Banks Give Loans for Your Dream House

Today fulfilling a dream of owning a house is not difficult. In India there are many banks and house financing companies that are willing to come to your doorstep to give you a loan. Even if you apply online for home loans you will find your mailbox full of mail from different banks and house financing companies. All of them will claim to offer the cheapest rates along with other benefits on home loans.

Banks and financial companies offering home loans, although have their own terms and conditions, the interest rate they charge is more close to each other is more or less similar in number. Banks and housing finance companies ask for property papers for security reasons. In banking terminology it is called Collateral Securities. There are some banks and financial institutions who ask for deposit of lump sum amount for the first time, commonly known as the down payment.

In case of property papers as security banks or Housing Finance Companies scrutinize the papers and find out their real market value, their intrinsic value. After thoroughly checking property papers if they find them right and fair in nature they considered them as Collateral Securities.

Home loans can be taken for a number of purposes like for building a new house, renovation of existing house, for expansion of existing house, etc. Banks have fixed certain parameters for issuing home loan which should be taken care of while applying for home loan.

You can fill the form for a loan and submit it physically or you can also apply online. If you apply online then you will be asked to give some personal details like security number and driving license number. You might be asked to furnish your previous credit history also. The banks and companies giving loan make sure that you have an ability to pay back the loan on time. For this they ask for your income statement.

Usually there are two types of home loan floating and fixed. In floating rate, interest changes with time i.e. the interest is impacted by various other factors like inflation, RBI increasing repo rates and CRR. In fixed, the rate of interest will remain same throughout which was finalized at the time of signing up for loan. In fixed you might pay an extra amount. In case you want to pay a fixed-rate loan off early, you may have to pay extra for breaking the fixed-rate agreement.

Before signing on the dotted lines read the documents and the agreement carefully and make sure you are aware of all various terms, interest rates and installment dates. Take care of hidden charges also.

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Housing Finance - A Revolution in the Market

The housing finance in India is growing at a fast pace. The home loans or housing finance is a huge industry in itself. A lot many people are trusting home loans in India to purchase property. This is the best and affordable way of realizing your dream of buying your own home. These finance options are open for all salaried individuals, self-employed individuals, partnerships, and even NRIs. The home loan can be availed for various purposes like loan for building a house, purchasing a piece of land, buying an existing house or apartment, and renovating a house.

The home loan can be availed for all kinds of properties like residential, commercial, and industrial. The loans for industrial and commercial property are of huge size and are normally taken by organizations. People also take home loan for the purpose of investment in property rather than for their own use. These properties are later on sold in the market at good profit.

Apart from a normal housing loan from Housing Finance Ltd one can also get home equity loan, a unique concept wherein the borrower can mortgage his existing property to avail loan that can be used for any kind of purpose as desired by the buyer. Generally, people avail home equity loan facility for the purpose of marriage, education, or to meet medical expenses. The maximum loan amount that banks normally offer is about 60% to 65% of the market value of the property. The home equity loan is generally provided on difference amount of the actual market value of the property and the amount the customer already owes to the bank. At one time this concept of borrowing was not much known but today it has become quite popular as the funds can be put in use as per the wish of the customer.

The housing finance companies follow a very strict process while providing loans to the customers. The loans are disbursed in line with the credit policies of the bank and financial institution. As part of their process, banks verify the credit history of the borrower to ensure safety of the funds. It is important to check whether the customer is a defaulter with some other financial organization or if he has misused any of the banking products.

The housing finance sector is being promoted in a big way in India. The banks and financial institutions are offering home loans at attractive terms. Even people find it advantageous to purchase property by availing home loan as they get tax benefits and easy repayment options. This is the best way to buy a property especially if you belong to service class. 

The banks and housing finance companies are also being professionally managed. They are always ready to assist the customers regarding queries related to the prevailing rate on interest, the various tenures available for repayment, conditions or the eligibility criteria for various categories of customers, the documentation required etc. It will not be wrong to say that housing finance in India has caused a revolution in the market and has motivated purchase of properties.

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Balance Transfer and Housing Finance

The Indian immovable property has come of ages. Consumer is the King now and gone are the days of monopolistic behavior. And definitely, if you are the one with sound financial background and impeccable credit record you can strike a better deal with the banks in terms of interest rates and other payment conditions and purchase your dream property without any hassle.

Interestingly, the same criteria are equally applicable on those, as well, who have already availed a loan from a bank. Near about all the major public and private sector banks in the Indian banking system are now offering the option of 'Balance Transfer' on housing finance. Often, banks in the housing finance sector tend to increase the interest rates when the benchmark interest rates increase. But, such alacrity is not shown by them in decreasing rates whether the Repo rate comes down or not. In such circumstances, balance transfer help the customer a lot. He can replace the higher rate loan and avail a lower rate one by paying some extra charges. These charges are lower compared to the total payable interest.

What is Balance Transfer and how is it relevant in the housing finance?

There are times you find that the interest rate on your home loan is at a higher level. Take an example. Suppose you were paying at the rate of 10.5 per cent per annum. This rate is quite high in comparison of 9 per cent offered by some other bank. In such cases balance transfer of housing finance comes into rescue. You can trigger off the balance transfer option with your existing bank or lending institution, under which the unpaid portion of your housing finance would get transferred to your desired bank, thereby taking benefit of the difference in the housing loan interest rate.

Things to take care of at the time of balance transfer:

* Tenure of loan amount should be taken care: Ideally, you should consider taking the balance transfer option when the remaining part of your payment period is more than 5-years and in such a case you have the time for speculative gains. There is no profit in transferring the home loan from one bank to another if you end up paying early payment penalty and other processing charges even more than the difference of Housing Finance

 and the amount you had to pay towards interest in the normal condition.

* Early Payment Charges associated with the housing finance scheme: Banks like State Bank of India, IDBI and ICICI offer benefits like exemption of the early payment charges to your existing bank if you transfer the balance. So you must confirm the same with the new lending institution that are they ready to deal with this matter. Otherwise, the deal is not profitable.

* Additional charges involved with the loan amount: You must confirm that the desired amount for your home purchase loan is perfectly at par with the balance you had in your previous bank. It may be the cases that that your new bank pays all early payment penalties and processing charges on your behalf and later add the amount to the principal of your housing loan. So, in such case your total owing remains the same and the transfer is not profitable. In this situation, you have to suffer the impact of debt compounding, which does not favors you in the long run.

Seeking balance transfer as a burden reduction option needs the similar degree of caution and study that you undertake while taking housing finance. Definitely with balance transfer, you can save a considerable amount of interest charges under this option once you strike the right chord!

[Source: http://ezinearticles.com/?Balance-Transfer-and-Housing-Finance&id=1337511]