Thursday, March 27, 2014

Mortgage Loan and Loan against Property- The difference



The most basic question that people in India are always confused about is the difference between Mortgage Loan and loan against Property. Are they the same, or does there is any difference between the two?

The answer is yes. There is a slight difference between Mortgage Loan and loan against Property. Mortgage Loan refers to a giving a security land or home as a deposit to the loan provider, who in turns adds some interest to it, and when you pay back that amount plus interest, your collateral legal documents is given back to you. 


The same procedure goes with Loan against Property, but in this case you can lend any type of property such as residential, commercial or agricultural land for getting cash in exchange. Most of the time, it is seen that the cash you get in exchange of Property is only 70-75% of actual value of the collateral. This surely increases the overhead on the customer to pay loan, since the deal is costlier to loan takers. 

The difference is, Mortgage Loan is only availed in case of purchasing homes. It can be used as an alternative to home loans. A down payment can be done using the mortgage, and remaining amount can be thought of as a Home Loan. On the contrary, Loan against Property can be availed for any purpose, not necessarily taking home. It can be used as secured loans with low interest rates for any personal requirements.

Hence, always make a note of how much property value cash you are getting in exchange of Mortgage Loan or Loan against Property in India.

Tuesday, March 11, 2014

Why people think Personal Loan is a good idea?





Every time you think you are in a urgent need of loan, and find no around to lend you that sum, the first thing that comes to your mind is Personal Loans. There are many uses of Personal Loans for which you can refer uses of Personal Loans.

The most basic idea behind having a Personal loan is that it is approved in no more time, since it is an unsecured form of loan. It does not require any verification or authentication in form of mortgage papers or any other collateral. Obviously, the interest rates associated are more than normal collateral mortgage loan, and it is given for smaller amounts up to 5-8 lakhs at once.
 
The second factor is that Personal loans have lesser interest rates than credit cards loan and repayments, hence for paying your credit card bills, you can get an instant approved Personal loan or else you end up paying higher interest rates than the bills. Due to such a high competition between the loan providers, customers get the benefit of some special deals such as some part of interest is cash backed, fixed interest rates for the whole tenure and others.

The short term funding can be fulfilled by this and you get lot of flexibility in terms of how you want to spend this loan like holidays planning, medical treatments, home renovation or any unexpected emergency and other needs. As long as you are sure about repaying its EMI’s, there is as such no problem associated with taking a Personal Loan.  

Saturday, March 1, 2014

5 Uses of Personal Loans



The most easily available loan now days are the Personal Loans. Almost every bank funds extensively for these loans since the loan amount is not so much high and generally vary between 1 to 15 lakhs, and interest rates are higher between 14 to 18%. 

The tenure for which Personal Loan is provided is also short, a maximum of 3-4 years and hence this is the product that is rendered a speedy express approval like in 4-5 days, it is approved. It is said as the unsecured collateral type of loan, since no guarantor is required for taking Personal Loans. 


The several uses of Personal Loans are:

  1.  Debt Clear: Most of the people take Personal Loans to instantly pay off any debts instantly. Due to other expenses, sometimes your temporarily debts you are not able to pay off so it is better to take a Personal Loan, and clear your other dues, such as credit card bills. Credit cards have higher interest rates than Personal Loan.
  2.  For Education purposes:Sometimes, if you are pursuing a private course, you are not eligible for an Education loan due to many constraints of percentages, college fees and others. So, in such cases, Personal Loans are a rescue for buying costly study material. 
  3. Medical Expenses: Treat your loved ones without thinking of expenses. Personal Loan are instantly approved for emergency medical treatments like surgery etc.
  4. Purchasing old vehicles: Car Loans or vehicle loans are not financed for buying an old vehicle, so you can have a Personal Loan for this.
  5. Holiday Planning: You work hard enough but not get so much to save and plan a holiday trip. So, take a Personal Loan and go for a holiday with your family and enjoy for some time.
Personal Loans are not early planned loans, and can be needed instantly, and therefore provided in express time limits. There are various public and private personal loan providers for this scheme.

Friday, February 21, 2014

Understanding Home Loans Balance Transfer in India



Does your Home loan providing bank or lender is charging you more interest rates than what others are offering? Opt for shifting your home loan to another lender by taking advantage of lower interest rates on home loans from other lenders. 

Do a thorough market research of new home loan transfer options. Interest rates usually differ after a fixed amount of loan amount such as 25-30 lakhs. But there are various points you should remember while transferring your housing loan to other banks or lenders.


  • Tenure Reduction: tenure refers to the time loan for which loan has been approved. Keep in mind, after shifting your Home loan to another lender, your existing home loan tenure should be decreased, so that you can pay off loans faster. Let the EMI’s be same.
  • EMI Reduction: If you are not opting for tenure reduction, you should go for EMI reduction. In this, your monthly or quarterly EMI amount should be lower than what you were paying earlier. 
  • Prepayment Charges: Since there are two types of interest rates applicable, fixed and floating. Floating interest rates home loans can be easily transferred to another lender without any prepayment charges. It cannot be true in case of fixed interest rates. A prepayment fee. A substantial amount of pre payment charges in shifting a loan may cost you even more than previous one.
  • Conversion Fee: Conversion fee is charged by your present bank or lender for converting your home loan interest rates to some lower one. It’s usually same as pre-payment charges. If you find it suitable, stick to the same lender with reduced interest rates on home loans.

Always, take in consideration, all costs and benefits while transferring your Home Loan to some other lenders. There are various private lenders who offers low interest rates on home loans than banks, and they are even more than trustworthy too. There are many such private companies such as Deals of Loan, which offers as low as 10.25% on home loans.

Thursday, February 13, 2014

Beware of "cheap" Personal Loans offers from Banks



          The next time your bank calls you and asks you for offering cheap Personal Loans, give it a second thought. The banks now-a-days have researched various things about you from your Personal account details and hence offer you loans that they say as "cheap". Pay strict attention to the details of the pre-processing and the pre-payment charges that are included for verification, stamp duty charges for legal agreements and other things.
          Generally, while offering you cheap Personal Loans, interest rates offered by banks may be less than available in market, but that is been compensate when you close the lead by not paying attention to pre-processing fees they would take. Banks do not slash their rates, they just increase the processing fee and pre-payment charges in exchange of giving cheap rates for Mortgage Loans.
           Generally banks in India offers Personal Loans at an interest rates of 12.99% up to 25% and often offers discounts on interest rates, but the catch is the same scheme is not available to all the borrowers and can be withdraw anytime without prior notice. Banks also want to increase their share of retail loans, hence they offer such schemes.
        The borrowers have to keep in mind that Personal Loans interest rates are fixed for the time period you have taken loan, and any changes to the RBI rules for interest rates does not affect and  change borrowers interest rates that he has filed for.
           Hence, you should always read all the documents clearly, analyze the difference in interest rates such as what are normal interest rates and what are being offered after discounted prices, understand the processing fee charges and see how much they are taking. You should always consult a Personal Loan consultant before getting such types of Loans.
            When things are crystal clear, you will not be any problem and won’t end up paying Personal Loans higher than what you expected.