{"id":9172,"date":"2024-01-30T15:27:09","date_gmt":"2024-01-30T09:57:09","guid":{"rendered":"https:\/\/ncfe.org.in\/?post_type=faqs&#038;p=9172"},"modified":"2024-05-10T11:29:06","modified_gmt":"2024-05-10T05:59:06","slug":"loan-borrowing","status":"publish","type":"faqs","link":"https:\/\/ncfe.org.in\/faqs\/loan-borrowing\/","title":{"rendered":"Loan &#038; Borrowing"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"9172\" class=\"elementor elementor-9172\" data-elementor-post-type=\"faqs\">\n\t\t\t\t<div class=\"elementor-element elementor-element-929df67 e-con-full e-flex e-con e-parent\" data-id=\"929df67\" data-element_type=\"container\">\n\t\t<div class=\"elementor-element elementor-element-1b85a40 e-con-full e-flex e-con e-child\" data-id=\"1b85a40\" data-element_type=\"container\">\n\t\t\t\t<div class=\"elementor-element elementor-element-4ddacfe elementor-widget elementor-widget-heading\" data-id=\"4ddacfe\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t<style>\/*! elementor - v3.23.0 - 05-08-2024 *\/\n.elementor-heading-title{padding:0;margin:0;line-height:1}.elementor-widget-heading .elementor-heading-title[class*=elementor-size-]>a{color:inherit;font-size:inherit;line-height:inherit}.elementor-widget-heading .elementor-heading-title.elementor-size-small{font-size:15px}.elementor-widget-heading .elementor-heading-title.elementor-size-medium{font-size:19px}.elementor-widget-heading .elementor-heading-title.elementor-size-large{font-size:29px}.elementor-widget-heading .elementor-heading-title.elementor-size-xl{font-size:39px}.elementor-widget-heading .elementor-heading-title.elementor-size-xxl{font-size:59px}<\/style><h2 class=\"elementor-heading-title elementor-size-default\">Faqs<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-05df1ea elementor-position-left elementor-vertical-align-middle elementor-mobile-position-left elementor-view-default elementor-widget elementor-widget-icon-box\" data-id=\"05df1ea\" data-element_type=\"widget\" data-widget_type=\"icon-box.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t<link rel=\"stylesheet\" href=\"https:\/\/ncfe.org.in\/wp-content\/plugins\/elementor\/assets\/css\/widget-icon-box.min.css\">\t\t<div class=\"elementor-icon-box-wrapper\">\n\n\t\t\t\t\t\t<div class=\"elementor-icon-box-icon\">\n\t\t\t\t<a href=\"https:\/\/ncfe.org.in\/faqs\/mutual-fund\/\" class=\"elementor-icon elementor-animation-\" tabindex=\"-1\">\n\t\t\t\t<svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"27\" height=\"22\" viewBox=\"0 0 27 22\" fill=\"none\"><path d=\"M8.43333 11L0 2.56667L2.56667 0L13.5667 11L2.56667 22L0 19.4333L8.43333 11Z\" fill=\"#E88B1A\"><\/path><path d=\"M21.7673 11L13.334 2.56667L15.9007 0L26.9007 11L15.9007 22L13.334 19.4333L21.7673 11Z\" fill=\"#E88B1A\"><\/path><\/svg>\t\t\t\t<\/a>\n\t\t\t<\/div>\n\t\t\t\n\t\t\t\t\t\t<div class=\"elementor-icon-box-content\">\n\n\t\t\t\t\t\t\t\t\t<h3 class=\"elementor-icon-box-title\">\n\t\t\t\t\t\t<a href=\"https:\/\/ncfe.org.in\/faqs\/mutual-fund\/\" >\n\t\t\t\t\t\t\tMutual Fund\t\t\t\t\t\t<\/a>\n\t\t\t\t\t<\/h3>\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\t\t\t\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-107164b elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"107164b\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t<style>\/*! elementor - v3.23.0 - 05-08-2024 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data-element_type=\"widget\" data-widget_type=\"icon-box.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-icon-box-wrapper\">\n\n\t\t\t\t\t\t<div class=\"elementor-icon-box-icon\">\n\t\t\t\t<a href=\"https:\/\/ncfe.org.in\/faqs\/gold\/\" class=\"elementor-icon elementor-animation-\" tabindex=\"-1\">\n\t\t\t\t<svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"27\" height=\"22\" viewBox=\"0 0 27 22\" fill=\"none\"><path d=\"M8.43333 11L0 2.56667L2.56667 0L13.5667 11L2.56667 22L0 19.4333L8.43333 11Z\" fill=\"#E88B1A\"><\/path><path d=\"M21.7673 11L13.334 2.56667L15.9007 0L26.9007 11L15.9007 22L13.334 19.4333L21.7673 11Z\" fill=\"#E88B1A\"><\/path><\/svg>\t\t\t\t<\/a>\n\t\t\t<\/div>\n\t\t\t\n\t\t\t\t\t\t<div class=\"elementor-icon-box-content\">\n\n\t\t\t\t\t\t\t\t\t<h3 class=\"elementor-icon-box-title\">\n\t\t\t\t\t\t<a href=\"https:\/\/ncfe.org.in\/faqs\/gold\/\" >\n\t\t\t\t\t\t\tGold\t\t\t\t\t\t<\/a>\n\t\t\t\t\t<\/h3>\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\t\t\t\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-8370b1e elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"8370b1e\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-84d132c elementor-position-left elementor-vertical-align-middle elementor-mobile-position-left elementor-view-default elementor-widget elementor-widget-icon-box\" data-id=\"84d132c\" data-element_type=\"widget\" data-widget_type=\"icon-box.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-icon-box-wrapper\">\n\n\t\t\t\t\t\t<div class=\"elementor-icon-box-icon\">\n\t\t\t\t<a href=\"https:\/\/ncfe.org.in\/faqs\/loan-borrowing\/\" class=\"elementor-icon elementor-animation-\" tabindex=\"-1\">\n\t\t\t\t<svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"27\" height=\"22\" viewBox=\"0 0 27 22\" fill=\"none\"><path d=\"M8.43333 11L0 2.56667L2.56667 0L13.5667 11L2.56667 22L0 19.4333L8.43333 11Z\" fill=\"#E88B1A\"><\/path><path d=\"M21.7673 11L13.334 2.56667L15.9007 0L26.9007 11L15.9007 22L13.334 19.4333L21.7673 11Z\" fill=\"#E88B1A\"><\/path><\/svg>\t\t\t\t<\/a>\n\t\t\t<\/div>\n\t\t\t\n\t\t\t\t\t\t<div class=\"elementor-icon-box-content\">\n\n\t\t\t\t\t\t\t\t\t<h3 class=\"elementor-icon-box-title\">\n\t\t\t\t\t\t<a href=\"https:\/\/ncfe.org.in\/faqs\/loan-borrowing\/\" >\n\t\t\t\t\t\t\tLoan & Borrowing\t\t\t\t\t\t<\/a>\n\t\t\t\t\t<\/h3>\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\t\t\t\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-b5a54f6 elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"b5a54f6\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-28049c3 elementor-position-left elementor-vertical-align-middle elementor-mobile-position-left elementor-view-default elementor-widget elementor-widget-icon-box\" data-id=\"28049c3\" data-element_type=\"widget\" data-widget_type=\"icon-box.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-icon-box-wrapper\">\n\n\t\t\t\t\t\t<div class=\"elementor-icon-box-icon\">\n\t\t\t\t<a href=\"https:\/\/ncfe.org.in\/faqs\/financial-planning\/\" class=\"elementor-icon elementor-animation-\" tabindex=\"-1\">\n\t\t\t\t<svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"27\" height=\"22\" viewBox=\"0 0 27 22\" fill=\"none\"><path d=\"M8.43333 11L0 2.56667L2.56667 0L13.5667 11L2.56667 22L0 19.4333L8.43333 11Z\" fill=\"#E88B1A\"><\/path><path d=\"M21.7673 11L13.334 2.56667L15.9007 0L26.9007 11L15.9007 22L13.334 19.4333L21.7673 11Z\" fill=\"#E88B1A\"><\/path><\/svg>\t\t\t\t<\/a>\n\t\t\t<\/div>\n\t\t\t\n\t\t\t\t\t\t<div class=\"elementor-icon-box-content\">\n\n\t\t\t\t\t\t\t\t\t<h3 class=\"elementor-icon-box-title\">\n\t\t\t\t\t\t<a href=\"https:\/\/ncfe.org.in\/faqs\/financial-planning\/\" >\n\t\t\t\t\t\t\tFinancial Planning\t\t\t\t\t\t<\/a>\n\t\t\t\t\t<\/h3>\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\t\t\t\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-42be5bb elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"42be5bb\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-094d36c elementor-position-left elementor-vertical-align-middle elementor-mobile-position-left elementor-view-default elementor-widget elementor-widget-icon-box\" data-id=\"094d36c\" data-element_type=\"widget\" data-widget_type=\"icon-box.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-icon-box-wrapper\">\n\n\t\t\t\t\t\t<div class=\"elementor-icon-box-icon\">\n\t\t\t\t<a href=\"https:\/\/ncfe.org.in\/faqs\/banking\/\" class=\"elementor-icon elementor-animation-\" tabindex=\"-1\">\n\t\t\t\t<svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"27\" height=\"22\" viewBox=\"0 0 27 22\" fill=\"none\"><path d=\"M8.43333 11L0 2.56667L2.56667 0L13.5667 11L2.56667 22L0 19.4333L8.43333 11Z\" fill=\"#E88B1A\"><\/path><path d=\"M21.7673 11L13.334 2.56667L15.9007 0L26.9007 11L15.9007 22L13.334 19.4333L21.7673 11Z\" fill=\"#E88B1A\"><\/path><\/svg>\t\t\t\t<\/a>\n\t\t\t<\/div>\n\t\t\t\n\t\t\t\t\t\t<div class=\"elementor-icon-box-content\">\n\n\t\t\t\t\t\t\t\t\t<h3 class=\"elementor-icon-box-title\">\n\t\t\t\t\t\t<a href=\"https:\/\/ncfe.org.in\/faqs\/banking\/\" >\n\t\t\t\t\t\t\tBanking\t\t\t\t\t\t<\/a>\n\t\t\t\t\t<\/h3>\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\t\t\t\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-38008ce elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"38008ce\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-91e0514 elementor-position-left elementor-vertical-align-middle elementor-mobile-position-left elementor-view-default elementor-widget elementor-widget-icon-box\" data-id=\"91e0514\" data-element_type=\"widget\" data-widget_type=\"icon-box.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-icon-box-wrapper\">\n\n\t\t\t\t\t\t<div class=\"elementor-icon-box-icon\">\n\t\t\t\t<a href=\"https:\/\/ncfe.org.in\/faqs\/financial-literacy\/\" class=\"elementor-icon elementor-animation-\" tabindex=\"-1\">\n\t\t\t\t<svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"27\" height=\"22\" viewBox=\"0 0 27 22\" fill=\"none\"><path d=\"M8.43333 11L0 2.56667L2.56667 0L13.5667 11L2.56667 22L0 19.4333L8.43333 11Z\" fill=\"#E88B1A\"><\/path><path d=\"M21.7673 11L13.334 2.56667L15.9007 0L26.9007 11L15.9007 22L13.334 19.4333L21.7673 11Z\" fill=\"#E88B1A\"><\/path><\/svg>\t\t\t\t<\/a>\n\t\t\t<\/div>\n\t\t\t\n\t\t\t\t\t\t<div class=\"elementor-icon-box-content\">\n\n\t\t\t\t\t\t\t\t\t<h3 class=\"elementor-icon-box-title\">\n\t\t\t\t\t\t<a href=\"https:\/\/ncfe.org.in\/faqs\/financial-literacy\/\" >\n\t\t\t\t\t\t\tFinancial Literacy\t\t\t\t\t\t<\/a>\n\t\t\t\t\t<\/h3>\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\t\t\t\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-828c285 elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"828c285\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-835d472 e-con-full e-flex e-con e-child\" data-id=\"835d472\" data-element_type=\"container\">\n\t\t\t\t<div class=\"elementor-element elementor-element-22f6ef3 elementor-widget elementor-widget-heading\" data-id=\"22f6ef3\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Loan & borrowing<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-355ffe6 open-all-toggle elementor-widget elementor-widget-toggle\" data-id=\"355ffe6\" data-element_type=\"widget\" data-widget_type=\"toggle.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t<style>\/*! elementor - v3.23.0 - 05-08-2024 *\/\n.elementor-toggle{text-align:start}.elementor-toggle .elementor-tab-title{font-weight:700;line-height:1;margin:0;padding:15px;border-bottom:1px solid #d5d8dc;cursor:pointer;outline:none}.elementor-toggle .elementor-tab-title 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(max-width:767px){.elementor-toggle .elementor-tab-title{padding:12px}.elementor-toggle .elementor-tab-content{padding:12px 10px}}.e-con-inner>.elementor-widget-toggle,.e-con>.elementor-widget-toggle{width:var(--container-widget-width);--flex-grow:var(--container-widget-flex-grow)}<\/style>\t\t<div class=\"elementor-toggle\">\n\t\t\t\t\t\t\t<div class=\"elementor-toggle-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-5591\" class=\"elementor-tab-title\" data-tab=\"1\" role=\"button\" aria-controls=\"elementor-tab-content-5591\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-toggle-icon elementor-toggle-icon-left\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-toggle-icon-closed\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"48\" height=\"48\" viewBox=\"0 0 48 48\" fill=\"none\"><path d=\"M24 31.4359L34.1026 21.3333L32.2 19.4974L24 27.6974L15.8 19.4974L13.8974 21.3333L24 31.4359ZM24.0089 48C20.6901 48 17.5699 47.3702 14.6483 46.1107C11.7266 44.8512 9.18518 43.1418 7.02393 40.9826C4.86273 38.8234 3.15178 36.2844 1.89107 33.3655C0.630355 30.4465 0 27.3277 0 24.0089C0 20.6901 0.629756 17.5699 1.88927 14.6483C3.14882 11.7266 4.8582 9.18518 7.0174 7.02393C9.1766 4.86273 11.7156 3.15178 14.6345 1.89107C17.5535 0.630357 20.6723 0 23.9911 0C27.3099 0 30.4301 0.629755 33.3517 1.88927C36.2734 3.14882 38.8148 4.8582 40.9761 7.0174C43.1373 9.1766 44.8482 11.7156 46.1089 14.6345C47.3696 17.5535 48 20.6723 48 23.9911C48 27.3099 47.3702 30.4301 46.1107 33.3517C44.8512 36.2734 43.1418 38.8148 40.9826 40.9761C38.8234 43.1373 36.2844 44.8482 33.3655 46.1089C30.4465 47.3697 27.3277 48 24.0089 48Z\" fill=\"#171717\"><\/path><\/svg><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-toggle-icon-opened\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"48\" height=\"48\" viewBox=\"0 0 48 48\" fill=\"none\"><path d=\"M24 20.3026L32.2 28.5026L34.1026 26.6667L24 16.5641L13.8974 26.6667L15.8 28.5026L24 20.3026ZM24.0089 48C20.6901 48 17.5699 47.3702 14.6483 46.1107C11.7266 44.8512 9.18518 43.1418 7.02393 40.9826C4.86273 38.8234 3.15178 36.2844 1.89107 33.3655C0.630355 30.4465 0 27.3277 0 24.0089C0 20.6901 0.629756 17.5699 1.88927 14.6483C3.14882 11.7266 4.8582 9.18518 7.0174 7.02393C9.1766 4.86273 11.7156 3.15178 14.6345 1.89107C17.5535 0.630357 20.6723 0 23.9911 0C27.3099 0 30.4301 0.629755 33.3517 1.88927C36.2734 3.14882 38.8148 4.8582 40.9761 7.0174C43.1373 9.1766 44.8482 11.7156 46.1089 14.6345C47.3696 17.5535 48 20.6723 48 23.9911C48 27.3099 47.3702 30.4301 46.1107 33.3517C44.8512 36.2734 43.1418 38.8148 40.9826 40.9761C38.8234 43.1373 36.2844 44.8482 33.3655 46.1089C30.4465 47.3697 27.3277 48 24.0089 48Z\" fill=\"#171717\"><\/path><\/svg><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-toggle-title\" tabindex=\"0\">Advantages of taking a home loan<\/a>\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<div id=\"elementor-tab-content-5591\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"1\" role=\"region\" aria-labelledby=\"elementor-tab-title-5591\"><p><span style=\"font-weight: 400;\">Considering the huge amount and the long tenure involved, a home loan is surely a liability. But it also offers you some benefits .<\/span><\/p><p><span style=\"font-weight: 400;\">Buying a home is a big step. It is a source of anxiety, frustration &#8212; and a huge sense of accomplishment. With the zooming property rates, it is difficult a buy a home through our savings entirely. Almost all of us have a to avail a home loan.<\/span><\/p><p><span style=\"font-weight: 400;\">Usually, a home loan is one of the biggest liabilities. Considering the huge amount and the long tenure involved, However your home loan also offers you some benefits. The below write-up highlights the advantages of taking a home loan.<\/span><\/p><p><b>Sense of accomplishment<\/b><\/p><p><span style=\"font-weight: 400;\">Buying a home is one of the biggest financial investments you may make in your lifetime; and that&#8217;s not just because of the sentimental value. The sum that most of us sink into our home does make it the largest component of our investment portfolio!<\/span><\/p><p><b>Capital Appreciation<\/b><\/p><p><span style=\"font-weight: 400;\">For each one of us who has seen property prices boom over the last five years, the prospect of mouth-watering capital appreciation is the biggest argument for buying a home. Construction costs alone, which account for more than 70 per cent of the flat&#8217;s cost, have risen at 15 per cent annually in the past decade. Rents too seem to keep up with inflation; making a home one of the few investments can shield you from inflation for the long term.<\/span><\/p><p><b>Low interest rate<\/b><\/p><p><span style=\"font-weight: 400;\">Buying a home is a long-term decision of over a 10-year period; the interest rates may go through several up and down cycles. Therefore, you can be sure that you will benefit from falling rates at some point in the cycle.<\/span><\/p><p><span style=\"font-weight: 400;\">There could also be situations in which the interest rates fall, allowing you to prepay your loan and own your home. For instance, those who bought property in 1995, at an interest rate of 18 per cent, not only saw interest rates fall dramatically over the next decade, to bottom out at about 7.5 per cent, property prices too appreciated steeply. This works as a double boost to wealth.<\/span><\/p><p><span style=\"font-weight: 400;\">The best way to manage borrowing costs is by actively managing your home loans! That&#8217;s not as difficult as it is sounds. Banks and home-loan lenders often give new borrowers much better rates than existing borrowers. During the uptick of the interest rate cycle, if your cost of borrowing increases by more than 2 percentage points, pay 0.5 per cent of the loan outstanding as processing fee (conversion charge) to your lender to avail the rates offered to the new borrowers.<\/span><\/p><p><b>Tax Benefit: Interest paid<\/b><\/p><p><span style=\"font-weight: 400;\">As per Section 24(b) of the Income Tax Act, 1961 a deduction up to Rs. 1.5 lakh towards the total interest payable on the home loan towards purchase \/ construction of house property can be claimed while computing the income from house property. (The deduction stands reduced to Rs. 30,000 in case of loans taken prior to March 01, 1999).<\/span><\/p><p><span style=\"font-weight: 400;\">The interest payable for the pre-acquisition or pre-construction period would be deductible in five equal annual instalments commencing from the year in which the house has been acquired or constructed.<\/span><\/p><p><b>Tax Benefit: Principal Repayment<\/b><\/p><p><span style=\"font-weight: 400;\">As per the newly introduced Sections 80C read with section 80CCE of the Income Tax Act, 1961 the principal repayment up to Rs. 1 lakh on your home loan will be allowed as a deduction from the gross total income subject to fulfilment of prescribed conditions.<\/span><\/p><p><b>Buying a home vs renting a house<\/b><\/p><p><span style=\"font-weight: 400;\">Let&#8217;s compare two individuals. Ram, is willing to buy a flat at current prices, while the other \u2014 Shyam \u2014 prefers to stay in a rented house. We assume Ram funds the flat cost of Rs. 33 lakh with his own capital of Rs. 8 lakh and the balance through a loan of Rs. 25 lakh for 15 years at an interest rate of 10 per cent per annum. His monthly commitment (equated monthly instalment) towards the loan will be Rs. 26,835.<\/span><\/p><p><span style=\"font-weight: 400;\">Assuming that the interest rate remains the same throughout the 15 years, he will pay back a sum of Rs. 48.35 lakh to the bank. Assuming he is in the 30 per cent tax bracket and earns tax benefits on the interest component alone (in deference to the new Direct Taxes Code), he would shell out a net sum of Rs. 42.75 lakh.<\/span><\/p><p><span style=\"font-weight: 400;\">Now, assuming property prices increase at a rate of 7 per cent, his Rs 33-lakh home will be worth Rs. 91 lakh after 15 years. His investment in the property fetched him an appreciation of Rs. 40.25 lakh. That is an internal rate of return of 6.9 per cent.<\/span><\/p><p><span style=\"font-weight: 400;\">Now, coming to Shyam, he decides to rent a home very similar to that bought by Ram. Assuming rental yields of about 3.5 per cent, he would need to shell out about Rs 10,000 per month in the form of rent. Now, as property prices are rising by 7 per cent every year, the landlord will raise his rent too by a similar amount. Having not invested in a home, he has a surplus every month (the notional value of the EMI minus the rent paid) to invest in safe instruments.<\/span><\/p><p><span style=\"font-weight: 400;\">Let us presume that Shyam is able to avail tax benefits at 30 per cent of the rent paid, by way of HRA. In the first year he saves monthly a sum of Rs 19,835 (Rs 26835 &#8211; Rs 7,000) and invests Rs 7 lakh (margin money for buying a house) at a post-tax return of 7 per cent. At the end of 15 years his total savings will be worth Rs 68 lakh. He would have paid out Rs 21 lakh by way of rent. His IRR would work out to 2.5 per cent. Though the investor saves quite a bit in initial years, the rise in rents reduces his savings in later years.<\/span><\/p><p><span style=\"font-weight: 400;\">In the above instance, obviously, Ram has got a much better deal than Shyam. Therefore, buying a home will pay off most for people who plan to stay in one location for a long horizon (say 15 years) and those who are in the higher tax brackets. Apart from this, property prices have to appreciate at a reasonable rate, preferably higher than inflation.<\/span><\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-toggle-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-5592\" class=\"elementor-tab-title\" data-tab=\"2\" role=\"button\" aria-controls=\"elementor-tab-content-5592\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-toggle-icon elementor-toggle-icon-left\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-toggle-icon-closed\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"48\" height=\"48\" viewBox=\"0 0 48 48\" fill=\"none\"><path d=\"M24 31.4359L34.1026 21.3333L32.2 19.4974L24 27.6974L15.8 19.4974L13.8974 21.3333L24 31.4359ZM24.0089 48C20.6901 48 17.5699 47.3702 14.6483 46.1107C11.7266 44.8512 9.18518 43.1418 7.02393 40.9826C4.86273 38.8234 3.15178 36.2844 1.89107 33.3655C0.630355 30.4465 0 27.3277 0 24.0089C0 20.6901 0.629756 17.5699 1.88927 14.6483C3.14882 11.7266 4.8582 9.18518 7.0174 7.02393C9.1766 4.86273 11.7156 3.15178 14.6345 1.89107C17.5535 0.630357 20.6723 0 23.9911 0C27.3099 0 30.4301 0.629755 33.3517 1.88927C36.2734 3.14882 38.8148 4.8582 40.9761 7.0174C43.1373 9.1766 44.8482 11.7156 46.1089 14.6345C47.3696 17.5535 48 20.6723 48 23.9911C48 27.3099 47.3702 30.4301 46.1107 33.3517C44.8512 36.2734 43.1418 38.8148 40.9826 40.9761C38.8234 43.1373 36.2844 44.8482 33.3655 46.1089C30.4465 47.3697 27.3277 48 24.0089 48Z\" fill=\"#171717\"><\/path><\/svg><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-toggle-icon-opened\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"48\" height=\"48\" viewBox=\"0 0 48 48\" fill=\"none\"><path d=\"M24 20.3026L32.2 28.5026L34.1026 26.6667L24 16.5641L13.8974 26.6667L15.8 28.5026L24 20.3026ZM24.0089 48C20.6901 48 17.5699 47.3702 14.6483 46.1107C11.7266 44.8512 9.18518 43.1418 7.02393 40.9826C4.86273 38.8234 3.15178 36.2844 1.89107 33.3655C0.630355 30.4465 0 27.3277 0 24.0089C0 20.6901 0.629756 17.5699 1.88927 14.6483C3.14882 11.7266 4.8582 9.18518 7.0174 7.02393C9.1766 4.86273 11.7156 3.15178 14.6345 1.89107C17.5535 0.630357 20.6723 0 23.9911 0C27.3099 0 30.4301 0.629755 33.3517 1.88927C36.2734 3.14882 38.8148 4.8582 40.9761 7.0174C43.1373 9.1766 44.8482 11.7156 46.1089 14.6345C47.3696 17.5535 48 20.6723 48 23.9911C48 27.3099 47.3702 30.4301 46.1107 33.3517C44.8512 36.2734 43.1418 38.8148 40.9826 40.9761C38.8234 43.1373 36.2844 44.8482 33.3655 46.1089C30.4465 47.3697 27.3277 48 24.0089 48Z\" fill=\"#171717\"><\/path><\/svg><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-toggle-title\" tabindex=\"0\">Housing loan terminology decoded<\/a>\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<div id=\"elementor-tab-content-5592\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"2\" role=\"region\" aria-labelledby=\"elementor-tab-title-5592\"><p><b><i>In the case of part disbursement of the loan, monthly interest is payable only on the disbursed amount. This interest is called pre-EMI interest<\/i><\/b><b><i><br \/><\/i><\/b><b><i><br \/><\/i><\/b><span style=\"font-weight: 400;\">When you are in the process of availing a loan to buy your dream home, financial institutions or banks usually use a number of technical terms which may sound new to you. The below article provides a list of number of technical terms used by banks when you avail a home loan.<\/span><\/p><p><b>Margin<\/b><\/p><p><span style=\"font-weight: 400;\">When you borrow, the home loan company or the bank will not lend you the entire amount. It will lend you 80% to 90% amount of the cost of your home. You will have to pay the balance 20% to 10%. The balance amount which you pay from your porket is called the down payment or margin.<\/span><\/p><p><b>Resale<\/b><\/p><p><span style=\"font-weight: 400;\">This is the term used when you are buying a home from someone who already owns it and is selling it. Hence, it is called resale. It indicates you are not buying a brand new home straight from the builder or buying one currently under construction.<\/span><\/p><p><b>Credit appraisal<\/b><\/p><p><span style=\"font-weight: 400;\">A home loan companies or banks will consider a number of parameters before it sanctions a loan to you. They will check your savings, income, age, qualifications, nature of work and work experience, etc. They will also verify how many loans you are currently servicing. Taking all these factors into account, lenders will determine whether you are eligible for a loan or not and also what should be the amount to be lent to you. This process is known as credit appraisal.<\/span><\/p><p><b>Repayment tenure<\/b><\/p><p><span style=\"font-weight: 400;\">Repayment tenure is the tenure for the number of year for which the loan gets sanctioned.<\/span><span style=\"font-weight: 400;\"><br \/><\/span><b>Pre-approved property<\/b><b><br \/><\/b><span style=\"font-weight: 400;\">Before purchasing any property, the home buyer needs to ensure that the builder possesses the requisite approvals. It means that the titles and the documents of the property have been examined by a bank \/ financial institution (FI) on the request of a builder. Banks \/ FI&#8217;s have the technical know-how, so their assessment will be a comprehensive one. It also takes into consideration things like the track record of the builder among several other things.<\/span><span style=\"font-weight: 400;\"><br \/><\/span><span style=\"font-weight: 400;\"><br \/><\/span><span style=\"font-weight: 400;\">If everything is in order, the builder will get a stamp of approval. Also, the bank \/ FI will view the builder&#8217;s ability and track record to complete the construction on time. However, this does not mean the home finance company is going to take any action or waive any charges if the construction is delayed. All it means is that the property falls within the legal purview and the builder has a good track record.<\/span><\/p><p><b>Equated monthly installments<\/b><\/p><p><span style=\"font-weight: 400;\">An EMI is the amount of money you will have to pay every month in order to repay your loan. An EMI is an unequal combination of your loan amount (principal) and the rate of interest. The EMI remains constant throughout the repayment period. Let&#8217;s say you have a five-year loan with an EMI of Rs 4,400. You will have to pay this amount for the next 60 months to the home loan company. To arrive at the EMI, the home loan financier will look at:<\/span><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The principal (the actual loan amount).<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The repayment period (the number of years you will take to repay the loan).<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The rate of interest.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">How the rate of interest is computed (monthly reducing, quarterly reducing or annual reducing basis).<\/span><\/li><\/ul><p><b>Disbursement<\/b><\/p><p><b>Full disbursement<\/b><\/p><p><span style=\"font-weight: 400;\">A full disbursement is when the entire cost is paid at one go; the home loan company hands over the entire payment to the seller. The cheque is disbursed (it is never in cash) only when you have submitted all the documents required and have made the down payment. If this is a resale, then the cheque is made out in the seller&#8217;s name. If you are purchasing your home from a builder, then it is in the builder&#8217;s name.<\/span><\/p><p><b>Partial disbursement<\/b><\/p><p><span style=\"font-weight: 400;\">A partial disbursement is made in stages (not at one go as in the case of full disbursement). When purchasing an apartment from a builder and it is under construction, the home loan company will not release all the payment at one go. The money will be released in stages. For instance, after the completion of the first floor, 20% of the payment will be made, on the completion of the last floor, 40% and so on and so forth. Hence payment is construction linked and disbursed accordingly.<\/span><\/p><p><b>Advance disbursement facility<\/b><\/p><p><span style=\"font-weight: 400;\">If the house is still under construction, then a partial disbursement is made. However, in some cases, the home loan company may be willing to make the entire payment even if the construction is not complete. This is known as an advance disbursement and will occur only in both these instances:<\/span><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If the buyer requests the home loan company to do so.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If the home loan company is fairly convinced the builder will complete the construction on time.<\/span><\/li><\/ul><p><b>Pre-EMI interest<\/b><b><br \/><\/b><span style=\"font-weight: 400;\">In the case of part disbursement of the loan, monthly interest is payable only on the disbursed amount. This interest is called pre-EMI interest and is payable monthly till the final disbursement is made, after which the EMIs would commence.<\/span><\/p><p><b>Offer Letter<\/b><\/p><p><span style=\"font-weight: 400;\">Once the loan is sanctioned, you will get an offer letter stating a number of details.<\/span><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Loan amount<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Rate of interest<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Fixed\/ flexible rate of interest<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Tenure of the loan<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">EMI amount<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If offered under a special scheme, details of the scheme<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Any other conditions of the loan<\/span><\/li><\/ul><p><span style=\"font-weight: 400;\">This letter does not mean the loan is yours. It only means the home loan company has agreed to consider you as one of its customers. It will then look into the various property and legal documents as well as value the property you are buying. The loan will only be disbursed once these formalities are complete.<\/span><span style=\"font-weight: 400;\"><br \/><\/span><span style=\"font-weight: 400;\"><br \/><\/span><b>PDCs<\/b><b><br \/><\/b><span style=\"font-weight: 400;\">Post-dated cheques are dated ahead of time and cannot be processed till the date indicated. Generally, the home loan company will ask for a year&#8217;s supply of cheques or maybe even two or three years. At the end, you will have to replenish the supply for the following years. These cheques will be addressed to the home loan company, signed by you and will state the exact EMI to be paid.<\/span><\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-toggle-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-5593\" class=\"elementor-tab-title\" data-tab=\"3\" role=\"button\" aria-controls=\"elementor-tab-content-5593\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-toggle-icon elementor-toggle-icon-left\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-toggle-icon-closed\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"48\" height=\"48\" viewBox=\"0 0 48 48\" fill=\"none\"><path d=\"M24 31.4359L34.1026 21.3333L32.2 19.4974L24 27.6974L15.8 19.4974L13.8974 21.3333L24 31.4359ZM24.0089 48C20.6901 48 17.5699 47.3702 14.6483 46.1107C11.7266 44.8512 9.18518 43.1418 7.02393 40.9826C4.86273 38.8234 3.15178 36.2844 1.89107 33.3655C0.630355 30.4465 0 27.3277 0 24.0089C0 20.6901 0.629756 17.5699 1.88927 14.6483C3.14882 11.7266 4.8582 9.18518 7.0174 7.02393C9.1766 4.86273 11.7156 3.15178 14.6345 1.89107C17.5535 0.630357 20.6723 0 23.9911 0C27.3099 0 30.4301 0.629755 33.3517 1.88927C36.2734 3.14882 38.8148 4.8582 40.9761 7.0174C43.1373 9.1766 44.8482 11.7156 46.1089 14.6345C47.3696 17.5535 48 20.6723 48 23.9911C48 27.3099 47.3702 30.4301 46.1107 33.3517C44.8512 36.2734 43.1418 38.8148 40.9826 40.9761C38.8234 43.1373 36.2844 44.8482 33.3655 46.1089C30.4465 47.3697 27.3277 48 24.0089 48Z\" fill=\"#171717\"><\/path><\/svg><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-toggle-icon-opened\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"48\" height=\"48\" viewBox=\"0 0 48 48\" fill=\"none\"><path d=\"M24 20.3026L32.2 28.5026L34.1026 26.6667L24 16.5641L13.8974 26.6667L15.8 28.5026L24 20.3026ZM24.0089 48C20.6901 48 17.5699 47.3702 14.6483 46.1107C11.7266 44.8512 9.18518 43.1418 7.02393 40.9826C4.86273 38.8234 3.15178 36.2844 1.89107 33.3655C0.630355 30.4465 0 27.3277 0 24.0089C0 20.6901 0.629756 17.5699 1.88927 14.6483C3.14882 11.7266 4.8582 9.18518 7.0174 7.02393C9.1766 4.86273 11.7156 3.15178 14.6345 1.89107C17.5535 0.630357 20.6723 0 23.9911 0C27.3099 0 30.4301 0.629755 33.3517 1.88927C36.2734 3.14882 38.8148 4.8582 40.9761 7.0174C43.1373 9.1766 44.8482 11.7156 46.1089 14.6345C47.3696 17.5535 48 20.6723 48 23.9911C48 27.3099 47.3702 30.4301 46.1107 33.3517C44.8512 36.2734 43.1418 38.8148 40.9826 40.9761C38.8234 43.1373 36.2844 44.8482 33.3655 46.1089C30.4465 47.3697 27.3277 48 24.0089 48Z\" fill=\"#171717\"><\/path><\/svg><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-toggle-title\" tabindex=\"0\">The downside of 0% interest EMI schemes<\/a>\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<div id=\"elementor-tab-content-5593\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"3\" role=\"region\" aria-labelledby=\"elementor-tab-title-5593\"><p><b><i>In financial parlance, you should never borrow to consume and worse if you are splurging on some electronic gadgets just to catch up with peers<\/i><\/b><\/p><p><span style=\"font-weight: 400;\">Often, what we perceive as economical always has tremendous economics behind it. Otherwise why would the seller be interested in selling something that which is fairly cheap to you? The 0% interest Equated Monthly Instalments (EMIs) was one of the few attractive schemes which had received strong acceptance, is a case in the point. Recently, Reserve Bank of India asked banks to stop 0% interest charging schemes that allowed consumers to buy goods on equated monthly instalments. Banks used to offer these special schemes to consumers to buy anything and everything from kitchen appliances such as induction cookers to even high end electronic gadgets such as smart phones, tablets and LED television sets.<\/span><\/p><p><span style=\"font-weight: 400;\">In financial parlance, you should never borrow to consume and worse if you are splurging on some electronic gadgets just to catch up with peers. The basic tenets of financial planning suggest that you should not borrow to splurge. It can overburden and may limit any scope to borrow for something essential. However, things are changing and sometimes people prefer to buy things by borrowing if they increase their efficiency or save their time. For example, working women want to own a microwave oven and a sales executive want to own a smart phone. And banks sensed an opportunity in this.<\/span><\/p><p><span style=\"font-weight: 400;\">They introduced dedicated schemes to sell these products to customers who can borrow. The only glitch here is that they are wrongly called 0% EMI schemes, where the consumers get the impression that they are not paying any interest. Banks were making consumers either pay down payments and service charges that would take care of the interest due on the money paid to product manufacturers or they were negotiating discounts deals with product manufactures, wherein the discounts were not passed on to the customers. In both cases, RBI feels that customer interests are compromised. Hence the regulator asked the bank to stop these deals immediately.<\/span><\/p><p><span style=\"font-weight: 400;\">For many customers who were planning to buy a new LED TV or have decided to upgrade their smart phone in the festive season that started with Ganapati Festival, it was a bad news. If you too belong to this segment of consumers do not lose heart. RBI has done the right thing for you. Now you may not get the 0% EMI offer you were waiting for. But you will surely see some efforts to offer transparent deals by both the banks and the product manufacturers. Manufactures may offer the same discounts to you that were earlier available to banks. Banks can still offer funding to you on credit cards and through personal loans.<\/span><\/p><p><span style=\"font-weight: 400;\">In essence, you can still access your dream gadget. New offers at lower prices are round the corner. But be careful. Do not go overboard while shopping. Ideally save and buy that smart phone you have been thinking of. But if you are keen to borrow, compare the offers across banks. Do look at charges such as processing and prepayment. You can negotiate on them and save money. Do not swipe your credit card too much. It is a dear source of money and if you cannot repay on time, it charges interest in the range of 28% to 36% per year. In addition, it pulls down your credit score, popularly known as CIBIL score.<\/span><\/p><p><span style=\"font-weight: 400;\">So, this festive season make it a point that you will protect your CIBIL score, by being within your limits. RBI has helped you on this journey by helping you to take the first step by abolishing 0% EMI schemes and bringing down the temptation in front of you. Now, the next step has to be from you to safeguard your financial goal and create a spotless credit profile.<\/span><\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-toggle-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-5594\" class=\"elementor-tab-title\" data-tab=\"4\" role=\"button\" aria-controls=\"elementor-tab-content-5594\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-toggle-icon elementor-toggle-icon-left\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-toggle-icon-closed\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"48\" height=\"48\" viewBox=\"0 0 48 48\" fill=\"none\"><path d=\"M24 31.4359L34.1026 21.3333L32.2 19.4974L24 27.6974L15.8 19.4974L13.8974 21.3333L24 31.4359ZM24.0089 48C20.6901 48 17.5699 47.3702 14.6483 46.1107C11.7266 44.8512 9.18518 43.1418 7.02393 40.9826C4.86273 38.8234 3.15178 36.2844 1.89107 33.3655C0.630355 30.4465 0 27.3277 0 24.0089C0 20.6901 0.629756 17.5699 1.88927 14.6483C3.14882 11.7266 4.8582 9.18518 7.0174 7.02393C9.1766 4.86273 11.7156 3.15178 14.6345 1.89107C17.5535 0.630357 20.6723 0 23.9911 0C27.3099 0 30.4301 0.629755 33.3517 1.88927C36.2734 3.14882 38.8148 4.8582 40.9761 7.0174C43.1373 9.1766 44.8482 11.7156 46.1089 14.6345C47.3696 17.5535 48 20.6723 48 23.9911C48 27.3099 47.3702 30.4301 46.1107 33.3517C44.8512 36.2734 43.1418 38.8148 40.9826 40.9761C38.8234 43.1373 36.2844 44.8482 33.3655 46.1089C30.4465 47.3697 27.3277 48 24.0089 48Z\" fill=\"#171717\"><\/path><\/svg><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-toggle-icon-opened\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"48\" height=\"48\" viewBox=\"0 0 48 48\" fill=\"none\"><path d=\"M24 20.3026L32.2 28.5026L34.1026 26.6667L24 16.5641L13.8974 26.6667L15.8 28.5026L24 20.3026ZM24.0089 48C20.6901 48 17.5699 47.3702 14.6483 46.1107C11.7266 44.8512 9.18518 43.1418 7.02393 40.9826C4.86273 38.8234 3.15178 36.2844 1.89107 33.3655C0.630355 30.4465 0 27.3277 0 24.0089C0 20.6901 0.629756 17.5699 1.88927 14.6483C3.14882 11.7266 4.8582 9.18518 7.0174 7.02393C9.1766 4.86273 11.7156 3.15178 14.6345 1.89107C17.5535 0.630357 20.6723 0 23.9911 0C27.3099 0 30.4301 0.629755 33.3517 1.88927C36.2734 3.14882 38.8148 4.8582 40.9761 7.0174C43.1373 9.1766 44.8482 11.7156 46.1089 14.6345C47.3696 17.5535 48 20.6723 48 23.9911C48 27.3099 47.3702 30.4301 46.1107 33.3517C44.8512 36.2734 43.1418 38.8148 40.9826 40.9761C38.8234 43.1373 36.2844 44.8482 33.3655 46.1089C30.4465 47.3697 27.3277 48 24.0089 48Z\" fill=\"#171717\"><\/path><\/svg><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-toggle-title\" tabindex=\"0\">How to become a \u201cloan eligible\u201d borrower?<\/a>\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<div id=\"elementor-tab-content-5594\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"4\" role=\"region\" aria-labelledby=\"elementor-tab-title-5594\"><p><span style=\"font-weight: 400;\">The ideal candidate for a loan from a lender\u2019s viewpoints would read like this &#8211; &#8220;Age between 24 and 45. Well educated professional. Expenses should not be more than 50% of income. Ideally must work for government services or a large corporate though self employed will be considered. A credit score greater than 750.&#8221; Even if you fit in all the criteria there are several factors on which your loan eligibility will be decided.<\/span><\/p><p><span style=\"font-weight: 400;\">Your bank will assess your repayment capacity while deciding the home loan eligibility. Repayment capacity is based on your monthly disposable \/ surplus income, (which in turn is based on factors such as total monthly income \/ surplus less monthly expenses) and other factors like spouse&#8217;s income, assets, liabilities, stability of income etc. The main concern of the bank is to make sure that you comfortably repay the loan on time and ensure end use. The higher the monthly disposable income, higher will be the amount you will be eligible for loan. Typically a bank assumes that about 55-60 % of your monthly disposable \/ surplus income is available for repayment of loan. However, some banks calculate the income available for EMI payments based on an individual\u2019s gross income and not on his disposable income.<\/span><\/p><p><span style=\"font-weight: 400;\">The amount of the loan depends on the tenure of the loan and the rate of interest also as these variables determine your monthly outgo \/ outflow which in turn depends on your disposable income. Banks generally fix an upper age limit for home loan applicants.<\/span><\/p><p><b>Increase loan eligibility&#8230;<\/b><\/p><p><b>Get a better Cibil credit rating<\/b><\/p><p><span style=\"font-weight: 400;\">A better Cibil score helps the bank look at your application in a more favorable light. It will not just decrease you the rate of interest that the bank charges you but also likely to increase your loan eligibility.<\/span><\/p><p><b>Two are better than one<\/b><\/p><p><span style=\"font-weight: 400;\">If your spouse is also earning, the income of your spouse can be combined and you could applied jointly for the loan. You can also club incomes with a parent to take a joint home loan.<\/span><\/p><p><b>Pay off older loan<\/b><\/p><p><span style=\"font-weight: 400;\">Since amount you are eligible for is a function of your disposable income, you could repay any previous loan to increase your eligibility as this will increase your disposable income.<\/span><\/p><p><b>Go in for a longer tenure loan<\/b><\/p><p><span style=\"font-weight: 400;\">A longer tenure loan will increase the amount that you are eligible to borrow. A longer tenure will also mean that you pay a more interest over the years and hence this not really advisable except as a last resort.<\/span><\/p><p><b>Step up option (SURF)<\/b><\/p><p><span style=\"font-weight: 400;\">For young professionals Step up option works well in increasing their loan eligibility. A step-up loan is one in which a bank or a financial institution lends money taking into account the borrower&#8217;s future income. The lender decides the loan amount for which an individual is eligible on the basis of the borrower&#8217;s expected professional growth. In this way, a borrower qualifies for a larger loan amount even if her\/his present salary is low.<\/span><\/p><p><b>Nurture your relationship<\/b><\/p><p><span style=\"font-weight: 400;\">If you have a long standing relationship with the bank, you may be able to convince them about the increase in future income and your repayment capacity. Also if you work for a large corporation, the bank may give you preferential terms including higher loan eligibility.<\/span><\/p><p><b>Some of the important aspects which will affect your loan ability are<\/b><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Your income<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Category of the company you work<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Other fixed payments<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If a home loan then property attributes for example most banks will not fund a property without a clear tittle<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Your and your co-applicant age should cross over 65 years during the tenure of the loan.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Tenure of the loan and rate of interest<\/span><\/li><\/ul><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-toggle-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-5595\" class=\"elementor-tab-title\" data-tab=\"5\" role=\"button\" aria-controls=\"elementor-tab-content-5595\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-toggle-icon elementor-toggle-icon-left\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-toggle-icon-closed\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"48\" height=\"48\" viewBox=\"0 0 48 48\" fill=\"none\"><path d=\"M24 31.4359L34.1026 21.3333L32.2 19.4974L24 27.6974L15.8 19.4974L13.8974 21.3333L24 31.4359ZM24.0089 48C20.6901 48 17.5699 47.3702 14.6483 46.1107C11.7266 44.8512 9.18518 43.1418 7.02393 40.9826C4.86273 38.8234 3.15178 36.2844 1.89107 33.3655C0.630355 30.4465 0 27.3277 0 24.0089C0 20.6901 0.629756 17.5699 1.88927 14.6483C3.14882 11.7266 4.8582 9.18518 7.0174 7.02393C9.1766 4.86273 11.7156 3.15178 14.6345 1.89107C17.5535 0.630357 20.6723 0 23.9911 0C27.3099 0 30.4301 0.629755 33.3517 1.88927C36.2734 3.14882 38.8148 4.8582 40.9761 7.0174C43.1373 9.1766 44.8482 11.7156 46.1089 14.6345C47.3696 17.5535 48 20.6723 48 23.9911C48 27.3099 47.3702 30.4301 46.1107 33.3517C44.8512 36.2734 43.1418 38.8148 40.9826 40.9761C38.8234 43.1373 36.2844 44.8482 33.3655 46.1089C30.4465 47.3697 27.3277 48 24.0089 48Z\" fill=\"#171717\"><\/path><\/svg><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-toggle-icon-opened\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"48\" height=\"48\" viewBox=\"0 0 48 48\" fill=\"none\"><path d=\"M24 20.3026L32.2 28.5026L34.1026 26.6667L24 16.5641L13.8974 26.6667L15.8 28.5026L24 20.3026ZM24.0089 48C20.6901 48 17.5699 47.3702 14.6483 46.1107C11.7266 44.8512 9.18518 43.1418 7.02393 40.9826C4.86273 38.8234 3.15178 36.2844 1.89107 33.3655C0.630355 30.4465 0 27.3277 0 24.0089C0 20.6901 0.629756 17.5699 1.88927 14.6483C3.14882 11.7266 4.8582 9.18518 7.0174 7.02393C9.1766 4.86273 11.7156 3.15178 14.6345 1.89107C17.5535 0.630357 20.6723 0 23.9911 0C27.3099 0 30.4301 0.629755 33.3517 1.88927C36.2734 3.14882 38.8148 4.8582 40.9761 7.0174C43.1373 9.1766 44.8482 11.7156 46.1089 14.6345C47.3696 17.5535 48 20.6723 48 23.9911C48 27.3099 47.3702 30.4301 46.1107 33.3517C44.8512 36.2734 43.1418 38.8148 40.9826 40.9761C38.8234 43.1373 36.2844 44.8482 33.3655 46.1089C30.4465 47.3697 27.3277 48 24.0089 48Z\" fill=\"#171717\"><\/path><\/svg><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-toggle-title\" tabindex=\"0\">Top ten tips to keep in mind while taking a home loan<\/a>\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<div id=\"elementor-tab-content-5595\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"5\" role=\"region\" aria-labelledby=\"elementor-tab-title-5595\"><p><span style=\"font-weight: 400;\">Thus, selecting the right home loan product in the market becomes much more important for many of us to avoid any surprises later.<\/span><\/p><p><span style=\"font-weight: 400;\">Taking a House is once in a life time decision for many of us with the spiraling prices of the property and the high interest rate regime in the market. Thus, selecting the right home loan product in the market becomes much more important for many of us to avoid any surprises later.<\/span><\/p><p><span style=\"font-weight: 400;\">Suresh Laxminarayan, a Bangalore-based techie, wanted to build a house in Bangalore. With great difficulty, he bought a 2400 square feet plot and was on a hunting phase for a home loan. It took him a great deal of time to do a survey and finalise on a home loan from State Bank of India (SBI) about ten years ago.<\/span><\/p><p><span style=\"font-weight: 400;\">\u201cWhen I took the home loan I had checked out about 10 different loan products. While I was sanctioned a loan for 20 years, I foreclosed my loan six months ago, that is within ten years,\u201d said Laxminarayan.<\/span><\/p><p><b>What are the right things he did? Read on to learn a few useful tips from him.<\/b><\/p><ol><li><b>Good research:<\/b><span style=\"font-weight: 400;\"> Do not go as per what your loan agent says. You do your own research of the best terms available in the market. \u201cWhile taking my loan, my agent did everything to stop me from going to SBI. I later on realized why, SBI pays less commission to agents, so they earn less. Hence they badmouth the bank,\u201d said Laxminarayan. \u201cBut SBI gave me the cheapest rate of interest,\u201d he added.<\/span><\/li><\/ol><ol start=\"2\"><li><b>Spend conservatively:<\/b><span style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"> keep a tab on your spends during the home loan tenure. The old adage \u201cA penny saved is a penny earned,\u201d holds true in case of home loan too. When you save money, you could actually use it to foreclose the loan.<\/span><\/span><\/li><\/ol><ol start=\"3\"><li><b>Park your additional funds:<\/b><span style=\"font-weight: 400;\"> A couple of banks have a facility, which allows borrowers to park their additional funds in the loan accounts. \u201cThis will reduce the interest proportionately from the principal amount for the time that the amount was parked. This is an interesting option. This was not there when I took a loan,\u201d said Laxminarayan.<\/span><\/li><\/ol><ol start=\"4\"><li><b>Learn what is floating or fixed rates:<\/b><span style=\"font-weight: 400;\"> there are two types of interest rates that banks offer: floating and fixed interests. Floating interest rate is linked to market. It moves in tandem with a base rate. Where as fixed interest remains fixed for a few months defined in the loan agreement. It is important to understand that in most cases floating rates work out cheaper than fixed rates in the long run.<\/span><\/li><\/ol><ol start=\"5\"><li><b>CIBIL Score :<\/b><span style=\"font-weight: 400;\"> It is important to have a score of 750 plus to get attractive rate of interest on your Home loan. Cibil data indicate that 80% of the home loan approvals are given to customer who have a credit score of 750 plus. Low Cibil score could possibly reject your Home loan application or you may have to pay a higher interest rate.<\/span><\/li><\/ol><ol start=\"6\"><li><b>Understand foreclosure norms<\/b><span style=\"font-weight: 400;\">: Recently, RBI banned foreclosure penalties. So make sure you do not pay anything extra while foreclosing your loan.<\/span><\/li><\/ol><ol start=\"7\"><li><b>Save up to foreclose: <\/b><span style=\"font-weight: 400;\">if you can save Rs 1 lakh in the current fiscal, do not use it on a dream holiday abroad. Instead use it to foreclose your loan. \u201cMy advice to every borrower is that learn to foreclose your loan as soon as possible. The sooner you free the amount you pay for equitable monthly installments (EMI), the earlier can you enjoy the freedom to spend that money on luxuries of life,\u201d added Laxminarayan.<\/span><\/li><\/ol><ol start=\"8\"><li><b>Compare processing fees:<\/b><span style=\"font-weight: 400;\">whether it is for a fresh loan or for a balance transfer. Enquire in all the banks before you finalise.<\/span><\/li><\/ol><ol start=\"9\"><li><b>Read the documents: <\/b><span style=\"font-weight: 400;\">read everything written in the loan agreement before you sign on the dotted line. It is very important to be aware of terms and conditions.<\/span><\/li><\/ol><ol start=\"10\"><li><b>Increase the bridge funding:<\/b><span style=\"font-weight: 400;\"> every borrower has to pay some money from his own pocket while buying a house. Try to pay as much as possible as down payment. This will reduce your interest paid on the principal.<\/span><\/li><\/ol><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-toggle-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-5596\" class=\"elementor-tab-title\" data-tab=\"6\" role=\"button\" aria-controls=\"elementor-tab-content-5596\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-toggle-icon elementor-toggle-icon-left\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-toggle-icon-closed\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"48\" height=\"48\" viewBox=\"0 0 48 48\" fill=\"none\"><path d=\"M24 31.4359L34.1026 21.3333L32.2 19.4974L24 27.6974L15.8 19.4974L13.8974 21.3333L24 31.4359ZM24.0089 48C20.6901 48 17.5699 47.3702 14.6483 46.1107C11.7266 44.8512 9.18518 43.1418 7.02393 40.9826C4.86273 38.8234 3.15178 36.2844 1.89107 33.3655C0.630355 30.4465 0 27.3277 0 24.0089C0 20.6901 0.629756 17.5699 1.88927 14.6483C3.14882 11.7266 4.8582 9.18518 7.0174 7.02393C9.1766 4.86273 11.7156 3.15178 14.6345 1.89107C17.5535 0.630357 20.6723 0 23.9911 0C27.3099 0 30.4301 0.629755 33.3517 1.88927C36.2734 3.14882 38.8148 4.8582 40.9761 7.0174C43.1373 9.1766 44.8482 11.7156 46.1089 14.6345C47.3696 17.5535 48 20.6723 48 23.9911C48 27.3099 47.3702 30.4301 46.1107 33.3517C44.8512 36.2734 43.1418 38.8148 40.9826 40.9761C38.8234 43.1373 36.2844 44.8482 33.3655 46.1089C30.4465 47.3697 27.3277 48 24.0089 48Z\" fill=\"#171717\"><\/path><\/svg><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-toggle-icon-opened\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"48\" height=\"48\" viewBox=\"0 0 48 48\" fill=\"none\"><path d=\"M24 20.3026L32.2 28.5026L34.1026 26.6667L24 16.5641L13.8974 26.6667L15.8 28.5026L24 20.3026ZM24.0089 48C20.6901 48 17.5699 47.3702 14.6483 46.1107C11.7266 44.8512 9.18518 43.1418 7.02393 40.9826C4.86273 38.8234 3.15178 36.2844 1.89107 33.3655C0.630355 30.4465 0 27.3277 0 24.0089C0 20.6901 0.629756 17.5699 1.88927 14.6483C3.14882 11.7266 4.8582 9.18518 7.0174 7.02393C9.1766 4.86273 11.7156 3.15178 14.6345 1.89107C17.5535 0.630357 20.6723 0 23.9911 0C27.3099 0 30.4301 0.629755 33.3517 1.88927C36.2734 3.14882 38.8148 4.8582 40.9761 7.0174C43.1373 9.1766 44.8482 11.7156 46.1089 14.6345C47.3696 17.5535 48 20.6723 48 23.9911C48 27.3099 47.3702 30.4301 46.1107 33.3517C44.8512 36.2734 43.1418 38.8148 40.9826 40.9761C38.8234 43.1373 36.2844 44.8482 33.3655 46.1089C30.4465 47.3697 27.3277 48 24.0089 48Z\" fill=\"#171717\"><\/path><\/svg><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-toggle-title\" tabindex=\"0\">Things to note while availing commercial vehicle loan<\/a>\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<div id=\"elementor-tab-content-5596\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"6\" role=\"region\" aria-labelledby=\"elementor-tab-title-5596\"><p><i><span style=\"font-weight: 400;\">The factors which you need to consider while availing a commercial loan include interest rates, additional charges, documents required and the term of the loan<\/span><\/i><i><span style=\"font-weight: 400;\"><br \/><\/span><\/i><i><br \/><\/i><span style=\"font-weight: 400;\">We have often heard about home loans, car loans and personal loans. Most of us also know the purpose which these loans serve. However, only a few of us would be aware of commercial loans. Let\u2019s try to understand the purpose of these loans, documentation process and who can avail them.<\/span><span style=\"font-weight: 400;\"><br \/><\/span><span style=\"font-weight: 400;\"><br \/><\/span><span style=\"font-weight: 400;\">Commercial vehicle loans are usually taken by individual, partnership firms, proprietorship firms, HUF (Hindu Undivided Family), trusts, societies, self-employed, businessmen and private and public limited companies for their financing needs for owning and running commercial vehicles.<\/span><span style=\"font-weight: 400;\"><br \/><\/span><span style=\"font-weight: 400;\"><br \/><\/span><span style=\"font-weight: 400;\">The borrowers of these loans are usually engaged in the business of transportation. Commercial vehicle loan options are available for buses, tippers, transit mixers or any other heavy, light or small commercial vehicle. A commercial vehicle loan can be taken for a variety of commercial vehicles, which may be used at different locations.<\/span><span style=\"font-weight: 400;\"><br \/><\/span><span style=\"font-weight: 400;\"><br \/><\/span><span style=\"font-weight: 400;\">Banks such as HDFC Bank, ICICI Bank, DCB Bank and Yes Bank among others provide such loans. Also NBFCs (non banking financial companies) like Reliance Commercial Finance and Fullerton India provide loans.<\/span><span style=\"font-weight: 400;\"><br \/><\/span><span style=\"font-weight: 400;\"><br \/><\/span><span style=\"font-weight: 400;\">While loans are sanctioned for the purchase of a new commercial vehicle, banks also offer loans for pre-owned vehicles. Borrowers can also avail of a top up on existing loans subject to conditions.<\/span><\/p><p><b>Loan Process<\/b><\/p><p><span style=\"font-weight: 400;\">The borrower\u2014who wants to avail of a commercial vehicle loan\u2014has to fill in the application form and provide the necessary documents. The documents include proof of address (passport, ration card, voters ID), proof of experience in the relevant area, track record of past loans (if availed) and six months bank statements of the last six months.<\/span><span style=\"font-weight: 400;\"><br \/><\/span><span style=\"font-weight: 400;\"><br \/><\/span><span style=\"font-weight: 400;\">The borrowers would also need to submit two years income tax returns, audited balance sheets and profit &amp; loss account statements. List of owned vehicles along with the copies of RC (registration certificate)books.<\/span><span style=\"font-weight: 400;\"><br \/><\/span><span style=\"font-weight: 400;\">Some banks may also ask for transportation contracts for higher quantum of funding. In some cases, banks may ask also for a personal guarantor.<\/span><\/p><p><b>Who can avail of a loan?<\/b><\/p><p><span style=\"font-weight: 400;\">Loans can be applied by individuals and by co-applicants, partners in partnership firms and directors in private limited companies can apply for a join loan. In case of individuals blood relatives can avail of a joint loan.<\/span><\/p><p><span style=\"font-weight: 400;\">The minimum loan amount which can be availed by for small players is Rs. 1 lakh, while the same for large corporate is up to Rs. 5 crore.<\/span><\/p><p><b>Approval process<\/b><\/p><p><span style=\"font-weight: 400;\">The loan is generally approved within seven days of submission of required documents to the bank. However, the time taken to sanction the loan may vary depending upon the nature of the loan, quantum of funding and location. Normally, the bank \/ financial institution disburses the loan directly to the vehicle dealer and not to the borrower.<\/span><\/p><p><b>Loan amount &amp; tenure<\/b><\/p><p><span style=\"font-weight: 400;\">The loan amount can vary depending upon the specific requirement. Funding can extent to 100% of the chassis, body funding can be extended on special requirement and on the past experiences.<\/span><\/p><p><span style=\"font-weight: 400;\">Chassis basically means the internal structure of a vehicle like engine, transmission, driveshaft, differential and suspension.<\/span><\/p><p><span style=\"font-weight: 400;\">The tenure of the loan can range from six months to sixty months.<\/span><span style=\"font-weight: 400;\"><br \/><\/span><span style=\"font-weight: 400;\"><br \/><\/span><b>Interest rates<\/b><\/p><p><span style=\"font-weight: 400;\">The interest rates range from 10% to 15% depending on the customer and vehicle segment. The customer segment comprises self employed, corporate, businessmen and partnership firms, while vehicle segment includes various vehicles such as trucks, buses, cars, etc.<\/span><span style=\"font-weight: 400;\"><br \/><\/span><span style=\"font-weight: 400;\"><br \/><\/span><span style=\"font-weight: 400;\">The rate depends on a lot of factors such as the number of vehicles owned by the borrower, his business turnover, repayment track record from other financiers (if any), etc. The financial institutions are able to confirm the rate of interest once they have studied the documents. The interest rate may be fixed or variable.<\/span><span style=\"font-weight: 400;\"><br \/><\/span><span style=\"font-weight: 400;\"><br \/><\/span><b>What are the processing charges?<\/b><b><br \/><\/b><b><br \/><\/b><span style=\"font-weight: 400;\">The charges include processing fee, stamp duty and vehicle valuation charges. The processing fee depends on the loan amount. It usually ranges from 2%-4%. The processing fee is non-refundable. Stamp duty is normally 2% for a loan amount of Rs. 5 lakh, 3% over Rs. 5 lakh and 4% beyond Rs. 10 lakh.<\/span><span style=\"font-weight: 400;\"><br \/><\/span><span style=\"font-weight: 400;\"><br \/><\/span><b>Repayment<\/b><\/p><p><span style=\"font-weight: 400;\">You need to make monthly payments to the lender to repay your loan. The monthly installment comprises of principal and interest calculated on the basis of rate of interest mentioned in loan agreement.<\/span><span style=\"font-weight: 400;\"><br \/><\/span><span style=\"font-weight: 400;\"><br \/><\/span><span style=\"font-weight: 400;\">In case, you wish to prepay your loan, a penalty of 2% of the outstanding loan amount is levied.<\/span><span style=\"font-weight: 400;\"><br \/><\/span><span style=\"font-weight: 400;\"><br \/><\/span><span style=\"font-weight: 400;\">To wrap up, the factors which you need to consider while availing a commercial loan include interest rates, additional charges, documents required and the term of the loan.<\/span><\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-toggle-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-5597\" class=\"elementor-tab-title\" data-tab=\"7\" role=\"button\" aria-controls=\"elementor-tab-content-5597\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-toggle-icon elementor-toggle-icon-left\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-toggle-icon-closed\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"48\" height=\"48\" viewBox=\"0 0 48 48\" fill=\"none\"><path d=\"M24 31.4359L34.1026 21.3333L32.2 19.4974L24 27.6974L15.8 19.4974L13.8974 21.3333L24 31.4359ZM24.0089 48C20.6901 48 17.5699 47.3702 14.6483 46.1107C11.7266 44.8512 9.18518 43.1418 7.02393 40.9826C4.86273 38.8234 3.15178 36.2844 1.89107 33.3655C0.630355 30.4465 0 27.3277 0 24.0089C0 20.6901 0.629756 17.5699 1.88927 14.6483C3.14882 11.7266 4.8582 9.18518 7.0174 7.02393C9.1766 4.86273 11.7156 3.15178 14.6345 1.89107C17.5535 0.630357 20.6723 0 23.9911 0C27.3099 0 30.4301 0.629755 33.3517 1.88927C36.2734 3.14882 38.8148 4.8582 40.9761 7.0174C43.1373 9.1766 44.8482 11.7156 46.1089 14.6345C47.3696 17.5535 48 20.6723 48 23.9911C48 27.3099 47.3702 30.4301 46.1107 33.3517C44.8512 36.2734 43.1418 38.8148 40.9826 40.9761C38.8234 43.1373 36.2844 44.8482 33.3655 46.1089C30.4465 47.3697 27.3277 48 24.0089 48Z\" fill=\"#171717\"><\/path><\/svg><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-toggle-icon-opened\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"48\" height=\"48\" viewBox=\"0 0 48 48\" fill=\"none\"><path d=\"M24 20.3026L32.2 28.5026L34.1026 26.6667L24 16.5641L13.8974 26.6667L15.8 28.5026L24 20.3026ZM24.0089 48C20.6901 48 17.5699 47.3702 14.6483 46.1107C11.7266 44.8512 9.18518 43.1418 7.02393 40.9826C4.86273 38.8234 3.15178 36.2844 1.89107 33.3655C0.630355 30.4465 0 27.3277 0 24.0089C0 20.6901 0.629756 17.5699 1.88927 14.6483C3.14882 11.7266 4.8582 9.18518 7.0174 7.02393C9.1766 4.86273 11.7156 3.15178 14.6345 1.89107C17.5535 0.630357 20.6723 0 23.9911 0C27.3099 0 30.4301 0.629755 33.3517 1.88927C36.2734 3.14882 38.8148 4.8582 40.9761 7.0174C43.1373 9.1766 44.8482 11.7156 46.1089 14.6345C47.3696 17.5535 48 20.6723 48 23.9911C48 27.3099 47.3702 30.4301 46.1107 33.3517C44.8512 36.2734 43.1418 38.8148 40.9826 40.9761C38.8234 43.1373 36.2844 44.8482 33.3655 46.1089C30.4465 47.3697 27.3277 48 24.0089 48Z\" fill=\"#171717\"><\/path><\/svg><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-toggle-title\" tabindex=\"0\">Know more about mortgage loan<\/a>\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<div id=\"elementor-tab-content-5597\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"7\" role=\"region\" aria-labelledby=\"elementor-tab-title-5597\"><p><i><span style=\"font-weight: 400;\">A mortgage loan offers the borrower an opportunity to generate additional income from an otherwise idle property<\/span><\/i><\/p><p><span style=\"font-weight: 400;\">In life, we come across certain situations, from where we cannot avoid some expenses. Some of these expenses include business expansion, marriage, medical emergencies or higher education. One such solution to meet these needs would be to avail a mortgage loan.<\/span><\/p><p><b>What is mortgage loan?<\/b><\/p><p><span style=\"font-weight: 400;\">Mortgage loan refers to loan against property which would be a residential house, non-agricultural land or commercial shop.<\/span><\/p><p><span style=\"font-weight: 400;\">In case of a residential or commercial property, the house should be fully constructed. It should be a freehold property and have marketable value. It should be free from all encumbrances\u2014free from mortgage or other charge on property.<\/span><\/p><p><span style=\"font-weight: 400;\">A freehold property is a property which gives full legal rights to the owners to live and use the property. Most property in India is freehold, which means that ownership is transferable. A freehold property owner has the right to sell, transfer and repair the property. The freehold properties give more right and responsibility to the owner.<\/span><\/p><p><span style=\"font-weight: 400;\">A mortgage loan grants the borrower an option to generate additional income from an otherwise idle property. Mortgage loan is specifically designed for an individual who already owns a property and is in need of borrowing some finances. But the property against which he is taking up the loan amount must be free from any encumbrance, i.e., it is not offered as security for any other purpose. Under this, the borrower pledges collateral in the form of property against the loan amount. The borrower still maintains the right of ownership of the property and when he repays the total loan amount on or before the tenure of the loan, he gets back his property.<\/span><\/p><p><span style=\"font-weight: 400;\">Mortgage loan can be taken for various funding requirements. But while availing this loan, one needs to state and assure that the loan amount is not being taken for illegal purpose or indulging in any speculative activity.<\/span><\/p><p><span style=\"font-weight: 400;\">Mortgage loans are offered by banks such as Bank of Baroda, Central Bank of India, Union Bank of India, State Bank of India, Punjab National Bank among others.<\/span><\/p><p><b>Types of loan<\/b><\/p><p><span style=\"font-weight: 400;\">Mortgage loans are of two types: Term loan and overdraft loan. Both the loans are offered against the security of the borrower\u2019s immovable property. In case of overdraft loan, the borrower has an option to withdraw money as per his need and save on interest cost. For instance: The bank has approved a total loan of Rs. 5 lakh for the borrower, of which he needs just Rs. 1 lakh, then the interest rate will be charged on only Rs. 1 lakh of the total loan amount.<\/span><\/p><p><span style=\"font-weight: 400;\">In an overdraft loan, the total loan is disbursed in installments depending on the borrower\u2019s requirement. Interest is charged only on the loan amount taken by the borrower and not the total loan. The borrower has to open an account in case of overdraft loan. The account is also called running account. The overdraft facility is available for one year and is to be reviewed annually.<\/span><\/p><p><span style=\"font-weight: 400;\">However, the interest rate charged on an overdraft loan is marginally higher than that charged on a term loan. Overdraft loans carry an additional 0.5% interest rate over and above a term loan.<\/span><\/p><p><b>Who can avail of a loan?<\/b><\/p><p><span style=\"font-weight: 400;\">Mortgage loans can be availed by individuals, salaried employees, self-employed, proprietary firms, partnership firms, professionals and businessmen. Loans can be applied by individuals and by co-applicants. Owners of the current property, in respect of which the loan is being sought, will have to be co-applicants. However, the co-applicants need not be co-owner.<\/span><\/p><p><b>Interest rate<\/b><\/p><p><span style=\"font-weight: 400;\">Interest rate on mortgage loan is normally charged on variable basis.<\/span><\/p><p><b>Loan amount<\/b><\/p><p><span style=\"font-weight: 400;\">The loan amount depends on the market value of the property and on the borrower\u2019s income. The property\u2014prime security with the bank\u2014is valued by the bank approved valuers and the loan amount is usually 50% of the market value of the property. For example: If the property value is Rs. 10 lakh, then the bank may approve the loan amount of Rs. 5 lakh for the borrower. The bank also considers the income criteria of the borrower which is three times of the last three years annual income.<\/span><\/p><p><span style=\"font-weight: 400;\">The minimum loan amount is Rs. 1 lakh, while the maximum loan amount varies from bank to bank.<\/span><\/p><p><b>Fees<\/b><\/p><p><span style=\"font-weight: 400;\">The processing fee is usually 1% of the sanction limit of the loan amount. Other charges include lawyer\u2019s fees and property valuation charges. These charges are borne by the borrower.<\/span><\/p><p><b>Documentation<\/b><\/p><p><span style=\"font-weight: 400;\">The documents include last three years annual income statement of the borrower, last three years income tax returns and property papers such as original sale deed, encumbrance certificate, property tax receipt, last six months bank statement and other relevant documents as asked by the bank.<\/span><\/p><p><span style=\"font-weight: 400;\">An encumbrance certificate is needed in a property transaction as an evidence of free title and ownership. It is a document issued by the registration authorities.<\/span><\/p><p><span style=\"font-weight: 400;\">The tax receipts include maintenance, water tax, municipal tax and any such taxes. If the property is a self-constructed property, the bank would also ask for an approved plan.<\/span><\/p><p><span style=\"font-weight: 400;\">The other documents include proof of identity (copy of passport, ration card, voters ID or driving licence).<\/span><\/p><p><b>Tenure and repayment<\/b><\/p><p><span style=\"font-weight: 400;\">The maximum tenure of the loan repayment is generally seven years. Repayment to the lender is done on equated monthly installments basis through electronic clearing service mandate or post dated cheques. The EMI comprises principal and interest rate.<\/span><\/p><p><b>Penal interest<\/b><\/p><p><span style=\"font-weight: 400;\">Any default in repayment will attract penal interest of around 2% per annum over and above the above rate of interest on the balance outstanding.<\/span><\/p><p><b>What happens if the loan is not repaid?<\/b><\/p><p><span style=\"font-weight: 400;\">The property can be repossessed by the lender to recover its outstanding loan amount. To allow recovery of the loan amount, courts can order foreclosure (sale in the open market to recover dues) of the property.<br \/><\/span><\/p><p><strong>Courtesy :<\/strong>\u00a0Financial Literacy Agenda for Mass Empowerment(FLAME)<br \/><strong>Source : <\/strong><a href=\"http:\/\/flame.org.in\/\">http:\/\/flame.org.in\/<\/a><\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t\t<script type=\"application\/ld+json\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@type\":\"FAQPage\",\"mainEntity\":[{\"@type\":\"Question\",\"name\":\"Advantages of taking a home loan\",\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"<p><span style=\\\"font-weight: 400;\\\">Considering the huge amount and the long tenure involved, a home loan is surely a liability. But it also offers you some benefits .<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">Buying a home is a big step. It is a source of anxiety, frustration &#8212; and a huge sense of accomplishment. With the zooming property rates, it is difficult a buy a home through our savings entirely. Almost all of us have a to avail a home loan.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">Usually, a home loan is one of the biggest liabilities. Considering the huge amount and the long tenure involved, However your home loan also offers you some benefits. The below write-up highlights the advantages of taking a home loan.<\\\/span><\\\/p><p><b>Sense of accomplishment<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">Buying a home is one of the biggest financial investments you may make in your lifetime; and that&#8217;s not just because of the sentimental value. The sum that most of us sink into our home does make it the largest component of our investment portfolio!<\\\/span><\\\/p><p><b>Capital Appreciation<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">For each one of us who has seen property prices boom over the last five years, the prospect of mouth-watering capital appreciation is the biggest argument for buying a home. Construction costs alone, which account for more than 70 per cent of the flat&#8217;s cost, have risen at 15 per cent annually in the past decade. Rents too seem to keep up with inflation; making a home one of the few investments can shield you from inflation for the long term.<\\\/span><\\\/p><p><b>Low interest rate<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">Buying a home is a long-term decision of over a 10-year period; the interest rates may go through several up and down cycles. Therefore, you can be sure that you will benefit from falling rates at some point in the cycle.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">There could also be situations in which the interest rates fall, allowing you to prepay your loan and own your home. For instance, those who bought property in 1995, at an interest rate of 18 per cent, not only saw interest rates fall dramatically over the next decade, to bottom out at about 7.5 per cent, property prices too appreciated steeply. This works as a double boost to wealth.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">The best way to manage borrowing costs is by actively managing your home loans! That&#8217;s not as difficult as it is sounds. Banks and home-loan lenders often give new borrowers much better rates than existing borrowers. During the uptick of the interest rate cycle, if your cost of borrowing increases by more than 2 percentage points, pay 0.5 per cent of the loan outstanding as processing fee (conversion charge) to your lender to avail the rates offered to the new borrowers.<\\\/span><\\\/p><p><b>Tax Benefit: Interest paid<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">As per Section 24(b) of the Income Tax Act, 1961 a deduction up to Rs. 1.5 lakh towards the total interest payable on the home loan towards purchase \\\/ construction of house property can be claimed while computing the income from house property. (The deduction stands reduced to Rs. 30,000 in case of loans taken prior to March 01, 1999).<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">The interest payable for the pre-acquisition or pre-construction period would be deductible in five equal annual instalments commencing from the year in which the house has been acquired or constructed.<\\\/span><\\\/p><p><b>Tax Benefit: Principal Repayment<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">As per the newly introduced Sections 80C read with section 80CCE of the Income Tax Act, 1961 the principal repayment up to Rs. 1 lakh on your home loan will be allowed as a deduction from the gross total income subject to fulfilment of prescribed conditions.<\\\/span><\\\/p><p><b>Buying a home vs renting a house<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">Let&#8217;s compare two individuals. Ram, is willing to buy a flat at current prices, while the other \\u2014 Shyam \\u2014 prefers to stay in a rented house. We assume Ram funds the flat cost of Rs. 33 lakh with his own capital of Rs. 8 lakh and the balance through a loan of Rs. 25 lakh for 15 years at an interest rate of 10 per cent per annum. His monthly commitment (equated monthly instalment) towards the loan will be Rs. 26,835.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">Assuming that the interest rate remains the same throughout the 15 years, he will pay back a sum of Rs. 48.35 lakh to the bank. Assuming he is in the 30 per cent tax bracket and earns tax benefits on the interest component alone (in deference to the new Direct Taxes Code), he would shell out a net sum of Rs. 42.75 lakh.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">Now, assuming property prices increase at a rate of 7 per cent, his Rs 33-lakh home will be worth Rs. 91 lakh after 15 years. His investment in the property fetched him an appreciation of Rs. 40.25 lakh. That is an internal rate of return of 6.9 per cent.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">Now, coming to Shyam, he decides to rent a home very similar to that bought by Ram. Assuming rental yields of about 3.5 per cent, he would need to shell out about Rs 10,000 per month in the form of rent. Now, as property prices are rising by 7 per cent every year, the landlord will raise his rent too by a similar amount. Having not invested in a home, he has a surplus every month (the notional value of the EMI minus the rent paid) to invest in safe instruments.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">Let us presume that Shyam is able to avail tax benefits at 30 per cent of the rent paid, by way of HRA. In the first year he saves monthly a sum of Rs 19,835 (Rs 26835 &#8211; Rs 7,000) and invests Rs 7 lakh (margin money for buying a house) at a post-tax return of 7 per cent. At the end of 15 years his total savings will be worth Rs 68 lakh. He would have paid out Rs 21 lakh by way of rent. His IRR would work out to 2.5 per cent. Though the investor saves quite a bit in initial years, the rise in rents reduces his savings in later years.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">In the above instance, obviously, Ram has got a much better deal than Shyam. Therefore, buying a home will pay off most for people who plan to stay in one location for a long horizon (say 15 years) and those who are in the higher tax brackets. Apart from this, property prices have to appreciate at a reasonable rate, preferably higher than inflation.<\\\/span><\\\/p>\"}},{\"@type\":\"Question\",\"name\":\"Housing loan terminology decoded\",\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"<p><b><i>In the case of part disbursement of the loan, monthly interest is payable only on the disbursed amount. This interest is called pre-EMI interest<\\\/i><\\\/b><b><i><br \\\/><\\\/i><\\\/b><b><i><br \\\/><\\\/i><\\\/b><span style=\\\"font-weight: 400;\\\">When you are in the process of availing a loan to buy your dream home, financial institutions or banks usually use a number of technical terms which may sound new to you. The below article provides a list of number of technical terms used by banks when you avail a home loan.<\\\/span><\\\/p><p><b>Margin<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">When you borrow, the home loan company or the bank will not lend you the entire amount. It will lend you 80% to 90% amount of the cost of your home. You will have to pay the balance 20% to 10%. The balance amount which you pay from your porket is called the down payment or margin.<\\\/span><\\\/p><p><b>Resale<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">This is the term used when you are buying a home from someone who already owns it and is selling it. Hence, it is called resale. It indicates you are not buying a brand new home straight from the builder or buying one currently under construction.<\\\/span><\\\/p><p><b>Credit appraisal<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">A home loan companies or banks will consider a number of parameters before it sanctions a loan to you. They will check your savings, income, age, qualifications, nature of work and work experience, etc. They will also verify how many loans you are currently servicing. Taking all these factors into account, lenders will determine whether you are eligible for a loan or not and also what should be the amount to be lent to you. This process is known as credit appraisal.<\\\/span><\\\/p><p><b>Repayment tenure<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">Repayment tenure is the tenure for the number of year for which the loan gets sanctioned.<\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><b>Pre-approved property<\\\/b><b><br \\\/><\\\/b><span style=\\\"font-weight: 400;\\\">Before purchasing any property, the home buyer needs to ensure that the builder possesses the requisite approvals. It means that the titles and the documents of the property have been examined by a bank \\\/ financial institution (FI) on the request of a builder. Banks \\\/ FI&#8217;s have the technical know-how, so their assessment will be a comprehensive one. It also takes into consideration things like the track record of the builder among several other things.<\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><span style=\\\"font-weight: 400;\\\">If everything is in order, the builder will get a stamp of approval. Also, the bank \\\/ FI will view the builder&#8217;s ability and track record to complete the construction on time. However, this does not mean the home finance company is going to take any action or waive any charges if the construction is delayed. All it means is that the property falls within the legal purview and the builder has a good track record.<\\\/span><\\\/p><p><b>Equated monthly installments<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">An EMI is the amount of money you will have to pay every month in order to repay your loan. An EMI is an unequal combination of your loan amount (principal) and the rate of interest. The EMI remains constant throughout the repayment period. Let&#8217;s say you have a five-year loan with an EMI of Rs 4,400. You will have to pay this amount for the next 60 months to the home loan company. To arrive at the EMI, the home loan financier will look at:<\\\/span><\\\/p><ul><li style=\\\"font-weight: 400;\\\" aria-level=\\\"1\\\"><span style=\\\"font-weight: 400;\\\">The principal (the actual loan amount).<\\\/span><\\\/li><li style=\\\"font-weight: 400;\\\" aria-level=\\\"1\\\"><span style=\\\"font-weight: 400;\\\">The repayment period (the number of years you will take to repay the loan).<\\\/span><\\\/li><li style=\\\"font-weight: 400;\\\" aria-level=\\\"1\\\"><span style=\\\"font-weight: 400;\\\">The rate of interest.<\\\/span><\\\/li><li style=\\\"font-weight: 400;\\\" aria-level=\\\"1\\\"><span style=\\\"font-weight: 400;\\\">How the rate of interest is computed (monthly reducing, quarterly reducing or annual reducing basis).<\\\/span><\\\/li><\\\/ul><p><b>Disbursement<\\\/b><\\\/p><p><b>Full disbursement<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">A full disbursement is when the entire cost is paid at one go; the home loan company hands over the entire payment to the seller. The cheque is disbursed (it is never in cash) only when you have submitted all the documents required and have made the down payment. If this is a resale, then the cheque is made out in the seller&#8217;s name. If you are purchasing your home from a builder, then it is in the builder&#8217;s name.<\\\/span><\\\/p><p><b>Partial disbursement<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">A partial disbursement is made in stages (not at one go as in the case of full disbursement). When purchasing an apartment from a builder and it is under construction, the home loan company will not release all the payment at one go. The money will be released in stages. For instance, after the completion of the first floor, 20% of the payment will be made, on the completion of the last floor, 40% and so on and so forth. Hence payment is construction linked and disbursed accordingly.<\\\/span><\\\/p><p><b>Advance disbursement facility<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">If the house is still under construction, then a partial disbursement is made. However, in some cases, the home loan company may be willing to make the entire payment even if the construction is not complete. This is known as an advance disbursement and will occur only in both these instances:<\\\/span><\\\/p><ul><li style=\\\"font-weight: 400;\\\" aria-level=\\\"1\\\"><span style=\\\"font-weight: 400;\\\">If the buyer requests the home loan company to do so.<\\\/span><\\\/li><li style=\\\"font-weight: 400;\\\" aria-level=\\\"1\\\"><span style=\\\"font-weight: 400;\\\">If the home loan company is fairly convinced the builder will complete the construction on time.<\\\/span><\\\/li><\\\/ul><p><b>Pre-EMI interest<\\\/b><b><br \\\/><\\\/b><span style=\\\"font-weight: 400;\\\">In the case of part disbursement of the loan, monthly interest is payable only on the disbursed amount. This interest is called pre-EMI interest and is payable monthly till the final disbursement is made, after which the EMIs would commence.<\\\/span><\\\/p><p><b>Offer Letter<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">Once the loan is sanctioned, you will get an offer letter stating a number of details.<\\\/span><\\\/p><ul><li style=\\\"font-weight: 400;\\\" aria-level=\\\"1\\\"><span style=\\\"font-weight: 400;\\\">Loan amount<\\\/span><\\\/li><li style=\\\"font-weight: 400;\\\" aria-level=\\\"1\\\"><span style=\\\"font-weight: 400;\\\">Rate of interest<\\\/span><\\\/li><li style=\\\"font-weight: 400;\\\" aria-level=\\\"1\\\"><span style=\\\"font-weight: 400;\\\">Fixed\\\/ flexible rate of interest<\\\/span><\\\/li><li style=\\\"font-weight: 400;\\\" aria-level=\\\"1\\\"><span style=\\\"font-weight: 400;\\\">Tenure of the loan<\\\/span><\\\/li><li style=\\\"font-weight: 400;\\\" aria-level=\\\"1\\\"><span style=\\\"font-weight: 400;\\\">EMI amount<\\\/span><\\\/li><li style=\\\"font-weight: 400;\\\" aria-level=\\\"1\\\"><span style=\\\"font-weight: 400;\\\">If offered under a special scheme, details of the scheme<\\\/span><\\\/li><li style=\\\"font-weight: 400;\\\" aria-level=\\\"1\\\"><span style=\\\"font-weight: 400;\\\">Any other conditions of the loan<\\\/span><\\\/li><\\\/ul><p><span style=\\\"font-weight: 400;\\\">This letter does not mean the loan is yours. It only means the home loan company has agreed to consider you as one of its customers. It will then look into the various property and legal documents as well as value the property you are buying. The loan will only be disbursed once these formalities are complete.<\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><b>PDCs<\\\/b><b><br \\\/><\\\/b><span style=\\\"font-weight: 400;\\\">Post-dated cheques are dated ahead of time and cannot be processed till the date indicated. Generally, the home loan company will ask for a year&#8217;s supply of cheques or maybe even two or three years. At the end, you will have to replenish the supply for the following years. These cheques will be addressed to the home loan company, signed by you and will state the exact EMI to be paid.<\\\/span><\\\/p>\"}},{\"@type\":\"Question\",\"name\":\"The downside of 0% interest EMI schemes\",\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"<p><b><i>In financial parlance, you should never borrow to consume and worse if you are splurging on some electronic gadgets just to catch up with peers<\\\/i><\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">Often, what we perceive as economical always has tremendous economics behind it. Otherwise why would the seller be interested in selling something that which is fairly cheap to you? The 0% interest Equated Monthly Instalments (EMIs) was one of the few attractive schemes which had received strong acceptance, is a case in the point. Recently, Reserve Bank of India asked banks to stop 0% interest charging schemes that allowed consumers to buy goods on equated monthly instalments. Banks used to offer these special schemes to consumers to buy anything and everything from kitchen appliances such as induction cookers to even high end electronic gadgets such as smart phones, tablets and LED television sets.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">In financial parlance, you should never borrow to consume and worse if you are splurging on some electronic gadgets just to catch up with peers. The basic tenets of financial planning suggest that you should not borrow to splurge. It can overburden and may limit any scope to borrow for something essential. However, things are changing and sometimes people prefer to buy things by borrowing if they increase their efficiency or save their time. For example, working women want to own a microwave oven and a sales executive want to own a smart phone. And banks sensed an opportunity in this.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">They introduced dedicated schemes to sell these products to customers who can borrow. The only glitch here is that they are wrongly called 0% EMI schemes, where the consumers get the impression that they are not paying any interest. Banks were making consumers either pay down payments and service charges that would take care of the interest due on the money paid to product manufacturers or they were negotiating discounts deals with product manufactures, wherein the discounts were not passed on to the customers. In both cases, RBI feels that customer interests are compromised. Hence the regulator asked the bank to stop these deals immediately.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">For many customers who were planning to buy a new LED TV or have decided to upgrade their smart phone in the festive season that started with Ganapati Festival, it was a bad news. If you too belong to this segment of consumers do not lose heart. RBI has done the right thing for you. Now you may not get the 0% EMI offer you were waiting for. But you will surely see some efforts to offer transparent deals by both the banks and the product manufacturers. Manufactures may offer the same discounts to you that were earlier available to banks. Banks can still offer funding to you on credit cards and through personal loans.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">In essence, you can still access your dream gadget. New offers at lower prices are round the corner. But be careful. Do not go overboard while shopping. Ideally save and buy that smart phone you have been thinking of. But if you are keen to borrow, compare the offers across banks. Do look at charges such as processing and prepayment. You can negotiate on them and save money. Do not swipe your credit card too much. It is a dear source of money and if you cannot repay on time, it charges interest in the range of 28% to 36% per year. In addition, it pulls down your credit score, popularly known as CIBIL score.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">So, this festive season make it a point that you will protect your CIBIL score, by being within your limits. RBI has helped you on this journey by helping you to take the first step by abolishing 0% EMI schemes and bringing down the temptation in front of you. Now, the next step has to be from you to safeguard your financial goal and create a spotless credit profile.<\\\/span><\\\/p>\"}},{\"@type\":\"Question\",\"name\":\"How to become a \\u201cloan eligible\\u201d borrower?\",\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"<p><span style=\\\"font-weight: 400;\\\">The ideal candidate for a loan from a lender\\u2019s viewpoints would read like this &#8211; &#8220;Age between 24 and 45. Well educated professional. Expenses should not be more than 50% of income. Ideally must work for government services or a large corporate though self employed will be considered. A credit score greater than 750.&#8221; Even if you fit in all the criteria there are several factors on which your loan eligibility will be decided.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">Your bank will assess your repayment capacity while deciding the home loan eligibility. Repayment capacity is based on your monthly disposable \\\/ surplus income, (which in turn is based on factors such as total monthly income \\\/ surplus less monthly expenses) and other factors like spouse&#8217;s income, assets, liabilities, stability of income etc. The main concern of the bank is to make sure that you comfortably repay the loan on time and ensure end use. The higher the monthly disposable income, higher will be the amount you will be eligible for loan. Typically a bank assumes that about 55-60 % of your monthly disposable \\\/ surplus income is available for repayment of loan. However, some banks calculate the income available for EMI payments based on an individual\\u2019s gross income and not on his disposable income.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">The amount of the loan depends on the tenure of the loan and the rate of interest also as these variables determine your monthly outgo \\\/ outflow which in turn depends on your disposable income. Banks generally fix an upper age limit for home loan applicants.<\\\/span><\\\/p><p><b>Increase loan eligibility&#8230;<\\\/b><\\\/p><p><b>Get a better Cibil credit rating<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">A better Cibil score helps the bank look at your application in a more favorable light. It will not just decrease you the rate of interest that the bank charges you but also likely to increase your loan eligibility.<\\\/span><\\\/p><p><b>Two are better than one<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">If your spouse is also earning, the income of your spouse can be combined and you could applied jointly for the loan. You can also club incomes with a parent to take a joint home loan.<\\\/span><\\\/p><p><b>Pay off older loan<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">Since amount you are eligible for is a function of your disposable income, you could repay any previous loan to increase your eligibility as this will increase your disposable income.<\\\/span><\\\/p><p><b>Go in for a longer tenure loan<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">A longer tenure loan will increase the amount that you are eligible to borrow. A longer tenure will also mean that you pay a more interest over the years and hence this not really advisable except as a last resort.<\\\/span><\\\/p><p><b>Step up option (SURF)<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">For young professionals Step up option works well in increasing their loan eligibility. A step-up loan is one in which a bank or a financial institution lends money taking into account the borrower&#8217;s future income. The lender decides the loan amount for which an individual is eligible on the basis of the borrower&#8217;s expected professional growth. In this way, a borrower qualifies for a larger loan amount even if her\\\/his present salary is low.<\\\/span><\\\/p><p><b>Nurture your relationship<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">If you have a long standing relationship with the bank, you may be able to convince them about the increase in future income and your repayment capacity. Also if you work for a large corporation, the bank may give you preferential terms including higher loan eligibility.<\\\/span><\\\/p><p><b>Some of the important aspects which will affect your loan ability are<\\\/b><\\\/p><ul><li style=\\\"font-weight: 400;\\\" aria-level=\\\"1\\\"><span style=\\\"font-weight: 400;\\\">Your income<\\\/span><\\\/li><li style=\\\"font-weight: 400;\\\" aria-level=\\\"1\\\"><span style=\\\"font-weight: 400;\\\">Category of the company you work<\\\/span><\\\/li><li style=\\\"font-weight: 400;\\\" aria-level=\\\"1\\\"><span style=\\\"font-weight: 400;\\\">Other fixed payments<\\\/span><\\\/li><li style=\\\"font-weight: 400;\\\" aria-level=\\\"1\\\"><span style=\\\"font-weight: 400;\\\">If a home loan then property attributes for example most banks will not fund a property without a clear tittle<\\\/span><\\\/li><li style=\\\"font-weight: 400;\\\" aria-level=\\\"1\\\"><span style=\\\"font-weight: 400;\\\">Your and your co-applicant age should cross over 65 years during the tenure of the loan.<\\\/span><\\\/li><li style=\\\"font-weight: 400;\\\" aria-level=\\\"1\\\"><span style=\\\"font-weight: 400;\\\">Tenure of the loan and rate of interest<\\\/span><\\\/li><\\\/ul>\"}},{\"@type\":\"Question\",\"name\":\"Top ten tips to keep in mind while taking a home loan\",\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"<p><span style=\\\"font-weight: 400;\\\">Thus, selecting the right home loan product in the market becomes much more important for many of us to avoid any surprises later.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">Taking a House is once in a life time decision for many of us with the spiraling prices of the property and the high interest rate regime in the market. Thus, selecting the right home loan product in the market becomes much more important for many of us to avoid any surprises later.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">Suresh Laxminarayan, a Bangalore-based techie, wanted to build a house in Bangalore. With great difficulty, he bought a 2400 square feet plot and was on a hunting phase for a home loan. It took him a great deal of time to do a survey and finalise on a home loan from State Bank of India (SBI) about ten years ago.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">\\u201cWhen I took the home loan I had checked out about 10 different loan products. While I was sanctioned a loan for 20 years, I foreclosed my loan six months ago, that is within ten years,\\u201d said Laxminarayan.<\\\/span><\\\/p><p><b>What are the right things he did? Read on to learn a few useful tips from him.<\\\/b><\\\/p><ol><li><b>Good research:<\\\/b><span style=\\\"font-weight: 400;\\\"> Do not go as per what your loan agent says. You do your own research of the best terms available in the market. \\u201cWhile taking my loan, my agent did everything to stop me from going to SBI. I later on realized why, SBI pays less commission to agents, so they earn less. Hence they badmouth the bank,\\u201d said Laxminarayan. \\u201cBut SBI gave me the cheapest rate of interest,\\u201d he added.<\\\/span><\\\/li><\\\/ol><ol start=\\\"2\\\"><li><b>Spend conservatively:<\\\/b><span style=\\\"font-weight: 400;\\\"><span style=\\\"font-weight: 400;\\\"> keep a tab on your spends during the home loan tenure. The old adage \\u201cA penny saved is a penny earned,\\u201d holds true in case of home loan too. When you save money, you could actually use it to foreclose the loan.<\\\/span><\\\/span><\\\/li><\\\/ol><ol start=\\\"3\\\"><li><b>Park your additional funds:<\\\/b><span style=\\\"font-weight: 400;\\\"> A couple of banks have a facility, which allows borrowers to park their additional funds in the loan accounts. \\u201cThis will reduce the interest proportionately from the principal amount for the time that the amount was parked. This is an interesting option. This was not there when I took a loan,\\u201d said Laxminarayan.<\\\/span><\\\/li><\\\/ol><ol start=\\\"4\\\"><li><b>Learn what is floating or fixed rates:<\\\/b><span style=\\\"font-weight: 400;\\\"> there are two types of interest rates that banks offer: floating and fixed interests. Floating interest rate is linked to market. It moves in tandem with a base rate. Where as fixed interest remains fixed for a few months defined in the loan agreement. It is important to understand that in most cases floating rates work out cheaper than fixed rates in the long run.<\\\/span><\\\/li><\\\/ol><ol start=\\\"5\\\"><li><b>CIBIL Score :<\\\/b><span style=\\\"font-weight: 400;\\\"> It is important to have a score of 750 plus to get attractive rate of interest on your Home loan. Cibil data indicate that 80% of the home loan approvals are given to customer who have a credit score of 750 plus. Low Cibil score could possibly reject your Home loan application or you may have to pay a higher interest rate.<\\\/span><\\\/li><\\\/ol><ol start=\\\"6\\\"><li><b>Understand foreclosure norms<\\\/b><span style=\\\"font-weight: 400;\\\">: Recently, RBI banned foreclosure penalties. So make sure you do not pay anything extra while foreclosing your loan.<\\\/span><\\\/li><\\\/ol><ol start=\\\"7\\\"><li><b>Save up to foreclose: <\\\/b><span style=\\\"font-weight: 400;\\\">if you can save Rs 1 lakh in the current fiscal, do not use it on a dream holiday abroad. Instead use it to foreclose your loan. \\u201cMy advice to every borrower is that learn to foreclose your loan as soon as possible. The sooner you free the amount you pay for equitable monthly installments (EMI), the earlier can you enjoy the freedom to spend that money on luxuries of life,\\u201d added Laxminarayan.<\\\/span><\\\/li><\\\/ol><ol start=\\\"8\\\"><li><b>Compare processing fees:<\\\/b><span style=\\\"font-weight: 400;\\\">whether it is for a fresh loan or for a balance transfer. Enquire in all the banks before you finalise.<\\\/span><\\\/li><\\\/ol><ol start=\\\"9\\\"><li><b>Read the documents: <\\\/b><span style=\\\"font-weight: 400;\\\">read everything written in the loan agreement before you sign on the dotted line. It is very important to be aware of terms and conditions.<\\\/span><\\\/li><\\\/ol><ol start=\\\"10\\\"><li><b>Increase the bridge funding:<\\\/b><span style=\\\"font-weight: 400;\\\"> every borrower has to pay some money from his own pocket while buying a house. Try to pay as much as possible as down payment. This will reduce your interest paid on the principal.<\\\/span><\\\/li><\\\/ol>\"}},{\"@type\":\"Question\",\"name\":\"Things to note while availing commercial vehicle loan\",\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"<p><i><span style=\\\"font-weight: 400;\\\">The factors which you need to consider while availing a commercial loan include interest rates, additional charges, documents required and the term of the loan<\\\/span><\\\/i><i><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><\\\/i><i><br \\\/><\\\/i><span style=\\\"font-weight: 400;\\\">We have often heard about home loans, car loans and personal loans. Most of us also know the purpose which these loans serve. However, only a few of us would be aware of commercial loans. Let\\u2019s try to understand the purpose of these loans, documentation process and who can avail them.<\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><span style=\\\"font-weight: 400;\\\">Commercial vehicle loans are usually taken by individual, partnership firms, proprietorship firms, HUF (Hindu Undivided Family), trusts, societies, self-employed, businessmen and private and public limited companies for their financing needs for owning and running commercial vehicles.<\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><span style=\\\"font-weight: 400;\\\">The borrowers of these loans are usually engaged in the business of transportation. Commercial vehicle loan options are available for buses, tippers, transit mixers or any other heavy, light or small commercial vehicle. A commercial vehicle loan can be taken for a variety of commercial vehicles, which may be used at different locations.<\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><span style=\\\"font-weight: 400;\\\">Banks such as HDFC Bank, ICICI Bank, DCB Bank and Yes Bank among others provide such loans. Also NBFCs (non banking financial companies) like Reliance Commercial Finance and Fullerton India provide loans.<\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><span style=\\\"font-weight: 400;\\\">While loans are sanctioned for the purchase of a new commercial vehicle, banks also offer loans for pre-owned vehicles. Borrowers can also avail of a top up on existing loans subject to conditions.<\\\/span><\\\/p><p><b>Loan Process<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">The borrower\\u2014who wants to avail of a commercial vehicle loan\\u2014has to fill in the application form and provide the necessary documents. The documents include proof of address (passport, ration card, voters ID), proof of experience in the relevant area, track record of past loans (if availed) and six months bank statements of the last six months.<\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><span style=\\\"font-weight: 400;\\\">The borrowers would also need to submit two years income tax returns, audited balance sheets and profit &amp; loss account statements. List of owned vehicles along with the copies of RC (registration certificate)books.<\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><span style=\\\"font-weight: 400;\\\">Some banks may also ask for transportation contracts for higher quantum of funding. In some cases, banks may ask also for a personal guarantor.<\\\/span><\\\/p><p><b>Who can avail of a loan?<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">Loans can be applied by individuals and by co-applicants, partners in partnership firms and directors in private limited companies can apply for a join loan. In case of individuals blood relatives can avail of a joint loan.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">The minimum loan amount which can be availed by for small players is Rs. 1 lakh, while the same for large corporate is up to Rs. 5 crore.<\\\/span><\\\/p><p><b>Approval process<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">The loan is generally approved within seven days of submission of required documents to the bank. However, the time taken to sanction the loan may vary depending upon the nature of the loan, quantum of funding and location. Normally, the bank \\\/ financial institution disburses the loan directly to the vehicle dealer and not to the borrower.<\\\/span><\\\/p><p><b>Loan amount &amp; tenure<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">The loan amount can vary depending upon the specific requirement. Funding can extent to 100% of the chassis, body funding can be extended on special requirement and on the past experiences.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">Chassis basically means the internal structure of a vehicle like engine, transmission, driveshaft, differential and suspension.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">The tenure of the loan can range from six months to sixty months.<\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><b>Interest rates<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">The interest rates range from 10% to 15% depending on the customer and vehicle segment. The customer segment comprises self employed, corporate, businessmen and partnership firms, while vehicle segment includes various vehicles such as trucks, buses, cars, etc.<\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><span style=\\\"font-weight: 400;\\\">The rate depends on a lot of factors such as the number of vehicles owned by the borrower, his business turnover, repayment track record from other financiers (if any), etc. The financial institutions are able to confirm the rate of interest once they have studied the documents. The interest rate may be fixed or variable.<\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><b>What are the processing charges?<\\\/b><b><br \\\/><\\\/b><b><br \\\/><\\\/b><span style=\\\"font-weight: 400;\\\">The charges include processing fee, stamp duty and vehicle valuation charges. The processing fee depends on the loan amount. It usually ranges from 2%-4%. The processing fee is non-refundable. Stamp duty is normally 2% for a loan amount of Rs. 5 lakh, 3% over Rs. 5 lakh and 4% beyond Rs. 10 lakh.<\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><b>Repayment<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">You need to make monthly payments to the lender to repay your loan. The monthly installment comprises of principal and interest calculated on the basis of rate of interest mentioned in loan agreement.<\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><span style=\\\"font-weight: 400;\\\">In case, you wish to prepay your loan, a penalty of 2% of the outstanding loan amount is levied.<\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><span style=\\\"font-weight: 400;\\\"><br \\\/><\\\/span><span style=\\\"font-weight: 400;\\\">To wrap up, the factors which you need to consider while availing a commercial loan include interest rates, additional charges, documents required and the term of the loan.<\\\/span><\\\/p>\"}},{\"@type\":\"Question\",\"name\":\"Know more about mortgage loan\",\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"<p><i><span style=\\\"font-weight: 400;\\\">A mortgage loan offers the borrower an opportunity to generate additional income from an otherwise idle property<\\\/span><\\\/i><\\\/p><p><span style=\\\"font-weight: 400;\\\">In life, we come across certain situations, from where we cannot avoid some expenses. Some of these expenses include business expansion, marriage, medical emergencies or higher education. One such solution to meet these needs would be to avail a mortgage loan.<\\\/span><\\\/p><p><b>What is mortgage loan?<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">Mortgage loan refers to loan against property which would be a residential house, non-agricultural land or commercial shop.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">In case of a residential or commercial property, the house should be fully constructed. It should be a freehold property and have marketable value. It should be free from all encumbrances\\u2014free from mortgage or other charge on property.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">A freehold property is a property which gives full legal rights to the owners to live and use the property. Most property in India is freehold, which means that ownership is transferable. A freehold property owner has the right to sell, transfer and repair the property. The freehold properties give more right and responsibility to the owner.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">A mortgage loan grants the borrower an option to generate additional income from an otherwise idle property. Mortgage loan is specifically designed for an individual who already owns a property and is in need of borrowing some finances. But the property against which he is taking up the loan amount must be free from any encumbrance, i.e., it is not offered as security for any other purpose. Under this, the borrower pledges collateral in the form of property against the loan amount. The borrower still maintains the right of ownership of the property and when he repays the total loan amount on or before the tenure of the loan, he gets back his property.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">Mortgage loan can be taken for various funding requirements. But while availing this loan, one needs to state and assure that the loan amount is not being taken for illegal purpose or indulging in any speculative activity.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">Mortgage loans are offered by banks such as Bank of Baroda, Central Bank of India, Union Bank of India, State Bank of India, Punjab National Bank among others.<\\\/span><\\\/p><p><b>Types of loan<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">Mortgage loans are of two types: Term loan and overdraft loan. Both the loans are offered against the security of the borrower\\u2019s immovable property. In case of overdraft loan, the borrower has an option to withdraw money as per his need and save on interest cost. For instance: The bank has approved a total loan of Rs. 5 lakh for the borrower, of which he needs just Rs. 1 lakh, then the interest rate will be charged on only Rs. 1 lakh of the total loan amount.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">In an overdraft loan, the total loan is disbursed in installments depending on the borrower\\u2019s requirement. Interest is charged only on the loan amount taken by the borrower and not the total loan. The borrower has to open an account in case of overdraft loan. The account is also called running account. The overdraft facility is available for one year and is to be reviewed annually.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">However, the interest rate charged on an overdraft loan is marginally higher than that charged on a term loan. Overdraft loans carry an additional 0.5% interest rate over and above a term loan.<\\\/span><\\\/p><p><b>Who can avail of a loan?<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">Mortgage loans can be availed by individuals, salaried employees, self-employed, proprietary firms, partnership firms, professionals and businessmen. Loans can be applied by individuals and by co-applicants. Owners of the current property, in respect of which the loan is being sought, will have to be co-applicants. However, the co-applicants need not be co-owner.<\\\/span><\\\/p><p><b>Interest rate<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">Interest rate on mortgage loan is normally charged on variable basis.<\\\/span><\\\/p><p><b>Loan amount<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">The loan amount depends on the market value of the property and on the borrower\\u2019s income. The property\\u2014prime security with the bank\\u2014is valued by the bank approved valuers and the loan amount is usually 50% of the market value of the property. For example: If the property value is Rs. 10 lakh, then the bank may approve the loan amount of Rs. 5 lakh for the borrower. The bank also considers the income criteria of the borrower which is three times of the last three years annual income.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">The minimum loan amount is Rs. 1 lakh, while the maximum loan amount varies from bank to bank.<\\\/span><\\\/p><p><b>Fees<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">The processing fee is usually 1% of the sanction limit of the loan amount. Other charges include lawyer\\u2019s fees and property valuation charges. These charges are borne by the borrower.<\\\/span><\\\/p><p><b>Documentation<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">The documents include last three years annual income statement of the borrower, last three years income tax returns and property papers such as original sale deed, encumbrance certificate, property tax receipt, last six months bank statement and other relevant documents as asked by the bank.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">An encumbrance certificate is needed in a property transaction as an evidence of free title and ownership. It is a document issued by the registration authorities.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">The tax receipts include maintenance, water tax, municipal tax and any such taxes. If the property is a self-constructed property, the bank would also ask for an approved plan.<\\\/span><\\\/p><p><span style=\\\"font-weight: 400;\\\">The other documents include proof of identity (copy of passport, ration card, voters ID or driving licence).<\\\/span><\\\/p><p><b>Tenure and repayment<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">The maximum tenure of the loan repayment is generally seven years. Repayment to the lender is done on equated monthly installments basis through electronic clearing service mandate or post dated cheques. The EMI comprises principal and interest rate.<\\\/span><\\\/p><p><b>Penal interest<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">Any default in repayment will attract penal interest of around 2% per annum over and above the above rate of interest on the balance outstanding.<\\\/span><\\\/p><p><b>What happens if the loan is not repaid?<\\\/b><\\\/p><p><span style=\\\"font-weight: 400;\\\">The property can be repossessed by the lender to recover its outstanding loan amount. To allow recovery of the loan amount, courts can order foreclosure (sale in the open market to recover dues) of the property.<br \\\/><\\\/span><\\\/p><p><strong>Courtesy :<\\\/strong>\\u00a0Financial Literacy Agenda for Mass Empowerment(FLAME)<br \\\/><strong>Source : <\\\/strong><a href=\\\"http:\\\/\\\/flame.org.in\\\/\\\">http:\\\/\\\/flame.org.in\\\/<\\\/a><\\\/p>\"}}]}<\/script>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"featured_media":9168,"template":"","class_list":["post-9172","faqs","type-faqs","status-publish","has-post-thumbnail","hentry"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Loan &amp; Borrowing - English (NCFE)<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ncfe.org.in\/faqs\/loan-borrowing\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Loan &amp; Borrowing - English (NCFE)\" \/>\n<meta property=\"og:description\" content=\"Faqs Mutual Fund Gold Loan &amp; Borrowing Financial Planning Banking Financial Literacy Loan &amp; borrowing Advantages of taking a home loan Considering the huge amount and the long tenure involved, a home loan is surely a liability. 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