Looking for home loan? Here’s how to choose your lender

You have zeroed in on your dream home and it fits your budget . The next step is to identify the lender who will provide the loan you need to make the purchase. It can be a daunting task, given the number of financial institutions and banks operating in the space. "Eligibility criteria, interest rate, processing fee and other factors will be key to deciding your lender," says Rishi Mehra, Co-founder, Deal4loans.com, a loan comparison service engine. Start your search by evaluating the home loan offerings from lenders in the following manner.

Loan amount and eligibility
The quantum of loan you are likely to get will depend on your monthly income and the value of the property. Typically, the loan amount would be 80-85% of the property value. However, it could be more in some cases. "For property valued up to Rs 30 lakh, the customer can avail of a maximum of 90% funding, subject to his income eligibility as assessed by the lender," says Mehra.

The RBI, through a notification last year, allowed a loan-to-value ratio (LTV) of up to 90% for home loans of Rs 30 lakh or less. Earlier, 90% LTV was allowed for loans of up to Rs 20 lakh. Whether you get a home loan at all or not would depend on your occupation (salaried or self-employed), disposable income and number of dependants. Remember, a bigger loan would imply a smaller down payment, but a higher EMI.
Interest rate
The rate of interest on the loan, which will influence the EMI and the total interest paid by you, must be considered before applying for the home loan. Shop around for rates and choose the most competitive one. You also need to find out if the rates are fixed or floating. When rates are fixed, there are no fluctuations. Floating rates vary according to market conditions. "Fixed rate of interest is 25-100 basis points higher than the floating rate. For a shorter loan tenure of 2-5 years, it is better to opt for fixed rates. But for a longer tenure, floating rates works best," says Mehra.



Responsiveness to change in rates
Another important thing is to judge your lender based on how quickly and by how much the lender changes its interest rates following policy changes by the Reserve Bank of India. For instance, if a lender is usually seen reducing rates in response to a cut in repo rate by the RBI, then one should opt for that lender. That is because you can expect a fair deal from that lender not only now but also in the future.

Processing charges and prepayment
The processing fee is the charge banks deduct for processing the loan. This can be anywhere between 0.25%-2% of the loan amount. Lenders also set terms and conditions pertaining to prepayment. "Borrowers must clarify the terms related to settlement/foreclosing the outstanding amount, transferring the balance to another lender's account, prepaying a part or full amount of home loan, and other things, before finalizing a lender. There are also processing and legal fees associated with home loan approval and disbursal.

Documentation
Though most lenders seek the same documents, like proof of age, address and income, actual requirements may vary.

Turnaround time
The time taken to sanction and disburse home loans varies from bank to bank. On an average, banks take around five days to sanction a home loan, provided all documents are in order. "There are a number of post-disbursement services involved. These include getting regular account statements and interest certificates on time every year. Choose a lender with strong systems and good record of after-sales service," says Shetty.

Once you have judged the banks and the housing finance companies on the above parameters, "try to choose what is best suited for you rather than just judging them on one single factor. It will help to close on the best housing finance partner," observes Mehra.

After the loan is sanctioned, the bank's surveyor will visit the property to prepare a technical and legal report. Based on the report and current market value, the valuation of the property will be done by the bank.



Author :- http://economictimes.indiatimes.com/
Reposted By :- http://www.credit4loan.com/

Is a home loan balance transfer your best option?

If one wants to take advantage of the falling interest rate regime and is not too happy with the lender with which he is servicing his home loan, he has the option of refinancing or opting for a home loan balance transfer. If you are in the early stage of your home loan tenure, here are the things to take note of if the idea of a home loan balance transfer has been playing on your mind.

A bank offering you a home loan balance transfer may make it sound like just a signature and an NOC from your existing lender, but the process of a balance transfer in reality is not that simple and requires careful consideration. Firstly, a home loan transfer makes sense only if you are servicing a loan at a higher interest rate than its counterparts in the market, you wish to lower your EMI and improve your cash flow.

A refinancing or a balance transfer will only make sense if your current lender is not flexible and is unable to give you some flexibility in your repayment process. This is however an unlikely phenomenon as banks are more than happy to reset the interest rate on your existing loan as they would not like to let go of a customer. Also if you wish to lower your EMI, there is no reason why your existing bank cannot do so, especially if you have been a diligent borrower making all your repayments on time.

Not the cheapest option

If this is sounding like a campaign against home loan balance transfers, it is because we want to tell you that this option comes with costs such as a processing fee that will be charged by your new lender as well as some other charges like stamp duty and the likes that a customer is required to pay but is not informed about upfront. Therefore, a refinance may prove to be costlier than you thought it was. But in the unlikely event that your existing lender is not even ready to give you a patient hearing, here are the things to consider while opting for a balance transfer:

A time taking process

If you have decided to go through the process of a home loan balance transfer, do bear in mind that it will not happen overnight because it is almost as long drawn a process as getting a new loan sanctioned and you will have to go through the entire rigmarole of paperwork all over again.

Opt for a balance transfer in the early stages of home loan tenure

In the earlier stages of your home loan tenure, the interest component of your EMI is high. Thus it is wise to go in for a refinancing option in the early stages of your home loan tenure. If you have only a few years left in repayment of your home loan, incurring additional expenses with a balance transfer, not to mention the hassles it involves with paperwork and the time taken – not worth the effort. Further if you are planning to move out of the property soon, a balance transfer is not a good idea for you.

Do it for the right reason

In conclusion, it is fair to say that it is wise to opt for a balance transfer only when your current lender refuses to listen to any request to reset interest rates or any other service request has not been paid heed to. But if you are contemplating a home loan balance transfer because your track record of repayment is not great with your existing lender, you can be rest assured that no new lender will be willing to take you on as a borrower as well! Whether it is a fresh loan or a refinance, a CIBIL score of 750 is therefore a must!


Author :- http://www.moneycontrol.com/
Reposted By:- http://www.credit4loan.com/

Wilful defaulters: Working on new system for making list public, says RBI Governor

Reserve Bank Governor Raghuram Rajan on Saturday said the central bank is working on a new system for making public the list of wilful defaulters and new mechanism for out-of-court settlement of bad loan-related disputes. “We have no intent or desire to protect malfeasance. We are very happy to make that list public. In fact my people are working on making sure that we can put that list up in an accessible way and also of defaulters against whom suit has been filed because that is already public information,” he said. As of now credit information bureaus are maintaining a list of wilful defaulters — borrowers who default despite having the capacity to make repayments.
Data from Cibil, the agency which collates information on credit, show 6,819 wilful defaulters owed banks Rs 74,699 crore until December 2015, up from Rs 22,332 crore that 3,703 wilful defaulters owed until December 2012.
We are creating a structure to help out-of-court resolution and we are still at work. It’s work in progress. We are fine-tuning it, making sure it works,” he said. The RBI is in favour of protecting privacy of loan defaults where there are no wrongdoings. A blanket edict that everybody’s name should be made public on the website might not be desirable, he said. Rajan said said it might not be correct to flash the name of all and sundry, including those who forgot to pay their credit bills. “We have to be weary of killing entrepreneurship in this county by putting all unsuccessful risk taking in the same basket. We need risk taking, we need people to take risk,” he said. Rajan added the RBI is creating a structure for an out of court settlement of the disputes relating to bad debts. He said early enactment of the bankruptcy code would give a ‘serious’ instrument in the hands of bankers, who till now lacked any such law to recover their loans in a meaningful way. “Till recently the threat that banks could make to promoters was meaningless, which is why promoters could go to bankers and say take 25 paise on the rupee, otherwise I will see you in a court for the next 15 years,” he said. Rajan said the RBI accorded priority to protecting jobs by trying to put stressed assets back into health, while investigative agencies deal with cases of malfeasance. “I think we have it (NPAs) contained,” Rajan said while speaking at a memorial lecture. The RBI had asked banks to start recognising all stressed assets from October-December quarter. The move led to a spurt in gross NPAs in the PSBs by about Rs 1 lakh crore to about Rs 4 lakh crore at end-December 2015. “But I also want workers in plants today, who are in danger of losing their jobs, to have that job, to be able to produce, because non-functional assets are in nobody’s interest, certainly not in the nation’s,” he said. RBI Guv calls money a great equaliser Stating that money empowers the society more than many other forms of affirmative action, RBI Governor Raghuram Rajan on Saturday argued for increasing society’s tolerance for its use rather than prohibiting the use of money and wealth. Rajan said making it easy for Dalits to start businesses may do more for their social status because money empowers than many other forms of affirmative action. “It is the great equaliser, that so many people across history have been able to acquire resources and invested them to make the world we live in,” Rajan said at a function organised by the Shiv Nadar University. “Income inequality is on the rise, with some having colossal incomes and others worrying about the next meal,” Rajan said about the widening rich-poor gap. Unfortunately, even while inequality between countries is diminishing today, inequality within countries is increasing, he said. In part, this is because skills and capabilities have become much more important in well-paid jobs, and those born in good circumstances have a much better chance, he said. According to him, the winner-take-all nature of many occupations accentuates the value of early childhood preparation; and hence the benefit of being born to the right parents. Rajan also cautioned students about unscrupulous schools which leave students with high education loans and ‘useless degrees’. “We should make sure that unscrupulous schools do not prey on uninformed students, leaving them with high debt and useless degrees,” he said. “The bottom line is that education at high quality research universities will remain expensive for a while, certainly till we learn to combine technology and people better,” Rajan said. ENS

Author :- http://indianexpress.com/
Reposted By :- http://www.credit4loan.com/

For loans over Rs 5 cr: RBI may share defaulter details if probe agencies want the info

THE Reserve Bank of India has indicated its willingness to share details regarding borrowers who have taken large loans of over Rs 5 crore with the government if such information were to be sought by vigilance and investigative agencies, or for court cases. A database of loans of over Rs 5 crore is currently maintained by the Central Repository of Information on Large Credits (CRILC), which was set up the RBI last year. The repository has been set up to improve assessment of credit risk by the banks, early detection of non-performing assets (NPAs), and to improve recovery of loans. While refusing to share the entire database of large loans with the government, the central bank will provide details as may be needed by the investigative agencies, Finance Ministry sources said.

Such information will enable these agencies to ascertain the entire credit history of large borrowers and help with investigation of loan cases where proper due diligence was not followed, they said.


The RBI set up CRILC in order to collect, store and disseminate information on large credits of banks and non-banking financial companies. CRILC collects information at one place and member banks can have access to this information. It enables banks to have a better view of the credit history and the status of all loans taken by the borrower. Banks are also required to report Special Mention Accounts, where principal or interest is overdue for period up to 90 days, to the repository. Such loan accounts are classified as NPAs. The Finance Ministry wanted access to the database to have a better view of large loans that are sanctioned and disbursed. Sources said private sector banks objected to the regulator sharing the entire information with the government, since the latter also being the owner of public sector banks has a conflict-of-interest in gaining data on commercial activities of its competitors. Data from Cibil, the agency which collates information on credit, showed that 6,819 wilful defaulters owed banks Rs 74,699 crore until December 2015, up from Rs 22,332 crore that 3,703 wilful defaulters owed until December 2012. The ratio of top 30 NPAs to NPAs above Rs 1 crore (large borrowers) as on March 2015 for scheduled commercial banks is 51.79 per cent, according to Finance Ministry data. An amount of Rs 1,30,156 crore was classified as NPAs in PSBs for borrowers exceeding Rs 500 crore as on December 2015, the data shows. Last month, the RBI submitted to the Supreme Court a list of defaulters owing Rs 500 crore or more to public sector banks just three months after the apex court ruled that the RBI is “clearly not in fiduciary relationship with any bank” and that it cannot hide information solely because of the embarrassment it may cause. But while submitting the list, the RBI said it was “extremely necessary” to keep these names confidential otherwise it would dent the “fiduciary relationship” between the RBI and the banks, and between the banks and customers. The RBI’s affidavit was filed in response to a reply sought by a bench led by Chief Justice T S Thakur, which had in March taken suo motu cognizance of The Indian Express report that Rs 1.14 lakh crore of bad loans had been written off by state-owned banks between 2013 and 2015.


Author :- http://indianexpress.com/
Reposted :- http://www.credit4loan.com/

Hospitals want patients to be rated on CIBIL lines

Private hospitals in the city wish to maintain "credit score" of patients and their families on the lines of CIBIL as a deterrent to refusal to pay up any bill.

It is one of the proposals that the Association of Hospitals, which represents over 50 private hospitals in the city, plans to submit to the government-appointed committee appointed by the Bombay High Court to look at workable solutions in case of non-payment of bill. Association officials met on Friday to discuss the issue.

The issue of non-payment came into focus in 2014 after a petition was filed in High Court by 25-yearold Sanjay Prajapati who alleged that his brother was detained by Seven Hills Hospital for not paying his bills. The court made scathing remarks against hospitals terming their practices as "inhuman" and "commercialisation of health". It then said that there needs to be guidelines spelt out by a government committee in which hospitals' representatives too can come up with suggestions to find a solution.

Other solutions include getting patients and relatives to sign an undertaking on stamp paper so that in case of non-compliance, civic or criminal action can be initiated. The association has also suggested having a quick-redressal board to settle such matters speedily outside the courts.

Activists say that such clashes take place because of the lack of transparency on the part of private hospitals in the billing process.

"It was a preliminary meeting where we discussed a few possible options. We have to suggest these solutions to the government committee that has been appointed to resolve the ongoing petition between a patient and a hospital that has snowballed into a big debate," said Dr PM Bhujang, president of Association of Hospitals.

Other solutions include getting patients and relatives to sign an undertaking on stamp paper so that in case of non-compliance, civic or criminal action can be initiated. The association has also suggested having a quick-redressal board to settle such matters speedily outside the courts.

A doctor who attended the meeting on condition of anonymity said, "We have at least three such cases where patients/relatives refuse to pay up after treatment. The patients know that the doctor cannot do anything. Legal recourse can drag on for years. So doctors and hospitals are left in the lurch," he said citing a case of a woman who came for a C-section and chose the best room in a hospital. "They had paid Rs 20,000 deposit. The total bill went up to Rs 45,000 but the relatives simply refused to pay up saying that they were overcharged," he said.



Author :- http://www.mumbaimirror.com/
Reposted By :- http://www.credit4loan.com/

Your money: 4 top ways to boost CIBIL score

You are no stranger to the fact that, it is essential for you to maintain a high CIBIL score to have access to loans when you need them. Just like maintaining your fitness profile you must also attend to your credit profile to ensure that your CIBIL score remains satisfactory. Here’s a closer look at how it can be done.
Your financial health is just as important as your physical health these days. In the modern times that we live in, each of your financial activity is being tracked not just by your bank, but the premier credit bureau in the country CIBIL that is keeping score based on your credit behaviour. Each time you apply for a new loan or credit card, your CIBIL score becomes a barometer of how creditworthy you are. Moreover, potential employers these days are increasingly asking for the CIBIL report of potential recruits. This is to assess how responsible they are with their finances and thus how trustworthy and responsible they will be in their jobs.
There are a whole host of factors that impact your CIBIL score. The most important factor that has a 35% bearing on your CIBIL score is your payment history. The other factors that impact your CIBIL score are credit utilization or how much of your total credit you have used, how long how you been servicing debt, the amount of new credit you have taken or applied for and the mix of your credit. Today, we are here to talk about how your credit mix can improve your CIBIL score:
1. Having a good mix or secured and unsecured loans 
One thing that helps you attain a high CIBIL score is a good balance of secured and unsecured credit. A mortgage or an auto loan qualifies as a secured credit. But you cannot rest your laurels if you have only one of these and have no unsecured credit. A credit card with a  reasonably high credit limit, or a personal loan qualifies under the head of unsecured credit. Unsecured credit means that no collateral or advance payment is required to be paid by the consumer at the time of the disbursal of such credit. Having a mortgage or an auto loan and credit card that you service on time is thus a good way to diversify your credit mix and thus keep a high CIBIL score.
2. Installment credit 
Another type of credit that helps you score with CIBIL on the credit mix front, is having some exposure to installment credit. If you have do not have a mortage or a loan for a vehicle, you student loan too qualifies as installment credit. In other words, any kind of loan with a fixed amount of repayment each month under a pre-specified time frame qualifies as installment credit. So if you are in your first job and still servicing a student loan for a management degree or a vocational degree that you have recently completed, you are still scoring high with CIBIL as far as your credit mix is concerned.
3. Finding the right balance 
The trick to have a good credit mix is to have a good balance of active credit. If you do not have a student loan and are not in a position to apply for a mortgage or an auto loan just as yet, do not be under the impression that no credit will help you have an impeccable CIBIL score. While we are not asking you to be reckless and apply for loans, you may want to start out small and prove that you are creditworthy by applying for a credit card at first when you just start about in your professional life. A credit card is a a great way to build your credit profile if you are using it responsibly. Spending within your means on the credit card and making outstanding payments in full is a great example of prudent use.
4. A word of caution 
While we are reiterating the fact that you must diversify your credit mix, you should not consider it to be a green flag to go and apply for every loan on offer. In this intensely competitive financial world, telemarketers and even direct mailers are always trying to lure you with loans on “low rates of interest” or “lifetime free” credit cards, but do bear in mind that things are being sugar coated and you are not being given the full picture upfront.
So don’t bite the bait easily. Not only will you end up with a loan that you do not need, your CIBIL score may drop as a result of too many hard inquiries. A hard inquiry on your CIBIL report happens when a lender accesses your CIBIL score and report to see how creditworthy you are. Therefore your aim to diversify your credit profile may backfire against you!
Thus, as you can see diversification of your credit mix is a great way to improve your CIBIL score. It has a important bearing on your CIBIL score. But when you set out to diversify your credit profile, do so  carefully so as to avoid it boomeranging on you and so that you don’t end up with a lower score instead!

Author : http://www.financialexpress.com/
Reposted By : http://www.credit4loan.com/

Four things that build & maintain high CIBIL score in 2016

As a conscientious individual you probably know that you need to maintain a CIBIL score of 750 and above (out of 900). This will ensure that you get easy access to credit, as lenders will deem you creditworthy. A good CIBIL score backed by good credit history in your CIBIL report will help you move forward economically and ensure your financial well-being. A new year round the corner is the best time to begin the journey to your attractive credit profile – high credit score. Here is how to go about building and keeping up a good CIBIL score.

Credit card- The first stepping stone

If you just started out in life with your first job, and have no credit history, it is prudent to begin building credit with a credit card. However, do not leap at the first offer that you come across. Compare the fees and reward points on each and pick up a card that is best suited to your needs. A credit card, when used judiciously can indeed be a stepping stone to a good CIBIL score. Spend small amounts on your credit card and ensure that you repay the whole outstanding within the billing cycle. The golden rule of using a credit card is, never to go beyond your means, i.e. not buying anything on the credit card that you think you will not be able to repay within the stipulated time frame of your billing cycle.

Make all repayments on time and clear loan outstanding

This is applicable not just to your credit card, but also to any other credit that you may have availed of. For instance, if you have a student loan running when you have begun your career, make it a priority to make the repayments on time. In fact, it is a good idea to make bullet payments and clear the loan outstanding, if you can afford to do so.

Most people get too overwhelmed in the transition phase between the life of a student and a life of an individual who is financially independent and tend to go overboard in a pursuit of “living well”. It is financially prudent not to give in to the lure of luxuries right away at such times and continue living the way you used to as a student till you find a foothold in your career.

Have a good mix of credit

When you begin your life as an independent individual your needs begin to change. You would probably want to avail of credit to purchase a two wheeler or a car and do up your home. Based on your cash flow, avail of credit prudently based on your needs. A good mix of credit, meaning a combination of secured and unsecured loans will augur well for your CIBIL score. However, do not opt for all such credit all at once as that will make you seem credit hungry to a prospective lender and bring down your CIBIL score on account of too many “hard inquiries”. Each time you make an application for fresh credit to a bank, the bank accesses your CIBIL score and CIBIL report in order to assess your creditworthiness. These requests from the banks gets recorded in your CIBIL report as “hard inquiries” and bring down your CIBIL score a few notches each time.

Check your CIBIL score and CIBIL report periodically

This is the part where most people tend to falter. Apart from maintaining good financial habits it is also of utmost importance to keep a tab on your CIBIL score and CIBIL report. This is to ensure that there are no discrepancies that have crept in. There can be errors like a wrong entry under your name, incorrect personal information on your CIBIL report. If you do not check your CIBIL score or CIBIL report periodically, these errors may surface when you are applying for fresh credit and may mar your chances of getting a loan when you need it the most. To ensure that things are in order thus, pull out your CIBIL score and CIBIL report at least once or ideally twice in a year and ensure that all your records are in order.

Thus as you can see, building a good CIBIL score and keeping it up is closely connected to good financial habits. Just as you would take care of your physical health by eating right and adequate exercise, take care of your financial health too by keeping up a good CIBIL score. Not only will this open up doors for you when you need credit, it will also give you perennial peace of mind!



Author :- http://www.moneycontrol.com/
Reposted By :- http://credit4loan.com/