Home Loan In Pune

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Home Loan in Pune Trends November 2011

Home Loan In Pune interest rates has touched average of 10.50%. Rbi has hiked its rates for the 13 th time within 2 years on 25 Oct. Many banks like ICICI, HDFC Ltd, LIC Housing Finance have come up with fixed schemes for 1-5 years. Axis Bank has come out a scheme which is fixed for entire 20 years but with rate is above 1% than normal rates. SBI and other PSU banks have not launched such schemes as yet.

We at Home Loan In Pune believe another hike may not happen but Rbi will review in middle of the December. With news of slowdown etc RBI is expected not to do two many raises after this. So this may be the peak of Home Loan In Pune rates After this situation may ease and interest rates may fall. So if you are thinking to take Home Loan In Pune don't delay as most of the rates will go down and your floating rates will also go down. Moreover you can never time the rates in Home loan market as the loan period is for 20 years.

A good news for customer is that all housing finance companies have been directed by there regulator to stop charging prepayment charges.This will ensure all Housing finance companies like HDFC LTD, LIC, Indiabulls, First Blue Home Finance will have 0% prepayment charges where as Loans from Banks will still have prepayment penalty of 1-3%.This 0% prepayment charge help you to switch your home loan company if they are charging more rates that others

In case you have been planning to buy your dream home for very long and you are unable to do that because of the rising prices everywhere, here is some help for you. You can take a loan that will help you to buy your dream home. All you have to do is to save enough money to make the down payment of your home that is 20% of the home value. The remaining 80% of the home can be taken as a loan from a bank depending upon how much loan you are eligible for. The bank will decide how much loan you are eligible for depending upon your income and various other parameters. This home loan can be repaid to the bank every month as equated monthly installments or more popularly know as EMI over the entire tenure of the loan. A part of this EMI goes towards repaying the principal component of the loan and the other part goes towards paying the interest. The EMI is calculated on a reducing balance basis. A reducing balance home loan means that in the initial days of the loan, the interest component of the EMI is high as the loan amount is high. But gradually, when the principal amount starts becoming lesser and lesser as you keep on paying it through EMI, the interest component of the EMI goes down and the principal component increases.

Also, while you are going to take a home you need to decide, the type of interest rate you want to pay to the bank. The banks will offer you with an option of a fixed rate or a floating rate. A fixed interest rate for your home loan means that the interest rate is fixed for the entire tenure of the loan. But these days, most of these fixed interest rates come with a reset clause where the bank has an option to change the interest rate after a fixed period of time generally in a range of 3 to 5 years. There are also a few banks that give you a fixed interest rate for the entire term of the loan.

The other type is the floating interest rate home loan where, the rates will depend on the base rate of the bank. As and when the bank will change their base rate, the interest rate will change for the customers. The change can either be in terms of EMI or tenure. For example, if the bank increases their base rate, the EMI will increase if the customer chooses the option to increase the EMI. Or in case the bank decides to decrease their base rate then the EMI will reduce for the customer. Generally the floating interest rates are cheaper compared to the fixed rates.

Looking at the interest rate scenario, this is quite an appropriate time to buy the home you were always looking to buy. The interest rates are on a rising trend thus in case you can manage to get a home loan right now, you can expect to get a better interest compared to what you will get a few months down the line.

Home Loan Eligibility Calculator

At Home Loan In Pune the amount of home loan you are eligible for depends on factors like your occupation (whether you are salaried/ self-employed), your income, the interest rate charged by the bank and the tenure of the loan. As you will discover, the interest rate on the loan not only influences how much EMI you will pay each month but also influences the loan amount you are eligible for. An interest rate fall can often make that dream home within reach. Also, as you increase your loan tenure, your eligibility increases as well - but there is a limit. Most banks would not do a loan for more than 20 year tenure and also it is imperative that you are no more than 58 years as of the date of last EMI payment. Also, the maximum loan to value ratio is typically maintained by most banks at about 75% to 85% (where the value is the property value + stamp duty + registration).

Types of Home Loan
There are different types of Home Loan In Pune available in the market to cater borrower’s different needs.

• Home Purchase Loan : This is the basic type of a home loan which has the purpose of purchasing a new house.

• Home Improvement Loan : This type of home loan is for the renovation or repair of the home which is already bought

• Home Extension Loan : This type of loan serves the purpose when the borrower wants to extend or expand an existing home, like adding an extra room etc.

• Home Conversion Loan : It is that loan wherein the borrower has already taken a home loan to finance his current home, but now wants to move to another home. The Conversion Home Loan helps the borrower to transfer the existing loan to the new home which requires extra funds, so the new loan pays the previous loan & fulfills the money required for new home.

• Bridge Loan : This type of loan helps finance the new home of the borrower when he wants to sell the existing home, this is normally a short term loan to the borrower & helps during the interim period when he wants to sell the old home & want to buy a new one, It is given till the time a buyer is found for the old home.

• Home Construction Loan : This type of loan taken when the borrower wants to construct a new home.

• Land Purchase Loan : It is that loan which is taken to purchase a land for construction & investment purposes.

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How to Choose the Right Home Loan

Are you hoping to begin a family in the near future? If you know one of you will stop working to begin a family, this will mean your income will be reduced. Don’t be tempted to qualify for a mortgage using both of your current incomes if you know one of them will stop in the near future. This is a recipe for disaster, as you’ll struggle to keep up with your payments if you’ve borrowed more than you can afford on one income.

Will you turn this property into an investment property in the future? Changing your loan structure in the future can get expensive if you make the wrong decision, so make sure you work these things into your current strategy.

Interest Rate

Of course checking out the interest rate is a major part of finding the right home loan. You’ll also need to decide whether you want to go with a variable rate or a fixed rate. However, think about your own goals and plans before you opt for a mortgage based purely on interest rate.

Often the really low variable rates come with application fees, valuation fees, and legal fees to set them up. They may also charge hefty discharge fees, exit fees, deferred establishment fees and other penalty fees for breaking out of them early.

Fixed rate home loans also carry ‘break fees’ if you break out of your home loan before the fixed term has expired. If you know you’re likely to sell your home or refinance it over to another lender in the next couple of years, don’t choose a fixed rate loan. At best, try to only fix in your rate for a shorter term instead.

Some customers may find that an offset account may carry a slightly higher interest rate than a basic variable home loan. This can be enough to put some people off and get them shopping around for the right basic variable loan instead.

However, if you know you’re disciplined enough to make one work in your favour, you’ll find that you end up paying far less interest in the long run by choosing a loan based on its features rather than its rate. Besides, you can always ask the lender if they have a professional package discount available on the amount you’re borrowing to help reduce the interest rate further.

How to Repay Your Home Loan Quickly

It sounds so easy: Apply for a mortgage and then make the repayments every month until it’s paid off. Right?

Unfortunately, if you pay only the bare minimum repayments shown on your mortgage documents each month, it will take you 30 years to repay. By the end of those 30 years, you will have paid almost as much in interest as the original amount you borrowed. 

Yet there are plenty of ways to repay your mortgage far quicker than the 30 years you signed up for on your documents. It’s just a matter of choosing any of a combination of tactics that work for your own financial situation and sticking with it until your mortgage is gone.

Here are some tips to help get you started:

Pay More Than the Minimum Payment

This sounds logical, but it’s surprising how many people don’t do this. Arrange for a direct debit from your regular transaction account for an amount slightly higher than the minimum payment due. Work on rounding up your payment to a nice even number. This will automate the payment and make it easier for you to remember how much your payment is each month.

Direct Debit Payments

Don’t rely on your memory to go into a branch and manually make your payments. You also shouldn’t rely on your memory to electronically transfer your mortgage payments each month. Instead, set up a direct debit repayment option that withdraws your payment from your transaction account automatically, either weekly, fortnightly or monthly.

This will also stop you from being charged any overdue fees or penalty interest rates if you happen to forget to transfer the money yourself by the due date.

Change Your Payment Frequency

Paying your mortgage monthly will mean you make 12 payments in a year. If you change your payments over to fortnightly, you’ll be making the equivalent of 13 monthly payments each year. This happens because there are 26 fortnights in each calendar year.

Just make absolutely sure the amount you make is calculated by dividing your regular monthly payment by 2. Then pay this amount. Don’t fall for the bank’s calculation of dividing your annual payment by 26. This won’t put you any further ahead.

Remember: Monthly payment divided by 2.

If you’re paid weekly, arrange to make your repayments weekly instead. You will still have the same benefit as paying fortnightly, as you’ll still pay the equivalent of 13 monthly payments each year, but it will make your budgeting easier to manage.

Remember: Monthly payment divided by 4.

Lump Sum Payments

If you receive a tax return or a bonus at work, pay a lump sum payment off your mortgage. You’ll be reducing your balance and reducing the amount of interest the bank can charge on your balance.

Switch Loan Products

If you’re not happy with your current mortgage, call your bank and ask about switching to an alternative loan product. You might want to fix your interest rate or switch your loan completely over to a basic variable home loan.

Your bank may charge you a small ‘switch fee’, but if it reduces your interest costs and makes it easier for you to repay your loan, this could be worth the hassle.

Home Loan Final Conclusion

A home loan doesn’t have to be a scary 30 year burden if you don’t want it to be. Spend the time working out which will be the best mortgage for your needs and goals. Work out your budget before you apply and make sure you have a plan in place to begin repaying your home loan as quickly as possible.

Take the time to work out exactly how much you can afford. Be realistic about whether you should borrow using one income or two, especially if you know one of those incomes might just stop in the future.

Don’t be tempted to buy a more expensive house than you can realistically afford to repay. Sure, having a nice house can be great, but what’s the point if you have to work overtime every day just to afford it? You’ll never be home to see it!

Your home loan is the key to buying your family home, so be sure you find the one that works for your own financial situation wherever possible.