Home Loan Transfer Process. Watch this video if you are paying more than 8.3-8.5% on your existing home loan

Which is the Best Personal Loan?

Tips to get the Best Home Loan in India

Top 5 reasons why a personal loan application may be rejected

Personal loan is the best way to finance immediate requirement for cash. Let's discuss how easy or difficult is it to get your personal loan application sanctioned. Here are the top 5 reasons why most personal loan applications get rejected. 

1.    Salary payment by cash: The way you get your salary is important. If you are earning well but getting salary through cash or cheque then banks may not give you personal loan. Bank prefer customers who receive salary directly in their bank account by direct transfer or ECS.

2.    Work experience of less than 3 years: Work experience plays an important role in obtaining a loan sanction. Most banks require minimum of 3 years experience to establish job stability. Some banks may also insist upon minimum one year stability in current job. Having sufficient experience but frequently switching jobs may also lead to rejection of your loan application.

3.    Residing in negative area: Your residence locality also matters when you  apply for a personal loan. Most banks have a "negative area list" and they don’t provide loans to resident of these areas. So it is good to check the same with the banker before handing over your document to them.

4.    Poor credit history and low CIBIL score: Bank always verifies your credit history before lending you any amount. If you have skipped EMI’s and haven’t paid your credit card bill on time, this all will affect your credit history and hurt your CIBIL score. The bank will reject your application in case of bad credit history. Check your approximate credit score estimate here

5.    Invalid Details: Bank verifies every detail provided on your application. If any detail is incorrect or if you are not reachable for verification, then your application is likely to be rejected. 

6 Smart Tips to Get Lowest Interest Rates on Personal Loan

Planning to go on a enjoy-now pay-later vacation? Here are some tips to get personal loan on lowest interest rates.

1 Check your CIBIL Score: Your CIBIL score is used by banks to check your previous loan repayment record. In case your CIBIL score is above 750, you are likely to get personal loans at lowest interest rates.

   

Check Seasonal Offers: Banks often offer special rates of interest on personal loan for limited periods. So always compare latest interest rates and schemes of multiple banks before applying for the loan. Remember that your salary bank may not always give you the best offer. Like phones, shoes and apparels, best offers are typically available online at Lowest Personal Loan Interest Rates in India

How about a gold loan instead? – Interest rates on gold loan range from 10-13% vs. 12-16% on personal loans. So, you may like to check the lowest rate available on personal loan with those on gold loan.

Hidden Charges: Some loan offers may look cheap with their low headline interest rates but come with hidden charges like processing fees, administrative fee, mandatory insurance premium and the likes. So, always check the overall costs before deciding on the loan. Many a times, these are not disclosed to the customer at the time of application. So, please check these upfront before applying for your loan.

 Prefer banks over NBFCs: Banks and NBFCs both may give same offers on loan but when you compare it in totality, most banks offer better deals on personal loans.

 Check Interest Calculation Method: Sometimes, Loans with low interest rates may be costlier than the higher rate of interest loans. It all depends on the way interest is calculated. So, don’t get carried away by such offers without understanding the details.

A flat rate would cost you more than reducing rate. In flat rate, you pay interest for the initial loan amount till end of loan tenure whereas in reducing rate, you pay interest only on the outstanding balance.

Everything You Need to Know About CIBIL Score 2.0

If you are a prospective home loan customer who is planning to apply for a loan, your CIBIL score would be one of the most important factors that a bank will consider while taking a lending decision. You might be required to check your own CIBIL report  in case you face any difficulty in getting an approval from banks.

You will, however, now receive a CIBIL TransUnion 2.0 report which is an upgraded version of the previous report. CIBIL TransUnion 2.0 follows a different approach for evaluating the past history of the borrowers and is considered to be an improved version of the earlier CIBIL credit report.

CIBIL TransUnion Score 2.0 is a score that is calculated based on various parameters on the consumer’s credit history and predicts the probability of default by the consumer. This credit score helps the banks in understanding the risk profile of its customers and accordingly take their lending decision.

One of the key changes and improvements in CIBIL 2.0  is that it also calculates a score for a new loan borrower with less than 6 months of credit history. In the previous version, any borrower who had less than 6 months of credit history would have got a score of 0. But, with CIBIL 2.0, the borrowers will get a score of 1-5, where 1 represents the highest risk of default and 5 represents the least risk of default.

The score is dependent on various parameters such as loan type (secured or unsecured), past credit seeking activities (like number of loan enquiries), 3 months overdue in any month for the past loan period, demographics (like age and location) etc.

Read more:-

• Loan againstproperty eligibility calculator
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• PPF Interestrate Calculator 2015
• Axis BankIFSC Code, MICR, Address of Branches in India 
• HDFC BankGold Loan Interest Rates

This feature can be especially helpful for those borrowers who have a short credit history of less than six months and need to take another urgent loan. In the past, even though the customer met the eligibility criteria, there was a possibility that his loan might get rejected by the banks for want of adequate credit history.

However, with CIBIL 2.0, even the new loan customers get a credit score, thus improving their chances of getting a new loan again within a short period.

In terms of credit score for borrowers who have 6+ month of credit history of any type/form of funding, the credit report will provide a score of 300-900. Banks may apply cut offs different from the cut-offs they used on the earlier reports while taking a loan decision. For instance, an 800+ in the previous report should now be equivalent to a score of 600-700 in the newer version.

The new CIBIL Score 2.0  is very helpful in determining a prospective borrower’s repayment capability. The report incorporates India specific factors related to customer demographics and the changing customer behaviour while calculating the score. 

CIBIL 2.0 has been tested on old data records of lenders and is being seen as an important tool in studying and modelling the behaviour of customers with high risk profile.

This article should have provided you a good understanding of CIBIL 2.0 and its implications for new loan borrowers. If you need further clarifications on CIBIL 2.0, please feel free to get in touch with us at care@myloancare.in.

5 Reasons Why I Love EPF Deduction from Salary

Do you feel depressed looking at the PF deduction in your salary slip every month? After reading this post, you will probably not feel so bad about it. Every month, 12.33% of your basic salary excluding other heads like HRA, DA, and other allowances is deducted every month towards Employee Provident Fund (EPF).

Today, in this article I will share why I don’t feel bad about the PF deduction reflected in salary slip.

1. For every Rupee deducted, your employer contributes another Rupee towards your EPF and Pension Fund. As per the EPF scheme, employers are required to contribute the same amount as deducted from your salary.  The entire amount deduced from your salary and two-third of that contributed by your employer is deposited towards EPF. The balance one-third of the amount contributed by the employer is deposited towards Employee Pension Scheme (EPS), whereby you create a corpus to earn pension post retirement.

2. EPF is totally safe, secure and tax-free:  The EPF fund is managed by the EPFO, a government of India organization and is invested only in government or government approved securities. The return on EPF is also fixed by the government every year. 
So, EPF money carries almost nil risk. The income from EPF is also totally exempt from income tax. In case your PF is managed by a company trust, even then the trust is governed by EPFO rules and investments are to be made strictly as per rules. So, even if the company goes bankrupt, it is unlikely that there would be any risk to the amount invested in your PF.

Useful Links:

•  Search BankBranches Details by IFSC Code
• Gold Loan Interest Rates Feb 2015
• Fixed Deposit Schemes, Interest RatesFeb 2015 of all Banks in India
• 2015 Mumbai Ready Reckoner Rates
• Loan against Property Interest Rates
• Personal Loan Interest Rates, Schemes

3. EPF cannot be attached in case of bankruptcy: Say, if you happen to default on a loan  taken from a bank or you need to pay some government dues. Banks and tax authorities can attach your personal property and even bank account. However, balance in EPF account is exempt from being attached under any circumstances and can be claimed by you without any problem.

4. You can nominate your near and dear ones for your EPF:

EPF offers nomination facility on all accounts. Nominee will be contacted by the company or EPFO in case of death of the employee and balance will be paid to the nominee. In case the nominee is not registered, the balance can still be claimed by your legal heirs but the process may take longer.

Now, are you more comfortable with EPF deduction just like I am? 
I hope so. So, how about putting some extra money in your EPF account? Yes, you have the option of investing more in your Provident Fund in the form of Voluntary Provident Fund (VPF).  However, note that there is no matching contribution in case of VPF.

Still not convinced that EPF deduction is a good thing? Here’s what you can do. You can opt out of EPF if you want. Yes, it’s possible to opt out of EPF. It may seem surprising for many people. If you earn a basic salary of more than Rs. 6,500 per month, you have the option to out of EPF. In such case, you will not see any EPF deduction in your monthly salary slip. However, you have to opt out of EPF only in the beginning of your job. 

Are there any advantages in becoming a priority banking customer?

Being a “priority banking customer” as the title suggests is being eligible for premium or special services from your bank.  While the idea of being eligible for premium banking services is no doubt appealing, it can at time come with associated charges. So, it is good to understand the general scope of priority banking services that are offered by almost all leading banks in India.  

“Priority Banking Services” are premium services offered by banks to their customers who match their eligibility criteria in terms of level of transactions on their banking accounts, banking accounts balance, and/or number of years of association with the bank. Banks offer several additional services to retain and maintain relationship with their old high net worth customers, who can potentially offer incremental profitable business to the bank.  

Some (indicative list) of the common services/facilities provided to priority banking customers are:

1.  Premium credit cards or debt cards free of cost

2.  Zero charges on RTGS and NEFT transactions via online banking.

3.  Cheque pick-up facility.

4.  Zero charges on balance enquiries.

5.  No charges on cash withdrawals when you transact on other bank ATM in India.

6.  Completely free Cheque book payable at any bank branch in India.

7.  Concessions in locker rent

8.  Free Demand Drafts

9.  Access to exclusive lounges and other areas

10. Exclusive Relationship manager

So as you would understand, many of the above benefits are small convenience based facilities and do not offer any significant benefit to the banking customer.

Useful Links:

• Mumbai Ready Reckoner Rates2015
• How to get lower personalloan EMI
• What is identity theft
• Difference between credit score and credit report

Obviously, where banks offer priority banking services free of cost, there is no harm in accepting the offer However, in several cases, a bank expects the customer to maintain high minimum amount balance in his account or pay additional annual fees to avail priority banking services.

Further, while there might not be any annual fees, one needs to be careful as what services are offered free of cost of under priority banking services as the banks may still be charging customers for some services.

One also needs to understand, that with the advent of ATMs, online and mobile banking, a rapidly growing section of regular banking customers have limited requirement for facilities such as Cheque pickups, demand drafts or a need to make branch visits quite often. Anyhow, for a large majority of customers, banking needs are basic and limited to depositing and withdrawing money with occasional requirement of a demand draft.

Hence, for these customers, becoming a priority banking customer by paying annual charges or keeping higher account balances may not make any financial sense. Priority banking services may appeal for banking customers who are not technological savvy and have a high dependence on banking to meet their business requirements such as bulk Cheque or cash deposits, cash management services and frequent requirement to make demand drafts.

It is for these customers, the additional services/features that come with priority banking may hold potential value. If you are one of the high usage banking customers, you can surely look at priority banking services to avail the extra comfort that come along. However, do remember to assess your banking requirements and do a cost benefit analysis of availing priority banking services.

Everything You Need to Know About Credit Score

What is Credit Score?

Credit score is a composite score calculated on a scale that ranges from mid-300’s to mid-800 on the FICO scale on the basis of the credit profile of the person as describe below.

1. Your Past Payment Record: - your consistency of making payments on loans and credit cards probably determines more than 90% of your credit score. Key factors that tend to be taken into account are:

a) What is your past payment record.

b) Every missed or delayed payment may lead to a lower score.

c) Recent history (Upto 2 years) has a greater impact on your score.

d) Consistent repayment record tends to improve your score over a period of time.

2. Nature of credit availed by you:

a) Higher reliance on unsecured loans such as personal loan and credit cards may lead to negative impact on your score

b) Credit card usage in excess of about 30- 40% of credit limit tends to pull down the score, more so if this is combined with revolving credit on multiple cards

3. Hard inquiries:

a) Too much loan related inquiries in the past are seen as a sign of a person badly in need of loans. This is sometimes referred to as a “credit hungry” profile. This may impact your score negatively.

What is a good credit score?

It’s more about keeping your score healthy rather than it being good or bad. It is often found that banks tends to give loan at lower interest rates and more attractive terms to those who have a credit score of more than 675. Lower scores will tend to make your mortgage and auto loan more expensive.

Main reasons for a low credit score:

There may be many reasons for a low credit score. They are classified into two main categories:

1. Low scores due to bank error

a) Errors in credit information provided by banks to credit bureaus

b) Identity theft or identity fraud where some unauthorized person has availed credit using your profile

2. Low score due to irregular past payment behaviour

a) Missed or delayed loan payments

b) Too much loan applications made in the recent past

d) High credit card dues.

Useful tips to improve your credit score:

a) Make all your monthly payments against loans on time

b) Keep away from too many credit cards. Don’t miss credit card payments.  Even if you find it difficult to pay the entire bill, make sure you pay at least the minimum due amount.

c) Moderate use of unsecured credit lines such as credit card and personal loan

Main Reasons to Choose a Top up Loan as Against a Personal Loan

Suppose you have recently taken a loan and after some time period (say 1 year), you again need some money for another purpose. Now what you do? Obviously, you can go for another loan.

But, do you know that there is another faster way to get a loan easily in case if you have a home loan which is already running? This loan is known as Top up loan. The benefit is that you can get this at a lower interest rate compared to a personal loan.

How Top up Loan Works?

When you take a home loan interest rates, you mortgage your property and the bank allows you to take a loan Upto 75 – 85% of the property value subject to your ability to pay EMI on that amount. After you make some EMI payments, the outstanding principal on the original home loan comes down and in some cases, even the property would appreciate.

Hence, the loan to value (LTV) comes below the maximum threshold of the bank.  Over a period of time, even your salary may have grown at 5- 10% per annum and hence you are now eligible for a higher loan amount.

So, at this time, you are eligible for a Top up loan. According to banks policies you are eligible for a Top up loan after paying 12 months EMI on the previous loan. Most banks offer top up loans at either the home loan rate or Upto 1% higher than home loan rate, which is still 2-3% lower than a personal loan.

Important things which you need to know about Top up loan:

1. Tax Benefit:

In Top up loan, you will get the tax benefit only when the loan amount is used for buying the home or if you use it for construction or renovation purpose.

2. No Security Required:

In Top up loan, you need not mortgage any further asset to the bank. This is because the bank is giving you top up loan on the security of your existing home which is mortgaged with the bank and all your property documents are already with the bank. Note that if you close your home loan, you also need to close your Top up loan.

                                                           

3. Processing fees:

Nearly all the major banks charge some processing fees of 0.25% to 1% on top up loans. You can sometimes get lower rates of interest and lower processing fees by opting to transfer your home loan to another bank.

4. Top up loan amount:

In Top up loan, loan amount cannot exceed 75% of the value of the property (together with the home loan) and the original home loan amount which you had taken earlier.

5. Loan tenure:

While personal loans are available for a period Upto 5 years, top up loan can be Upto 15 years, resulting in lower EMI’s.  Also, floating rate top up loans are exempt from prepayment charges unlike personal loans where you need to pay high charges for prepayment.

Is Top up Loan Good Alternative to Personal Loan?

In most cases, a top up loan is better than a personal loan. You chances of getting a Top up loan are high if you have already taken a home loan and your repayment record is good. 

What are the Terms and Conditions While Adding Co-applicants in a Home Loan

Terms and Conditions While Adding Co-applicants in a Home Loan:

While applying for the home loan, you always have the option of adding another borrower or a co-applicant or a joint applicant. A co-applicant is a person who applies for a loan along with the main borrower.

Adding a co-applicant can be beneficial if you want to increase your home loan eligibility. A co-applicant’s income will also be considered as a determining factor for Home Loan Eligibility Calculator.

However, not everyone can be a co-applicant in a loan and banks specify some conditions for a person or an entity to be added as a co-applicant to the loan application.

Useful links:

• Current Base Rate, PLR of All Banks,NBFC rate in India
• IFSC Code, MICR Code, Address of BankBranches In India
• Fixed Deposit interest Rates, FDInterest Rates India, Latest Rates All Banks
• Gold Loans Interest Rate in India

Below are some of the points to take care while adding a co-applicant:-

1. Spouses (husband and wife)

It is very common to have spouses as co-applicants in a home loan calculator and this helps in many ways. In case both are earning, their combined income can be used for calculating eligibility. Secondly, both can claim tax benefits in proportion of the EMI they pay and increase their combined tax benefit.

2. Siblings:

Two brothers can be joint applicants in a loan for the same property if they stay together. However, typically a brother and a married sister cannot be co-applicants in a home loan in most banks.

3. Father and Son:

Father and son can be co-applicants in a home loan with each other even if the property is owned by only one of them.  Incomes of both father and son can be considered for determining eligibility. However, in this case, loan tenure may have to be restricted based upon the father’s age.

Read more:

• Axis Bank Current Home Loan Interest Rates 
• Allahabad Bank Current Home LoanInterest Rates
• Dena Bank Current Home Loan InterestRates

4. Business Partners:

Two or more people unrelated by blood but partners in the same business entity (or controlling shareholders and directors in the same company) can act as co-applicants with each other for a loan. The income of the partnership or company they jointly own can be added to their individual incomes to arrive at eligibility. This is however subject to the condition that they co-own the property.

Note that distant relatives, friends and unrelated persons or entities cannot be added as co-applicants. 

Documentation for co-applicant:

A joint applicant or a co applicant is equally liable for the loan as the main applicant. Accordingly, same set of documents (KYC, income) are required for a co-applicant as for an applicant.

Impact on CIBIL:

Note that the co-applicants’ CIBIL Score and CIBIL Record will reflect all loans in which he/ she is an applicant or a co-applicant irrespective of who pays the EMI

These are some of the terms and condition that you need to take care while adding a co-applicant when you apply for home loan. If you have any other questions related to home loan, you can tell us via comment section.

Points to be Remember While Taking a Home Loan after 45

If your age is 45 years or more in age and are thinking of taking a home loan, chances are that you will need to go for shorter loan tenure up to 15 years as compared to younger home loan borrowers.  Say, you apply for a home loan at the age of 45 and your retirement age is 58 years, then the maximum tenure which the bank may be willing to give you will be 13 years. As the tenure is relatively shorter, your Home Loan Eligibility Calculator will be lower for the same EMI or you will have to shell out higher EMI compared to a 30 year old person availing same amount of home loan.

In recent past, increase in the salary levels has brought down the average starting age of most home loan borrowers. People now avail home loans in their late 20’s and early 30’s making it possible for banks to offer longer loan tenures up to even 30 years.

Now, if you happen to be taking a home loan in your 40’s, here are some important points that you need to know:

1. Do in-depth research: In today’s complex world, researching all the available Home Loan Calculator is very important, no matter what your age may be. However, when you make a new long term financial commitment at the age of 45, it becomes more important for you. This is because you also have many other expenses to take care of, such as children’s education, their marriage and your own retirement.

Useful links:

2. Increase your down payment or own contribution: At the age of 45, you may have more savings than a 30 year old.  So, it may not be a bad idea for you to use your savings to make higher down payment, thereby opting for a lower loan amount. This will reduce your EMI and your interest outgo.

3. Choose the maximum possible loan tenure available: The loan tenure available to you will be maximum 15 years. So, try and avail that.  In case you have surplus money available, you can always prepay your home loan.

Mistakes to Avoid While Taking Home Loan

Taking any loan requires proper planning and in-depth analysis. In particular, when you take a home loan this becomes even more important because the commitment is for long term, typically 15 to 20 years. In case you happen to select the fake a wrong bank or an inappropriate loan product, you may end up in paying more money for your home loan that you should. Many a times, borrowers tend to hurry up with their home loan choice and end up committing to a costly deal that negatively impacts their future finances even though it looks good initially.

Below are some of the common mistakes by the home loan borrowers:

1. Opting for Teaser Home Loan Schemes: Banks come out with different home loan schemes to address different segments of the market. One of the very popular schemes is teaser home loan scheme. Under this scheme, in the initial years or months, interest rate is fixed as low as 8% to 9% per annum in order to attract customers. After the initial period, loan shifts to a floating rate of interest, typically accompanied by a steep increase in the applicable rate of interest. Those who choose such schemes must check if they have the ability to afford a higher EMI in future.

2. Borrowing more than you can pay as EMI to the bank: This is another very popular mistake that many home loan borrowers make. When banks check the loan eligibility of the borrower, they search each and every parameter and after that grant the home loan.

However, even borrowers must check whether they can reasonably pay the EMI while meeting their other commitments.

There should be adequate cushion available for slight increase in EMI.  Further, if the property being bought is still under construction and the borrower is staying on rent, he must check that he can pay the rent and pre-EMI at the same time.  Further, some parts of the cost of flat (such as stamp duty, registration, club charges, etc.) are typically not funded by banks. 

Useful Link:

Home Loan Calculator

Home Loan EligibilityCalculator

Home Loan EMI Calculator

So, borrower must have adequate cushion available to make these payments to the builder.  It is also common for builders to many a times increase the overall cost on some pretext or the other, so some cushion must be available to make this extra payment.  Try not to maximize your loan amount eligibility.  Opt for a loan tenure that is most comfortable but not necessarily the longest as you pay more interest to the bank for the same loan when you opt for longer loan tenure.

3. Not studying home loan agreement properly: As a home loan borrower, it is very important that you properly read and understand the home loan agreement before signing on the dotted line. It is a fact that more than 95% of the home loan borrowers don’t read the document properly. The loan agreement sets out the rights and obligations of the bank and the borrower. While the document may appear lengthy or complicated, it is important to read and understand it as you are agreeing to abide by it.

Feel free to ask your bank representative to explain to you any terms that you don’t understand in the loan agreement. Most importantly, the loan document will typically have a schedule that will list the applicable interest rate, charges and other commercial information. Please read this part very carefully and ensure that the contents are same as what you have been told by the salesperson.

MyLoanCare-Home Loan InterestRates  

These are some of the mistakes that are often made by home loan applicant. Still, you need further suggestion about home loan in Mumbai, Bangalore or any other metro city in India, contact MyLoanCare sales team.