Buying a home is a dream for many but only a few individuals can actually make their dreams come true. Home loans have been specifically designed to let you make such dreams come true without having to pay all the money up front. However, once the loan is approved and disbursed, the bank expects you to pay the EMI due till the tenure of the loan ends. If you fail to pay the EMI on time because of losing your job or perhaps due to a medical emergency, you will become a loan defaulter and bank will initiate the process of taking over your property and selling it through an auction to recover your loan amount. Thus to provide a solution to this problem, we have listed a few things that you can do when unable to pay your home loan EMIs:-
- Negotiate: The foremost thing that you must do after becoming a loan defaulter is to negotiate with the bank over this issue. The lender will always be ready to talk with you about this issue as they find it the easier way to resolve the problem rather than going through the tiresome process of taking over your asset forcibly.
- Ask for a grace period: You can ask for a grace period from the bank to pay the loan. You can clearly explain to them the reason as to why you have not been able to pay the EMIs in a timely manner. Banks sometimes give loan defaulters the grace period for resuming EMI payments with some penalty.
- Go for loan restructuring: This is an apt solution when your home loan interest rates have been escalated and you may not afford the increased EMI. As part of the loan restructuring, the lending bank will increase the tenure of the loan upon which, your individual EMI payouts would go down. Though this will result in you paying more, it will be better than losing possession of the property.
- Seek assistance from credit counseling centers: There are many counseling centers available in many banks that may help you with this issue. They will provide you the appropriate solution of your problem by giving the fair knowledge of the thing that you should do to keep you away from being snared in a debt trap.
- Liquidate your investments: If all the aforementioned options fail to work, liquidating your investments is the last option that can come to your rescue. You can liquidate your existing investments such as deposits or mutual funds to pay the EMI’s. In case you have a life insurance policy such as an LIC policy, you might try to get a loan against the policy. You can then use this amount to make part payment for the loan which will reduce the constantly increasing EMI’s. There is no harm in doing this as it will keep you defaulting on your home loan. Besides life insurance, equities, fixed deposits or other savings can also help you get a secured loan.
- Last Option: When you are left with no other option than to sell off your prized possession in order to pay off the home loan amount, make sure your property is sold at a good price. This will not only help you pay the debts but you will also be left with a bit of extra cash at your disposal if the resale value is greater than the original loan amount.
Conclusion: These are a few of the top options you have in case you are unable to pay your home loan due to whatever reasons. To avoid getting into such situations in future, make sure you have at least 4-5 months of expenses that should be kept aside for the emergency purpose. Besides you must also have individual health insurance and critical illness policies for you and your family that will pay for the sudden medical crisis, during unemployment or in any other adverse situations.
Basics about credit score
Credit score is the major factor which is considered by the lenders when you opt for a home loan, the higher your score is the better are your chances of getting a home loan approval.
A Credit score between 350 and 900 represents a borrower’s credit worthiness which means that whether he/she will be able to pay off the loan which is offered to them. However, a high number shows higher creditworthiness, so an individual who has a credit score of 850 will be considered highly eligible to pay off the debts on time, whereas an individual with a credit score of 350 will be likely to miss payments.
It shows in detail the records of past borrowings. In case you missed or made delayed payments of your credit cards or loan EMIs, these are also reflected in your credit report. Therefore, it is advised that before applying for home loan you must get a copy of your credit score, it will prevent you from being unpleasantly amazed and you will have a chance a fix any kind of errors on it
Good credit score for home loan
Home Loan Credit score is one of the key factors that determine your interest rates on a home loan. Additionally, a higher credit score improves a borrower’s chances of getting lower interest rates. Credit score is a three-digit number which ranges from300 to 900 and sums up your credit history. Credit report contains a credit score which decides the creditworthiness of a borrower. Credit report also includes your personal as well as account details which tell a lender about previous debts such as credit cards and loans. Before sanctioning a home loan to you, a Lender will pull your credit report from one of three credit bureaus- CIBIL TransUnion, Equifax or Experian. Using the information contained in your credit report, loan officers will evaluate your eligibility for the loan and the applicable interest rate. At present, there is not clearly defined definition of a good score, as many banks and financial institutions may have different criteria of judging a good score. But according to CIBIL, 90% of home loans are sanctioned to borrowers who have a credit score more than or equal to 700. So, rule of thumb – the closer your credit score is to 900, higher are the chances of getting a home loan approved at low interest rates.
The Bottom line…
Ideally you should check your credit report every year, so as to make sure that you have ample time to course correct if your credit report is not in shape. Regular checking of the report will ensure that you have a good credit score, enough to help you land a good home loan deal. You have a number of ways to check it online, one such option is Paisabazaaar.com. You can visit the website and generate your free credit report. Don’t leave any stone unturned to create the desirable credit report, so that you stand no chance of losing on your interest rates and you avail your home loan in a hassle free manner.
While glancing at your credit report, check for every minute detail like the spelling of your name, your previous addresses, details of the associated accounts and their correct reports along with the ones which are now closed.
After doing this, if you find out any error that might have crept in, dispute them online to get the corrections done. Having a poor credit score that is less than 500 can get you in trouble of getting a home loan with extremely high interest rates and this scenario disturb your financial picture.
Gold – the yellow metal, the metal favored by women and men alike. For women, it has ornamental value while for men it has an investment value as gold is always found to appreciate in value over time. If numbers are to be believed, India’s gold imports have shown an increasing trend over the years because consumers are continuing their romance with this favored metal. To cash in on this romance, banks and financial institutions are offering gold loans against the pledge of gold ornaments owned by individuals. These loans are easy to avail, cheap and less risky (from the lender’s perspective) and are highly favored by both borrowers and lenders. The popularity of gold loans is reflected in their CAGR which shows that the Compounded Annual Growth Rate of Gold Loans outstanding from 2008 to 2012 was 57.5% for banks and 98.5% for Non-Banking Financial Corporations (NBFCs).
In short, gold loan is becoming an increasingly favorable borrowing option for many individuals. When it comes to geographical distributions, South Indian leads the race with an annual gold loan demand of 40% followed by West India at 25%, then by North India in the range of 20% to 25% and the race completes with East India with only a 10% to 15% demand of gold loan. Bangalore, Ahmedabad and Mumbai are the top 3 cities which have the highest demand for Gold Loans as people have no qualms in obtaining this easy source of finance. With all the brouhaha over gold loan, here are some reasons why gold loans are a current favorite of many borrowers:
- Low rate of interest – one of the primary reasons of availing this loan is because the loan promises a lower rate of interest compared to other personal loans which are unsecured and thus, have a higher interest incidence.
- Easy availability – unsecured personal loans are issued after checking the creditworthiness of the applicant and usually require thorough checking on the lender’s part and waiting on the borrower’s part. Gold loans are sanctioned against the security of gold ornaments and are thus easily available
- Utilization of assets – your gold ornaments, though assets, remain sitting in your lockers because of lack of any apparent use. A loan against these assets, thus, sounds practical as you can avail money on your ornaments for meeting your personal or business related expenses without having to sell your ornaments off.
- Easy procedure – since the loan is issued against gold assets, the requirement of documents is reduced and the loan processing procedure becomes shorter. This entails easy availability of finances through an easy application and sanction process
- Flexible – many lenders provide for an overdraft facility wherein the interest is charged only on the borrowed amount. There is also the prepayment facility extended by other lenders where the loan can be prepaid anytime without additional charges while some lenders insist only on the interest payments during the loan tenure. Thus, a gold loan comes with flexible features which are suitable for borrowers.
- Beneficial for lenders – since lenders obtain the security of the gold ornaments, they do not have any default risk of non-repayment of the loan. The loan is issued based on the value of the gold pledged with the lenders and as such, the applicant’s income capacity and financial position does not indicate the repayment potential. Thus, lenders are risk-free when it comes to obtaining the repayment of their loans granted.
With so many benefits, no doubt the gold loan sector recorded such a high Compounded Annual Growth Rate (CAGR). Borrowers in Bangalore, Mumbai and Ahmedabad have contributed prominently to the gold loan growth rate story. Gold loan is issued based on the prevailing price of gold and the current price per 10 gram of gold on the date of writing this article in these top 3 cities is as follows:
Purity of Gold
24 Karat Gold
|22 Karat Gold||Rs.28,000||Rs.29,600||
The prices fluctuate every day and as is evident above, is region-specific. The purity of the gold pledged, the current prevailing price of gold and the total quantity of gold pledged are the factors which determine the amount of loan available to the borrower. So, India is taking leaps and bounds in securing a gold loan, how about you?
A saving account maintained with a bank is the basic banking practice followed by all. Moreover, with the recent launch of Jan Dhan Yojana Scheme incorporated by our honorable Prime Minister, the penetration of savings accounts has reached even to the remotest of villages. A savings account provides us with the day-to-day banking facilities like withdrawing cash when required, depositing any excess money in hand, paying bills, making transactions using a Debit Card which comes with the account, etc. With the increasing consumer awareness, banks have added various new features to their savings account to provide an extra edge to customers. With about 100 or more banks in our country today, you have a wide variety of choices when it comes to choosing the best savings account for your needs.
A large variety of choices also makes us scratch our heads wondering which one would be the best among all and it becomes difficult putting a finger on one specific bank’s savings account. I intend to help all you confused people out there who are not able to make this decision. To choose the best savings account, the following features hold relevance and should be considered.
• Network of branches – the most important guiding factor, when it comes to choosing a back for a savings account, is location of the bank’s branch. Banks in the vicinity of your home or office would be obviously given preference as it eases carrying out banking transactions which require a branch visit.
• Variety – another important criterion is the variety in the types of Savings Accounts offered by the bank. Today, banks offer specialized accounts like salary accounts, premium accounts, women, senior citizens or children oriented accounts, basic accounts and zero balance accounts. You would be benefitted by the account most suitable to you and the choice of the bank also depends on the product variety it offers in terms of saving accounts
• Interest rate – returns are always given the prime position and you would definitely like to earn the highest rate of interest on your savings account. Since RBI has made allowances for flexible interest rates, gone are the days when savings accounts offered a universal rate of 4% per annum. Today, banks offers as high as 6% or 7% rate of interest on their savings account
• Online Banking facilities – this one is gaining importance in the current times when internet has eased the way of life for individuals. Everyone uses the all-too-dependable internet to carry out all their activities and transactions. Banking is no exception to the rule and you should consider the ease of online facilities extended by your bank before choosing it to be the best.
• Fees and charges – though often ignored, you should check the associated charges levied by the bank on its account related transactions and activities. Needless to point out that the bank with the lowest charges is the winner hands down of being the best in its category.
• Minimum balance requirement – most savings accounts require maintenance of a minimum balance in the account monthly or quarterly. If you fail to maintain this balance, you are liable to be penalized. A higher minimum balance requirement is disadvantageous because you lose the returns you would have otherwise earned on investing the minimum balance fund elsewhere. Thus, look for banks which do not have a very high requirement of maintaining the minimum balance in the offered savings account.
If we keep all the above-mentioned points in consideration, IndusInd Bank Savings Accounts qualify in all respects. IndusInd bank has an all-India presence of about 745 branches which solves the branch location problem. There are twelve types of savings accounts designed for different segments of people and each account provides great features and benefits. When we talk about interest rates, 4% is provided in all accounts where the balance is lower than 1 lakhs, 5% for balances between 1-10 lakhs and 6% for balances above 10 lakhs. Thus, individuals have the potential to earn a high rate of interest on their savings account. With internet banking, mobile banking and phone banking facilities, the bank has made banking easier. The minimum balance requirement in the accounts and the fees and charges are also kept low and affordable.
All in all, IndusInd bank does provide some of the best savings accounts and can be chosen for opening a new account.
Personal loans have a unique feature of coming into the picture first, when facing a financial crisis due to emergency of any kind or even a long planned and well – thought over expense. Personal loans are a helpful tool in case of medical urgency or even to redo your living room. No one from the lending institute would ever come back and ask you about the area of usage of the disbursed funds. The absence of any kind of collateral or a security also makes personal loans one of the highest selling asset products offering by any reputed bank or a financial institution.
Next step is to obviously choose from the various options available around us. Nowadays, the lending institutes try to aggressively sell the loans. Remember the last time your friends about receiving another call from a loan department and getting bothered! However, you need to research on seeking feedback about the lowest interest rates and low turn-around time for processing of loan application.
Once you have chosen about the loan amount and the institution where you will be borrowing from, you need to adhere to the eligibility criterion monitored by the borrowing institution. Among the other documentary requirements, one check is completed from the bank’s end – CIBIL score.
What is a CIBIL score?
CIBIL is the abbreviated notation for The Credit Information Bureau (India) Limited. CIBIL happens to be an agency which provides credit history and associated reports linked to any individual or even a commercial set ups. CIBIL agency possesses records and details of your loan of any kind or credit cards even. This being an independent agency, helps to provide the most sought after platform by banks and other Financial Institutes, the credit worthiness of a possible lender. It reflects the history of lending by an individual and the associated repayment history. Any EMI skip or settlement of a long standing overdue for any loan account or credit card by an individual gets captured in the CIBIL scores. Data available on CIBIL gets updated every month with the help of submission of information by various lending institutes.
Good CIBIL score
CIBIL scores typically range from 300 to 900 for a person having any kind of credit history, 300 being the lower end of the score range. In order to be considered eligible for a personal loan, lending institutions look for a safe CIBIL score between 750 and 900 of the borrower. One might question in this scenario, whether a person having no credit history of any kind stands a good chance to get his loan application processed? The response is – NO. The reason behind this is the lenders are no really sure whether you really possess an appetite for credit at all.
You might have a pertinent question post the above information. Why such a high CIBIL score requirement for seeking a personal loan? Simple explanation would be the boon of personal loans –i.e., not seeking collaterals, becomes the bane for the lender. Personal loans have been considered by all lending institutions being an unsecured asset type hence making them very risky. A high CIBIL score would direct the lending institutions to ascertain whether a lender possesses a habit of a disciplined repayment.
Nowadays, CIBIL allows any individual to check his/her credit scores online post submission of a small fee. A tentative lender can check his score directly in case he is unsure about the same. The latter situation is desirable in such a case, since a rejection of any kind of loan application can further bring down the credit scores. On the other hand, a good credit score of 750 and above can help you negotiate better terms with any lending banks/institutions.
In situation where your loan application has been rejected by any bank due to a bad credit score, it is prudent not to apply for a loan immediately at some other organisation. First and foremost, one should check the CIBIL report in details and work towards clearing dues or unattended loan/credit cards.
An individual has to practise to be careful and disciplined while managing loans and credit cards. This can serve a long way to achieving the financial goals in the long term.
Applying for a credit card has become very simple nowadays. All you have to do is visit your bank or even simpler, log on to the bank’s website. Everything can be done with a few clicks. Similarly, you can also check the status of your credit card application with ease. Understandably, you wait for your credit card and any delays in the process can be demotivating. Thankfully, you can put the speculations aside and see what is happening to your application on your bank’s portal.
Checking the status of your credit card application online
Like mentioned above, it is very simple to check the status of your application. Here is what you have to do:
1. Log on to the bank’s website.
2. Open the link to track the card (commonly spotted on the left panel).
3. Enter the application reference number or application form number in the space provided.
4. Enter your mobile number or your date of birth (for verification)
5. Get to know the status of your application
Some banks also provide this service via text messages. All you need to do is send as SMS to the number provided with all the details. You will then get a reply with the status of your application.
What are the statuses that are commonly seen?
When checking for your credit card application status online, you will see any one of the following:
• Application approved
• Application declined
• In process
Let us take a closer look at each.
Application approved – This is a very positive status report as once your application is approved, your entire credit card journey will commence. The bank, after going through the profile of the consumer and the documents submitted, decides whether or not it will issue the credit card. Your application getting approved means that the bank is happy with your profile and would like to issue you a credit card.
Application declined – Whether a bank’s representative called you directly and convinced you to take a credit card or it was your own decision to apply for one, your application can be declined. Many people are left confused as to why their application got declined, but there are some very basic reasons behind this. If you find your application has been declined, check to see if you submitted all the correct documents. Then, if you are employed with a lesser known company or are unemployed or self-employed, then the bank may have thought of you as a potentially risky person to do business with and therefore declined your application.
In process – This status message means that your application is still being scrutinized, your credit scores evaluated and your overall financial health is being looked into. Banks exercise some caution before issuing credit cards to ensure that the customer doesn’t become a defaulter later on. So this status may take some time to change into either an ‘approved’ status or a ‘declined’ status.
Despatched – If you see this status when you log on to check the status of your credit card application, then you must feel happy! This means that your application has been approved and your card is on its way to reach you.
Other ways of checking the status of your credit card application
Apart from checking the status online, you can also visit a branch of the bank and speak to a customer relationship officer directly. If you provide them with the basic details (the same details that you need to enter on the website), they can check the status and let you know instantly. Alternatively, you could also contact your card agent or broker through whom you applied for the card. It is the broker’s job to provide you with all the information that you need regarding your credit card. Give him the required data and he will do the job for you.
So as you can see, it is extremely easy these days to know exactly what is happening to your credit card and how far away it is from you! Like all banking transactions, checking the credit card application status is also extremely simple and you can carry it out without any difficulty whatsoever.
Gold loan, as the name implies, is a loan that is offered by banks to the consumers against their pledging of gold ornaments like gold ornaments, gold coins etc.Gold loan is offered by all types of nationalized banks, private banks as well as other financial companies at very competitive rate of interest. They are generally used to carry out all the basic household requirements of the consumers like children’s education, marriage etc. Presently there are many financial companies offering these gold loans at attractive interest rates. Let us have a look at the top 5 leading companies offering gold loans:
- Muthoot Finance Gold Loan
- Mannappuram Finance Gold Loan
- Union Gold Loan
- HDFC Gold Loan
- SBI Gold Loan
Muthoot is the leader in the Gold Loan race while SBI also gains the number 5 spot in our list. Since these two are among the top players, it necessitates knowing the reason why. The Gold Loans promised by them must have some benefits which ensure the leading spots. So, let us delve into the Gold Loans of Muthoot Finance, a Non-Banking Financial Corporation and SBI, a leading public-sector bank.
Muthoot Finance Gold Loan
Muthoot Finance is one of the leading and largest gold loan providers not only in India but also globally. They have been taking into account all the gold loan needs of the customers at very competitive interest rates for the past 129 years. Let us have a look at the features of Muthoot Finance Gold Loan:
- The loan is distributed as quickly as within 5 minutes.
- The customers can enjoy the loan at an amount as low as Rs.1500.
- The loan amount has no maximum limit.
- It offers prepayment of loan option to the applicants without any charge.
- Simple loan application process involving minimal documents.
- The gold, against which the loan is taken, can be valued in the safety of the house of the applicant.
- Quick loan disbursal process increases customer relations
- The gold ornaments of the applicants are stored in a safe environment.
SBI Gold Loan
State Bank of India is also one of the leading gold loan providers in the country. They offer loan to the applicants in exchange of gold items like gold ornaments, gold coins etc. at very competitive interest rates. Let us have a look at the features of SBI Gold Loan:
- Simple loan offering procedure.
- Comparatively less paperwork required.
- Minimum loan amount is Rs.20,000 and maximum loan amount is Rs.20 lacs.
- Any person with a fixed monthly income like pensioners, bank employees can take up this loan.
- Lower interest rate on the loan granted
- Gold loan is offered to anyone above the age of 21 years.
- It accepts security of gold ornaments like gold coins, gold jewellery etc.
- Nominal loan processing fees is levied.
The above were the benefits of Gold Loans from each institution and the following table provides a comparative analysis of both the loans for a bird’s-eye view.
|Points of analysis||Muthoot Finance Gold Loan||SBI Gold Loan|
|Loan variants||The company offers gold loans in 8 different type of variants||Only one type of Gold Loan is available with the bank|
|Rate of interest||Interest rate ranges between 14% to 24%||Interest rate remains constant at 11.20%|
|Minimum loan||Minimum loan amount is Rs.1500||Minimum loan amount is Rs.20,000|
|Maximum loan||No maximum loan amount limit||Maximum loan amount is Rs.20 lacs.|
|Repayment tenure||The loan can be repaid within 7 days or within a maximum of 12 months||Repayment period of 30 months or 36 months is available depending on the nature of the loan|
|Evaluation of Gold||In-house evaluation of gold possible.||No in-house gold evaluation done.|
Now you know why these two Gold Loans are placed in the leading spots. Gold is not bought on a daily basis so why not do a detailed study beforehand and then opt for the best gold loan plan that would suit the needs and requirements of the applicants? The benefits of the leading plans are discussed above and you can make an informed decision. So now, secure your gold in the best possible hands and enjoy the benefits of the loan which is easily available, has lower interest rate and can be put to multiple uses.