Contact bank before applying for property

Home loan provides very convenient option to have a home of your own. Burt there are a lot of things that needs to be taken care of. If a customer neglects even one aspect or condition he might find himself by a lot of complications.

One our of those things that a customer need to take care of is that he must collect all the possible details about the property and before applying for the property he must contact the bank for the loan as afterwards a customer might find it difficult to get a home loan. In that case the borrower is forced to settle for high interest rates.

There are certain criteria’s that a bank uses to decide the borrowing capacity of a customer. A customer must also be aware of his borrowing capacity.

The executive director and chief financial officer of IDBI Bank R K Bansal said "The criteria for deciding the home loan are primarily the cash flow and expenses of the borrower.”

Generally the banks assumes that a customer needs around 45-50 percent of his monthly income to meet his personal expenses and takes consider 40 percent of the monthly income that a customer can pay as EMI’s for the loans that he has taken.

Home improvement loans for low income group

MicroBulid India Fund, an initiative led by Habitat for Humanity International and Habitat for Humanity India that aims to support more than 6,000 low income families by providing home loans so that they can improve their homes.

For the purpose Habitat for Humanity International and Habitat for Humanity India has entered in to an agreement with ASK group. In order to reach the masses efficiently the fund will invest in reputable, local microfinance institutions which, in turn, will allow them to offer affordable home improvement loans to low-income families.

A person who is a client of the partner microfinance institution and has maintained a good track record will be eligible to get the loan. The loan amount is expected to stay around Rs. 45,000.

“We know that many low-income families in India face obstacles when trying to secure loans to improve or repair their homes, thanks to support from ASK Group, we are able to unveil the MicroBuild India Fund to give more people access to the financial support they need. This move takes us one step closer to our goal of eliminating substandard housing,” said Rick Hathaway, vice president of Habitat for Humanity International’s Asia-Pacific office.

The ASK Group is delighted to be able to help Habitat for Humanity put the MicroBuild India Fund into operation. It is an innovative program that fills a gap in the microfinance marketplace that desperately needed to be filled. Thousands of people in the future will benefit from the investment Habitat for Humanity is making now,” said the Founder and Chairman of ASK Group Asit Koticha.

Lending rates expected to stand still for a while

Borrowers are going through a very difficult phase due to the soaring interest rates. During the Fiscal year-11 the banks raised their lending rates by 150-200 basis points. During the same time Central Bank raised the rates seven times, it inspired the banks to raise their lending rates too.

This might bring a lot of relief to the borrowers as for this year many experts believes that there are very scanty chances of banks hiking the lending rates during the first half of the new financial year.

Head of financial research team in Macquarie Securities Mr. Suresh Ganapathy said “I don’t think the lending rates will see a hike for the next six months. Post-September possibly, a 50 basis point hike can be expected.”

Due to the regular hike in the interest rates the home loans segment is experiencing a dip, any further hike can retard the growth in the home loan sector to a great extent.

Dhanlaxmi Bank hikes Base Rate

Leading private sector lender, Dhanlaxmi Bank has hiked its Base Rate. The bank has hiked the Base Rate by 50 basis points or 0.50 percent to 8.75 percent.

Base Rate is the rate of interest below which no bank can lend. So the hike will make will make all the new loans dearer by 50 basis points. The BPLR( Benchmark Prime Lending Rate ) offered by the bank is 17.25 percent, and the it has kept that stable.

After the third quarterly review, RBI hiked key lending rates by 25 basis points reacting to the situation; banks have been raising their interest rates.

The revised rates are effective from today itself.