Loan on property Investment

The main topic for this article is property investment. As we know, banks have progressively tightened their lending criteria in the wake of the GFC, investors are getting frustrated because they can't source finance for their next purchase. In this article, I will discuss about ways to break through the credit ceiling and increase our serviceability limit.

The first step which is consolidates unsecured debts into your mortgage. Typically, unsecured debts such as credit cards and personal loan have short repayment period. This method is use to force us to reduce our debts with high cost monthly repayments. These high repayment levels will cause the bank's ability to repay calculation for our mortgage. The reason is because unsafe debt will limits the amount of uncommitted funds we have available to repay the proposed mortgage. Rolling our personal loan and other debts into our mortgage can help us because they won't show as other financial commitments. Anyway, it will stretch the debt over the life of your Loan on property term, creating more interest in the long run.

The second step is by reducing excess credit, especially Loan on property. It is believe to say that if we have any credit cards with limits that exceed our need for credit, action that will be received either cancel the limits or reduce the limits down to a manageable level. When there are lenders assess our ability to repay a mortgage, they might assume that our credit card will be fully drawn up to its limit.

For knowledge that most credit card supplier make a statement that three percent of the debt amount be repaid every month, the unused limits can be detrimental to your mortgage borrowing capacity Loan on property. Every $100 in credit card limits adds $3 per month to our monthly expenses and reduces our ability to borrow.

It may sound very good but all the lenders will look at the credit limit on our card or cards as a liability that we may have in the future, even if we don't owe a solitary cent currently.

Currently, if we have a card with an $800 limit and another with a $400 limit, a lender will write down $1200 as a debt under our name. Reducing our credit card limit by $1000 may increase your calculated monthly disposable income by $30, which has the effect of having a net pay rise of $360 per annum."

Article Source: http://EzineArticles.com/4432090

All Purpose Loan - Loan on property

Loan on property is an all purpose loan. A loan can be taken for any purpose in the time of financial emergency.  There is personal loan but it is tagged with a high interest rate along with short loan repayment tenure. Therefore many people are not able to take personal loan. If you own a house you can take loan against and it turns out to be cheaper than a personal loan. The reason behind this is the lender has the mortgaged property as security with it therefore there is no tension of defaulter of loan amount. While in the personal loan there are no such security norms.

The Loan on property has a long repayment period, generally 10 years. The loan can be taken for any financial requirement whether it is for funding of the existing business in case of debt consolidation, any emergency, education, marriage or other constraints. In case of personal loan you have to specify the reason for taking loan but in this loan there is no such rule but if your loan amount is Rs 25.00 lacs and above then you have to specify the purpose of the loan.

For instance the country's largest public sector bank SBI has a clause that the loan can be taken for any purpose what so ever. In case the amount of loan is Rs 25.00 lacs and above then purpose of loan will have to be specified along with an undertaking that loan will not be used for any provisional purpose whatever including speculation on real estate and equity shares.

Some of the banks give the loan against both types of properties whether residential or commercial but some of them give loan against only the residential property. The loan amount can range from Rs 10 lakhs to Rs 3 crores, though the amount varies from lender to lender.

Some of the banks offer special schemes along with this loan like free personal accident insurance cover.

To get this loan you must be above 21 years of age and the maximum is 60 years, whether salaried of self-employed. For instance the largest public sector bank the State Bank of India has the following eligibility criteria - an individual who is: an employee or a professional, self-employed or an income tax assesse or engaged in agricultural and allied activities. Bank has fixed the maximum age limit to 60 years.

Though, some banks have fixed the maximum age limit for self-employed individuals to 65 years. The salaried applicants should be employed continuously for at least three years.

Documentation

Self-employed individuals can submit computation of income for the last two years certified by a charted accountant.

In this Loan on property there is a facility of an overdraft. Some banks offer this facility. The big advantage of taking this loan using the overdraft option is that the borrower has to pay the interest only on the money withdrawn, till the time loan is repaid.

While in the normal course the interest is paid on the entire amount throughout the tenure of the loan.

Before finalizing a bank check for the fees and penalties. Banks charge processing fees - is the amount charged by banks to cover the cost of processing your loan. The amount range varies from bank to bank. The fee amount is generally between 0.25 to 2%. The foreclosing of the loan before the actual tenure carries prepayment penalty.

Article Source: http://EzineArticles.com/1989617

Loan on property- For Greater Flexibility and Freedom

Each one of us needs money at one or the other time in our life. You may wish to buy a new home. One can fulfil his or her personal desires by withdrawing money from the savings account. But, do you think it is right to withdraw the savings when an efficient alternative is available that is taking a loan from the loan market. You can use the savings in future when some emergency occur. Now, the question arise that which loan to choose from the infinite number of loans existing in the market. If you own a property or want to buy one, Property loan will be the perfect option for you.

Loan on property are secured against a property. Property put as collateral can be a residential or a commercial property. The loan providers grant more flexibility to the borrower and freedom to use the money as they wish. A borrower can use a property loan to buy a new car or to pay for much needed home improvements.

Loan on property offer borrowers the opportunity to enjoy the benefit of flexible repayment option, low interest rate and a longer repayment term. Property loans are available with the term facility of up to 10 years. The rate of interest on a property loan is low as it is a secured loan.It accounts for a low monthly instalment which is much cheaper than the personal loans.

Commercial property is the property which is used for business purposes. It is commonly known as business property such as office buildings, stores which are intended to operate with a profit. This loan is similar to secured business loans.

Property loans are generally allowed against a residential property. When a borrower puts his home as collateral against the loan, the property loans take the form of a mortgage. A property loan secured against a home is specifically designed to facilitate the UK residents to provide financial support to them so that they can purchase a home. This type of property loan is popularly known as residential property loan.

The amount you can borrow with a loan against property depends on the equity in your property. Equity is defined as the difference between the market value of the property and the claims held against it.

There is one drawback of a property loan. It involves the risk of repossession for a borrower. The lender will repossess the property kept against the loan if the borrower defaults on the monthly installments or the loan amount.

A bad credit rating cannot stop you from borrowing a Loan on property. You just need to put your property as collateral to borrow money from the loan market. So people who have faced county court judgments or bankruptcy can also apply for this loan.

There are number of lenders who provide loan against property. With the technology growing day by day, entry of the online lenders has widened the growth scope of the finance market. Banks and financial institutions are now identified as traditional lenders. Online lenders give the convenience of applying for an online loan and try to keep you away from all the hassles. You can apply for an online Loan on property from your home or office's computer which is equipped with internet.

Article Source: http://EzineArticles.com/124163

Home Equity Loan Interest Rate - Getting the Best Deal

Many home owners today are choosing to catch up on major expenses by seeking a home equity loan. The home equity loan interest rate that you are able to obtain will make a huge difference in the amount of money that you will be repaying over the term of the loan. In order to get the best possible deal, here are some things to consider.

What is a Home Equity Loan?

It is a method of financing whereby a homeowner borrows an amount based on the difference between the market value of the home and the amount still owing on the original mortgage - if any. An equity loan on your home may also be known as a second mortgage or borrowing against the property. The loan may be received as cash, payment of bills, line of credit or as collateral for other property.

Where Can I Find the Latest Information?

In the past, home loans were often issued by banks, savings and loan institutions or other mortgage lenders at the local level. Today, there are many equity loans available through the Internet. These loans may be associated with private or large commercial lenders. They may specialize in second mortgages or be available from a regular mortgage lender.

What Factors Affect the Interest Rate?

Many factors affect the rate of interest that will be charged on a home equity loan. The creditworthiness of the homeowner is just one example. The amount of collateral accrued in the home is also taken into consideration. There is often a cap placed on the loan-to-value ratio of the second mortgage. The term of the loan and the size of the loan will also affect the rate of interest charged.

Fixed Rate or Variable Rate?

A fixed interest rate is one that is determined at the beginning of the loan period and remains the same throughout the loan. It tends to be somewhat higher than a variable interest rate. A variable Property Loan Interest Rate

is one that can be adjusted up or down during the repayment period. The adjustment is usually based on an outside factor such as the prime lending rate.

Uses for a Home Equity Loan

This form of finance is usually an option considered when the homeowner has upcoming major expenses and needs cash or credit. The loan may be taken to pay for major improvements on the home that will increase its value. It is sometimes used to pay for college expenses or for catastrophic medical bills. Another common use for the loan is to pay off credit card bills with a higher interest rate.

Loan Term

The loan term is the length of time allowed for repayment of the loan. It may be as long as 25 or 30 years in some instances, or a short as two or three years. The lender is usually willing to structure a loan so that you can afford the payments within your budget.

Before choosing additional loans or credit of any type, you should make sure that it is the best fit for your long-term financial needs. By seeking the best home equity loan interest rate, you will pay less money overall. You will be on a better financial footing so that you can pay the loan off more speedily.

Most people don't realize that fixed home equity loan can save them money as well as freeing off some cash. If you can obtain a home equity loan refinancing you can often save a small fortune in interest charges over the period of the loan. Visit our website to get free information about the pros and cons of home equity loans.

[Source: http://ezinearticles.com/?Home-Equity-Loan-Interest-Rate---Getting-the-Best-Deal&id=3583340]

Investment Property Loan Types

An investment loan on property is a loan for non-owner occupied property. There are two main classifications of investment property mortgages. These classifications include: commercial and residential. A commercial property mortgage is for a dwelling that contains 5 or more units and/or is zoned as commercial. A residential investment mortgage is for a dwelling that is one to four units and is zoned residential. Commercial and residential mortgages are two completely different loan types and have significantly different qualification standards. The following is a basic description of each mortgage type.

Residential loan on property

Residential property investment mortgages have similar qualification guidelines as standard owner-occupied mortgages. Although, they do have higher down payment and credit score requirements. Below is a summary of the general guidelines for residential investment mortgages.

• Credit Score Requirement - The minimum credit score requirement is typically 680 or above for investment mortgages.

• Debt to Income Ratio - Typically, the debt ratio limit for an investment mortgage is 40% of the borrower's verifiable income. Besides W2 income, the borrower's last 2 years tax returns will be needed to calculate the income that can be used from other rental properties or other sources of income.

• Down Payment - Investment property mortgages require at least 15% down, but the down payment requirement increases with lower credit scores and the greater the number of units in the property.

• Income - Lenders typically will only use rental income if the borrower has a two-year history of owning rental properties. This is usually documented via the tax returns and schedules.

Commercial loan on property

Commercial loans typically have higher rates, greater fees, and shorter terms than residential mortgage. The two most important factors for lenders on this loan type include: a positive cash-flow for the property, and the borrower's past commercial property management experience. Below is a summary of the general guidelines for residential investment mortgages.

• Credit Scores Requirement - The minimum credit score requirement is typically 720 to 740 for a commercial loan.

• Down Payment - The minimum down payment for a commercial mortgage is typically 30% or greater. When refinancing, the maximum equity position is usually 70% of the appraised value of the property.

• Debt Service Coverage - This is a ratio used by lenders to calculate the property's ability to generate cash flow. It is a calculation comparing the net operating income minus the mortgage payment and the other debt payments.

Article Source: http://EzineArticles.com/9079856

How to manage your finances with the property you own

Savings is our part of life. Right from childhood our parents teach us the value of savings time-on-time basis so that you utilize it during any emergency in future. No matter how meticulously an individual saves, at times when your finances are strained you’ll need some help to tide over safely on to the shore. Borrowing from family or friends is an alternate option but again there is fear of rift is associated if not paid on time. If the money you need is large such as for child education, sending them for higher studies, medical treatment, or other emergency it becomes stressful to manage finances. Relax! A better option would be to leverage an asset you own – your house.

Today, leading banks and finance companies offer loan against property (lap) so that you can use your house as collateral to take a loan from a bank.  LAP is given against the mortgage of property. It is provided at a certain percentage of your property’s market value. It usually stands around 40 to 60% of your property value in the market. Property loans help you leverage the economic worth of your home along with continuing to enjoy occupancy of the same, so that you get immediate finance to meet a variety of personal and business needs.

Loan against property are avail for fully constructed, freehold residential and commercial properties for: business needs, marriage, medical expenses and other personal needs. You may also transfer your outstanding loan availed from another bank / financial company.

In today’s time traditional finance come at extremely high rate of interest, stringent measures to pay and less time duration to clear of the debt. But taking a loan against property is certainly cheaper than a traditional loan, where interest rates are as low as 10 to 13%.  Since these are secured form of loans you can get a higher amount than the one you will get for an unsecured loan like a personal loan. Ofcourse, every bank will also have small processing fee of around 0.50% of the loan amount. For better understanding you can always visit relevant site and make sure the mandatory documents are available at the earliest for application.

The loan offered by a bank will vary from person to person since it depends on various factors, including the work profile and age of the borrower. Typically, the income proof for three years is required to have the loan against property and the minimum age is around 24 years. Lenders prefer that the loan be fully repaid while the borrower is employed, so the maximum age till loan maturity in case of a salaried person is 60 years and for self-employed its 65 years.

Your credit history counts a lot when it comes to avail property loan. It is extremely important that you have a good credit score rating to avail any form of loan. Before, lending out the loan, banks have a background check of your credit history through a Credit Information Company like CIBIL (Credit Information Bureau India Ltd.) and go through your repayment track record. Based on your credit score banks will ascertain your repayment capacity. Your defaulting on any bill payment will reduce your chances of getting a loan. After the bank is satisfied with the paperwork, it will offer you the loan, which will typically range from 40-70% of the value of the property.

Home Loan

Property Loan

Avoid guesswork while planning for your future

Last week, I interacted with a group of investors at an event. Almost all of them had made a substantial amount of investments, mostly of the tax saving kind. More than half had investments in equity funds of one kind or another. 

However, an interaction with one investor stuck me as particularly interesting. In about an hour of analyzing his investments, he swung from being vaguely unhappy to supremely confident to somewhat scared about the future

My friend, who is in his mid-40s, had been investing in mutual funds for about 20 years. In all these years, he and his wife have invested different amounts -- mostly equity funds -- in a sporadic manner. Most of the investments were around Rs 20,000-30,000 at a time, although less in the earlier years.

They've never kept a precise track of how much they invested and what the gains for. Still, unlike many such investors, they had dumped all the paperwork and statements in two big box files and  kept them safely .They had a vague notion that in all these years, he had invested about Rs 20-30 lakh, most of it in the last decade, and that it was worth around Rs 50-70 lakh.

Finally, one day, with a few hours of hard work to organize everything, they got to know what exactly was happening with their investments. Look for Property Loan Interest Rate to their pleasant surprise (actually, wild joy), it turned out that the investments were worth almost Rs 2 crore. The power of equity investments, and of compounding over long periods of time, had created a bonanza.

The net result of all this was that my friends' outlook on life took another U-turn. From feeling prosperous and thinking about German cars and Italian evenings, they started feeling seriously worried about the future. At their current rate of saving, they just wouldn't have enough money for all the expenses, as well as sustain themselves after retirement

Even if they worked till 65, they would have another 25 years of expenses to sustain. Even a rough calculation of inflation and expenses over a quarter of a century is a frightening experience.

Some of us understand the magic of compounding on investments, but very few manage to apply compounding to expenses and inflation and then get a feel of what that means for their own future.

[Source: http://economictimes.indiatimes.com/wealth/plan/avoid-guesswork-while-planning-for-your-future/articleshow/53906154.cms]

Property loan interest rate- Loans at Lower Interest Rate

Perhaps, people who are desperate to purchase or construct a new house will definitely do it this time. Opportunity is knocking at your door and you just need to welcome it.

Bank has just declared that the state owned bank decided to reduce its prime lending rate to a great extent i.e. by 75 basis points from November 10, 2008. But, the Banks have already cut their lending rates. However, Banks are yet to cut off the lending rates.

The oriental Bank of Commerce has cut its lending rate on home loans up to Rs. 30 lacs. The Bank has also reduced its lending rate on education loan. Of course, this venture on the part of the banks are going to be very beneficial for the prospective borrowers of loan who have been since long cherishing the dream of purchasing real estate in India. The availability of the housing loans in the country is one of the main factors behind the boom in the real estate industry in India. This loan can be obtained not only for construction of new house but this loan can also be utilised to renovate or extend a house or even purchase real estate or pay the stamp duty. Besides the aforementioned banks there are other financing companies in the country like HDFC who offer loans. These banks also offer home loan to enable people to realise their dream pertaining to real estate at decent rates.

Whenever, you consider Property loan interest rate one has to have good knowledge of the rate of interest that are being taken from the borrower in return for the loan lent. This rate of interest is classified into two types which are fixed and floating. There are different kinds of clients in the loan market. Some would like the fixed rate of interest whereas; there are others who would like to have the floating rate of interest. Both the rates do not have identical repayment structure. If you have adopted the fixed rate you will have the same stable rate of interest throughout the loan repayment period. However, a borrower must make it a point that he does not delay any instalment. Otherwise, the borrower may have to bear the penalty for delay. On the contrary, the floating rate is not stable or does not remain same during the repayment term. It does fluctuate and one has got to bear the rise in its rate. But, the floating rate is suitable for you only if you are able to pay off the loan quickly. This rate will also suit you if you are capable of making additional repayments.

Clients of housing loans must also be aware of the hidden charges, if there is any. At times, it is also found that there are a lot of restrictions associated with a loan when its Property loan interest rate is low. An individual must make it a point not to delay any instalment as such an act on the part of the borrower may lead to penalty in the form of extra cost.

Source: http://EzineArticles.com/1767831

What Are the Factors That Affect Mortgage Loan Interest Rate?

Mortgage loan interest rate can be defined as the interest rate on mortgaged properties generally advanced to secure a loan. When you're shopping for a mortgage loan, you may usually want to get the best rate. Interest rates depend on the economy. Even so, you can do some things that will make it easier for you to get a better interest rate. There are certain factors to get a good mortgage loan interest rate.

Firstly, the best interest rates are given to those with the highest credit scores. So, you may want to improve your credit score. You may get the best help from a mortgage broker. Why, because, a good mortgage broker has access to multiple lenders and can more easily find you a lender that will offer you the best rates.

For the best rate mortgage loans, it is best to apply for a loan and lock the rate during a dip in interest rates, when possible. You can update yourself about the latest interest rate news and trends. A good mortgage interest rate is ideal, but only if it also provides you with an affordable mortgage payment. For example, you could get a better interest rate with a 15-year mortgage but the payment will be much higher than a 30-year mortgage.

When buying a home, it may be useful to check and compare Mortgage Loan Interest Rates to get the best possible rate. Using a mortgage interest rate calculator can help you make logical decisions on purchasing your next residence. The first and foremost step is probably to identify the type of loan you are choosing (i.e. fixed, adjustable rate, interest only; etc.). You may gather information about the original loan amount you want to finance along with the estimated interest rate and term of the loan.

These three data elements are the basic requirements for any home mortgage interest calculator you may decide to use. 

Then you may run your home mortgage interest calculator using the required data to project a monthly payment. You can try running multiple scenarios using different numbers and document each result and compare your results from running the home mortgage interest calculator. When you are comfortable with a certain type of loan, it is probably time to submit the paperwork to a bank or other lending institution to get approved financing.

People often wonder why there is always a constant change happening to mortgage loan interest rates. Numerous factors come into play when determining the interest rate you'll pay on a home loan. The higher the percentage of the purchase price that you can afford to make as a down payment, the lower will be the interest rate. Similarly, the more of your closing costs you're willing to pay for, the lower the interest rate you're given. The monthly payments on a shorter term loan are generally higher than those of longer term loans. However one of the best ways to save money overall on the costs of buying a home is to strive for as short a loan term as possible. Your credit rating and income level are enormous factors considered in determining the interest rate offered to you on a home loan.

[Source: http://www.sooperarticles.com/finance-articles/mortgage-articles/what-factors-affect-mortgage-loan-interest-rate-199435]