Home Loan

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]

All Purpose Loan - Loan Against Property

Loan against 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 against 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

Documents required for applying for loan are:

Proof of identity (passport, driving license etc).

Proof of residence address (passport, electricity bill etc), and proof of age (birth certificate, school leaving certificate, passport etc).

Salaried individuals must submit their latest acknowledged IT returns or bank statements for the last three months.

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

In this loan 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.

Some banks charge this as a percentage of the outstanding principal of the loan amount. Therefore study all the features and terms and conditions carefully.

Article Source: http://blogs.rediff.com/loanagainstpropertyindia/2016/08/17/all-purpose-loan-loan-against-property/

Be Sure on Choosing Your Home Loan Lender

Investment strategies in the real estate sector are becoming popular in the recent times. However these deals require hard work as there are lots of hassles that are involved while dealing with the real estate agents, lawyers and potential buyers. Above there is a need for huge amount of funds before finalizing on a real estate deal. Thus it is always better to a have good market survey prior to your property purchase.

Going on the fund side, there are many banks and housing finance companies that offer home loans which are easily availed. But to do a bit of market research is beneficial as it will keep you well informed about the changes that will you help in getting flexible loan terms and low interest rates. A good online research on home loan comparison would prove useful on deciding the best lender for you.

Today the market is floated with a number of home loans that are offered both at fixed and floating interest rates. Fixed rate home loans are availed with a view of fixed interest rate over the loan tenure. If one opts for this category of home loan then he need not worry about fluctuations in market interest rate.

Fixed rate Property Loan is not dependent on the rise in interest rates. On the other hand, there are floating rate loans where the interest charged varies with the market interest rate. These loans are also known as variable or adjustable rate home loans which generally start with both low interest rate and low EMI. But with a rise in interest rate, your monthly payment-EMI- also rises.

Buying a home is what everybody aspires today and arranging funds for the same is not a difficult task but to get the best deal may be tough. The competition today is rising with an increase in the number of banks and financial companies. These institutions are offering loans that are convenient in repayment through various options of monthly installments. All of them make every effort to provide the borrower with the best service.

These organizations are also offering additional facility now-a-days. Even if you do not have a good credit history, you can opt for home loans. So you need not fear about a loan being sanctioned due to your late payments, bankruptcy, discharge, etc. However these loans are offered at higher interest rate to customer with bad credit history.

So one just needs to sit in front of a computer with internet and compare the rates and services provided by the different lenders in the market. You can just compare the various quotes and find out which one cost you less.

This method is appropriate for people who dream to own a home. Online research facilitates you with various loan options and thereby helps in choosing the right option for you. So with high-speed internet access available with ease, searching for a home loan is no more a difficult task.

A proper comparison between the rates and schemes offered by differ lenders will definitely prove beneficial at a time of your property purchase.

[Source: http://ezinearticles.com/?Be-Sure-on-Choosing-Your-Home-Loan-Lender&id=1701160]

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]

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]

Essentials of loan against property and should you go for it

Among a host of loan options provided by banks, a relatively popular product is the Loan against property or mortgage. The product clicks with borrowers because it generally allows one to borrow a relatively large sum of money for any need. It generally has easy documentation, speedy approvals and flexible repayment options.

According to the Transfer of Property Act, 1882, a mortgage, which is essentially availing a loan against property is "the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, and existing or future debt or the performance of an engagement which may give rise to a pecuniary liability.

This means one can apply for a loan from a bank by extending the property as a collateral or security. However, as the definition states mortgage only involves "transfer of interest" and the ownership of the property remains with the borrower. Ownership transfers to the bank only in the event of default on the loan.

Loan against property or a mortgage is popular because it has some perceptible benefits. Higher loan amounts are generally available for longer tenure when compared to conventional loans, and at a discounted interest rate. Most banks accept both residential and commercial properties for mortgage.

Its key benefits are:

Good when availing larger amounts

Interest rates are lower

Tenure is longer, which means lower EMI

Good tool for debt consolidation.

Funds can be used for business as well as personal needs.

To fulfill the eligibility criteria banks generally demand proof of residence, proof of identity, latest Bank Statement where you can show a salary / income for the past 6 months.

Loan eligibility as usual depends on the borrower's credit rating along with factors like income, age, qualification, number of dependents, spouse's income (if any), assets, liabilities, and continuity of occupation. Once the loan is approved is it either disbursed in full or in installments as instructed by the borrower? The borrower can often choose between fixed and floating rate of interest and generally there is an option for part and prepayment of the loan.

Who should opt for it?

Mortgage or loan against property is particularly popular when it comes to needing money for your business. While there is no restriction on using it for personal needs, however, if the amount is small, a personal loan can make much more sense.

While people use loan against property for education and even to buy/build a second property, most mortgage loans are taken for business purposes. This is especially helpful if the business ..

[Source: http://economictimes.indiatimes.com/small-biz/money/essentials-of-loan-against-property-and-should-you-go-for-it/articleshow/48523638.cms]

Personal loan or loan against property: Which one is better?

What is personal loan? Personal loan as the name suggests, is an unsecured loan that you can raise from bank for your personal use. 

There are no restrictions on the proceeds of the loan amount – you can use it to pay off your debt, construct a house, set up your business or even for your wedding etc. What is loan against property? A loan against property (LAP) is a secured loan disbursed against the mortgage of the borrower’s property. It can be residential property (either self-occupied or a rent), commercial property or even a piece of land.

Just like a personal loan, there is no restriction on using the proceeds of an LAP. You can use the LAP proceeds to finance your child’s education and wedding, to build a home for yourself, to meet medical expenses, to buy personal or commercial vehicles and even to finance your business. How to choose between the two?

Processing time: As a loan against property is obtained by mortgaging the borrower’s property, the lender has to verify related documents before disbursing the loan. The lender may also undertake technical study to confirm the ownership of the property and find out its market value. In addition to this, you will be asked to submit documents supporting your income to judge your loan repayment capacity.

This entire process can take anywhere between 15 to 30 days and hence, Loan against Property is not suitable for those seeking quick disbursal of loans. Personal loans on the other hand, do not require any collateral. Lenders usually judge your application on the basis of your monthly income and credit score and hence, your application may get approved within 7 days.

Interest rates: Being a secured loan, the interest rates of LAP is usually lower than that of personal loan. This can be anywhere between 11% and 16%. In comparison, interest rates of personal loan can be as high as 24%.

The main factor determining the interest rates in personal loans is the borrower’s credit score. LAP will suit those who are unable to get a good personal loan deal because of poor credit scores.

Tenure of loan: In case of LAP, the loan tenure can be as high as 15 years whereas the upper limit of personal loan is usually around 5 years. 

The longer tenure of loan repayment brings down EMI payouts, which increases the affordability of big-ticket loans. However, the flip side is that the longer tenure would also result in higher interest payout.

[Source: http://www.moneycontrol.com/news/loans/personal-loan-or-loan-against-property-which-one-is-better_6365581.html]