Month: April 2017

Kerala’s love affair with gold

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Kerala-love-gold

Kerala is well-known for its fascination with gold and gold jewelry. In the 1970s, till 2000s whenever Keralites traveled to Gulf countries they returned with large quantities of gold. Those days there were many restrictions on the import of gold and this is the reason that Malayalees bought gold when they went abroad. However, nowadays the restrictions on gold import are more relaxed and the yellow metal is more easily available within the country. Most Indians, including Malayalees, do not consider gold to be for mere ornamentation instead gold is considered a good form of investment. However, if you are considering buying gold for investment then you should consider the gold rate in Kerala at the time of buying.

Where Should you Buy Gold in Kerala?

There are a number of jewelry shops spread across the length and breadth of this South Indian state. All the major cities including Cochin, Thiruvananthapuram and Calicut have a large number of jewelry shops. Even the smaller towns are not far behind in their love for gold and you can find all sizes of shops in the smaller towns as well. The more popular shops include Malabar Gold, Gold Alukkas, Joy Alukkas etc. In fact, gold buyers are literally spoilt for choice when it comes to gold shops in this state. It is a good idea to visit some of the most popular shops in the city that you are in and then engage in some window shopping while you decide the particular shop that you wish to buy from. Make sure that this shop provides some kind of certification like BIS and Hallmark. Otherwise there are many traditional shops in each city which have been passed down from one generation to another and they are equally reliable.

What to check when buying gold in Kerala?

Before you set out to buy gold in this state, you should always check the price. Although the rates of gold will be more or less the same across the state and cities, labor charges are the real catch. Some shops charge more for the making of the ornaments, but this does not matter if you are buying gold bars or biscuits or coins. However, if you are buying ornaments then it is advisable to check the making price of different shops. At the same time, as mentioned above, you should check for purity and wherever possible only opt for hallmarked jewelry.

How gold prices are determined in Kerala?

Gold rate in Kerala largely depends on the international price of gold. Hence if the price of gold rises in the international market, it will rise in Kerala as well and vice versa. If we consider the last few years, the year 2016 has been a good year for people wanting to invest in gold in Kerala and they have got significant returns. In fact, if people in this state sell the gold bought last year in this year then they stand to gain almost 20%. If you are looking for steady returns then gold is a good investment along with being a good diversification saving instrument.

Take into consideration taxation of gold in Kerala

You definitely need to bear in mind that gold in Kerala or elsewhere in the country will be taxed. If you sell gold after three years, there will be a 20% tax with indexation. This means that if the indexation works out to be 10% over two years, your tax rate on the gold that you sell will only be 10%. If you sell gold before three years, you will be taxed according to your tax slab. Hence you will end up paying 10, 20 or 30 percent depending on your tax slab. The higher is the tax slab, the more will be the tax rate on your gold.

What is the Procedure to Pre-close LIC HFL Home Loan?

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Home loans can run for a long tenure and may extend up to 15 to 20 years. Home is regarded as one of the best investment options. However, not everyone wants to wait for the long tenure to repay loans, since they want to close the loan before the scheduled time.

lic-hfl-home-loan

Therefore, home loan pre-closure is the only option to close your long-term loan before the said duration by paying-off in part or in full. However, it is highly important that you inform the bank if you want to close the loan before its scheduled period. You will have to give it in writing to the bank.

It should be kept in mind that banks usually charge prepayment penalty for closing loan ahead of tenure. However, there are a few banks that do not levy this charge if you can furnish proof regarding the source that you have used for making the pre-payment. As proof of income source, you will have to produce ITR filing, salary slips and bank statements.

The procedure to pre-close LIC HFL home loan is:

  • First, you will have to apply for a pre-closure certificate requesting LIC HFL.
  • You will receive the certificate in few days, after which you will have to issue a cheque in favour of the banking institution LIC HFL. With this, you will have to give a request letter for pre-closure of the loan.
  • In case of fixed rate home loan, a prepayment penalty will be charged, but in case of floating rate home loan, no prepayment penalty is charged.
  • Once the payments are done towards the pre-closure of LIC HFL home loan, you will be given the original property documents. The best part of the procedure to pre-close LIC HFL home loan is that the documents can be received in just 15 days.

Usually, there are other procedures that need to be followed in case of home loan pre-closure, other than what you have seen in pre-closure of LIC HFL home loan.

First off, you should get back all original documents, scan them and keep them in a safe place. Make sure that all the pages in the original document should be as it is.

Second, you should obtain a No Objection Certificate (NOC). It is a clearance certificate, which clarifies that the bank no longer has obligations or interest with your property. It ensures that all documents are cleared by the bank after sorting out all doubts.

Just like the procedure to pre-close LIC HFL home loan, other banks have the similar rules. Third, is to remove all liens on your property and getting the same from the registration office. A lien is defined as a transaction which is registered in the Registrar Office that causes obstruction in selling the property. Walk to the registration office with a bank official and get the lien removed. You should know that without a lien removed, a home loan pre-closure is incomplete.

You should also get a legal clearance certificate from your lawyer. The legal clearance certificate that is obtained from the reputed lawyer. Though it is an optional attachment, this process will speed up your pre-closure procedure.

You should also have a detailed track of all loan repayments. Since this process is required to speed up your pre-closure procedure, you should start by tracking all bank statements that actually reflect your loan EMI. Also, keep a photocopy of a demand draft or cheque while paying lump sum prepayments.

Also, obtain an encumbrance certificate from the Registrar. It is a document maintaining all financial transactions that have been performed on the property.

Thus, the smooth procedure to pre-close LIC HFL home loan, as mentioned above, makes sure that even if you close repayment of home loan before time, there is no obligation left to it.

What happens to home loan defaulters?

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Home is the sweetest abode and when you build a home you want to stay in it for as long as possible. Now, if you have sought loan to make your home, then make sure that you repay it on time so that your home stays yours. However, if you fail to repay, then what happens? What happens to home loan defaulters?

home-loan-defaulters

Home loan defaulters- What happens to them?

RBI has stated rules and guidelines for home loan defaulters. When a person fails to repay loan, his entire amount of remaining loan becomes a non-performing asset. In that case, the bank has full right to ask repayment of the home loan in the form of outstanding amount.

The moment a person fails to pay an instalment, it becomes a default instalment. However, home loan default is not a grave issue, since repayment of one or two instalment may happen. Nevertheless, in case of serious situations, legal actions are taken against all home loan defaulters.

Home loan defaulters- What the banks do against them?

The government of India passed a law to protect the interest of lenders, called SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act) in 2002. The law allows the lenders to seize and eventually sell the mortgaged property from the borrower and sell it to acquire the outstanding loan amount.

However, it should be kept in mind that financial institutions like banks are not so severe when it comes to confiscate borrowed amount plus interest from borrowers. Banks try every other possible way to acquire the due loan amount from home loan defaulters. But when nothing works, legal action is taken.

Other obligations for home loan defaulters-

The property is seized by the lender and sold to produce the rest of the lending amount, but problems of borrower do not end there. If the amount realized from property sale is more than outstanding amount, then the excess money paid to the borrowers. Otherwise, if the property sale amount is lesser than the outstanding amount, then the borrower will have to pay the shortfall amount. Apart from this, the borrower will have to meet another obligation which includes paying to reimburse long term capital gain tax.

Another obligation rises when the property against which the borrower has taken loan is disposed within 3 years from the day of acquisition; the excess amount over cost of the property is regarded as short-term capital gain. In that case, the excess amount is taxed for home loan defaulters.

Since it is a serious situation, what can home loan defaulters do to save the property?

  • Liquidating investments is a great option. Liquidate bank fixed deposits, equity and mutual funds and pay it off to bank. This way you can save your dream house.
  • Have a communication with your lenders. Home loan defaulters can evade grave situation like legal action against them in case of default of loan repayment by talking to the lender regarding EMIs. Request the lender to extend the total loan tenure since this will help to bring the amount of EMI within your financial.
  • If home loan defaulters come across serious situation that curb their ability to repay loan, then they have an option to save themselves. Suppose, if the borrower falls critically ill and cannot work, then he/she can furnish related documents in the bank as proof of his/her condition. Further, you will have to produce more documents to the bank proving your record of servicing and your disciplined repayment process, then the bank may be convinced to reschedule your loan.

Home loan defaulters, therefore, can follow the above three ways to curb any problems rising from non-repayment of loan.

The 5 Best Credit Cards for you

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top-5-credit-cards

The market is flooded with credit card options today and it definitely gets difficult to choose one. Unsecured credit cards offer better benefits and rewards, while the secured ones are easy to get even with a low credit score. So to help you choose the best suitable option for you, listed below are 5 of the best credit card options from which you can choose one according to your requirements.

  • ICICI Bank credit card Platinum card- This is a good option for those having minimal requirements. To avail this ICICI Bank credit card, you do not need any additional proof, identity or income proof. Interest rate  charged per month is 2.50% and the interest rate per year is 34.49%. The cash withdrawal fee charged is 2.5% on the amount which is withdrawn. The benefits include free credit time limit of up to 50 days, cash withdrawal facility and flexible credit limit.
  • ICICI Bank credit card Coral credit card- You can fetch this ICICI Bank Credit Card only if you have a fixed deposit account with the ICICI Bank. 85 percent of the total fixed Deposit balance is the credit limit you will be offered. It should be kept in mind that if you fail to pay off dues on this ICICI Bank Credit Card, within 60 days, then the bank will withheld the outstanding amount from your fixed deposit account. This ICICI Bank credit card has Rs.500 joining fees and offers 15% savings on eating out at select 800 restaurants, free airport lounge access, double reward points on groceries, supermarkets, etc.
  • SBI Signature credit card- Just like the ICICI Bank credit card, this SBI credit card is also issued against a fixed deposit and is a secured card and is known as SBI Signature credit card. It offers generous  rewards and bonus points: one reward point is equal to 0.25INR, regular IP (2 reward points for every Rs.100 spent), accelerated earn rate (10 reward points for Rs.100 spent), 10,000 bonus reward points on annual spends of Rs.2 lakh or Rs. 3 lakh or Rs.4 lakh and 20,000 bonus reward points if spends exceed Rs. 5 lakhs.
  • SBI Advantage Platinum credit card- You can use this card all over the world just like other ICICI Bank credit card offers. This card offers access to over 200 golf courses, and helps you to earn rewards on dining, national and international purchases. Also, the card offers complimentary access to Elite Priority Pass Program and membership to enter airport lounges of the country or outside anywhere in the world. With this card, you can earn up to 40,000 cash points per year.

This card has many useful features and comes with extended credit limit option, which means that the unpaid balance on the card is carried forwarded at 2.55% monthly. The card offers cash withdrawal limit of 100%, free credit period of up to 50 days and enables booking of railway ticket online, etc. You can replace this card anywhere and also share its benefits with any other supplementary cards.

  • Indusind credit card- This is also like the ICICI Bank credit card, which is a secured card on fixed deposit. Particularly, the Indusind Aura credit Card has less joining fees than other credit cards offered by Indusind. Anyone can apply by paying a simple joining fee of Rs.899. Addtional service tax is applicable on the joining fee. This joining fee will be waived off after spending Rs.25,000 in the first 3 months of applying for this card.

Thus, apply for any of the credit cards above and enjoy the benefits and rewards offered. In case of secured credit cards, make sure yo have a fixed deposit account before applying for one.

What should be my CIBIL score for SBI Home Loan?

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How important is CIBIL score for a loan? No matter whom you ask in the banking arena, the answer will be ‘very’. There may be other loans where CIBIL score is given a bit less importance and the bank offers loan to people with a low score to grab business. However, this is not true for home loan as home loan is only given to people having a good score. This ensures that the borrower will be able to pay the amount in time and he can be trusted. Home loans run for a long period of time and in such a scenario, this is quite important. The same is applicable for SBI.

cibil-score-for-home-loan

What is CIBIL score?

A CIBIL score is one of the most popular credit scores which summarize your credit history. It is a three digit number that represents your credit record, either good or bad. It is derived by looking at the credit history of the individual during a certain time period. The score ranges from 300 to 900, 300 being worst and 900 being best.  A score above 700 is considered a good credit score by most of the banks and financial institutions.

CIBIL score for SBI Home Loan

It is very obvious that you must have a good CIBIL score in order to take a home loan from SBI. This is applicable for home loan too since that is a much bigger amount compared to other loans. SBI is quite strict when it comes to CIBIL score of the customer as they want to be sure of their repayment capacity. A good credit score according to them is 750. So, if your credit score is more than 750, you have high chance of getting a loan if other criteria are satisfied.

What to do if your credit score is low?

If your credit score is low, it is possible that most of the banks will refuse your loan even if you have high income. However, it is not absolutely impossible to increase the score but you may need to wait for six months. A bad credit score means, you have failed to pay installment of your loan. The loan may be of any kind, it can be a personal loan, education loan or credit card dues. Make sure to pay the installments regularly for the next six months without missing a single payment and your score will definitely improve over the time. It is mandatory to wait for six months because that much time is required for the score to improve.

If you have recently taken a loan or missed payment on your credit card, you shall not go for the purchase of home on loan because it is possible that your application will be rejected. You can check your CIBIL score online from the authorized website. You can check it for free once and will have to pay for yearly subscription if you want to keep on checking.

Home loan is a very important decision for anyone as the loan repayments will continue for a long period of time. Gone are those times when people used to wait till retirement in order to purchase a home. These days’ people purchase it at an early age so that they can enjoy the comfort for a longer period of time. However, it is important for the banks as well to know that you will be paying the amount in time.It is thus quite important to have your CIBIL score checked before you apply. This will prevent you against loan rejection.

Home Loan Transfer – Know the process

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Today, everyone dreams of owning a home. For some, it is a need, for others it might be luxury or just an investment. Government also gives tax benefits for those who apply for home loan. Taking a loan for a house usually means lending a huge amount for a long tenure. The interest rates for home loans changes every financial year. There are chances that the interest rates might drop after you take a home loan.

transfer-your-home-loan

However, you don’t need to worry about paying more as you can transfer your home loan from your current bank to another and enjoy lower interest rates. This is called Home Loan Transfer or Refinancing or Takeover of Loan. In other words, it is a process in which you can shift your existing loan amount (or outstanding amount) to another bank offering lower interest rates.

Why Transfer Your Home Loan From Your Current Bank?

There are various reasons why people go for home loan transfer:

Save Money

Due to difference in the interest rates between two banks, transferring your home loan to a bank offering lower interest rates can reduce the amount of your monthly EMI.

Attractive Offers

Other banks would love you to become their customers. Because of this, they will offer you attractive discounts and benefits.

Poor Service by Existing Bank

If you are not satisfied with the service of your existing bank, you can go ahead and transfer the loan.

Loan Top-up

If the rates of the house have gone up in the past few years, banks might offer you incremental funding or Loan Top-up, which you can use for home improvements.

Eligibility Criteria

To avail home loan transfer, an individual must complete the following criteria:

  • He/She should be of Indian nationality.
  • He/She should be between 21-60 years.
  • He/She must be employed for atleast 2 years in your current organization. The time period might vary from bank to bank.
  • He/She should have some monthly repaying capacity.
  • He/She must have paid all the previous EMIs and bills on time.

Documentation Required

Carry the original and photocopies of the following documents:

  • Self-attested passport photographs
  • Loan transfer application filled with all the details
  • Last 3 months salary slips, with proper break up
  • Last 6 months bank statement from where the last loan EMIs were deducted
  • Identity Proof (PAN, Aadhaar, Voter ID Card)
  • Address Proof
  • Age Proof (10th certificate, PAN, Aadhaar Card)
  • Loan statement copy
  • Complete property documents, which will be given from existing lender

Process Involved

Following are the steps involved in the home loan transfer:

  1. Search and research for the banks offering lower interest rates for home loan transfer.
  2. Once decided, submit an application to your current bank requesting for loan transfer.
  3. On the basis of the request, you bank will issue a NOC with the outstanding amount.
  4. Submit that NOC along with the documents (mentioned in the previous section) to the bank where you transfer the loan.
  5. Your new bank will close your current loan amount to the previous bank.
  6. Once the transactions are over, the previous bank will handle the property papers to the new bank and cancel the post-dated cheques.
  7. On transferring your account, you need to pay some processing fees which can range from 0.5% to 1.5%.

Looking for another bank that offers lower rate of interest on your current home loan is a daunting task. However, online aggregators make it easier with their Home Loan Balance Transfer Calculator. With this tool, you can compare the rate of interest offered by different bank, based on your needs. Also, they offer you a fine print of transfer agreement to help make you better decision.

Final Words

Although, home loan transfer look like an easy task, there are few things that you should keep in mind. Firstly, avoid going for loan transfer after 6-7 years of loan payment as you might have paid majority of amount initially. Your new bank will treat your application as fresh and you will have to go through legal verification once again. Also, there might be some issue in case of irregular loan repayment. Therefore, make sure that you keep all aspects of home loan transfer in mind.

Which banks offer low interest rates on home loans in India?

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Gone are the days when people used to wait till retirement to accumulate money in order to pay for the home they wish to buy and in the end they were able to live in that house for only a few years. This era and its generation are fast and they want things instantly instead of planning and waiting for future. In such a scenario home loan is the only option for young working class as that would make them stay where they want to for a bigger chunk of their life. While there are several banks offering home loan to customers, only a few offer low interest rates and other benefits. Read on to know about the scenario in the current time.

In order to understand home loan interest rates and know about the best offers, you need to first understand that there are two types of interest rate method which banks may offer you. You can choose floating interest where the interest rate will change as per RBI guidelines and fixed interest where the interest will be fixed for a duration of time like two or three years. Most banks have these two options and in some cases women are offered lower interest rates too.

HDFC Bank: One of the most trusted private banks as far as home loans are concerned is HDFC. The bank has almost become people’s bank due to its vast networking and numerous plans to choose from. The number of customers it deals with every day is countless. Currently the interest rate is 8.5% for the new customers and the processing fee is up to 0.5%.

IDBI bank: For IDBI bank floating interest rate is prevailing at 9.15% for the first year of availing the loan. The base rate for the bank is 9.5%. According to the recent plan, the bank may offer loans at 8.55% for the first three months.

LIC housing finance: LIC housing finance is offering home loan at 8.7% interest per annum. This is also a floating amount and will vary with time. The maximum tenure can be 30 years.

DHFL home loan: DHFL is emerging as a preferable option as far as home loans are concerned. Currently the institution is offering home loan at 8.60% with low processing fee. This is again floating interest rate that will vary with time.

Axis Bank: Axis bank is also considered a trusted bank for all kind of loans and at this point of time, the bank offers home loan at 8.65% per annum. The bank also has a unique offer where the EMI for the last 12 months will be waived off if the repayment is done on time each month for the entire tenure.

ICICI home loan: The home loan interest rates for ICICI bank is at  8.65% and the bank offers 20% extra amount than your eligibility(subject to approval). So, if the cost of your new home is a bit more, you can always opt for ICICI home loan.

Indiabulls home loan: Indiabulls has also earned a good name in the home loan market and in the current scenario, the bank offers an interest rate of 8.50% which is again a floating rate of interest.

SBI home loan: SBI also offers competitive interest rates on home loans, which is currently at 8.55%. The low interest rates bring down the EMI amount payable per month quite low.

The home loan market is witnessing increasing competition due to increase in purchase of houses and decrease in the interest rates. It is therefore the right time to make a decision and get your home loan transferred or take a new loan in order to make the most of the prevalent scenario.