Why do borrowers transfer a home loan from one bank to another?

transfer a home loan

An expanding number of borrowers are changing their home loans to more financially approved banks. It has been declared that there has been a 20 percent hike in transferring of home loans as revealed by the Economic Times. The switching of home loans means that the old lender pays off the old debts and then starts making EMI payments for the new debts.

Why do borrowers transfer a home loan?

People applying for home loans do often transfer a home loan from a higher interest rate to a lower interest rate to make subsequent savings. Applying a higher rate of interest especially for home loans is not a good option. Thus people tend to change the lender to opt for a lower rate of interest. During the tenure of loans the savings rate increase for the debtor and thus it reduces the financial pressure.

MCLR

It is now proclaimed that all interest rates upon home loans are now completely based on the bank’s marginal cost and not the base rate of the bank. People may start opting for home loans from other non-financial institutes. However, in case, the interest is the socialist one and thus they may vary the interest rate as they don’t follow the concept of MCLR.

MCLR linked home loans 

If your bank is offering a higher rate of interest in home loans you must look for a lower interest rate. In no way, the existing bank is allowed to charge the repayment of the loans. It will be a better option if you choose banks whose interest rates are quite linked with MCLR.

Convert base rate to MCLR

The customers whose loans are solely under the base rate of the bank are further acclaimed to change it to MCLR. The borrowers whose loans are transfixed to the base rate can convert it to the MCLR mode. But customers can continue with the base rate if the loan is near to an end. If the difference between the MCLR and the base rate is high then it’s better for borrowers to convert their loans to MCLR. MCLR is best with banks offering lower interest rates. 

Why transfer

Lenders with their interest in the base rate can transfer their loans to banks with MCLR. It is far easy and helps in automatic transformation. It can be done by a single fee payment and signing some legitimate documents.

Things you should consider 

Timing

The customer should be evaluating the timing of their loans. Within the early tenure of the loan period, it should be done. The biggest thing you should consider before choosing is that it shall offer a lower rate of interest. Repayments get less in cost if the loan is transferred in its earliest period. 

Miscellaneous fees

You should go thoroughly through the processing fee and other charges. By well maintaining the stamp duties and the legal fees it is to be done. These are the fees that cost much more than the actual valuation of the loan amount.

Terms and conditions

Evaluate the terms and conditions well. It is often in the case that while transferring the loan amount the borrowers find it can be processed accordingly. The terms and the conditions are a narrow trap mostly for the customers who think transferring their loans to another bank is quite suitable.

Documentation 

The steps involved are also documentation. Taking proper documents at the right time also helps in re-fixing the loan amount. Improper documentation leads to the misreading of the loan amounts and thus creates a lot of trouble.

How does balance transfer help? 


Lower interest rates 

It’s less risky as a property is provided in the form of mortgages. It helps in availing for lower interest rates which are at all profitable for the lender. It also helps the lender summing up his savings. 

Ensures pre-payment

 The best mode of home loan transfer is that it ensures loan pre-payment and doesn’t block it. A lot of borrowers have this question in mind, does loan pre-payment get blocked. It gets ensured so the answer is no.

No complications

Applying for a home loan from one bank to another bank is quite an effortless job as it seeks no paperwork. Therefore it reduces the tension of documentation and more prominently there’s no confusion in it.

Induces savings

As with the help of the MCLR loans the rate of interest decreases and the tenure to repay also increases. Thus it helps the borrowers to induce their savings quite a bit.

Thus with these banks making advancements in technology home loan transfer is not a difficult job. While opting for a home loan you should consider a lot of things. Most prominently borrowers should go for lower interest rates and MCLR. Like the right paperwork, the right documentation is very much needed.

Why You Should Review Your Home Loan Periodically

Review Your Home Loan Periodically

Home loans can be beneficial at some point in our lives. When you take a home loan, you are saving a few lakhs in your taxes. Home loans come with several benefits but at the same time can be hectic for some people as well. It is important that you review your home loan periodically in order to plan out better. Always remember that taking a home loan is no joke and it is a big step in your financial life.

Here is why you should review your home loan periodically:

1 . Switching lenders

The market is an ever-changing and dynamic place. The interest rates of home loans keep on changing with time. You will certainly come across lenders who are offering better interest rates in the field of home loans. For a better assessment, you should switch over to new lenders who are offering better interest rates. You just have to maintain a decent payment record and a good credit score.

2 . Foreclosure

Foreclosure is nothing but advance payment of your home loan. You might have got a bonus and with that money you are willing to pay the rest of the amount. This can bring down the loan amount drastically. The burden of the loan and the tenure of repayment will decrease. To do this, you just have to provide a written application along with the KYC documents.

3 . Add-on loan

You have taken a considerable amount as a loan but later you realize that the amount was not enough. You can take an additional loan and add up with the initial loan amount. This is also called a top-up loan. You must remember that a top-up loan is a personal loan and not a home loan. The interest rates will be comparatively high in this type of loan.

4 . Avoid more loans

You are dragging a home loan already. The tenure varies from 15 to 20 years depending on the loan amount. This is a burden already. To ensure financial stability, you must not take up more loans. First, repay the entire loan amount of the initial loan and then think of taking another loan for your financial use. Remember that taking more loans at the same time will take you into the debt trap.

5 . Timely repayments

This is a crucial part of a home loan. Always keep in mind that you must pay your EMIs before the last date. Do not wait for the last date to pay your EMIs. This will help you in avoiding the late fines and high-interest charges. You must pay the bills by the due date and this will create a good credit score for yourself. If you have a good credit score, then you can easily take loans in the future for your financial usage. So, it is better to avoid late fines in case of repayments.

What are the possible ways to reduce your Home Loan EMI?

reduce your Home Loan EMI

The equated monthly payment is one of the biggest headaches that any of the customers endure. To make sure that all your debts are paid off as well as there remain sufficient funds to help you throughout the month is a tough job. Many of the lenders, as well as banks, have adopted schemes for the repayment of their home loans. The due EMI dates for engrossing home loans are kept quite close to your salary credit dates. This is done to ensure that there are sufficient funds in your account to repay the EMIs. Thus at all the whole process becomes quite harassing as well as confusing for both the lender and the customer. Thus here we bring about the best of the possible ways to reduce the home loan EMIs.

Compare online rates of other corporates

The first and foremost thing that you should be doing before choosing a home loan EMI. Do your homework in the most appropriate manner and thus it will help you a loot. The reason behind the fact is that comparing online rates as well as searching for the lowest of the EMIs will be beneficial. This all will help you to understand the other sources as well as provide you with the best rates.  This will surely be the most strategically way of reducing home loan EMIs.    

Opt for longer repayment tenure on your loan

This is another of the most beneficial points to remember while opting for home loan EMIs. Try and keep the period of your home loan EMI as long as possible. This, in turn, will churn your savings as well as maintain the interest rate quite lower. Another fact is that the higher will be the tenure of your home loan the more will be it easy for you. Facts to remember about this is that a better tenure will give you a better cost induction. This also will churn your bank balance and will make the path easy for you to repay back.

Make big down payments

This is the most formulated and the most progressive way of reducing the home loan EMI. The reason behind the fact is that the more will be your down payment the less will be your EMI. Picking out certain points is that try to reduce as much as possible at the first move. The bigger will be your down payment the best will it be for you. Ascertaining things is that if you are able to cut off your expenditure to a legitimate level of pay a big down payment this would certainly make things smoother. Making a huge down payment may induce some efforts yet will ease out things later.

Refinance your loan

To this stands another of the facts for existing customers. Any existing customers can refinance their loans with other lenders if seen better options. The reason for this fact is that any other lender or any other retailer might provide beneficial options. Likewise, other lenders may provide lower rates of interest as well as a longer tenure to repay back the home loan. The EMIs may remain for a short period of time as well as will certainly help the customers in inducing savings. Thus this remains another of the most strategically way of reducing home loan EMIs.

Ensure all EMIs gets paid without penalties

This forms another of the basic point of reducing the cost of EMIs. The reason for this fact is that if your EMIs are given time to time it won’t induce penalties. Try and keep your EMIs short as well as maintain them properly. This is something which will surely reduce the rate of your EMI as well as will won’t induce unwanted prices.

Negotiate with the existing lender 

Last but not least try and negotiate terms with your lender. The fact to it is that negotiating terms with your lender as well as making the terms and conditions flexible will help you a lot. The fact to it is that changing lender is quite a big problem. Thus try and refinance the terms and conditions with your existing lender. Try to make him reduce the interest in EMIs as well as ask him for a longer tenure.  This all will be quite helpful to reduce your home loan EMIs.

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First-time home buyers guide

First-time home buyers guide

Buying a house in the proper location and in the proper place is really quite a hectic job. To depend on the work of the lender is another of the most frustrating things that you may need to undergo. Many a time you witness that instead of paying higher debts you don’t meet to your satisfaction. Thus to try and keep things legitimize there are certain beneficial steps which can help you a lot. Instead of completely depending on a lender on choosing the perfect house for you analyses it yourself. Thus following below are some certain steps that will provide a perfect guide for first-time home buyers?

Pick up a proper mortgage 

This is the best of the things that you should surely think about before buying a house. The reason for this fact is that as you will be on an ongoing EMI there should be a proper mortgage for it. Pick up a certain mortgage and thus it will surely help you in ensuring a goodnight’s sleep. The reason for this fact is that a proper mortgage can help you to outstand your loan even if you are somehow not able to pay it.

Don’t go for bigger EMIs

This is another point that you should certainly be keeping in mind. The fact to it is that you should never be going for bigger and higher EMIs as you are a first-time buyer. Try and optimize your EMIs up to a certain level and this will keep things straight. More to the fact is that invest and utilize your remaining money so that you don’t have problems facing EMIs. Try and cut shot the overall of your expenditures and this at all will help in flexing your EMI options.

 Optimize your budget before buying a house

This is the first and foremost thing that you ought to do. The reason for this fact is that while going for higher and better investments you should clearly optimize your budget. This is certainly something which at all will makes things flexible for you and won’t cost you contemplation. Try and optimize your budget at your level best and then risk investments. As you are a first time home buyer you should clearly optimize your budget and keep it up to a certain level. This is surely something that will help you figure out when to invest and where to invest.   

Choose the perfect location with your guide

This is another of the fact that you should be Cleary taking into view while choosing your house. The perfect location will bring the perfect price. The reason for this fact is that try and optimize your first time home buyers in the best place possible. The main factor behind this is that a perfect location will define your house in the most exquisite ways possible. Another point towards the fact is that when you would be reselling your house you will get the best of the prices. This would be just because of the location.

Thus here were the most exquisite steps for first-time home buyers. Try and optimize them in the best of the ways possible. 

Pros and Cons of Taking a Joint Home Loan

Taking a Joint Home Loan

Joint Home Loans are the best item among the Home Loan items accessible in the market. On off the chance that both the partner is working on the loan. Moreover, it makes it very reasonable to take a home advance mutually and contribute together to the EMIs. Joint home credits are in incredible interest nowadays because of the few advantages related to it. Furthermore, almost all the banks maintain on Joint Home Loan even if the possessions have a single proprietor.

PROS of Taking a Joint Home Loan

Bigger home loan amount

Contrasted with the advance sum that affirmed to a solitary individual. The credit sum endorsed for a joint home advance is constantly more prominent. This is because adding a co-borrower to a home advance builds your qualification and subsequently. Moreover, you become qualified for a higher advance as a couple. This can benefit eligibility for home loans.

Tax benefits of joint home loans

We as a whole realize that specific tax breaks can benefit from a home advance. These tax breaks are accessible under area 80C for the key reimbursement and under segment 24 on the intrigue paid. Moreover, it helps to reduce the interest rate of the home in the long term. Most banks, as a rule, acknowledge women as co-candidates just if either the woman is the proprietor. The proprietor of the property in question or her salary has considered over while evaluating the credit qualification and reimbursement limit. 

Rebate on interest rate in joint home loans

The majority of the banks offer a discount on the financing cost for female home advance borrowers. Along these lines, to profit this advantage you can pick your significant other to be the essential candidate and designate you like the optional candidate. Doing this can give you the home advance on a lower loan fee when contrasted with others. 

Payment flexibility

It is important to have flexibility in joint home loan payment the applicant does not have an equal contribution towards repayment. Banks will consider obligation to-salary proportion as a sum of all co-underwriters’ money related standing. Fundamentally, rather than at least two individual assessments, they will include every one of your salaries and obligations. Moreover, it thinks about it as one substance. This is helpful in case you want to score better rates, higher odds of endorsement, or conceal for a financial assessment.

Cons of Taking a Joint Home loans

A lower credit score

In the event that when the borrowers cannot pay the EMI of the home advance. Overall, the FICO rating of both the candidates will fall and thus future acquiring will be hard for them. In case both the partners separated and divorce filled, proprietorship over the material goods becomes the reason to fight. Moreover, the credit of the interest is much lower in the market of the loans. 

The joint home loan is not for everyone

Overall, not every person can be a co-endorser in a joint home credit. In America, beyond what two individuals can pursue a joint home credit, yet there are conditions. They should be either your partner, kin, or life partner, and matured somewhere. In the range of 18 and 50 years of age. All co-endorsers will likewise be available during all credit-related strategies.

In the joint home loan, you will have joint property

Everybody needs to develop a winner in the event that grasping the hazard with your rights. Things being what they are, the individuals who sign the advance with you will likewise claim the property with you. This implies they legitimately get a state when you need to lease, sell, or do anything with the property. Moreover, you cannot simply bulldoze ahead when they would prefer not to do what you state.

Your credit can be affected

Joint home loan reimbursements do not make the qualification between who pays the portions, as long as the portions being paid. Overall, if any of your co-endorsers neglect to reimburse a lot of the regularly scheduled payment, the onus is on you to reimburse the necessary month-to-month whole at any rate. Moreover, the hazard having your FICO rating demolished by the carelessness of the other party. As far, the bank is concerned, both of you neglected to pay adequately and potentially on schedule. 

Taking a joint home loan advance may appear to be a simple pass to a progressively important bit of property. However, make sure to consider the other side of the coin too before bouncing in. 

Is it worth taking a home loan for tax benefits?

home loan for tax benefits

Taking a home loan can be beneficial for you in many ways. The government has always encouraged its citizens to take up home loans. Guess what taking home loans can yield tax benefits and help you buy your dream house at the same time. Under section 80C, taking home loans can help you fetch multiple tax benefits and reduce your tax outgo. But the question is is it worth taking a home loan for tax benefits?

There are several government schemes which can help you fetch home loans to buy your dream house. In addition, a home loan can have multiple benefits, and the major benefits are discussed below:

1. Deductions of interest paid

People take home loans for the construction of a house. The construction of the house should complete within 5 years from the end of the financial year in which you took the loan. You can claim the interest for the EMIs paid for deduction from your total income to a maximum of 2 lakh rupees under Section 24. You can claim this deduction from the year in which you complete the construction of the house.

2. Deductions on principal repayment

Under Section 80C, the principal amount paid in the EMI for the year is eligible as a deduction. In this case, you can claim the maximum amount of deduction up to 1.50 lakh rupees. There is a condition for this claim. Your house cannot be sold within 5 years of possession. If you did this, then the dedication claimed will add back to your income in the year of sale.

3. Deductions for stamp duty and registration charges

Apart from claiming the deductions of interest paid and deduction on principal repayments, there is another benefit of taking home loans. You can claim a deduction of registration charges and stamp duty fees under Section 80C. In addition, you can claim up to a maximum amount of 1.50 lakh rupees. In other words, you can claim it only in the year in which you incur all your expenses.

4. Claim additional deductions in case of home loan

You can also avail of additional deductions under Section 80EE and the maximum deductions allowed is up to 50,000 rupees. There are certain conditions to claim this deduction. The home loan amount has to be 35 lakh rupees and the value of your property should not exceed 50 lakh rupees. On the date of sanction of loan, individuals should not own any other house or property. In addition, Section 80EE has been reintroduced effective from FY 2016-17

5. Deduction for Joint Home Loan

If you have taken up a joint home loan, then you are eligible to claim a deduction of home loan interest up to a maximum of 2 lakh rupees and principal repayment up to 1.5 lakh rupees each in their tax returns under Section 80C. To qualify for this claim of deduction, there should be co-owners of the property taken on loan.

Home loans can be effective in fetching you a lumpsum deduction in interests and this can cut down your costs in the long run as well as you can plan things accordingly.

Hope this will help you to understand is it worth taking a home loan for tax benefits? For such more things follow Kreditdeals.

Best Banks to Apply for a Home Loan

Choosing for the best deal in home loans is critically important. It is not only capable of helping you buy a home but it is quite a lot of money in any loan you may go for in the future. As the loan is too big, you might find difficulties in finding the approval along with the suitable interest rates. In your locals, you might find a number of banks and lenders who offer bank loans. However, with online lenders, you can experience a plethora of good deals. 

Here, we are going to look at the best banks to apply for a home loan. For this, we have considered many things including processing fees, interest rates, preclosure charges, legal fees, etc.

ICICI home loans

You will definitely go for a deal where approvals are speedy, documentation is simple and the interest rate which is competitive. 

The bank offers loans such as house construction, purchase, and home renovation. Moreover, you are able to get not only a floating but also a fixed rate for those properties that are up to Rs. 5 Crores with a maximum loan tenure of 30 years. 

They charge interest as per the monthly reduction in balance. That means they calculate the principal at the end of each month on which they charge the interest. 

State Bank of India home loans

Do you wish for a loan where you are free from any legal issues with your property papers? SBI home loans assure you hassle-free services here. The bank is capable of offering house construction, house purchase as well as home renovation loans. Moreover, they offer top-up home loans.

Moreover, SBI offers SBI Maxgain loan (also known as overdraft loan) and floating-rate loans. If you compare it to other lenders, interest rates are lower. 

Charging of the interest rate is as per the daily reduction of the balance. The recalculation is done on a daily day end. In case if you have made a part-payment, the reduction of the interest outgo will begin the next day. 

HDFC Bank Home Loan

Well, the HDFC bank verifies the property documents quite strictly. The bank is capable of offering doorstep services. The documentation and submission process is also quite simple and easy. With the competitive interest rates, this bank is one of the highly recommended banks from which you can buy a home loan. They are able to offer loans for house construction, house purchase as well as home improvement, and extension. 

Axis bank home loan

It is capable of offering loans for the purpose of construction, top-up as well as purchase for an amount even smaller as Rs. 3 Lacs. moreover, the interest rates are quite competitive to go for. However, the processing fee is fixed for each various loan amounts.

Dewan Housing Finance Ltd.

The bank is capable of offering construction, house purchase as well as renovation loans. However, it does not offer top-up loans. One of the best things is the least time for disbursement without any hassles. You won’t be struggling with the verification process as it is quite smooth. It is capable of offering home loans with floating rates. The calculation of the interest is on the basis of monthly-reduction.

Indiabulls Home Finance

This is capable of offering home loans for house construction, home renovation, home purchase, and home extension. 

However, the processing fees being higher, you won’t be expecting any additional charges like a valuation or legal charges. 

The calculation is on the basis of a monthly reduction in balance. The bank is capable of offering both floating and fixed rates where the rate is fixed in the first two years. 

If you have not proper documentation or have not the clarity of the inheritance, we prefer you go for Indiabulls Home Finance.

LIC Housing Finance Home Loan

It is able to offer loans for house construction, house purchase, renovation as well as the extension of the home. Moreover, there are some conditions where you can also apply for top-up loans as well. Here. the interest rates are as per the basis of monthly reduction. 

PNB Housing Finance

Well, PNB Housing Finance is able to offer a plethora of products when it comes to home loans. PNB offers loans for a home extension, purchase, construction as well as renovation. However, you won’t be getting a top-up loan from here.

Bank of Baroda Home Loan

This bank is capable of offering home loans at an interest rate which is very competitive. You can get loans for purchasing, renovating, or constructing a house. Moreover, you can get approval even before you have finalized the property. 

Hence, these are some of the best banks to apply for a home loan. In addition, you won’t be getting approval issues if you have clear documents.