Property investment is not just about purchasing the property you like. It involves thorough planning, accessing goals and eventually finalizing on a property which can offer you that much-needed comfort and peace of mind. The best time for investment in Thane property is now.Piramal Vaikunth Phase IV is such a project in Thane, Maharashtra that promises tranquility in the hustle bustle of the city
Besides lower interest rates, home loan transfer also accompanies a range of benefits like better service, pre-approved offers and many more.
However, to leverage the optimum advantage, individuals have to consider a few things. Here are some of them.
- Time of refinancing
It plays a crucial loan in determining the profitability of this facility. Generally, in the initial stages of repayment, individuals mostly service their interest liabilities. Thus, it is often wiser to opt for this facility during the first half of repayment term.
Financial experts also suggest avoiding this option after 3 years of repayment.
- Negotiate Interest rates
Before switching a lender, existing borrowers should negotiate with their lenders for better home loan interest rates. Lenders often offer revised rates to those with impressive repayment history.
Thereby, individuals can save on several charges that are applicable while availing this facility.
- Additional charges
Typically, a home loan refinancing comes with several charges that borrowers are entitled to pay. For instance, borrowers need to pay processing fees, foreclosure fees, inspection fees, administration fees and others.
Thus, before approaching a new lender, borrowers have to weigh if the charges worth the transfer. For more clarity, they can also use a home loan balance transfer calculator to estimate the cost of this facility.
- Repo-rate linked loans
RLLR or Repo-rate Linked Lending Rate is determined by RBI. If the repo rate decreases, the interest rates also decrease and vice-versa. Since interest rates are subject to the market scenario, individuals may have to pay a higher interest rate than before in the event of rate hikes.
On the other hand, borrowers get immediate relief when RBI cuts repo rate, resulting in reduced EMI outgo.
- Credit report
The eligibility for this facility also relies on the credit history of the borrower. Lenders generally offer loan transfer facility only to those who have an excellent repayment history and a credit score of 750 and above.
Hence, keeping these facts in mind, individuals can make most of this home loan transfer facility and lower their home loan EMI burden.
Paying home loan EMI during a financial crisis can be challenging. However, following are some simple tips for borrowers to reduce home loan EMI burden.
- Extend loan tenure
Home loan EMI reduces with longer tenure. Thus, if you face difficulty in paying EMIs, you can request your lender to extend the loan tenure to suit your repayment capacity.
In that case, you have to contact your lender and inform them about the situation and cite the logical reason for this request. The lender will assess the situation and will suggest solutions accordingly.
However, you also have to remember that lengthening tenure also means extending liabilities for a longer time and increased interest costs.
- Opt for a home loan balance transfer
Another great way to reduce home loan EMIs immediately is opting for home loan balance transfer facility. Individuals with a good repayment track record can look for a lender that offers a home loan with a lower interest rate and other additional facilities.
Borrowers can transfer their outstanding loan amount to the new lender and settle for affordable monthly instalments.
- Keep emergency funds
One of the best ways to cushion financial difficulties is maintaining emergency funds while you have a strong financial foothold. To address the shortage of money, you can take out a certain portion of monthly income and deposit it in that fund.
Financial experts advise maintaining an emergency fund of 3% to 4% of one’s monthly income and gradually growing it to 12%. It will allow one to continue paying EMIs sans difficulty, even during financial crunches.
- Liquidate assets
Borrowers can also consider liquidating their assets that generate the least profit. However, they should not let go of the assets that hold a higher value.
Before availing a home loan, individuals should calculate associated EMIs, keeping in mind the financial crisis that may arise sometime during its tenure.
Besides, following the ways to reduce home loan EMI burden, individuals should also carefully determine their loan amount. It will help them to tackle financial liabilities with ease. Read Also: Top 6 Effective Ways to Increase Your Home Loan Eligibility
Lenders set home loan eligibility that prospective borrowers need to fulfil to get their desired fund. Depending on these prerequisites, lenders approve credit only to eligible candidates.
Following are some of the tips that borrowers can choose to increase their home loan eligibility.
- Choose a lower loan amount
Individuals can lower their loan amount to ensure a guaranteed loan approval. The low principal means a limited risk for lenders. Thus they can approve the amount easily.
- Maintain a good credit score
The credit score is one of the crucial factors that determine the eligibility of a borrower. Thus, prospective borrowers should start adopting financial habits that help with improving eligibility.
For instance, borrowers generally need to have a credit score of 750 and above to be eligible for a home loan. To ensure such scores, individuals need to service their existing dues on time.
- Opt for a joint home loan
If you have a low credit score, you can also opt for a joint home loan with a co-applicant whose scores are more impressive. Since it reduces the risk factor for the lenders, individuals can opt for a big-ticket loan while applying with a co-applicant.
- Showcase all income sources
Another effective way to convince a lender about your repayment capacity is citing all income sources, besides monthly salary. In this regard, they can also mention the rental yield, interest income from a fixed deposit, etc.
- Reduce the FOIR
Fixed Obligation to Income Ratio is a crucial parameter that determines the home loan eligibility. Most financial experts advise maintaining a FOIR of 40% to 50% that would help them improve home loan eligibility. Along with that, borrowers should also limit their credit utilisation ration below 40% to enhance their eligibility.
- Choose a longer tenure
The EMI payable reduces with longer tenure and vice-versa. Consequently, it also lowers the risk to lending institutions of delinquencies.
These are some of the tips that individuals can follow to improve their home loan eligibility and instant approval of the credit required.
When you have taken out a loan, a top-up is an additional advance over and above the existing loan amount. Such a facility is popularly termed as top-up loan. It is particularly helpful when borrowers need new credit, but do not seek to avail external financing. As the borrower’s credentials are already submitted to the lender, securing top-up is hassle-free and less time-consuming.
Here are some of the dominant reasons why a top up loan can be a favourable option –
- Faster processing and disbursal
Since this additional credit facility is availed from an existing lender of home loan, both the verification process and fund disbursal happens quickly. All the relevant documents of the borrower have already been vetted.
- Simpler criteria
While borrowers opting for balance transfer can readily avail a top-up loan, it involves the simple CIBIL score criteria 750 or up, and a healthy credit repayment history.
- No-end use restriction
One of the major advantages of this additional credit is that there is no restriction on final utilisation of this fund. You can use to it meet any requirements, which may or may not be related to housing. For example, you would have the liberty to use it for interior decoration or to meet a medical emergency.
- No further collateral
Borrowers are not required to submit any other collateral apart from what has already been mortgaged while taking out the home loan. Naturally, this credit line is a favourable option among borrowers.
- Easy interest rate
The interest rate on top-up is relatively lower than other unsecured loans, making this credit facility more cost-effective.
- Income Tax benefits
Borrowers can enjoy income tax benefits for funds available under this credit facility if used for a home extension, renovation, construction, etc.
Should you seek to derive the full benefit of this credit line, find out about the top-up loan option on the home loan offered by your lender, and streamline your plan to use funds, accordingly.