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Home Loan

RBI Guidelines for Home Loan Balance Transfer

Paying higher interest rates on your home loans can be tough. Besides being charged higher interest rates by the lender, sometimes the terms and conditions do not suit the interests of the borrower. In that case, borrowers opt to transfer their balance from their current lender to a new one. The new lender might be charging a low rate of interest. Or you might be getting a longer tenure, or maybe the terms and conditions are better. The term used for switching lenders in search of better opportunities is called a home loan balance transfer. A home loan balance transfer is a way to maximise your loan affordability and get better service terms. The Reserve Bank of India regulates this facility by issuing necessary guidelines from time to time to deliver more benefits to the borrowers. What is a Home Loan Balance Transfer, and Why is it Done? A home loan balance transfer is a process through which you can change your current lender. If you are unsatisfied with the current terms and conditions or the interest rate, you can search for a new lender. It will give you access to better terms and conditions and a lower rate of interest. You can close the loan account of the previous lender after paying the due installment and any penalties. From the next month, you can start repaying your interest to the new lender following your home loan balance transfer. What are the RBI's Home Loan Balance Transfer Guidelines? The RBI issued several policies to help borrowers finance their high home loan balance transfer interest rates with more affordable options. If the borrower defaults on the current loan, he or she may pay without penalty because of the fluctuating interest rates. Banks’ fees to switch your balance are about 1–3%. Who is Eligible for a Home Loan Balance Transfer? People paying a higher rate of interest towards a bank loan that offers a lower rate can opt for this. The new lender will pay off the unpaid loan by giving the remainder to the old lender. It is vital to compare the interest rates when going for this. Important points to know To create a uniform code of loan processing, the RBI has established specific rules for loans against property and home loan balance transfer that all financial institutions should observe. For instance, the most up-to-date RBI guidelines state that pre-payment or partial repayment of LAP loans purchased with variable interest rates for non-business purposes incur no costs. What are the documents required for a home loan balance transfer? According to the RBI, the following is a list of documents that you must submit for a home loan balance transfer: Aadhar Card, Latest Electricity/Gas Bill, and Ration Card. Property Tax/Water Bill, Co-Applicant Guarantor-KYC Documents, Employee Cards, Voter IDs, Driver’s Licenses, and Passports. Salaried Individuals’ Six Months’ Worth of Proof of Income The last three months of bank statements showing salary deposited. Your last two years' W-2s and Form 16s. Information Technology tax filings for the last two years and statements from the principal bank account. CA-audited financials covering the most recent six months are all required of self-employed individuals. What are the benefits of a home loan balance transfer? Here are some of the benefits of a home loan balance transfer: Low rate of interest: The primary reason for transferring your balance to a new lender is the lower interest rate you will be charged. The interest rate will be much lower than what your previous lender used to charge. Extended tenure of repayment: The repayment tenure significantly increases in a home loan balance transfer, giving you ample time to plan your finances and repay the loan with utmost convenience. The tenure can be as long as 20 years, which can even be extended to 30 years in most cases. Better terms and conditions: The new lender might offer better terms and conditions, including zero to minimal processing fees, no extra charges, lesser penalties, etc. High flexibility: Besides that, the new lender might provide enough flexibility to make loan-related decisions and tailor your home loan credentials. For example, the option to choose between monthly installments and quarterly investments. No foreclosure charges: Banks don’t charge you any pre-payment fees or foreclosure fees in case of a home loan balance transfer. Under the new RBI guidelines, if you foreclose the account before its term, you won’t be charged any extra fees for the pre-payment. However, earlier, prepayment fees from lenders averaged about 2–5% of the loan balance. [B-02] Conclusion: When the current lender doesn’t meet your conditions, charges you a higher rate of interest, and doesn’t allow you enough flexibility, it is time for you to look for a home loan balance transfer. To protect yourself from being taken advantage of by your lender, it is in your best interest to become well-versed in all of the rules and regulations related to a home loan balance transfer issued by the Reserve Bank of India.

08-11-2023

Personal Loan

How to avail low interest rate on personal loan in Gujrat

Gujarat is one of India’s most developed and developing states. What comes to your mind when you hear its name? Apart from Modiji, of course. Business? You are right. However, Gujarat is not only about business. Apart from cities, and far from them, it has forests, deserts and beaches. Home to various communities, you would see festivals all around the year. It has an incredible historical heritage. It has all that you can take a personal loan for. Moreover, surprisingly, Piramal offers you these at interest rates as low as 10.5%. Therefore, you don’t have to worry about losing much from your working capital while repaying for home renovation. You can still carry out your business smoothly. This article makes you aware of the scope of personal loans in Gujarat and the ways to avail of them at low interest rates. [B-01] What is a personal loan? In contrast to loans where security is required, personal loans are offered to borrowers based on their creditworthiness. Applying for a personal loan just requires a minimal amount of paperwork. A personal loan does, however, have higher interest rates than other types of loans. Personal loan interest rates are predicted to vary from 8% to 30% annually. Types of personal loans You can expect huge benefits from taking a personal loan in Gujarat if you have recently shifted to cities like Rajkot, Surat, Vadodara, Jamnagar, Morbi, etc. But, before taking any loan, you must know if it suits your requirements/needs. A. Home Renovation Loan Cities like Rajkot are even costlier than Ahmedabad when it comes to buying or renting a home. If you have already taken a housing loan here, the renovation might be heavy on your pocket. You must consider taking a home renovation loan from Piramal at 10.5% B. Travel Loan A vacation home or resort near Gir Forest or a beach in Dwarka can be costly. But why compromise on a holiday if you can take a cheap personal loan for travel? Piramal Finance provides insurance along with the loan. C. Medical Loan Gujarat has all the hospital chains like Wockhardt, Apollo, Sterling, etc. The soaring prices of beds and medicines is scary. If you do not have health insurance and emergency funds, which everyone should have, you can take a personal loan to fulfil your medical requirements. D. Wedding Loan Destination wedding sites are seeing a spurt in Gujarat, especially in Junagarh. You might have dreamt of a wedding where the pre-wedding shoot takes place near waterfalls and the reception at a resort. But why limit the number of guests if you are eligible for a personal loan? E. Festival Loan Whether it is Eid-ul-Adha or Bestu Baras, you can’t stop yourself from participating in a festival in Gujarat. Festivals like Diwali can be expensive if you want to celebrate full-fledged. If you cannot afford these expenses, a Festival Loan can help you celebrate while delaying your expenses. Piramal provides personal loans at a minimum 10.5% interest rate. Features of a Personal Loan Piramal provides personal loans with zero pre-payment and foreclosure charges. A loan of more than Rs1 lakh and less than Rs10 lakhs falls under a ‘Personal Loan’. Minimal documentation is required. Sanction doesn’t take much time, and disbursals are instant. Monthly EMIs are not more than your monthly budget. A flexible repayment tenure from 12 to 60 months is allowed. Piramal Finance helps improve your loan eligibility by allowing the clubbing of incomes. Are you eligible for a Personal Loan in Gujarat? If you are one of the following, you can get a personal loan in Gujarat for lower interest rates. A. Salaried Employees A person who has a job in a Government Institution, Private Sector, Public Sector, MNCs, Partnership Firm, or, Proprietorship Concerns must have: Age: Between 21 and 60 years Work Experience: More than or equal to 6 months Income: At least Rs 25,000 per month B. Self-Employed Professionals like an architect, a doctor, or CA and non-professionals like Business Owners, Partners, Proprietors, or Promoters/Directors in private and public limited companies can apply for a Personal Loan in Navi Mumbai – Belapur CBD. Their age must be more than 23 and less than 70. How to apply online for a personal loan? Piramal Finance has made it easier for even a layman to get a Personal Loan in Gujarat: Visit the website of Piramal Finance and choose ‘Personal Loan’ from the main menu. Select ‘How to Apply’ from the article marker or scroll down to find the same title. Click the link in the ‘How to Apply’ paragraph and discover a dialogue box. It is a form titled, ‘Quick Apply’. Fill out the compulsory details and enter the Captcha (Are you a robot?). Go through the ‘Website Usage and Privacy Policy’ before checking/ticking. Submit your application and get in touch with a Relationship Manager. [B-02] The Conclusion The lengthy process of applying online for a Personal Loan in Gujarat from Piramal Finance is explained in this blog. It also clarifies the significance of other loans besides personal loans that one may obtain. Piramal also specialises in loans for homes and home-related purchases. The greatest NBFC is one that helps beginners get loans or at least learn about the loans for which they may qualify. One that offers a user-friendly platform to ask for money.

08-11-2023

Guide

What is the rate of Interest of a Loan Against Property?

Loan Against Property is a popular form of secured loan in India where an individual pledges a property as collateral to avail of a loan. The interest rate on Loan Against Property (LAP) in India is subject to various factors, such as the loan amount, the loan tenure, the value of the property pledged, and the borrower’s credit score, among others. [B-01] In 2023, the average interest rate for Loan Against Property in India was around 9.35% to 12.75%. However, it can vary from bank to bank and financial institution to financial institution. Some of the leading banks in India offer Loan Against Property at interest rates ranging from 9.25% to 11.50%. The interest rate on Loan Against Property also depends on the type of property pledged. For instance, the interest rate on a residential property is generally lower than a commercial property’s. This is because a residential property is considered a safer option for lenders than a commercial property. Additionally, the loan amount and the loan tenure also significantly impact the interest rate of the Loan Against Property. Larger loan amounts and longer loan tenures are usually associated with higher interest rates. On the other hand, smaller loan amounts and shorter loan tenures generally have lower interest rates. The borrower’s credit score also plays a crucial role in determining the interest rate on Loan Against Property. A higher credit score implies a lower risk of default, so lenders are willing to offer loans at lower interest rates to such borrowers. A credit score of 750 or above is considered good, and borrowers with such a score can expect to get loans at lower interest rates. In addition to the factors mentioned above, the country’s current economic scenario also impacts the interest rate of Loan Against Property. In 2023, the Indian economy was in a steady growth phase, so the interest rates were on the lower side. However, this can change as the economic scenario evolves, and lenders may adjust their interest rates accordingly. It is important to note that while interest rates are an important factor to consider while availing of a Loan Against Property, they are not the only factor. Borrowers should also consider other charges and fees associated with the loan, such as processing fees, pre-payment charges, etc. [B-02] In conclusion, the interest rate on Loan Against Property in India in 2023 varied from 9.35% to 12.75%. The interest rate depends on various factors such as the loan amount, the loan tenure, the value of the property pledged, the borrower’s credit score, and the country’s current economic scenario. Borrowers should consider the interest rate and other charges and fees associated with the loan while availing of a Loan Against Property.

08-11-2023

Know More

Everything you need to know about Working Capital Management in India

Managing the day-to-day finances of a business is critical for ensuring smooth operations and financial health. This is where working capital management comes into play. Regardless of the business size, efficiently managing working capital ensures that companies can meet their short-term obligations, sustain growth, and enhance profitability.In this guide, we will explore what is working capital management, its meaning, components, objectives, and the most effective approaches to manage it in today's competitive environment. Working Capital Management Meaning Working capital management is the process of handling a company's short-term assets and liabilities to ensure sufficient liquidity for daily operations. It involves balancing current assets (like cash, receivables, and inventory) against current liabilities (such as accounts payable and short-term debts).In simple terms, working capital management ensures that a business has enough cash flow to cover its regular expenses without over-investing in resources.Key Takeaways Working Capital Management Definition: The strategic handling of current assets and liabilities to maintain liquidity and operational efficiency. Ensures smooth day-to-day business operations. Involves decisions on cash, inventory, receivables, and payables. A key indicator of a company's short-term financial health. Working Capital Management Formula The basic formula to calculate working capital is: Working Capital = Current Assets – Current Liabilities A positive working capital indicates that the company has sufficient short-term assets to cover its short-term liabilities, reflecting good liquidity. Conversely, a negative working capital suggests that the company might face financial stress and struggle to meet immediate obligations. Example 1: Healthy Working Capital Scenario ABC Textiles Pvt. Ltd. has the following financials: Current Assets: ₹15,00,000Cash: ₹3,00,000Accounts Receivable: ₹6,00,000Inventory: ₹6,00,000Current Liabilities: ₹10,00,000Accounts Payable: ₹7,00,000Short-term Loans: ₹3,00,000 Applying the formula: Working Capital = ₹15,00,000 – ₹10,00,000 = ₹5,00,000 Interpretation: ABC Textiles has a positive working capital of ₹5,00,000, reflecting good financial health. The company can easily meet its obligations, pay its suppliers on time, and maintain operational stability. Example 2: Worst-Case Scenario – Negative Working Capital Let’s assume ABC Textiles faces delayed receivables and unsold inventory, reducing its current assets to ₹8,00,000 while liabilities remain the same: Current Assets: ₹8,00,000Cash: ₹1,00,000Accounts Receivable: ₹3,00,000Inventory: ₹4,00,000 Current Liabilities: ₹10,00,000 Applying the formula: Working Capital = ₹8,00,000 – ₹10,00,000 = -₹2,00,000 Interpretation: ABC Textiles now has negative working capital of ₹2,00,000. This is a red flag indicating liquidity problems. The company may: Face difficulties paying suppliers. Risk penalties due to delayed payments. Be forced to take on costly short-term debt. Suffer operational disruptions. Benchmark Guidance: A Current Ratio (Current Assets / Current Liabilities) below 1 indicates liquidity stress. Ideally, maintaining a ratio between 1.2 to 2 is considered safe. For SMEs, ensuring working capital is at least 20% to 40% of annual turnover helps maintain financial flexibility. Working Capital Metrics To evaluate working capital efficiency, businesses use various metrics: Current Ratio = Current Assets / Current Liabilities Quick Ratio (Acid-Test) = (Current Assets – Inventory) / Current Liabilities Days Sales Outstanding (DSO) Inventory Turnover Ratio Accounts Payable Turnover Ratio Components of Working Capital Management Receivables Management: Ensuring timely collection and minimizing bad debts. Inventory Management: Optimizing inventory levels to avoid stockouts or overstocking. Payables Management: Strategically managing payment terms to suppliers without hurting supplier relationships. Cash Management: Planning and forecasting cash inflows and outflows to ensure liquidity at all times. Importance of Working Capital Management Ensures liquidity and solvency. Improves creditworthiness and financial flexibility. Enhances profitability by reducing unnecessary financial costs. Helps avoid over-reliance on external financing. Relevant Study Reference: A study by Smith & Begemann (1997) highlighted that firms with efficient working capital management report higher profitability and liquidity, especially in the manufacturing sector. Objectives of Working Capital Management Maintain adequate cash flow. Optimize current assets and liabilities. Minimize cost of capital. Support smooth operations and growth. Types of Working Capital Management Working capital can broadly be classified based on duration, purpose, and variability. Permanent (Fixed) Working Capital This refers to the minimum amount of working capital that a business needs to maintain its day-to-day operations at any given time. It is not affected by fluctuations in sales or production levels. Examples: Regular inventory levels, cash for utilities, salaries, etc.Objective: Ensure uninterrupted business operations. Temporary (Variable) Working Capital This is the additional working capital required to meet seasonal or special demand fluctuations. Examples: Extra inventory during festive seasons, funds for promotional activities.Objective: Manage short-term spikes in demand or production. Gross Working Capital It represents the total investment in a company's current assets, regardless of liabilities. Formula: Gross Working Capital = Total Current AssetsFocus: Managing assets like cash, inventory, and receivables effectively. Net Working Capital Net working capital is the difference between current assets and current liabilities. Formula: Net Working Capital = Current Assets – Current LiabilitiesFocus: Ensuring liquidity to meet short-term obligations. There are some other types too that are often overlookedRegular Working CapitalReserve Working CapitalSeasonal Working CapitalSpecial Working Capital Type Based On Purpose Permanent Working Capital Duration Day-to-day operations Temporary Working Capital Duration Seasonal/Unexpected demands Gross Working Capital Accounting Total current assets management Net Working Capital Accounting Liquidity management (Assets - Liabilities) Regular Working Capital Need Routine business needs Reserve Working Capital Need Emergencies/Contingency Seasonal Working Capital Need Manage seasonal fluctuations Special Working Capital Need Special projects or expansions Effective Approach Towards Working Capital Management To maintain financial health and operational efficiency, businesses need a proactive, data-driven, and strategic approach towards working capital management. Here’s how companies can build an effective working capital management strategy: Accurate Cash Flow Forecasting • Regularly prepare and update cash flow forecasts.• Use realistic sales projections, taking into account payment cycles and seasonal trends.• Monitor upcoming obligations like loan repayments, supplier dues, and payroll. Efficient Receivables Management • Implement strict credit control policies.• Offer discounts for early payments to encourage faster collections.• Use invoice financing or factoring if receivables are blocking liquidity. Optimized Payables Management • Negotiate better payment terms with suppliers without straining relationships.• Avoid paying too early unless there are incentives like cash discounts.• Monitor payables aging reports regularly. Inventory Control and Just-In-Time (JIT) Practices • Adopt inventory optimization tools to balance stock levels.• Avoid overstocking by using JIT or lean inventory management techniques.• Conduct regular stock audits to eliminate dead stock. Technology Adoption & Automation • Use ERP systems, AI-powered cash flow tools, and accounting software for real-time visibility and automation.• Automate billing, collections, and payment processing. Use of Working Capital Financing Products • Leverage short-term working capital loans, overdraft facilities, lines of credit, or invoice discounting to manage temporary cash gaps.• Avoid over-reliance on expensive short-term loans by planning ahead. Build a Cash Reserve • Maintain a contingency fund or reserve working capital for unexpected shocks like economic downturns, sudden demand surges, or supply chain disruptions. Regular Monitoring & Reporting • Track working capital ratios, DSO, DPO, and inventory turnover regularly.• Conduct quarterly or monthly working capital reviews.• Involve cross-functional teams (finance, procurement, sales) in working capital planning. Expert Tip: Businesses that integrate working capital management into their overall strategic and financial planning outperform those who treat it as a routine task. Studies by Ernst & Young and PwC indicate that companies that actively manage working capital can unlock up to 5-7% of additional cash flow, improving profitability and growth prospects. Working Capital Management Examples • A retail store reducing its inventory holding period to free up cash.• A service provider negotiating early payments from clients to improve cash flow.• A manufacturing company extending payables terms without hurting supplier relationships. FAQs What is the need of working capital management? Efficient working capital management ensures liquidity, prevents operational disruptions, and supports business growth by balancing incoming and outgoing cash flows. What problems and issues can be faced in working capital management? • Poor cash flow management.• Over-investment in inventory.• Inefficient receivables collection.• Supplier disputes due to delayed payments.• Over-reliance on short-term debt. What are the benefits of working capital management? • Enhances liquidity and solvency.• Reduces financing costs.• Improves profitability.• Strengthens supplier and customer relationships. Explain the scope of working capital management. The scope includes managing all aspects of short-term finance like cash management, credit management, inventory control, and accounts payable/receivable, ensuring smooth day-to-day operations and financial stability. What are the principles of working capital management? Conservation of liquidity Optimal utilization of resources Maintaining profitability without compromising liquidity Balance between risk and return What Factors Affect Working Capital Management? Business cycle phase Seasonal demand Credit terms with suppliers and customers Operational efficiency Industry norms What Factors Influence Working Capital Management? Company size and scale. Product lifecycle. Financial policies. Supply chain dynamics.

08-11-2023

Personal Loan

What are the best personal loans in India and how to choose one of them?

Banks and financial institutions in India offer personal loans for different purposes. Now, everything is available online. You can even apply for a personal loan online from the comfort of your home. Today, a personal loan has become a favourable choice of debt. The fact that personal loans are unsecured, aids in tipping the balance in its favour. A personal loan is a sum of money that you borrow from a bank or another financial institution. After receiving the funds, you begin repaying the lender. You can decide the tenure and instalment amount with your banker in advance. Taking a personal loan online is a significant financial decision. Hence, it is important to consider the best options available to you. Let us check out some of the most popular personal loan plans in India. [B-01] Brief Analysis of Best Personal Loan Plans HDFC Bank Personal Loan HDFC is one of the leading banks in India. You can consider their loan as it is available at affordable terms. Here are the details of the loan. Interest rate 11% p.a. to 21.00% p.a. Minimum age 21 years Maximum age 60 years Minimum income Rs. 25000 per month Processing fee Up to INR 4999 Loan amount Up to Rs. 40 lakh Loan tenure 12 to 60 months Loan disbursal time 4 days ICICI Bank Personal Loan ICICI Bank is known for the quick approval of loans. You can apply for their personal loan online in a few simple steps. Interest rate 10.75% to 19% per annum Minimum age 23 years Maximum age 58 years Minimum income Rs. 30000 per month Processing fee Up to 2.50% of loan amount plus GST Loan amount Up to Rs. 50 lakh Loan tenure 12 to 72 months Loan disbursal time 4 days Axis bank Personal Loan For fast processing of your personal loan online, you can choose Axis bank. There are plenty of ways in which you can use these funds. With minimal documentary requirements, here are the details of such loans. Interest rate 10.99% to 21% per annum Minimum age 21 years Maximum age 60 years Minimum income Rs. 15000 per month Loan amount Up to Rs. 40 lakh Loan tenure 12 to 60 months Loan disbursal time 4 days IDFC First Bank Personal Loan There are many benefits if you apply for a personal loan online here. You can transfer the balance of an existing personal loan here. Enjoy paperless and digital processing of loans and check these details. Interest rate 10.49% to 25% per annum Minimum age 23 years Maximum age 60 years Minimum income Rs. 25000 per month Loan amount Up to Rs. 1 Crore Loan tenure 6 to 60 months Processing Fee Up to 3.5% of the loan amount SBI Xpress Credit Personal Loan You can apply for this personal loan online if you are planning a wedding or vacation. It will help you make big-ticket purchases conveniently. Interest rate 10.49% to 25% per annum Minimum age 23 years Maximum age 60 years Minimum income Rs. 15000 per month Loan amount Up to Rs. 35 Lakh Loan tenure 6 months to 6 years Processing Fee Up to 1% of the loan amount Kotak Personal Loan For any pressing financial needs, you can take a personal loan online from the bank. Get instant loans from the bank to cover any unexpected needs. Check out the details here. Interest rate Starting at 10.99% up to 24% Minimum age 21 years Maximum age 60 years Minimum income Rs. 25000 to 30000 per month Loan amount Up to Rs. 25 Lakh Loan tenure 12 to 60 months Processing Fee Up to 3% of the loan amount Bandhan Bank Personal Loan Another ideal option to apply for a personal loan online is Bandhan Bank. You will get attractive rates of interest and quality features with your loan. Check out the details here. Interest rate Starting at 10.25% up to 20% Minimum age 21 years Maximum age 60 years Minimum income Rs. 25000 per month Loan amount Up to Rs. 25 Lakh Loan tenure 12 to 60 months Processing Fee Up to 3% of the loan amount How To Choose Personal Loan Online? Here are some crucial factors that you need to consider when selecting a personal loan online. Documentary Requirement Check the list of documents that you need to submit to get a personal loan. Some of the common documents include income statements and ITR returns. Interest Rates Check the interest rates chargeable on the loan. Banks offer loans at a wide range of interest rates according to the borrower’s profile. Tenure Personal loans carry a longer repayment tenure. Check with the bank about the same and choose a loan that sits comfortably in your financial budget. Amount Of Loan Consider a bank that offers the best interest rates on your desired amount of loan. Since the purpose of taking a loan could vary, check whether your bank is willing to offer the said amount. Charges Understand what type of charges are being levied by your bank. These charges determine the ultimate amount that you can get after loan disbursal. [B-02] Conclusion These options for the best personal loan in India are among the most fitting ones. Now, the banking market has expanded substantially. As long as you are aware of the features of a personal loan, you should not face any difficulty in getting the right one. Always read the terms listed in the loan document before signing for it. For more such knowledge and information about taking a personal loan online, visit Piramal Finance. It is the premier destination to gain all the financial data that you need to make informed decisions. Browse through a wide range of financial offerings and information right here.

08-11-2023

Home Loan

Plan your Home Loan with a Home Loan EMI calculator

When you take out a mortgage, you choose the term length, such as 30 years or 15 years. Then you make monthly payments during that period until the end of your loan. If the monthly payment isn’t enough to cover your loan amount by the end of your term, this means, you are behind on your home loan calculator with prepayment. You need to make up the difference. Use this article to find out how much interest you could save by paying extra each month so you don’t have to pay an excess balance at the end of your mortgage period. [B-01] Home loans and their types A home loan is any type of financing that is used to buy, build, or improve a house. There are many types of home loans, but in general, there are three main categories: Fixed-rate loans: A fixed-rate mortgage is where the interest rate stays the same for the entire term of the loan. There are no surprises when it comes time to refinance or pay off your mortgage. This type of mortgage also typically requires monthly payments that are constant throughout the life of the mortgage. They do not change as a result of fluctuations in market interest rates. Adjustable-rate loans: An adjustable-rate mortgage, or ARM, is an interest-only mortgage. It has an interest rate and monthly payments change over time. ARMs are often used for mortgages. They offer lower initial rates than fixed-rate mortgages. The result is that borrowers end up paying more for their loans in the long run. But may benefit from lower monthly payments in the short term. Interest-only loans: Interest-only loans are becoming increasingly popular. This is because of their lower monthly payments and the increased equity borrowers buildup in their homes. However, interest-only loans may not be for everyone. It is important to understand the risks associated with this type of mortgage before signing on the dotted line. The basics of a home loan calculator with prepayment A home loan calculator is an online tool that allows you to determine the amount for the prepayment option. Most online calculators provide you with four crucial factors when you opt for a prepayment. They are: The amount of EMI saved Amount of EMI due Amount of revised EMI Revised loan tenure Online calculators are easy to use and help make calculations simple. All you need to do is enter your home loan details, such as: Outstanding home loan amount Home loan tenure Interest rate Prepayment amount you wish to pay Once these details are filled in, you can calculate and find out the overall savings from the loan pre-payment option. How a home loan calculator with prepayment can help you save money If your goal is to pay off your mortgage as quickly as possible, then knowing how much to put towards your mortgage each month is important. A home loan calculator that includes an EMI calculator helps you figure out how much of your monthly payment will go towards the principal and how much will go towards interest and fees. This ultimately determines how long it will take to pay off the mortgage. There are various types of calculators on the market, so be sure to do research before choosing one. Some factors you may want to consider when selecting an EMI calculator are cost, features offered, and ease of use. Tips for using a home loan calculator with prepayment The most important thing about calculating your mortgage payments is to do it correctly. Many people make mistakes that end up costing them more in the long run. If you have an online calculator on your smartphone or laptop, this should be much easier as most are set up for ease of use and provide explanations for each type of payment. A simple online calculator is all you need to get an idea of how much interest, monthly payments and total borrowing cost will be when taking into account compound interest and the repayment period. Just plug in your details on the EMI Calculator and click ‘Calculate’. You should aim to make at least four times the payment each month as even though it will take longer, it will reduce the total borrowing cost. If possible, try to set up a fixed direct debit from your bank account that’s large enough to cover the extra required payment amount. All online calculators come with pre-set parameters so you don’t have to worry about calculations. But if you are unsure what they mean then click help for explanations or ask someone for help. There are also other tools available to work out repayments such as a mortgage calculator. It takes into consideration rental income, investment returns and other factors. Whatever method you use, remember it is always better to pay off more than what you owe. This will keep costs down over time and stop you from getting further into debt. Other ways to save money on your home loan One way to save money on your home loan is to use an EMI Calculator Online to calculate your monthly payment and figure out how much interest you could end up saving by paying off your mortgage early. A second strategy for cutting down on the amount of interest you owe on your home loan is to increase your payments from the beginning of the term. A Home loan calculator will give you an estimate of what extra payments would do for reducing your total debt if done from day one. The third strategy for cutting down on the amount of interest owed is to buy fewer houses than needed for its purpose. That way, less interest will be accumulated over time. [B-02] Conclusion Home loan calculators are easy to use and give you an idea of how much it will cost for your monthly payments based on the initial down payment and interest rate. The best part about using one is that it also includes the option of paying off your mortgage in full by adding the desired amount to your current balance each month. Piramal Finance can assist you in the journey to your dream home. Fill out the form and get started now.

08-11-2023