Friday, May 27, 2011

To counterbalance hike in lending rates

The soaring lending rates has been keeping the borrowers really busy, since last two years the lending rates have gone up by 200 basis points, the figures themselves describes the pain that the borrowers have gone through.

Due to the fluctuation in the lending rates the borrower now has to make continuous moves to counterbalance the effect of the hike in the lending rates, the borrowers that have opted for floating interest rates are the one that have been the worst hit. The same has created an urgency to manage the home loan according to the market situation so that the loan never has an upper hand on the borrower.

The best option to minimize the effect of hike is prepayment; not full but partial. A .person can also go for full prepayment if any other lender is ready to lend at considerably lower rates or if the borrower is not satisfied with the loan scheme or the lender, but that is another case.

The best thing about partial prepayment is that is does not attract any penalty, the amount prepaid is deducted from the principal amount that results in substantial decrease in the amount on which the interest is to be charged.

As a person necessarily can not have multiple sources of income from where he can arrange funds to prepay his loan, so he can leverage the benefits of Fixed Deposits and Recurring Deposits, through which he can earn interest rates that can be very helpful for a borrower to prepay a loan.

If a person does not have ample savings to prepay then he can ask his lender to increase the loan tenure, most of the times the lenders readily do that, as for the lender the long the loan tenure the more it will earn from the funds that it has lent to the borrower; but again there is no certainty about it as this option is only for the borrower that are not nearing the retirement age.

Another way by which one can manage his Loan is through step-up loan scheme. if a person in initial stage of his career or if is expecting considerable hike in his income in near future then he can opt for this facility. Borrower has to pay less EMIs in the beginning and as the fund inflow increases borrower can start paying more.

Wednesday, May 25, 2011

Plan your home loan through home loan calculators

A person can get a whole lot of information while sitting at one place through internet, it has evolved as an information hub over the years and now a person can find even the minutest of the details about any topic. A person who wants to borrow home loan must also make use of the information available on the internet to get what he wants from his loan and to get details about it.

Apart form details about a home loan scheme a customer can even calculate the total amount that the loan will cost him and hence can compare various loan scheme offered by various lenders and can pick the one that he finds the best. This can be done through home loan calculators.

As the total loan amount is dependent on the interest rate charges and the time duration for which the loan has been borrowed so these two factors cats as the driving force in a loan and so a borrower can get an idea of what a loan scheme would cost him under various circumstances.

If a person is planning to borrow a home loan in future then he can use home loan calculators to get an estimate of the amount that the loan will cost him every month, he can then start planning funds accordingly that will ultimately help him when he would actually borrow the loan and during the loan tenure.

There are various web sites where one can find the home loan calculators. To be precise a person can make use of the calculators on different web sites.

Tuesday, May 17, 2011

How to select best deal out of the pile

There are a lot of home loan providers available in the market that might be willing to borrow a home loan to a person. The might even try to lure the customer with their irresistible home dwelling loan schemes but it is up to the borrower that which scheme does he wants to go for, it is solely his call.

A smart customer always knows the importance of his home loan, as the home loans are for a long duration so it becomes very essential to be get every hidden detail about the loan and to be sure that home loan does not create any undesirable an unexpected hurdle in the future. So it becomes very essential fro a borrower to evaluate him as well as the loan scheme before he actually applies for it.

At first a borrower must get his credit details and start working on removing the faults in the list. It s not a small procedure and might take some time so the instant he realizes the need of a home loan in the future he must start working on this aspect right away.

In the meanwhile he can look after the other aspects that also need to be taken care of, like self evaluation. He can try to get an idea of his loan eligibility as in how much he can borrow; according to that he must start his hunt for the property. Such a thing can protect him for inconvenience on the future. In order to maximize the chances of getting his loan approved he can try to pay back all his previous debts and to fulfill all his previous commitments, it will definitely enhance his borrowing capacity.

After all this he must start looking for the lenders that can lend him at the least possible rates, for that he can compare the interest rates offered by various lenders and that is how he can form a pool of probable lenders.

It is also necessary to evaluate the home loan scheme as a whole as sometimes a lender can offer a loan scheme on a lower rate of interest but the extra costs on the scheme might make it far more expensive from the other schemes ,in the long run. There are home loan calculators available on various web sites through which a person can calculate the total amount of the loan that it will cost in by the end.

These are the basic things that a person must take care of before applying for a loan to make sure that he gets the best home loan scheme.

Monday, May 16, 2011

Need to borrow more?

There is abundance of home loan lenders in the market but still a borrower can sometimes find it difficult to find a lender that is willing to finance the required amount because the loan amount that he requires exceeds his loan eligibility.

Lenders follow very stringent procedure while lending loan to the borrower and that includes careful and precise evaluation of the borrower in terms of his financial state, lenders prefers a borrower with good credit history as there is much less involved in lending to such a customer as compared to a defaulter; and since the lending rates have increased the lenders tend to lend to the applicants that they are sure about.

Sometimes even if a borrower has a decent credit history, borrowers won’t lend to such a borrower due top his loan eligibility. The loan eligibility of a borrower is determined by the total inflow of funds and his total commitments. But there are several ways by which a lender can improve his loan eligibility and can borrower loan from the lender his wants to.

The first thing that a borrower can do is to pay all the loans and other commitments as then the amount that he can pay as monthly installment will increase and hence the amount that he can avail as home loan.

The most effective option is to club income with relative. The applicant can club his income with his wife, spouse, mother, and father. The bank will then decide the loan eligibility of the borrowing by clubbing both the incomes. This is the most convenient option that a borrower can go for.

Other option includes increasing the loan tenure, if a person opts for it then the amount of EMI that he needs to pay will decrease and hence the capacity of paying installments will increase resulting in an increase in his loan eligibility.

If a person is in his initial stage of his career and expects increase in the fund inflow in near future than step-up loan is a very suitable option for him. Under this loan scheme, initially the borrower has to pay lower EMIs but the amount of EMIs increases with the time period, it also helps in enhancing the borrowing capacity of a borrower.

Do your homework well

For a first time buyer it can be really very difficult to select the best possible deal amid the home loan products available to him. The demands and requirements for the loan can differ from person to person, that is why a loan scheme that suits one borrower does not implies that it will be worthy for all the other borrowers also and hence home loans must be chosen diligently.

Home loan brokers can be of great help for the first time borrowers as then a borrower can leverage on the knowledge and experience that the broker possesses. The chance that a borrower will fall in the trap of the lenders reduces drastically.

Internet can also be of great help here, before actually looking for a lender, the borrower can start researching on the various websites about the loan schemes of a particular lender. It is also good to get the basic idea about the loan procedure as the lenders follows very stringent loan procedure and any kind of mistake at any point of time even while applying, can cause unnecessary trouble.

To get an estimate of how much would a particular loan scheme will cost, a borrower can use the home loan calculators available on various web sites. They can be very beneficial at times as then a borrower will have a better idea about the feasibility of a loan.

As dwelling loans are very hefty and for a long period of time, so it is becomes very necessary for a borrower to get every thing cleared about the loan scheme form the lender and for that evaluation of the loan scheme is very necessary and besides that it is also important to have a clear cut idea about the requirements as then the borrower can negotiate on concrete grounds and will be able to extract more and more out of the deal.

Tuesday, May 3, 2011

Secured loans, another good option

Due to the drastic hike in the property rates over past few years, it has almost become impossible for a person to own a house from his savings. Home loan is a very good option for such people, but getting a loan is not a very easy task as one might think.

Fro getting a loan, it is very necessary for a person to have a good credit score. Good credit score establishes credit worthiness of a person and lenders prefer to lend to such customers as the risk involved is lesser as compared to a person with bad credit score.

To have reputed employer also helps, as it ensures job security and it is amongst the basic criteria that the lenders tend to check before they sanction the loan. a person with good credit score can even avail add-on benefits on his loan.

If the capital requirement of a person is not very high and he wants to avail loan at comparatively lower interest rate then he can opt for secured loans where he can borrow money from the lender providing his property of value comparable to the loan amount.