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]

Understanding the Home Mortgage Loan Process

After spending many weekends visiting open houses and looking online for just the right place, you’ve found a new home to buy. You’ve done the negotiating dance and have finally signed the sales contract, which is contingent on approval of a mortgage loan for you, the buyer.

Now it’s time for your Eaton Federal Savings Bank mortgage loan expert to get to work to make the new home yours. To help you understand what to expect during the loan application process, we’ve outlined the most common steps on the path to closing.

Getting Started

First, you’ll want to have a talk with one of our mortgage loan experts to select the type of mortgage loan that is best for your financial situation. If you need more information on the various types of loan programs, be sure to read the Mortgage Financing article in our Learning Centre.

Locate or gather the following pieces of information to make completing the loan application faster.

Home and work telephone numbers of the seller and agent

Copy of sales contract for the property

If a condo complex: Information on the development; i.e. number of units, number of units owner-occupied, etc.

If new construction: Cost of land, acquisition date, market value, and cost of construction

Names, addresses, telephone numbers of your current and previous employer(s)

Account numbers and balances of your checking, savings and investment accounts and the institutions' addresses and telephone numbers

All pages of the last 60 days of all bank and/or credit union statements (actual statements work best because they have the financial institution name, customer name, account number, and transaction history)

List of all credit cards, instalment loans, and other debt along with balances, required monthly payments and the name of the creditor

Pay stubs for the last 30 days including year to date totals

List of stocks, bonds, CDs, retirement funds, autos and their current values

All pages of your most recent investment account(s) statement.

Proof of other income sources (alimony, rentals, freelance income)

Value of your life insurance policy (is) both cash value and face amount

Divorce decree, alimony records

Tax returns for previous two or three years and any other proof of employment or income; be sure to include all schedules, W-2 forms and 1099 forms

Proof of real estate currently owned: address, market value, rentals, liens, taxes, etc.

The Application Process

Once you know the type of mortgage loan and have gathered the needed information, then you’re ready to complete the mortgage application. This can take a while to complete so you’ll want to block off sufficient, uninstructed time. You can apply for your home loan online for added convenience or make an appointment with one of our loan officers to complete the application together.

Your loan officer will provide a quick assessment of your financial information and credit report to make sure moving forward is prudent. Once the information is complete, we’ll submit the application for processing.

Now your loan application is in the hands of Eaton Federal and its team of mortgage professionals. To learn more about the final steps from application to closing, stay tuned for our upcoming Part 2 of this article, Understanding the Home Mortgage Loan Process.

[Source: http://www.eatonfed.com/blog/understanding-the-home-mortgage-loan-process-part-1]

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]

Meet your immediate financial need with a loan on property

Property has always been the most favored form of investment for the capital appreciation it offers as well as for its ability to be pledged as collateral in times of financial need. For the property owner having flat in any part of the country, loan against real estate is often the most convenient type of loan available in the market. Although there are various routes of availing cash such as a personal loan, a loan against property (LAP) is probably the best option for most people.

What is a LAP?

A loan against property (LAP) allows you to leverage your realty assets to gain funds in an urgent situation. A LAP gives the borrower access to a secured loan with a lower rate of interest and a longer repayment period. It can be used for a number of purposes from personal – marriage, sickness to commercial reasons such as investment in business, office expansion etc.

When you apply for a LAP you can get upto 70% of the value of the property or twice your annual income (whichever is lower) as a loan against your immovable property. It is available for a period of 1 year to 15 years and the rate of interest will be in the range of 12 – 16% p.a.

Alternatives to LAP

Personal Loan

Although emergency funds can be arranged through various routes such as a personal loan, a loan against property has lower interest rates and is easier to access than a personal loan.

Loan from family and friends

Another option is borrowing from family or friends but when the amount is large, people can be hesitant to help, or may not be able to procure the funds immediately to help you.

 Benefits of LAP

Lower Interest Rate

Currently the prevailing rate for personal loan varies from 14% to as high as 48% p.a whereas the rate of interest on LAP varies from 12 – 16% making a LAP far cheaper than a personal loan.

Longer Tenure

For a personal loan the maximum tenure is 5 years whereas for a LAP the tenure can extend up to 15 years.

Minimal documentation

Being a secured loan, a LAP has comparatively faster approvals with minimal documentation required.

Option to top-up loan

If the value of the property has risen during the tenure of the loan, the owners also have the option to avail a top-up on their existing loan. This is especially useful for the self -employed and entrepreneurs.

Reverse mortgage option available for senior citizens

Senior citizens can avail a reverse mortgage against their homes, through which they can get a loan, released in monthly or quarterly installments or as a lump sum payment immediately  against the security of the house they own and live in, thus ensuring them financial freedom in their retirement years.

Applying for a LAP                                                   

Any type of freehold  Loan on Property for apartments in any part of country , irrespective of whether it is rented out to a third party or self-occupied by the applicant,  is eligible for LAP. The only consideration is that the title of the property should be clear without any encumbrances.

In case of joint ownership of a property, all the co-owners should also be co-applicants on the LAP, to assure the bank that all owners are in agreement with offering the property as security for the loan.

The bank will then request for all the documents related to the title of the property, along with identity proof, address proof and income proof to be submitted to them.

The next step for the bank would be to check your repayment track record and your credit history through the Credit Information Bureau India Ltd (CIBIL). Once the bank is satisfied with your financial records, it will sanction the loan, which will typically range from 40-70% of the value of the property.

A LAP is one of the best ways to raise money in an urgent situation when large funds are needed. However the borrower must keep his repaying capabilities in mind as the bank can take complete possession of your mortgaged property if you fail to make your payments.

Source: http://loan-against-property-india.weebly.com/blog/meet-your-immediate-financial-need-with-a-loan-on-property