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ITREND Homes | Convertible Homes | 1BHK in Hinjewadi | 2BHK in Hinjewadi

ITrend Site Add: At S. No. 275/1 and 276/1, Mann, Hinjewadi, Pune
Contact : 09511951142 | 09561615858
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What is new for promoter builders ? | 1 BHK in Hinjewadi | Residential Apartments in Hinjewadi

Every prompter/builder has to pay Tax on RCM (reverse charges mechanism) if they purchase any goods from unregistered dealers.

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Switching Home Loans - A Matter of Profit and Loss | Home Loans in Hinjewadi | 1 and 2 BHK in Wakad, Pimpri, Chinchwad, Punawale

1bhk in hinjewadi, 2bhk in hinjewadi

When is the Right Time to Switch?

The best time to switch your home loan is during the primary years of repayment as it will give you the maximum benefit. If you are nearing the end of your repayment term, switching is not advisable for the EMI at that point primarily consists of the principal amount with barely any interest payment left. So ideally, consider a switch only if your loan tenure still has 8 to 10 years left. Apart from the tenure term, you also need to evaluate the rate cut. Switch only if the reduction in rates is at least 0.75 to 1.00 per cent. The rate cut and tenure period should preferably be inversely proportionate to each other. This implies that if you have a longer tenure term left, say 10-15 years, even the slightest rate cut of 25-50 bps can help you save a lot. You can use online EMI calculators for getting accurate figures.

Does Switching Cost?

Yes, it does. You are required to pay a one-time fee if you wish to switch home loans. This fee ranges between 1 to 1.5 per cent of the remaining loan amount. However, there are some banks who levy a fixed amount on switching. Besides, you are also entitled to pay a ‘foreclosure fee’ to the existing bank. In case you are interested in switching the loan rate with your existing bank, you will be charged a ‘conversion fee’ of 1 to 2 per cent of amount outstanding. This also has another benefit- you are saved from the nuisance of documentation and paperwork. Additionally, there are several other costs such as stamp duty, legal charges and valuation fee. So, do a little math and see if these overhead charges total up to more than what you can save on the interest rate. If yes, switching is ill-advised.

Longer Tenure, More Savings

Prudence dictates that if you want to save the maximum, switch only if your repayment period is at least 8 to 10 years. The other criterion that you need to keep in mind is that switching will only reap benefits if the difference between your present and reduced rate of interest is at least 1 per cent. For example, if your loan tenure is equal to or less than 5 years, you should look for a 1 per cent rate cut to profit. Also, settling for a cut of less than 0.75 per cent will not prove beneficial even if the repayment period is around 10 years. So think before you switch!

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Foreclosure - Do's and Don'ts | Home Loans in Hinjewadi | 1 and 2 BHK in Wakad, Pimpri, Chinchwad, Punawale

Forecloser

Most people have this doubt – If I get approved for a loan and then am able to pay off a certain sum or the full loan itself, will i have to pay interest also? Absolutely not. Infact RBI has made it more feasible. Banks until May 2014 were charging a processing fee for such foreclosure. The Reserve Bank of India in May 2014 made it clear that banks are prohibited from charging such fees.

1. What percentage of your income is your EMI – an EMI of over 40% of your monthly household income is definitely not desirable, it hampers smooth budgeting and your financial planning for a secure future. So if, for whatever reasons, your EMI is over 40% of inflows, do pay off your home loan as quickly as your capacity will allow – and do consult your loan officer for every charge associated with the repayment/s.

2. Weigh the impact of losing that tax benefit – you’re currently claiming certain deductions under say, Section 80C or 24B. Assess the impact of foregoing those benefits when you plan to foreclose a home loan. Maybe now is not the right time, a careful look at the increased tax outflow needs to factor in your decision.
3. How will foreclosure impact the rest of your financial planning – There are certain mandatories in financial planning, like retirement, children’s education, insurance, health care contingencies. Your foreclosure should not be at the cost of any of these. Any funds being considered for use in repayment should ideally be surplus after considering such essentials.
4. Better sooner than later – While it isn’t advisable to foreclose your loan within 6 months of taking it, you’d incur high processing fees; direct all surplus funds into early, rather than late, repayment of your home loan.
5. Measure the trade-off between Interest paid and returns on other investment options – Your surplus funds can be invested in numerous ways, some of these may offer better returns over a period of time than the loan-interest pay-out in that same time. An exception though would be a situation where you are nearing retirement and your salary income is due to cease- in such a case, foreclosure could be more attractive.

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High Cibil score is your ticket to a lower rate of interest | Home Loans in Hinjewadi | 1 and 2 BHK in Wakad, Pimpri, Chinchwad, Punawale

Interest Rate

What is the first thing that runs through your mind when you think of availing a new loan? Interest rates of course! Everybody in pursuit of credit wants to avail of it at the lowest possible rate of interest. Did you know that you can command a low rate of interest on a loan product based on a high CIBIL score? Let’s tell how it works. A low interest rate is desirable for any borrower as he has a lesser going out each month as a monthly outgo by way of an interest component.

A loan has two parts- the principal component and the interest component. The higher the rate of interest, the higher is your outgo by way of an equated monthly installment (EMI) that you will opt for on your loan. Naturally then, if your loan interest rate is low, your EMI is lower.

How banks decide upon interest rates

While there are benchmark rates of interest rates that each bank has on different loan products, they are not bound to give you the loan on the same rate of interest as may be specified on their website or any other such communication that you may have received from them. Banks decide upon the rate of interest based on your CIBIL score. When you apply for a loan, banks pull out your CIBIL report and CIBIL score. If your score is 750 and above, it is likely that you will get a loan at competitive rate of interest. In fact a high CIBIL score also gives you an advantage, and you may even consider bargaining with several lenders before you settle with one handing out the best rate of interest to you. On the other hand if your CIBIL score is poor and is way below the desirable level of 750, you are left with no power at all, and are at the mercy of lenders. Your CIBIL score is a measure of your creditworthiness, and a poor CIBIL score is reflective of the fact that your credit behaviour has not been up to the mark. As a result the prospective lender that you have made an application to for a loan views you as a “risky” customer who is likely to default on his repayment. The bank will then set an interest rate on the loan product that is higher than the industry benchmark. In fact, the bank has the discretion to even reject your loan application if it feels that you are too risky a customer.

How you can alter your CIBIL score

If a prospective lender is giving you a loan at a high rate of interest, you must check out your own CIBIL score and CIBIL report to see what has gone wrong. Most likely, you will have outstanding repyments on your credit card or loan repayments that have not been made on time. There are other factors such as a high credit utilization or how much of your total credit you have used up that have a negative bearing on your CIBIL score. There may have also been too many hard inquiries on your report, that happens when you have applied for too many loans in quick succession. Therefore, if you are being offered a loan on a high rate of interest, and your bank states that your CIBIL score is not satisfactory as a reason for the same, you may want to postpone your decision to take a loan and concentrate on bringing up your CIBIL score first. The easiest way to do so is to pay off your outstanding credit as soon as you can. Also, do not be impulsive about taking a loan and make several applications to different banks. Put in adequate thought before you make an application with a lender of your choice. At least six months before you decide to take a loan, pull out your CIBIL report and CIBIL score and see that everything is as desired in it. Only when you are satisfied with your own CIBIL score and have ensured that nothing is amiss in your CIBIL report, think of making an application to a bank for a loan that you require.

As we stated earlier, the moment you walk in with a high CIBIL score along with your loan application the ball is in your court. You can then be rest assured that the bank will then do all it can to get you as a customer. Your CIBIL score thus will not only open up doors for you, but is also your ticket to lower interest rates.

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Fixed vs Floating Rate of Interest | Home Loans in Hinjewadi | 1 and 2 BHK in Wakad, Pimpri, Chinchwad, Punawale

Fixed and Floating

By choosing a fixed rate of interest for your apartment you will pay the exact same percent of interest in the entire tenurity of your loan. The equatable monthly installments will not change. However, the Floating rate of interest, the more popular of the two, offers the flexibility of adjusting the EMI as per market dynamics.

Advantages and Disadvantages of Fixed Interest Rates:
Since home loans come with a longer tenure compared to most other loans, a fixed interest rate brings a sense of clarity when it comes to loan repayment. People with fixed budgets can get a clear idea of their EMI obligations if they opt for a fixed interest rate loan.
The biggest disadvantage of such a setting is that the fixed interest rate loans are anywhere between 1 to 2.5% higher than floating interest rate depending on the bank or NBFC. Usually most banks offer fixed interest rates for limited years and not the full tenure, making the user susceptible to floating market rates once the fixed rate tenure period is over. So read your loan agreement carefully before you proceed
Advantages and Disadvantages of Floating Interest Rates:
Floating interest rate fluctuates with market economics and interest rates are linked to a base rate and a floating component. The base rates are decided by the bank or NBFC concerned as per the quarterly base rate announcements of the Reserve Bank of India. Floating interest rates are usually lower than fixed interest rates although parameters like inflation and current account deficit are used in calculation of base rate by RBI which can mean an uncertainty and different EMI for each repayment or installment for the loan.

Point to note:

1.Fixed rate interest charges are generally 1- 2.5 percent higher than floating rate charges.
2. On October 5 RBI reduced the REPO rate from 6.5% to 6.2%. REPO rate is the rate at which banks borrow money from RBI.
3. MCLR – Marginal Cost of Funds based Lending Rate introduced by RBI in April 2016 to ensure lower interest rates with quicker disbursements, consistently.
4. After the historic Demonitisation move by Narendra Modi on November 8, all banks with massive cash inflow are encouraged to offer loans at discounted interest rates.

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