan. Hence, applying with a co-applicant reduces the primary applicant's credit risk and increases his chances of getting a home loan. Avail of higher Loan Amount: If both applicants in a joint home loan application are income-earning individuals, this helps in calculating home loan EMI affordability. This means the loan amount becomes considerably higher than for a single applicant or individual. This offers significant room for budgeting for a better home for both. Let’s look at an example here – Your sights are set on a house that is valued at Rs 40 lakhs, however your income status and bills only make you eligible for a home loan worth Rs 20 lakhs. Here, applying with a co-applicant can help. Both your combined financial status will allow for a larger home loan amount hence giving you access to the house of your choice. Interest Rates: Home loan interest rates can be lowered if a co-applicant is female. Since banks in India offer comparatively lower interest rates on loans given to women, including a female applicant on a joint home loan application is highly beneficial. Longer Tenure: Adding a younger co-applicant can help you extend the tenure of your loan, giving you greater repayment flexibility. A joint home loan can be taken with a child as a co-applicant to increase your loan tenure. Tax Benefits: A number of tax benefits are available for both the primary and secondary applicants on a joint home loan. The percentages depend on their contribution towards the principal and interest rates of the loan. Either applicant can avail of tax deductions of up to 2 Lakhs on interest repayment and up to 1.5 lakhs on principal repayment. In case of a rented property, the benefit of the entire interest rate can be availed. Cons of Joint Home Loan: Longer Documentation Process: Since a joint home loan involves two or more applicants, the documentation process is usually longer. The lending organization has to verify the credit history of both applicants. Lending organizations also have to ensure that each applicant submits the required documents individually and that these documents are accurate and not forged. This process can be tedious and time-consuming, which in turn delays the disbursement of the loan. Share of property: Co-applicants only get a limited share of property on a joint home loan. Thus, in case of the untimely death of an applicant without a properly documented will, the co-applicant is only left with less than half a share of the co-applicant’s. The rest is shared among the co-applicants parents, spouses, and children. Credit Score: Since a joint home loan offers flexibility or autonomy in sharing responsibility, such as who repays what amount, it also means that the credit scores of both applicants are equally at stake. Failure to pay loan installments by either applicant will affect the credit scores of both applicants on a home loan application. Separation of loss of a co-applicant: In the case of separation from a co-applicant, let’s say, in the case of a married couple, the entire responsibility for repayment of the loan then falls on the primary applicant. The same thing happens in case of losing the co-applicant to an untimely death. In such cases, it is always advisable that individuals apply for life insurance to avoid unexpected financial burdens. [B-02] Conclusion: Thus, we can see that a joint home loan can be extremely beneficial in many ways for new homeowners, provided one is aware of the risky paths to be avoided. A joint home loan can allow aspiring homeowners to realize their wishes quickly if planned carefully and chosen well.
A house is one of the most pricey purchases in life. Though having your own house is still a big deal, long gone are the days when people slogged and saved all their lives and then bought a house. Thanks to the easy availability of home loans, buying a house is now a much more attainable dream. You can borrow a home loan from a bank or a financial firm like Piramal Finance. Different home loan types are available for you to choose from based on your requirements. However, the real twist is deciding the right home loan tenure. Tenure refers to the number of years in which you would have to return the loan amount to the institution in the form of EMIs. [B-01] Factors to Consider When Choosing the Right Tenure For Your Home Loan Choosing the right tenure for your home loan can be confusing. To help you out, here are the top three factors that you should consider: Age of the borrower Overall interest rate Your income For How Long Should You Take a Home Loan? After considering the factors mentioned above, let’s understand through an example. So, suppose you are a 30-year-old male borrower with an income of INR 1 lakh per month, and you are looking forward to getting a home loan of INR 20 lakh. So, let us see how your chosen tenure will affect the EMIs you will have to pay. Loan Amount Rate of Interest Tenure Monthly EMI 20 lakhs 11% 10 years INR 27,550 20 lakhs 11% 15 years INR 22,732 20 lakhs 11% 20 years INR 20,644 20 lakhs 11% 25 years INR 19,602 20 lakhs 11% 30 years INR 19,046 5 Tips to Reduce Rate Other than the loan tenure, other aspects can help you get the best possible deal when planning to take a home loan. Let us take a look at some golden rules that you must keep in mind: Make frequent prepayments Research Choose the shortest possible tenure Higher Down Payment Increase EMIs when possible [B-02] What is the Best Home Loan Tenure? Sadly, there is no perfect answer to this question. For different individuals, there could be different suitable tenures. Therefore, the tenure you choose has to suit your requirements the most. However, you must remember that the home loan interest rate or the EMI does not affect other life expenses too much. As discussed above, if you can pay higher EMIs, you can choose a shorter tenure, but if you are looking for affordable EMIs, you can opt for a longer tenure. Use a home loan EMI calculator to clearly understand the interest rate and EMIs.