07 Jun, 2012 By:
The cost of living is very high and is on a consistent rise. People who are looking forward to buy property can't pay the asking price on their own, given the heavy price tags associated with realty business in the country. They are left with no other choice to get a loan. And when it comes to applying for a loan, one can get great benefits from adding a co-applicant to his loan application. A co-applicant is a person who can jointly apply for a loan with the primary applicant.
The main advantage of having a co-applicant by one's side is increasing the odds of getting a larger amount loan. When two people jointly apply for a loan, one is listed as the primary applicant and the other as co-applicant. During the process, the lender examines the application, both applicants' credit score and overall financial standing in order to decide the loan amount and tenure. After the loan is granted, both applicants become co-borrowers and account for debt repayments as per their shares.
So, who can be a co-applicant? Family members – spouse, parents, brothers and children are the only people who can jointly apply for a loan. It actually varies from one bank to another – some banks don't allow siblings to co-apply. And the person co-applying must not be a minor. A co-applicant can be a brother, but not a sister. Even in case of a brother, it's important that both the brothers stay together and also intend to do so in the newly purchased property.
Though designed for maximizing loan eligibility, co-applications' biggest advantage is tax savings. A borrower can claim tax deduction on the loan's interest portion under Section 24(b) of Income Tax Act. Both the borrowers are entitled to tax benefits in the proportion to their share of the loan amount. The principal repayment component as well as the interest usually exceeds the deduction limit only because the amount is extremely large when applied jointly.
Having a co-applicant has its downside as well. If a person is in course of preparation for investing in a second home, he will have to be confronted by some loss. As per the Income Tax Act if a person owns more than one house, only one will be considered as self-occupied and others as rented out. Henceforth, he will have to pay tax on the rent received because one of the house is considered rented out, even if that's not the case. This means the person will have to pay tax on an income he is not receiving.
Applying for a joint home loan comes with significant benefits in optimizing loan eligibility and getting tax benefits. And at the same time, has a drawback as well. Therefore, one must very carefully gather all information about co-applications in order to make an informed and right decision.
07 Jun, 2012 By:
With the skyrocketing prices of just about everything, our expenses are rising simultaneously. And because of these packed budgets, most of us struggle to pay mortgages. Maintaining a perfect balance between monthly expenses and debt repayments, becomes very hard sometimes which may result in home foreclosures. If one is lagging behind on his mortgage payments, he should try out some simple solutions that may help him save his home from being foreclosed.
1. One shouldn't ignore any letter and notice from the bank as these keep him posted about every detail relevant to the procedure so that he can get right assistance to get the matter resolved within time.
2. Due to any reason, if one is going to fall behind on repayment, he must call the bank ASAP and inform them about his plight.
3. Get a reinstatement figure from the bank. It gives the info on previous payments, precise amount due and exactly how much money is required to bring the loan back to current status.
4. If it has been three months aggregating past due, the debtor may get in trouble. The bank will officially place the property in foreclosure status and the amount to bring the loan back to current status will be more than before because of the addition of late fee and legal fee. Adding to the troubles, the bank can refuse to accept any payment unless the debtor pays entire past due amount.
5. Creating a budget comes very handy. One should enlist all his monthly expenses as well as sources of income each month. This out-and-out information will help the attorney in sorting things out, in case the borrower decides to seek legal assistance.
6. Loan modification is another aide-de-camp in eluding foreclosure. One can ask his lender to lower interest rates or monthly payments through loan modification.
7. It's of absolute importance that one follows up his loan modification plea. It's not unusual to find out that the lender is going through foreclosure process exactly when the borrower is applying for loan modification. Therefore, one should contact the lender very frequently and ensure that the foreclosure process is being put off for a while and the loan modification application is being reconsidered.
8. Don't fall into a trap. Many companies make false promises to help the borrower save his home from being foreclosed. As appealing and affirming it may sound, one must not fall for such bonds. One should realize that no third party can help him retain his property and he may end up losing the house as well as additional money paid under such scams.
9. Another thing that may help the borrower is taking responsibility. If the lender is convinced that the borrower is being financially responsible regarding his payments, he (lender) is more likely to cut the debtor some slack. So, what one needs to do is cut back on the expenses and find different sources to earn from in order to arrange for payments.
10. Consulting a local attorney helps a great deal. Lawyers with expertise in foreclosure issues can provide the borrower with some excellent advice. Bankruptcy lawyers can be really helpful here as they have immense experience in putting an end to foreclosure auctions.
06 Jun, 2012 By:
Having a home is a cherished dream of an average Indian. Due to the skyrocketing prices of property, many people have held themselves back from buying their dream homes. But courtesy of home loans, this far-fetched dream has turned into a close reality for many. Whether purchasing an already-built house or constructing it from the ground up, finalizing on one takes plenty of time and effort. Additionally, deciding on the home loan is one of the most crucial aspects of buying a home. Thereby, one must be considerate of several important factors when making the decision.
Type of Property :
An Indian citizen (resident or NRI) considering a purchase of a property is entitled to apply for home loans to an accredited financial entity in India. Before applying for the loan, one must consider the kind of property he is looking forward to buy. Lenders offer home loans for three different kinds of property:
ready to move in home
construction on a pre-owned plot
under construction house from a third party
Repayment Options :
Once one has decided on the property type, he must research on the loan repayment options provided by various banks. Factoring in different aspects like property prices, borrower's income, his previous repayment records, etc., the lending financial institution decides on the loan amount and repayment structure.
Several institutions allow borrowers to switch from floating rate home loan to fixed rate home loan. Adding to that, a no-penalty option is also on offer by a few financial institutions wherein one has the option of prepaying up to 25% of his loan each year. These options can make repayments extremely convenient for the borrower. Therefore, it's of utmost importance that the borrower does his homework on differing options on offer by various lenders.
Loan Period :
All kinds of loans available in the market are offered for different time periods. A person can opt to repay the loan within five years or take up to as much as 25 years. One should keep in mind two aspects here:
the longer the loan period, the more interest to be paid
the longer the loan period, the more tax benefits
Aggregate interest and tax benefits are the two main concerns for the borrower and he must give a deep thought to his repayment capacity, higher interest rates and longer repayment period, prior to making a decision. One can take help of friends and family members to aid in making a balanced decision so that he doesn't end up losing a fortune over repayments.
Due to the high property prices, chances of getting a loan passed for the required amount are less. Therefore, several banks let loan co-applicants combine their incomes in order to increase the loan amount. The repayment installment amount is divided between both the applicants which makes it convenient. Pretty much all the lenders allow co-applicants to apply for home loans, but the definition of co-applicants differ from one lender to another – spouse, parents, siblings and children come in the category.
27 May, 2009 By:
A house to live is a basic necessity for every person. Banks and other financial institutions offer home loans to people who meet the required eligibility criteria. It helps those people who can not afford to pay the full price of a house.
To avail of the facility of a home loan you need to have certain qualifications. The eligibility criteria are related to a person's age, income, past repayment history and the cost of the property. It also considers the person's work experience, number of dependents, spouse's income, stability of income and employment, assets, liabilities, etc. Banks normally lend up to 3-4 times the annual gross income as a home loan. Every bank has its own set of eligibility criteria that may differ slightly.
Banks need certain documents at the time of applying for a home loan. The types of documents may vary, though normally those include proof of age, proof of identity, proof of residence, salary slip of last three months along with salary certificate, proof of continuity in job for last two years or Form 16, bank statement for last six months, proof of business address in respect of businessmen, etc.
Due to the booming Indian economy, there is a lot of competition among banks to offer various kinds of retail loans to people. The banks keep cutting interest rates and keep offering attractive terms and conditions to lure customers towards the banks. Owning a home of own is a dream, which is easier to realize now.
20 Apr, 2009 By:
Owning a house of own is a dream for every person. Lots of people go for any bank loan in the case they can not afford to pay the full price of a house. Banks and other financial institutions offer home loans to people who meet the required eligibility.
Various banks offer home loan with their own terms and conditions. The interest rate, eligibility criteria, documents required, etc, all differ depending on the bank offering the loan. Many banks may be having some fine print or “conditions apply” that need to be carefully looked into. It is better to verify the facts properly before deciding to go for a loan offered by a certain bank. It may also happen that you may qualify for the loan of a certain bank only as it may differ depending on the bank.
It is advisable to do proper research before going for any loan. Ask the people who have opted for a personal loan for their views on what bank offers the best loan. Many a times it happens that you go for a loan offered by a bank and later repent about your decision.
Do proper study of the banks' eligibility criteria. You need to have certain qualifications for getting a home loan. The eligibility criteria are related to your age, income, past repayment history and the cost of the property. It also considers your work experience, number of dependents, spouse's income, stability of income and employment, assets, liabilities, etc. Banks normally lend up to 3-4 times the annual gross income as a home loan. Every bank has its own set of eligibility criteria that may differ slightly.