Many existing home loan customers are coughing up high interest rates. If you’re amongst them, you should consider shifting your home loan from your existing lender to a new one. This facility is called a ‘balance transfer option’ and many banks offer this facility nowadays. Doing so will decrease the monthly EMI you are paying towards your loan and will bring in savings.

If You Want To Save Money On Your Home Loan, Apply For A Home Loan Balance Transfer Right Here!

You should also consider shifting from the old BPLR system, where the interest rate constantly changes, to the new base rate system. This is more transparent than the previous one and ensures you don’t end up paying more unnecessarily.

One of the most popular products among Home owners, a Balance Transfer can help you get a better deal on your Home Loan thus enabling savings. You can also use a balance transfer to take a top up loan from a bank, which allows you to pay off your other loans by taking a consolidated loan from a bank.

Home Loan Balance Transfers are primarily used for High value loans, where rising tenures and expensive EMIs become too troublesome, due to flux in market conditions. A Home Loan Balance Transfer can go a long way in helping sustain a long tenure home loan or loan against property and also gives one the option of working with competing banks for better rates.

Save Money With A Home Loan Balance Transfer!

Many people don’t know that banks don’t increase Home Loan EMIs but they increase the tenure of the home loan when the floating interest rate increases. If you are paying higher interest rate on your home loan then we can help you save a lot of money.

Pre-payment of your home loan does not have any penalty and switching your home loan balance to a new bank has never been easier!

Balance Transfer for Home Loans and Personal Loans is a product, offering the customer a choice to transfer the outstanding balance of the home loan availed for better terms & conditions, EMIs and possibly well sized savings that could be better invested elsewhere.

Many customers look at Home Loan Balance Transfers as making their loans more efficient. In some cases, the nature of Floating Interest Rates leaves customers with longer tenures, higher EMIs and so on. Many customers find their solution in Home Loan Balance Transfers which help to move from higher rate of interest to lower rate of interest or increase in loan components as Top ups.

Eligibility For Balance Transfer

Home Loan balance transfers have stringent eligibility requirements that one is typically familiar with while taking a home loan or a personal loan.

The eligibility of the Balance Transfer will be based on the seasoning and track-record of existing loan only ñ Minimum Clear Repayment Track Record of 18 Months is required.

Balance Transfer Loans have a fair amount of eligibility criteria that can help you obtain the right deal. Below, we will list some of these requirements to help you get a Balance Transfer for your loan.

• * Resident Indian: Salaried or Self-employed
• Vintage of at least six months
• Good repayment track record
• Repayment Track Record of Existing Loans

Documentation for Balance Transfer

Just like the documentation requirements for Home Loans, applicants will need to provide a set of documents to approve the home loan balance transfer.

What Is Loan Against Property

Loan against property (LAP), are basically loans provided by banks against the security of one’s own property. LAP is designed to meet the financial needs of someone who already owns a house or multiple properties so as to get the best out of their assets. Its important to remember that the property which you are putting up for your loan should be free any encumbrance (i.e. it is not given as security for any purpose or any other loan).

Banks provide LAP for both Salaried as well as Self-Employed individuals. The rates and loan amounts differ based on your property and your annual income.

Banks will always want to consider all risks, which is why while you are applying for your loan against property, there are certain factors the bank considers with respect to your property to mitigate its risks in giving out the loan. These factors determine your rate of interest, and loan amount. You can get a LAP of up to 80% of the registered value of your property depending on the Bank’s policy and the property type and valuation.  The value of the property would be determined through a valuation conducted by the Loan Provider.

Individuals apply for LAP for a variety of reasons. Some of the common ones are your childs wedding, loans for new business ventures, second homes, vacations, medical treatment just to name a few.

How To Apply For Loan Against Property

Application
Processing
Documentation
Property Verification/Valuation
Sanctioning of the Loan
Disbursement

Important Questions on Loan Against Property

What kind of processing fee do you need to pay for Loan Against Property?

A nominal fees and charges are to be paid to the Bank depending upon their term and conditions.

How much time does the bank take to disburse the loan?

The processing of the loans usually takes 7 to 10 working days once all the documents are submitted. It also depends upon your profile and documentation.

How is interest charged on Loan Against Property?

Some financial institutions make LAP available only under the floating rate. Fixed rate loans are off limits. Borrowers need to enquire before finalising a LAP from lending institutions.

It is normally available for residential properties only, but can be available for commercial property also.

Does the property have to be insured?

Yes the property has to be insured against fire, flood, earthquakes and other appropriate hazards during the tenor of the loan.

How can I repay my loan?

The repayment of loan is done through Equated Monthly Instalments. It can be paid through Post Dated Cheques (PDC) or Electronic Clearance System (ECS).

Can I pre-pay my loan?

The loan against property can be pre-paid along with the pre-payment charges. Usually the bank charges a fee in percentage of the principal pre-paid.

Loan Against Property Eligibility Criteria

Some of the Elgibility Criteria when applying for a Loan Against Property Are As Follows

Income

• Age (min. 21 years)
• Property Valuation
• Existing Liabilities (if any)
• Current Work Experience
• Financial Documents
• Number of Dependants

The eligibility for LAP is calculated on basis of either the percentage of property value that you own and the amount of income you have to enable you to return the EMI on the Loan. So you can get Loan against property upto annex % of property value and the net amount that you earn after other EMI has been deducted from your net income

Loan against Property is given on the below mentioned property types and the percentage of loan you can get is given below:

Loan Against Property – For a Residential Property

Self Occupied – 65% of Property Value
Vacant – 55% of Property Value
Rented – 55% of Property Value

Loan Against Property – For a Commercial Property

Self Occupied – 50% of Property Value
Vacant – 40% of Property Value
Rented – 40% of Property Value
This varies from Bank to Bank by 5 – 10% of the above mentioned percentages.
In order to calculate how much you would be estimated to pay, most banks use a formula which is given below.

Loan Against Property for Salaried Individuals:-

{(NTH – Obligation) * 60%} / EMI per Lac

Loan Against Property for Self Employed Individuals:-

{(NTH – Obligation) * 65%} / EMI per Lac

Whichever is lower from the value of the property or your income- that loan amount will be given to you.

Other Eligibility Criteria Revolves Around the Maximum Age of The Person Applying For The Loan

For Salaried employees – 60 Years

For Self-Employed – 70 Years

Loan Against Property Tips

Loan against Property (LAP) refers to a secured loan category somewhat like a home loan where the borrower provides guarantee by using his property as security. The right of ownership of the property is still with the borrower, and if for some reason, the borrower is unable to repay the loan amount, the property can always be sold off to pay off the debt.

The maximum loan amount varies from bank to bank and could range from Rs.2 lakhs up to Rs.100 lakhs. The loan amount depends on the property valuation, your income and of-course your repayment capacity.

The maximum loan amount can come upto 80% to 100% of property value for commercial setups and up to 80% for residential properties (This is really variable as it completely depends on the valuation of your property).

The maximum loan tenure in Loan Against Property cases is 15 years.

Be ready to provide security, collateral or guarantors in order to obtain a Loan Against Property, not to mention a long verification process.

Most banks do not accept properties that are on lease or that are based on power of attorney.

The maximum age limit of eligibility is 60 years.

Loan Against Property features Fixed or Floating interest rates. You also have an option of changing from Fixed to Floating interest rates and vice versa once every year.

A processing fee is usually 0.05% to 3% of the loan amount and is payable upfront. This fee however will be deducted from the disbursal amount payable to you. We recommend that you try and negotiate a 0% processing fee or atleast a flat discount. Most bankers and agents will be happy to do this to ensure the loan gets sold to you.

You can also prepay the entire loan outstanding anytime after 180 days of availing the loan. Pre-payment charges will be levied accordingly. If you intend to do so, please ask for the pre-payment amount to be waived or a reduction in the penalty charges.

You can also increase or enhance your loan against property eligibility. For that you need to show income of atleast three persons, most preferably a family member or a business partner.

Additional Points To Remember When Considering a Loan Against Property

Compare Loan Against Property offers from 3-4 banks, and select the one which offers maximum benefit to you and your purpose.

Pay special attention to the tenure of the loan. The EMI may be less for longer tenures, but the total interest outflow will be higher.

If its possible, consider pre-payment options. All banks charges 2% – 3% of the loan in case you decide to pre-pay the outstanding amount.

Default in payments results in penalties. It can also adversely affect your credit history and profile. So make sure to make your payments on time. This really plays an important role in getting more loans. Dont miss payments or you will be penalized.

Make sure that all deals and offers agreed upon are supported by relevant papers. So make sure you always ask for a letter in a banks letter-head mentioning the likes of, exact rate of interests, processing fees, pre-payment charges along with interest-schedule, when you decide to finalize your loan with a particular bank or agent.

Make sure you recheck all terms and conditions, before signing any documents. Please Read the Fine Print.

Do not sign any blank documents. Even if it takes you a few hours to fill-up the form, take your time. Do not leave anything for the executive to fill-up.

Once you have received a loan do your best to pay it back as quickly as possible. Banks make their money off the interest they charge and the sooner you pay back a loan the less money you will have to pay in interest.

Personal Loan in India

A personal loan is a loan for your personal use, be it your child’s wedding, a dream vacation, or a shopping extravaganza. A personal loan does not require any security or collateral and can be availed without much fuss. Typically personal loans range from Rs. 50,000 to Rs. 30 Lacs with a tenure typically ranging from one to five years. Getting a Personal loan is quite stress free and there are typically a number of offers in the market most of the time.

Apart from the rate of interest banks also charge some fees which are usually of two types. Once when you are applying for the loan and once when you are pre-closing the loan. The fees when charged at the time of processing called as Processing Fees vary from 2-3% of the loan amount. This could be reduced if you have the ability to bargain. the second charge is the prepayment penalty paid at the time of pre-closure. This too varies from 2 – 3 %. Similar to processing charges, you can also try to get this fees reduced.

Personal Loan Amount

An individual can borrow as much as they can repay. This in banking terms would mean a personal loan that has an EMI that does not exceed 40% of your monthly take home income, where the EMIs for existing loans are also deducted.

Personal Loan Interest Rates

Personal loan rates vary from bank to bank, and are anywhere between 14%-26% depending upon your profile and the policies/scheme you decide to opt for.

How Fast Can I Get a Personal Loan? (Instant Loans)

Personal loans don’t take too long to process. Banks usually disburse your loan within seven working days. However, it is recommended that you keep all your documents ready and in order, especially the post dated cheques (PDC), to avoid any delays. How fast you get your personal loan is dependent on your document collection process.

Personal Loan Co-Applicants

Personal loans can be taken with Co-Applicants to help you increase the loan amount you are eligible for. The income of the co-applicant also features in your valuation and helps in increasing your chances of getting a personal loan.

Personal Loan Eligibility Criteria

While lending money the lenders take into account various factors to arrive at the decision whether to lend the money or not and how much to lend. This universal rule of lending equally applies to personal loans extended by the banks and Non Banking Finance companies (NBFC). Since personal loans are given without any security or third party guarantee, the lenders are extra cautious and have stringent norms for establishing eligibility of borrower.

Eligibility criteria

Profile of the borrower

A lender advances loan in the expectation of it being repaid within specified period. So income of the borrower is the main criteria to establish the eligibility for personal loan. Due to this reason, students, housewives and retired people are not eligible for personal loan facility from the banking system. Since a loan has to be repaid within certain period and that too with the current income, one can avail personal loan during his working life and not beyond that.

Salaried people can apply for personal loan anytime between 21 years till completion of 60 years of age assuming that the age of retirement is 60 years. In case the age of retirement specified for any particular organisation is lower than 60 years, the eligibility to apply for the personal loan will come down accordingly.

Since self employed do not have any specified age for retirement and generally work  beyond 60 years they can apply for personal loan upto 65 years of age. Moreover as self employed do not start earning as early as a salaried, the minimum age for applying for personal loan for self employed is generally kept higher at 25 years.

Stable Employment

As a lender is interested in the timely and orderly serving of personal loan, regular flow of income is a prerequisite for availing a personal loan. So the lenders advance personal loans to the persons who have regular and consistent income. Those who are in employment, should at least be working for minimum of two years. At least one year with the current employer is generally also insisted by the lenders. Likewise for self employed the lenders want consistent and established source of income, for which the borrower has to submit documents like profit and loss account with balance sheet for at least two previous completed years to substantiate the income. Due to irregular source of income, film and television artists generally find it difficult to get a personal loan.

Financial Statements

For establishing your eligibility you need to submit some financial documents to the lenders in addition to your regular Know Your Customer (KYC) documents. For salaried the financial documents required to be submitted are simple. Copies of the salary slips for past six months along with form no. 16 and or copy of the Income Tax Return (ITR) filed for previous two years are sufficient. However for self employed elaborate set of documents are needed to be submitted to the bank. The self employed have to submit copies of their ITR along with certified copy of profit and loss account along with balance sheets for previous two years are needed. The lender may also ask for copy of the bank statement to verify the volume of the business stated in the profit and loss account.

Employer type

Since personal loans are very risky product from the lender’s perspective, the lender wants to ensure that the borrower will be prompt and regular in servicing the personal loan. For this purpose, the lenders take into account the employer where you are working, to assure themselves about lower risk of default on the part of the borrower. Most of the lenders have a categorised list of employers for the purpose of granting personal loans to salaried people.

People working with government department and those with government companies have better opportunity for being eligible for personal loan than those working with other employers. Likewise persons working with top listed companies or reputed private companies including Multi National Companies have better prospects of getting a personal loan.

Outstanding EMIs

Lenders assume that certain portion of your existing monthly income, generally 40%,  is available for servicing of any loan taken by you. So your personal loan eligibility gets curtailed in case you are serving any existing loan. The amount of EMI of such existing loan being served will be reduced from the surplus  available for serving any loan.  Accordingly the amount of EMI which you can service for personal loan will also come down accordingly. As the amount of personal loan eligibility depends on how much EMI you can pay month after month, any running loan will significantly reduce your personal loan eligibility. In case the balance EMIs for running loan are not many, you can arrange to prepay that existing loan and thereby significantly enhance your personal loan eligibility. In such a situation, the personal loan eligibility will be higher than the balance of the existing loan outstanding being repaid.

Credit history of the borrower

With the advent of credit information bureau like CIBIL, the lending for banks and NBFCs has become easier as the complete history of credit transactions of the prospective borrowers is available to the lender. The credit information bureau provides the credit history and credit score of the borrower to the lending institutions on request. A good credit history and higher credit score, points towards disciplined dealings in credit and loan transactions. A good history and a better credit score provides a primary assurance to the lender about the borrower timely serving the loan taken. Moreover with higher credit score, the lender may give you higher personal loan than what you would be eligible with lower score.

A better credit score also help you negotiate and get better interest rates on your personal loans with higher eligibility at the same time. Generally a CIBIL credit score of more than 750 is considered satisfactory and higher the score higher comfort the lender gets and better terms the borrower can ask for from the lender.

Tenure opted

Since the repayment of a personal loan has to be made by way of an equated monthly instalment (EMI) which is generally fixed for the entire tenure of the loan, one can get higher personal loan eligibility, with longer tenure, as the amount of EMI one can service gets constrained by your disposable income. The tenure of the personal loan is also restrained by your age at the end of the tenure you wish to opt.

As  personal loans carry high rate of interest and as the lenders charge prepayment charges in case you prepay the personal loan fully before the original tenure, one has optimise the tenure taking into account various factors.  A longer tenure is not necessarily good for each borrower.

Co-borrowers

For home loans the lenders allow your children, parents and spouse to be co borrowers to enhance your overall eligibility in terms of higher home loan amount but for personal loans the lenders, generally, do not allow any other person to join as co-borrower. So the eligibility for personal loan is fully ascertained on the basis of your own income and you have no scope to enhance it by adding anyone else.

However if the personal loan to be taken is in the nature of marriage loan, the bride and groom are allowed to make a joint application for such loan.  So in case of marriage loan making  your future life partner as co borrower can help you get higher amount of personal loan if the other person is also earning.

Personal Loan Tips

Now a days with easy availability of personal loans from banks as well as from Non Banking Financial Companies (NBFC) people face a problem of plenty and find difficulty in choosing the right lender to minimise the cost and optimise the benefits. Here are some tips to do that.

1. First and most important tip is to check your credit score on any of the credit information bureau like CIBIL before you apply for any loan. Your credit score is the starting point for the lender to help to decide whether you can safely service the personal loan being applied for. Generally a CIBIL credit score of 750 and more is acceptable to the lenders as most of the loans have been given to person with this minimum qualifying credit score. So unless you have the minimum qualifying credit score, it does not make sense for you apply for personal loan as the application is most likely be rejected.

2. After you have checked your credit score and before you apply for personal loan, you should do a thorough research about the various personal loans available in the market. There are various websites like https://www.roongtasecurities.com where you can get details of various providers of personal loans. While doing this research you need to ascertain who is providing the personal loan for the tenure for which you want as the maximum tenure of personal loan varies amongst various lenders. You also need to understand the processing charges levied by various lenders for processing your loan application. You should also do a thorough research on the various terms and conditions attached with prepayment charges because this is the major cost after the interest cost.

3. As personal loans carry very high interest rates, you should properly work out your personal loan requirement.. The requirement of personal loan should be arrived at with detailed working rather than with just guess work. A good estimate of requirement of personal loan should neither be on higher side nor on lower side. This exercise will help you minimise the cost of the interest which you pay on personal loan as well as help you avoid payment of prepayment charges which are levied in case you prepay your personal loan before its tenure. Some of the lenders allow you to prepay your personal loan only after you have paid certain instalments. There are other lenders who let you part prepay your personal loan every year upto certain percentage of the amount outstanding. So in case you are not sure of the tenure within which you would be able to pay the loan, it would be good idea to select lenders who offer you such flexibility in prepayment of the loan.

4. Generally lenders do not allow you to have two personal loans at the same time. So in case you are already servicing a personal loan, the probability of your getting another is low. So ensure that there is a gap of at least six month between two application for personal loans.

5. The eligibility for personal loan is dependent on your ability to pay the certain every month. So in case you are not able to get the personal loan within the tenure initially opted by you and since the lenders do not allow any joint borrower except in case of wedding loan, the only option available to you to enhance your eligibility is to opt for the longer tenure of personal loan.

6. Since your loan amount eligibility is also dependent on the amount of any existing liability being serviced, it is advisable to pay up all your credit card outstanding in case you have opted for carry forward of the credit card outstanding due as allowed by the credit card issuer.

7. Deciding about the tenure of personal loan is the most difficult part of the entire process because in case you opt for the longer tenure you end up paying either interest for the longer period for extended period else you will have to bear the prepayment penalty. In case you opt for shorter tenure resulting in higher Equated Monthly Instalment (EMI) it may cause stress on your cash resources. This may some times may affect your credit score and credit history as well. So do a thorough calculations and deliberations on the amount which you can comfortably service month after month.

8. As the banks generally charge processing fee for processing your loan application, which adds to your cost, you will be able to reduce this cost if you have good credit score as well as have existing relationship with the lender. The processing fee is negotiable and can even be waived fully if you have strong credential and negotiating skills.

9. It is preferably to avail the credit facility from your existing bank as it reduces the processing time of the application. Check from your existing banker whether they have any personal loan product for you and also check whether you are a preferred customer of the bank.

10. Since interest is the most important cost component of the personal loan, it is very important for you to understand the interest rate mechanism. Whether it is fixed rate or floating rate. It is important to understand how the interest is charged on personal loan being offerred. In case of flat rate the interest is charged on the entire amount of loan throughout the tenure of the loan without giving credit for the EMIs paid. You should opt for the loan where the interest is charged is on reducing balance of the loan instead of the original amount of the loan.

11. While filling up the application form, it is very important that you fill up all the details correctly. Be honest with whatever details you submit to the lender. Do not fabricate any documents or details. This may cost you dearly, sometimes in jail, in case the misinformation happens to be material one. Please fill up the entire form yourself instead of signing on the dotted lines.

12. This the most important tip. As it happen in marketing. Do not rely on the promises verbally made to you by the representative. Insist for written confirmation for all the benefits or concessions offered by you.

13. Work out your overall cost taking into account the rate of interest as well as the processing charges which you may have to pay before you zero in on any particular lender.

14. Last but not the least. Always read the application form thoroughly. If the fine prints are not fully legible use a magnifying glass if need be. In case you do not understand the fine print, take help of person who can help you understand the same.