A bridging loan as the name implies is a loan used to "bridge" the financial gap between monies required for your new property completion prior to your existing property having been sold. A bridging loan is in simple terms a short-term mortgage that is secured against the property that you are selling, with the money that is lent being used to complete the purchase of the new property. Because of the nature of their use, bridging loans can be arranged in a very short period of time, usually around seven to ten days, which is important when you need to complete on the purchase or risk loosing the property. Bridging loans are short term loans arranged when you need to purchase a house but are unable to arrange the mortgage for some reason, such as there is a delay in selling your existing property. Timing is of the essence when selling one property and buying another. Sometimes if you are looking for a new home and the right property becomes available, it is not always possible to wait until your current home is sold. The beauty of bridging loans is that a bridging loan can be used to cover the financial gap when buying one property before the existing one is sold. For example, if you are in a chain, where you are buying a property at the same time as selling a property, it's possible that you'll be put in the situation where you need to complete your purchase, but the funds from your buyer are not available. You are now under pressure to complete on a particular date but do not have the funds available. This is where bridging loans come in. They are looked on as short term lending to cover a specific short term need. Bridging loans can be arranged for any sum between £25000 to a few million pounds and can be borrowed for periods from a week to up to six months. Because of the nature of bridging loans they can usually be arranged at short notice and within a few days. Bridging loans are widely available and can usually be arranged by your existing mortgage provider. A bridging loan is similar to a mortgage where the amount borrowed is secured on your home but the advantage of a mortgage is that it attracts a much lower interest rate. While bridging loans are convenient the interest rates can be very high. When considering a bridging loan please remember that you may be paying not only for the bridging loan but also for the mortgage on your existing property. Although bridging loans are convenient, you need to consider the pitfalls too, like the high interest rates. The downside to the fast nature of these types of loan is that the interest rates charged on them are relatively high, this is because not only are they short-term and for large amounts, but the risks to the lenders of non-payment are higher than for other circumstances and this is taken into account when the loan rates are calculated. Although the rates are high when compared to other loans available on the market, when you take into account the short amount of time over which this interest is charged, and the benefits that a bridging loan can bring, the costs are reasonable. Bridging loans are designed to provide you with the equity from your current home in order to make your new purchase, before you are able to sell your own property. The loan is secured against the home that you are selling in the form of a mortgage or second mortgage, and will allow you in general to release around 65% of the property's value. With these funds you are then in a position to complete the purchase of the new property, and once your old property sells you can clear the bridging loan. If you are considering such a loan, you should be confident of a sale, and that you will be able to clear the debt within six months, as the high interest rates are something that you do not want to be paying long-term. Bridging loans are available to the people that have found it more difficult to get mortgages, such as those with an adverse credit rating. This enables these people to build a track record before applying for the traditional mortgage. Bridging loans can take from 48 hours at the shortest to around ten days if the circumstances are more complex. Despite the costs, bridging loans are very popular, after all if you have spent a lot of time searching for the perfect property you will not want to miss out on it because of a relatively short delay in the sale of your current property. It is in these cases where bridging loans can prove invaluable, enabling you to secure the sale of the home that you want, and concentrate on the sale of your property at a later date. Bridging loans can be provided for: Residential property Commercial property Land New build Renovations or refurbishment Speculative properties Conversions Overseas property
Military members the price for serving your country and defending freedom is difficult, fortunately finding the right loan to fit your situation doesn't have to be when you know where to look. Finding a loan provider that understands the pressures and time constraints that many military members are currently going through can be difficult and downright depressing. Lets be honest, after working upwards of 15 or more hours a day who has the time or energy to go seek out loan providers in person. Fortunately the Internet has easily resolved that problem. Using the Internet to find a military loan provider has leveled the playing field. Never again will you have to worry about talking to a loan lender during your short lunch hour or feel pressured to take the first loan that you qualify for. Now you can simply do an online search for military loan providers and find a loan provider for free in the comfort of your own home. Most online loan lenders allow you the opportunity to compare numerous quotes for free and you're never under any obligation to accept any loan that is offered to you unless it meets your specific needs, wants or desires. In most cases you can find out if you're approved for a loan within 24 hours. Some providers even have the capability to tell you within minutes if you qualify for a loan. The only requirement is for you to fill out a simple form on their website that usually takes less then 5 minutes. Don't worry; they also keep any information you provide secure and confidential. Best of all you can search for your loan at any time day or night - even in your pajamas if you so desire. Stop searching for a military loan the hard way. Instead use your computer and find the loan you need online without any time constraints or hassles.
Every one dreams of buying a home but most of us do not have sufficient funds in our bank account to make such a purchase. So we are left with the option of asking a housing finance company to finance our purchase. However choosing the best home loan lender is important if we have to escape all the hassles that are linked to availing a loan.
Also before you pick the lender for your home loan try to sort out in own mind the criteria you are looking considering your own credentials. Check on some important aspects of the loan, such as finance costs and interest rates. Tracing down a good home loan lender who can guide you through the entire loan procedure and help in accomplishing your dream of a nice house is a little difficult. So some of the following tips can help you in achieve your dream faster.
1. Finalize your property before the lender
You should always finalize the property you want to purchase before looking for lenders that would be ready to finance your house. This is important because some banks lend for a property that is already furnished while others extend for a self constructed property or property that is under construction. Thus it is better to finalize the category of your property first and then look for lender options. It will help us to focus in a defined area and extract all relevant information before finalizing on the lender.
2. Ensure your loan eligibility criteria
All the banks follow some eligibility standards for giving a loan. Primarily, it depends on your income and repayment track records. You can get details of all bank home loan criteria from individual banks or in the Rupeetimes Home Loan section and choose the one that can offer you maximum amount based on your income. The loan eligibility amount can also be increased if you club your and spouse’s income.
3. Fixed or Floating interest rate
One is always left in dilemma while opting between fixed and floating interest rate. It is always thought that a fixed interest rate means same rate throughout the tenure but sometimes it is adjustable after a certain period of time, provided which either your EMI amount or the loan tenure can increase. Thus it is better to clear this point in hand with your lender. On the other hand, if you are opting for the floating rate loan, make sure that your lender’s floating rate has come down at least over the past two years. Market scenario should also be analyzed if you planning to avail a floating rate loan as it depend on the economy’s interest rate. Some time back Rupeetimes.com covered an article describing the pros and cons of fixed and floating loan rates.
Banks always charge a fee in order to apply for loan with them. This fee is known as the processing fee and is non-refundable. Generally it varies between 0.50% and 1% of the total loan amount. However one should be clear that paying a processing fee does not mean that o loan will be sanctioned by the bank. Therefore it is always better to have written agreement with your lender. A switching fee is also charged if plan to switch from a floating rate to fixed rate. The catch is that you can try to negotiate on this. Some banks on negotiations even give you a flat processing fee.
5. Assure all the hidden costs
Mostly the interest rate charged by the bank is taken into consideration while taking a loan but there are large hidden costs involved with most loans that prick the borrower’s pocket. Hence it is advisable to decide on all legal charges, pre-payment charges, valuation fees, processing fee and other hidden costs before a loan is availed.
6. Be assured about the lender before making a choice
You should always be well informed about your lender as it will help to have a clear picture about the future. Depending on where you live, you can locate online comparison on rupeetimes.com that will tell you about a number of similar lenders suiting your needs. At a glance you can get all the right and detailed information you need and on what each lender can offer to its customers. If you match up what each lender can give you to what you are actually looking for and which best suits your needs, you can then compare it with others.
Free Auto Loan Tips The following tips should help increase your chances of getting a car loan at a better rate. Tip #1 - If you just started a job (recently graduated from college) then wait 6 months to apply for your car loan. Tip #2 - If you have currently have bad credit then repair it before applying for an auto loan. Tip #3 - If you've recently moved then wait until you have lived at your new address for 6 months before applying for a loan. Tips #4 - If you have had a previous auto loan or home mortgage on your credit report then your chances for a new loan improve greatly. Tip #5 - Try and pay off all of your credit card balances or at least lower them. You may want to consider finding the best debt consolidation loans to erase all of your credit card bills. The bottom line is don't keep a high debt load or credit card balances. Tip #6 - You must have a stable job or occupation. Tip #7 - Other examples of credit extended to you should appear on your credit report. Verify this with a quick and easy online credit report. Also avoid charge off's on your credit report. Tip #8 - If you've filed bankruptcy before then you should wait 3-4 years before trying to get an auto loan. Free Home Loan Tips Tip #1 - Make Bi-Monthly Payments: Instead of paying your mortgage with one monthly payment switch to paying half of your loan payment every 2 weeks. The savings comes from the 26 half payments you make which add up to 13 monthly payments versus the regular 12 payments you would normally make in a year. The end result is you save a large sum of money on the interest owed and you'll own your home a lot sooner! Tip #2 - Choose a 15 year mortgage instead of a 30 year mortgage: You'll end up with a higher monthly payment but in the long run you also save tens of thousands of dollars in interest charges, especially if you shop for the best home loans you can afford. Tip #3 - Mortgage Refinancing: Currently this is the most popular trend. You refinance your mortgage if you can get a rate that is at least one percentage point lower than your existing mortgage rate and plan to keep the new mortgage for several years or more. Tip #4 - Buy down the rate: The seller or builder, or through innovative pricing, can help you buy down your mortgage rate for one, two, or three years. Tip #5 - Consider an adjustable-rate mortgage (ARM): If you think you will be in your house for less then 5 years then perhaps you should consider an ARM. An adjustable-rate mortgage (ARM) starts with a considerably lower interest rate, but then adjusts every year. This type of loan moves a little bit of the risk away from the lender, and the lender rewards you with a lower rate. Usually these mortgages are capped to rise not more than two percent in any year, and not more than five or six percent for the life of the loan for your protection.
| (1) USE CLICKS FOR BRICKS |
Ho hum! Is this article about another one of the traditional brick and mortar corporates, making a foray in the virtual world? Nope, it sure isn't. This is about using the myiris.com home loans site for finding your set of bricks and making a home out of it. Even if you intend living out of a suitcase, this site helps you find some place to dump your suitcase. |
| (2) LOAN MELA |
It’s like a mela out there what with the number of banks and housing finance companies (HFCs) competing to give out loans. Today there are about 20 National Housing Bank-registered HFCs and over 200 unregistered HFCs in the country wanting to dole out loans. Getting a loan would seem easy given this scenario. But is it? Before the oft-repeated Hindi film scene of getting lost at the mela occurs here’s what you need to consider before going in for a loan. This way you don’t need to go through the hajhaar hassles before the invariable happy ending. |
| (3) WHY TAKE A HOME LOAN? |
What's an average Indian's most cherished dream? A world trip with Aishwarya Rai would seem to be the answer as seen from the various episodes of Kaun Banega Crorepati (KBC)! Jokes apart, moving into their dream house would rank among the top three things on the wish list of most people. After all, there's nothing like having a roof, particularly one's own, over one's head. All that house hunting every few years, grumpy landlords, killing rents would be a thing of the past. Hey, you even get to use nails to hang your favorite paintings and pictures. Taking a home loan nowadays has many advantages. Added to this, the RBI has been regularly slashing interest rates, with the result that housing finance loans that came at an interest rate of 16.5% to 18% four years ago are now available at 11.5% to 13% or lower. Each year the Finance Minister's largesse during the Budget seems to be solely concentrated for the housing sector and construction sector. The Budget 2000's allowed interest payment upto Rs 1 lakh and principal payment of Rs 20,000 to be exempted from income tax. To top it all, the Housing Finance Companies (HFCs) are aggressively wooing customers. When EVERYTHING seems to be on a roll, make the best of the situation. |
| (4) WHAT ALL CAN I TAKE A LOAN FOR? |
There are different types of home loans tailored to meet your needs. Here’s a dekko of some of them: Home Purchase Loans: This is the basic home loan for the purchase of a new home. Home Improvement Loans: These loans are given for implementing repair works and renovations in a home that has already been purchased by you. Home Construction Loan: This loan is available for the construction of a new home. Home Extension Loan: This is given for expanding or extending an existing home. For eg: addition of an extra room etc. Home Conversion Loan: This is available for those who have financed the present home with a home loan and wish to purchase and move to another home for which some extra funds are required. Through home conversion loan, the existing loan is transferred to the new home including the extra amount required, eliminating the need of pre-payment of the previous loan. Land Purchase Loans: This loan is available for purchase of land for both construction or investment purposes. Bridge Loans: Bridge loans are designed for people who wish to sell the existing home and purchase another one. The bridge loans help finance the new home, until a buyer is found for the home. |
| (5) HOW MUCH WILL THE BANK/ HFC LEND? |
The corollary to this question is - How Much Can I Afford? This is presuming that questions like what sort of loan I require what sort of time frame am I looking to get a house/flat, its ranking on my priority list etc have been thought out and you are gung ho about the idea of a house. The amount of loan, the bank/HFC gives you depends on three more or less similar questions they ask themselves about you: Will we get our money back? - This roughly translates to finding out whether you make enough money to pay back the loan. Can this guy repay us? - This translates to finding out your credit worthiness and the risk profile Are we safe? - This translates to taking a check on the collateral - if you have a co-guarantor or something of value - should you be unable to repay the loan Amount Tenure Interest Rate Miscellaneous charges a) Interest Tax b) Processing Charge c) Prepayment Penalties d) Commitment Fees e) Others |
| (6) WHAT ALL IS REQUIRED TO GET A LOAN |
Having homed in on the bank and the type of loan you require, comes the toughest part of how to get a loan. Getting a loan isn’t like taking a walk in the park. The bank requires a plethora of documents for ascertaining your credentials and details of the plot/house/flat. Here’s a sample of what you need to produce to get your loan: Common (for salaried as well as self-employed borrowers) For salaried borrowers For self-employed borrowers |
| (7) DO I NEED TO GET INSURANCE FOR MY HOUSE |
Many lenders may insist on getting your home insured to safeguard their interest. After all, if say your house, which you hadn’t insured gets destroyed in a fire, the loan lender will be left high and dry without any collateral. There are various kinds of insurance covers available for a homeowner. The various options may be insurance against fire, against other disasters, etc. Apart from getting the mandatory ones you should try to get insurance as per your circumstances.(for further details check the Sure Insure section). |
| (8). HOW MUCH TIME DOES IT TAKE TO GET THE LOAN SANCTIONED |
Finally, once all the nitty-gritty but essential work of selecting the land/ home, completing all the legal documentation's etc is completed, you can think about getting your loan. It takes around fifteen days for processing of one's application if the documents are in order. It takes another week for the company to check out the property papers and make the disbursement. In case of property under construction, the disbursement is made in installments according to the stage of construction. |
A home loan helps you reduce your tax burden besides offering the pleasure of owning a house and living in it. Home is where the heart is, and in today's world, home is what takes up a good part of your income as well. Most people, young and old, have equated monthly instalments to worry about, which makes home loans a subject of pressing concern. First the benefits, apart from the obvious one of having the pleasure of owning a house in due course of time. Taking a home loan is a great way to reduce your tax burden. Resident Indians are eligible for tax benefits on principal and interest components of a loan under the Income Tax Act, 1961. The tax deduction can be claimed on interest payments subject to an upper limit of Rs 1,50,000 for a financial year. Moreover, you can get added tax benefits under section 88 on repayment of principal amount upto Rs 20,000 per annum which can further reduce your tax liability by Rs 4,000 per annum (tax rebate of 20 per cent on the principal repaid, subject to a principal ceiling of Rs 20,000 per year). Benefits aside, most of us still have to grapple with the fine print of a loan agreement. Increasing your loan eligibility The greater your tenure, the bigger the loan eligibility. Since the monthly installment per lakh is lower for longer-tenure loans, banks disburse a higher loan for the same income. Another way to increase eligibility is to club incomes of allowable relatives such as spouse or parents or children or siblings. If you have the funds and can invest higher down payment amounts then take a smaller percentage of the cost of the house as a loan. Show proof of repayment track record for a past loan (car/home/personal loan) or a credit card with a large recognised lender. The bank may be persuaded to increase the income-based eligibility after examining the repayment track record. Other things being equal, your existing bank (especially a private sector bank) is likely to give you higher loan eligibility than others because it is privy to your savings account. Funding your down payment requirement If you are not able to fully finance the margin amount, you can also take a personal loan along with your home loan. This can happen if your monthly income is above Rs 10,000, or if you are a practising professional. But personal loans -- being expensive and for a short tenure -- are likely to drain your monthly resources. Take this option only when you have resources to pay off the personal loan from sources other than those taken into account for your home loan. You can provide adequate additional security by pledging liquid financial assets such as shares, securities, fixed deposits, insurance policies with existing high surrender values, etc. in lieu of the 10-15 per cent margin money expected from you. You can obtain a loan against the surrender value of your life insurance policy from the life insurance company or from a bank. You could also take a loan from your employees provident fund account if you have had such an account for more than five years. How to get the best rate for your loan Unless loan amount is a constraint, approach prospective lenders only after the property is finalised and disbursement is required in the next few days. Most lenders reserve their best rates for immediate disbursement cases. Bundle your loan request with the loan requirements of your friends and colleagues and thus offer a larger loan portfolio to the bank. This can be specially powerful if the property is in the same building since the legal and technical costs can be reduced which can then be passed on as a benefit to you. If the property is being bought from a reputed builder, you can also employ the month-end trick by negotiating till the 23rd or 24th of the month. Every bank has monthly targets for its staff and as the month-end nears the bank offers slightly better terms to enable them to fulfil their target. Remember all rates are negotiable. Check around in the market before finalising your lender. Can one get both exemption of HRA as well as deduction of interest payable on the home loan? A number of salaried consumers take a home loan to acquire a residential property but do not stay in that property for various reasons. They stay in rented premises for which they pay rent. If they are receiving a house rent allowance from their employer a question frequently arises whether they can claim exemption of their HRA based on the rent actually paid by them as well as the interest payable on the loan taken to acquire the owned property. To answer this question we need to look at the relevant part of the Income Tax Act and the rules. The exemption of HRA is covered under section 10 (13A). Simply speaking the only conditions for allowing the exemption of HRA are: Rent must actually be paid by the assessee (legal term for the person whose tax liability is being worked out) for the rented premises, which he occupies. The rented premises must not be owned by him. As long as the rented premises are not owned by the assessee the exemption of HRA will be available upto the limits specified in the relevant rules. There is no mention here about any effect on the exemption because of ownership of any other property. Let us now turn to the deduction of interest payable on a home loan. Contrary to popular perception the interest is not a straight deduction allowed from the salary income. The deduction is actually allowed while calculating the 'income from house property' though the effect (given below), in the case of self occupied property, is the same as allowing it as direct deduction from salary income. The relevant sections are section 22 to section 27. Again putting it very simply the calculation of 'income from house property' is done as under: Income from house property (H) = A-S-I, where A = annual value = rental income (net of municipal taxes), less S = 30 per cent of A as a standard deduction, less I = interest payable on any loan taken for acquisition or construction of this property. The point that we must remember is that "income" can also be negative or in other words include a calculation of loss. In the case of self occupied property the annual value 'A' is taken as 'nil' (therefore 'S' automatically becomes nil as 30 per cent of 0 is 0) and 'I' is restricted to a maximum of Rs 1,50,000. Therefore in the case of self occupied property the result of calculation of 'income from house property' or 'H' will always be a loss to the extent of the interest payable on the home loan or Rs 1,50,000 whichever is lower. Where the property is given on rent the annual value will be calculated based on the rental and the final income (or loss) from house property will be calculated as given above. Please note that in such a case there is no restriction on the maximum amount of deduction available in respect of 'I'. 'Income from house property' is either taxed (if it is positive) or if it is a loss, it is allowed to be set off against the income from other heads including salary (and hence the popular misconception that interest on home loans is allowed as a deduction from salary income as the impact, in the case of self occupied properties, is the same as a direct deduction of the interest from salary income). There is nothing in the section that affects the exemption of HRA at all. Also there are no conditions that restrict the availability of deduction of interest based on the assessee's stay in any other premises.
