 |
 |
- Can I repay the loan ahead of schedule?
- On what basis is the amount of the home loan decided? or on what basis a capacity of a person to repay the loan is evaluated ?
- What are the types of loans available depending on the interest charged?
- What is the difference between monthly rest and annual rest?
- What is the security required against the home loan?
- What are the other costs in Home Loans?
- What is an EMI?
- Fixed, Variable Or A Combo Which Home Loan Is Best? (Would a floating rate of interest home loan work out to be better as component as compared to the fixed one, or would a combination loan just be your best bet? )
|
| |
| |
| Q. |
Can I repay the loan ahead of schedule? |
| A. |
Yes, you can repay a loan ahead of schedule. Some HFCs charge a pre-payment penalty. |
| |
|
| Q. |
On what basis is the amount of the home loan decided? or on what basis a capacity of a person to repay the loan is evaluated ? |
| A. |
The amount of home loans granted by various financial institutions generally is between 2 lakhs to one crore and between 70% to 100% (under special schemes) of the purchase price. The amount of the loan for each individual depends on the following factors:-
- The income of the family applying for the loan.
- Age of the applicant for retirement or years left for completing 65 years.
- Number of dependants
- Qualifications
- Assets and liabilities
- Stability/ continuity of the employment/ business of person applying for a loan.
|
| Q. |
What are the types of loans available depending on the interest charged? |
| A. |
Most Housing Finance Companies offer the fixed rate as well as the adjustable rate (Variable) home loan to customers.
- Fixed rate: where the rate of interest charged by the HFC on the loan is constant over the tenure of the loan.
- Variable rate: where the rate of interest charged by the HFC on the loan keeps changing with respect to the rates in the market over the tenure of the loan.
|
| Q. |
What is the difference between monthly rest and annual rest? |
| A. |
- Monthly rest: the interest is calculated on the outstanding principal loan at the beginning of every month.
- Annual rest: the interest is calculated on the outstanding principal loan at the beginning of every year.
|
| Q. |
What is the security required against the home loan? |
| A. |
The main security for a home loan is the first mortgage of the property to be financed, normally by way of deposit of title deeds and/or such other collateral security as may be necessary. In addition interim security may be required, if the property is under construction. The documents of title will be kept in the safe custody of the HFC until repayment of the loan. |
| |
|
| Q. |
What are the other costs in Home Loans? |
| A. |
Normally, the other costs include the processing fees, administrative fees, pre payment charges, delayed payment charges, if any. Some HFCs also charge legal fees and technical fees from the customers while others may include charges for stamp duty and registration of the mortgage deed, if they are going in for a registered mortgage deed. |
| |
|
| Q. |
What is an EMI? |
| A. |
Home loan repayment is by Equated Monthly Installments (EMI) comprising of both principal and interest. EMI is to be paid every month through post dated cheques or through direct deductions from the salary. Pending final disbursement, you pay interest on the portion of the loan disbursed. This interest is called pre-EMI interest. Pre-EMI interest is payable every month from the date of each disbursement upto the date of commencement of EMI. |
| |
|
| Q. |
Fixed, Variable Or A Combo Which Home Loan Is Best? (Would a floating rate of interest home loan work out to be better as component as compared to the fixed one, or would a combination loan just be your best bet?) |
| |
A new home loan is on the cards since the past few months, the home loan interest conundrum has them some what confused. “In the past, the choice was simple: you opted for a fixed for a fixed home loan, or a variable one. now there’s a third option – Flexi –which combine a bit of both. Friends suggest we opt for a floating rate, elders in the family prefer fixed and my chartered accountant has been suggesting the combination scheme, the ‘flexi’. Frankly, it is confusing, now with media reports suggesting Housing finance company (HFC) will raise interest rates, it only adds to the confusion. Considering the question from the realtor’s view-point, I thing home buyer should go in for the flexi, very simply because as a n individual home buyer, you will not have the resources to take on the HFCs in any confrontation. If it a variable or floating home loan, the basic sentiment in a home loan taker’s mind is that he or she has no control over fluctuations in the rate. A fixed home loan is (fixed rate money market condition) “fixed” for just the three first three years, there is a clause which lets HFCs re-set the interest rate – which does not make ‘fixed’ seems rather unreal. This is where a flexi loan, which gives the best sense.
From the builder point of view home loan fuelled growth in the residential real estate segment over the past few years. ”Low interest rates on home loans, tax benefits and variable interest rate s fuelled the residential reality market for actual user. So advise to home buyers “Don’t just follow the crows, do your own calculation, don’t skip the home work, consult your financial advisor or taxation consultant before you decide which home loan scheme to opt for fixed, floating or flexi.
It is your entire financial situation, your sources and resources of income your home’ loan value. Marginal increase in home loan in interest rates, need to be viewed in proper perspective – a middle class family which has taken a home loan, with an EMI that is about 40 to 50 percent of loan income definitely be affected.
Considering the current interest rate scenario and to protect against any upward movement in future, the “middle path” flexi loan does seem to have plus point. ”For those who are about to take the home loan, this may be the better option. However before taking a final decision on this on this, it would be advisable to consider factor like profile, tenure of the loan, prepayment charges and the ages of the borrower. Hope fully home loan seekers will find such advise the same option. |
| |
|
