Terms and Conditions While Adding Co-applicants in a Home Loan

While applying for the home loan, you always have the option of adding another borrower or a co-applicant or a joint applicant. A co-applicant is a person who applies for a loan along with the main borrower.

Below are some of the points to take care while adding a co-applicant:-

1. Spouses (husband and wife)

It is very common to have spouses as co-applicants in a home loan calculator and this helps in many ways. In case both are earning, their combined income can be used for calculating eligibility. Secondly, both can claim tax benefits in proportion of the EMI they pay and increase their combined tax benefit.

2. Siblings:

Two brothers can be joint applicants in a loan for the same property if they stay together. However, typically a brother and a married sister cannot be co-applicants in a home loan in most banks.

3. Father and Son:

Father and son can be co-applicants in a Loan against Home with each other even if the property is owned by only one of them.  Incomes of both father and son can be considered for determining eligibility. However, in this case, loan tenure may have to be restricted based upon the father’s age.

4. Business Partners:

Two or more people unrelated by blood but partners in the same business entity (or controlling shareholders and directors in the same company) can act as co-applicants with each other for a loan. 

The income of the partnership or company they jointly own can be added to their individual incomes to arrive at eligibility. This is however subject to the condition that they co-own the property.

Note that distant relatives, friends and unrelated persons or entities cannot be added as co-applicants. 

Documentation for co-applicant:

A joint applicant or a co applicant is equally liable for the loan as the main applicant. Accordingly, same set of documents (KYC, income) are required for a co-applicant as for an applicant.

Impact on CIBIL:

Note that the co-applicants’ CIBIL Score and CIBIL Record will reflect all loans in which he/ she is an applicant or a co-applicant irrespective of who pays the EMI.

[Source: http://myloancare.blogspot.in/2014/12/what-are-terms-and-conditions-while.html]

            

How the Stock Market impacts Mortgage Rates

Although inflation expectations are the primary factor that influence the direction of mortgage rates on a day-to-day basis the stock market can also have an impact.

To understand how this relationship works its first important to understand how mortgage rates are determined. Mortgage rates are entirely determined by the price of mortgage-backed bonds (MBS's). MBS's are bonds that are issued by Fannie Mae & Freddie Mac that are backed by the interest paid by mortgage holders. Like the stock market there is an exchange where MBS's are traded.

There is an inverse relationship between the price of MBS's and mortgage rates. When the prices of MBS’s increase mortgage rates drop and vice versa.

So, to understand how the stock market can influence Mortgage Loan Interest Rates we have to understand how they impact the price of bonds. Stocks and bonds compete for the same investment dollar. In other words, an investor with money to invest has to make a decision to invest their money in either the stock market or in the bond market (it should be noted that there are other investment options but these two classes are the primary vehicles for investment capital).

For an investor stocks are generally thought to provide higher returns over time but also come with greater volatility. Conversely, bonds tend to have lower returns over time but have less volatility. Because bonds tend to provide low volatility with modest returns the bond market can often act as a "safe-haven" for investors who sell their stock positions.

Therefore, in general, when the stock market goes down it is a sign that investors are selling stocks and shifting their capital into bonds. This boosts bond prices and drives mortgage rates down. Conversely, when the stock market rallies it is a sign that investors are selling bond positions in order to shift capital into the stock market. The greater supply of bonds on the market drives prices lower and pushes mortgage rates higher.

It's important to understand that there are a myriad of factors that impact mortgage rates on a day-to-day basis. Inflation expectations & technical trading patterns are two of the primary factors that we monitor. However, in the absence of new information on these two topics it's not uncommon for mortgage rates to be impacted by the stock market in the aforementioned manner.

[Source: http://mortgagerateupdate.blogspot.in/2008/05/how-stock-market-impacts-mortgage-rates.html]

Loan against Property in India: Must-Know Advantages

In times of financial trouble, a loan can act as a life savior. One loan that can be a solution to numerous financial problems is loan against property (LAP). Loan Against Property is a secured loan which is provided against the mortgage of a property.

LAP can be applied by people who are self-employed and are in need of a huge amount of money. By applying for LAP, they can secure funds without renting or selling out their property.

When once applied for LAP, the property of the borrower is kept as a mortgage. The loan amount varies around 40-70% of the market value of the property.

Advantages of Loan against Property in India

Can Be Obtained Easily

Obtaining Loan against Property is not much of a hassle. Once the borrower presents security (read – property) and gets an approval on it, loan sanction doesn’t take too much time.

Can Help in Fulfilling Various Purposes

Loan against Property can be used for a number of purposes, such as:

To meet the financial needs of a commercial activity, trade, or for expansion of business.

To suffice a family member’s educational expenses.

To make repairs, extend or renovate an already existing commercial or residential property.

For urgent and unavoidable medical treatments.

Interest Rates Are Low

Loan against Property can be one of the best options to opt for as the interest rates of this loan are comparatively lower. Usually the interest rate of Loan against Property ranges between 11.5% – 13.75% while for personal loan it hovers between 16% – 20%.

Longer Repayment Tenure

Nothing can be more beneficial for a borrower than getting longer repayment tenure. Loan against Property offers the borrower longer repayment tenure, generally between 10-15 years which eventually eases out the burden of EMI(s).

Optimum Use of Idle Property

Many people own a property that lies unused for a long span of time. To make optimum use of such property, you can secure a loan against it. This allows the borrower to retain ownership of the property, and at the same time have an opportunity of acquiring a loan at a low interest rate too.

Continuous Ownership

In case you acquire the loan, but are not able to repay the amount, you have the flexibility of selling off the property and settling the loan amount. This gives you a chance to continue the ownership of the loan secured, along with the benefit of having surplus cash as well.

Flexibility of Loan Amount

Another benefit of Loan against Property is the possibility of securing a larger amount of funding. The lenders allow flexibility of loan amount, depending on the type and value of the property.

[Source: http://www.biz2credit.in/blog/2015/07/28/loan-against-property-in-india-must-know-advantages/]

Steps for NRIs to Sell a Property in India

Are you an NRI and inherit a property? Did you buy a home in India and got settled in other country. Are you planning to sell off that home? Here are the details.

Steps for NRIs to Sell a Property in India

For expats, selling a property in India from abroad is a challenging process, especially if they left the country years back. There are rules for an NRI in selling his/her inherited property in India and it requires legal help. Here is the step wise procedure on how NRIs can sell their inherited land or property legally without any litigation:

The process is quite similar for residential Indians and non-residential Indians except for the latter have tax implications and repatriation policies.

1. Title Transfer for Inherited Property

If the property is inherited, then the title should be changed to the seller’s name by the process of mutation of revenue records. This transfer requires a will or a succession certificate. If one cannot procure a copy of the will, then the local court can issue a succession certificate. With this certificate, one can apply for a title change in the mutation of revenue records office.

This procedure is time consuming and it is advisable to have them changed earlier.

2. Checklist of Documents Required for Selling

It is necessary to procure all the documents required for selling the property in India. Some of the documents include:

The title deed or mother deed of the property

No objection certificate to show the clearance of litigation and debts.

Occupation certificate issued by the municipal corporation

Plan approval/sanction certificate

Cooperative share certificate if the property is a part of a society building

Lawyer certificate, if any of the original documents were lost

Property Loan documents if any

Apart from these documents, the seller should have a PAN card number to sell properties that involve big amount transfers. The NRI can apply PAN to sell the properties or he/she can submit form 60 at the registrar office for the same.

3. Finding a Right Brokerage Firm

If there are no close friends or relatives to trust with the transaction, it is wise to consult a brokerage firm to assist in the selling process. However, if the seller has realty market sense and people to support then he/she can go ahead with the selling process on their own.

The brokerage firm can help you in suggesting the market situation, finding suitable buyers, price trends and risks involved. They can assist in fixing the selling price, applying for PAN and attorney service to obtain legal documents and tax implications. Although they provide end-to-end solutions, brokerage in India has no legal license and it could be troublesome if the brokerage fee is not fixed properly. It is advisable to find the right brokerage firm and fix the fee before initiating the selling process.

4. Sales Registration

It is essential to grant the power of attorney for the transaction to a PoA holder. There is no need to grant a complete power of attorney; instead the seller can give ‘Admit PoA’ rights to the PoA holder who will merely represent the owner in the registrar office. According to this, the seller should duly sign all the documents and the PoA holder will represent him in the sale registration.

However, issuing the PoA process differs from time to time and each firm will have a different process. Once the registration is complete, the seller should also concentrate on the tax implications.

[Source: http://loan-yantra.blogspot.in/2015/10/steps-for-nris-to-sell-property-in.html]