Factors that can affect your home loan rates

Home loans, either secured or unsecured are given by banks and financial institution for the sole purpose of building and purchasing houses. Most often than not a home loan is given for the long term and the interest rates ranges from 7% to 10% depending on the borrower and the lender. The eligibility criteria also differ from bank to bank. At present, the home loan India sector has grown exponentially and is expected to grow further.

The eligibility criteria for home loans and it’s interest rates are regularly revised by the Reserve Bank of India from time to time. There are several financial tools that affect your home loan interest rates, both fixed and variable. The reserve bank of India monitors and effectively applies these tools to control the economy.

Fixed factors are mandatory for financial institutions; they dictate the terms and policies for home loans in India. These factors are as follows:

• Base rate – it is the minimum rate set by Reserve bank of India for home loans in India. It is set to ensure transparency and low cost of all available home loan funds.

• Repo rate – it is the rate at which the Reserve bank of India lends money to a financial institution in the event of any shortfall. If the Reserve bank of India wants to put more money in circulation, it lowers the repo rate and vice versa. Hence it is a tool to regulate inflation.

• Reverse repo rate – it is the rate at which the Reserve bank of India borrows money from financial institutions. It is a tool to control the money supply in the economy.

• Cash reserve ratio (CRR) and the Statutory liquid ratio (SLR) – CRR is the amount of money that a bank has keep with the RBI. The SLR is the ratio between liquid assets (cash, gold) and the net demand and time liabilities (NDTL).

Apart from these fixed factors that dictate the interest rates for home loans India, there are other variable factors that affect the home loan rates such as:

• Prime lending rate (PLR) – it is a reference rate set by banks taking into consideration their cost of operations. So the PLR is directly proportional to the home loans rate.

• Down payment – The lump sum amount you pay initially which is treated as collateral affects your home loans rate. High down payment leads to low-interest rates and vice versa.

• Credit Score – your income level and your credit rating makes up your FICO score which is calculated by banks to evaluate your loan amount and home loan rate.

• Shorter loans – you can cut down the tenure of your loan say from 20 years to 10 years and by doing so it will bring down your home loan rate.

How can a loan calculator assist you?

Managing your money requires precise organisation and attention to detail. The income you earn from a job and make from investments as well as the loans you apply for when required needs to be allocated among expenses, savings, investments, and spending on nonessentials. Attending to every financial detail along with keeping a record of all transactions may seem like a tough job at times, but financial calculators are profitable. They are also practical tools for money management and can help a great deal in the long run. With calculators designed for different finance-related aspects, one can easily figure out how long it will take to achieve his or her goals.

A loan calculator is one such tool that helps in estimating your loan amount and monthly payments to ensure that it fits your budget conveniently. Whether you borrow for yourself, or for your business, the loan calculators can show you how to determine the costs.

There is a general mathematical formula that is commonly used in any loan calculator. It basically works on two arithmetic formulas, and it includes two calculators, an interest rate calculator and a payable loan instalment calculator. Hence, for a particular loan amount, tenure and interest rate, the payable amount can be calculated, and the amortisation schedule offered by various banks and other financial institutions will be almost similar, and the pattern of reduction of principal loan amount through payment of each instalment will typically follow similar trends across all financial institutions. A loan calculator eases the tedious task of calculating a person’s payable amount.

The loan calculator India asks for the following inputs related to one’s loan:

• Loan Amount: The amount borrowed is defined as the principal amount of the loan. Based on this value, the rate of interest is applied which is then divided into monthly instalments according to the tenure of the loan. It should not be more than 40% of your monthly income.

• Interest Rate: It is the value that is charged on the loan amount. The interest rate can be of two types, either fixed or floating in type. With the fixed interest rate loans, the rate stays the same throughout the loan tenure with each EMI instalment is equal. In case of floating interest rate, the rates may vary from time to time with the base rate value, thus changing the consecutive EMI value.

• Loan tenure: It is the duration selected for repayment of the loan. Generally, the loan tenure ranges between a few months up to 5 years for most banks and financial institutions.

People using loan calculator India are highly benefited since it helps them to efficiently manage their financial issues and accordingly enables them to choose the loan scheme that suits them the best.

Why the personal loan EMI calculator is essential to get the best loan rates?

Equated monthly instalments, also known as EMI is defined as the the amount that a loan borrower needs to pay. This amount needs to be paid throughout the loan tenure in order to repay the borrowed loan amount. Each EMI amount includes part of the due amount, which is the principal and the interest borrowed through the loan.
This loan EMI is the monthly repayment that a borrower, will need to repay back, in accordance to the amortization schedule. But in order to calculate the ideal amount, a tool can be used to determine the EMI’s payout. This tool is the Personal Loan EMI Calculator

There is a general mathematical formula that is commonly used by most financial institution to calculate your personal loan EMI. For a fixed personal loan amount, the tenure and interest rate will be calculated into the EMI. The amortisation schedule offered that comes with this loan will be similar, to the pattern of reduction of a principal loan value through payment of each EMI. The personal loan EMI calculator eases the tedious task of calculating a person’s EMI. At the same time, this tool also displays the best personal loan offers as per one’s eligibility and requirements.

Personal loan EMI calculator calculates the EMI for personal loans on the basis of the inputs that are provided. This EMI calculator requires the following inputs related to one’s loan:

• Loan Amount: The amount borrowed is define as the principal amount of the loan. The rate of interest is then calculated on the borrowed amount. It is then divided into the required EMIs according to the tenure of the loan and it should not be more than 40% of one’s monthly income.

• Interest Rate: It is the rate of interest charged on the principal amount. The interest rate can be either classified as fixed or floating in type. In case of fixed interest rate loans, the rate stays the same throughout the loan tenure. However, with the floating interest rate, the rates may vary from in accordance with the base rate. This, in turn, will cause the EMI value to vary.

• Loan tenure: It is the period chosen for the repayment of the loan. The loan tenure ranges between  a few months to 5 years for most banks and financial institutions.

This personal loan EMI calculator works on two fixed arithmetic formulae. It includes two calculators, interest rate calculator and EMI calculator.

The first calculation is simple as it is uses the calculator to calculate the monthly interest on borrowed loan amount. The second calculation uses a complex formula which is used to calculate the personal loan EMI. Hence the use of personal loan EMI calculator helps in providing an idea regarding the best personal loan schemes available in the market.

How to take advantage of credit cards during festive seasons?

The festive season is in full swing, and everyone must be visiting their friends, family and relatives, purchasing and giving gifts, splurging on shopping due to the discounts and offers available. Among all this, their pocket must be feeling the pinch too due to the festive season. However, if a person plans his/her finances well, they can sail through the festive season with ease. Many buyers have been smart enough by timing their purchase to make use of most of the discounts as well as loan offerings by banks or Credit Cards.

Credit cards offer reward points, cash back offerings and conversion of purchase into easy EMIs. Loans are provided for consumer durables with interest rates as low as zero percent at times to entice customers to get into instalment payment mode.

Following are a few ways how one can take advantage of credit cards during festive seasons:-

• Cash back and rewards: Credit cards in India come with amazing cash back offers and reward point schemes during the festive seasons to make the purchase more attractive. A person can go for either a predetermined percentage of cash back (usually about 5%) into their credit card account or accumulate reward points to avail offers at a later stage. Cashback schemes, however, can also attract impulsive buyers to make an unnecessary purchase that can dent the financial well-being in the event of any missed payments.

• Exclusive discounts and EMI purchase option: As a consumer, a person can use his/her credit card not only to get an exclusive discounted deal but can also to grab an EMI deal which extends for a few months.

The exclusive discounts, however, can be limited to a particular retailer or bank credit card and are not applicable to all cards. For EMI option, banks charge a predetermined processing fee and a surcharge for facilitating EMI through a credit card purchase escalating the overall cost of purchase. So, while purchasing during festive seasons, one should not fall into the greed that retailer discounts are the end of the story.

• Minimal Documentation: Credit card loans require minimal documentation, and this makes it a popular option with a large number of buyers. Credit card EMIs get approved just via a call or mail.

It is, however, advisable to prepare a festive budget before the festive season is underway. Thus one can know how much they should save in order to meet the festival expenses in the near future. During the festival season the shopping expenses will definitely be higher, and if not planned in advance one may end up overspending. This can be taken care of, if one can compensate in other areas of their budget.

What are the benefits of a Personal Loan that every millennial must avail?

A personal loan is a short to medium term unsecured loan that an individual can use to meet their current financial needs. Though mostly used to meet expenditures related to down payments, unexpected medical expenses, vacations and debt restructuring, a personal loan may find its use for practically any type of expense. The tenure of such a loan is shorter as compared to a mortgage, and this adds to its benefits. Unlike a mortgage, which is usually for ten, twenty and sometimes for thirty years, a personal loan is commonly for one to five years.

Millennial as a whole are referred to, in many different ways, but some common words used to describe them are tech-savvy, connected, multi-takers, and slightly impatient. These traits create an interesting and complex generation of people. In the context of personal finances, there are a lot that millennial need to learn, especially, about personal loans. There are a lot of things millennials need or want. These include home, new car, home improvements, weddings, etc. The best personal loan offers a perfect solution for such millennial who are strapped for cash but have decent credit and a verifiable source of income.  

The benefits that every millennial can avail of personal loan is as follows:-

• Easily Available – Such loans are offered at reasonable interest rates by almost all banks and financial institutions. It is easy and convenient to get these loans in comparison to other types of loans.

• No Agent or Middleman Involved – One can directly approach the bank or financial institution for the loan. Since it does not involve any middleman or agent, unnecessary delays and expenses can be avoided.

• Unsecured Loan – It is an unsecured loan. It involves no collateral security in order to get this loan. All that is required is the borrower’s ability to pay back the money. Once the lending institution becomes sure of the person’s repayment ability, they process the loan.

• Less Processing Time – Since the best personal loan is available without any security or guarantee, the processing time involved in receiving it is also very less. 

• Minimum Paperwork – Getting such a loan does not require verification of any asset or any other kind of proofs and certificates that involve a lot of paperwork as none of the borrower’s property is mortgaged.

Personal loans can be a great option for anyone looking for money in a pinch or to help simplify their debt, and it’s a process that makes millennial feel very comfortable and matches their character traits perfectly. All a person needs know is that how much debt he/she can handle. Once it is done, you are well on your way to setting yourself up for financial success.

Benefits of owning a recurring deposit from an early age

Recurring Deposit, in present days, is one of the most preferred investment schemes available in India. Investors looking for a more promising investment scheme with good returns choose recurring deposit because it is a very convenient financial product. Before discussing the benefits of owning a recurring deposit from an early age, it is necessary to get a hold upon what recurring deposit actually means.

A Recurring Deposit or RD as it is generally referred to is a unique term deposit offered by banks. It is an investment scheme which allows customers with the ability to make regular deposits and earn decent returns on investments. This basically consisting of regular deposits and an interest component, this investment scheme provides flexibility and ease of use to individuals. The account holders can choose to invest a particular amount each month, ensuring that they have sufficient income for an emergency and ultimately facilitates earning decent interest on the amount. Given the fact that fixed deposits are rigid making it unideal for short-term investments, a recurring deposit is an ideal investment or savings option.

Most of the banks in India offer a recurring deposit account, with the term typically ranging between 6 months and 10 years and provide the investors with an opportunity to choose a term as per their needs. Competition among different banks to attract new customers has ensured that interest rates are competitive, and thus helps an investor earn a good amount on maturity of the account. Once determined, the interest rate does not alter during the given tenure, with the Reserve Bank of India ensuring that strict guidelines are followed. On maturity, the individual will be paid a huge amount which includes the regular, periodic investments and the interest earned on them.

The benefits of owning a recurring deposit from an early age are as follows:-

• Useful for Planning Short Term Goals- Investing in a recurring deposit is completely free of any risks and guarantees good returns in comparison to mutual funds and stocks. Because of this nature of this termed deposit, investors contemplating on short-term goals in a time span of 1 to 3 years choose to involve in a recurring deposit. It helps to handle situations where huge expenses are involved.

• Recurring Deposit Interest Rates- Recurring Deposit interest rates depend on the tenure and deposit amount. Interest rates for RD vary from 7.25% to 9% depending on the bank and the plan chosen by the customer.

Hence opening a recurring deposit account at an early age provides more returns due to the longer tenure of investment. The high and guaranteed returns attract more customers nowadays to open such accounts. In addition to this, facilities of online recurring deposit schemes have made things much easier.

Factors to keep in mind before making an NRI investment.

Just because one is an NRI or a Non-Resident Indian, it does not mean that they cannot invest in Indian stocks. One can invest under the Portfolio Investment Scheme or PIS, by opening and NRE or NRO account in any of the RBI authorised Indian Banks.

But before making an NRI investment there are few factors that you should keep in mind. They are-

• First and foremost concern while making an NRI investment is to know if India is actually a good option to invest in or not. Compared to nations like Brazil, China and Russia, India was underdeveloped and its economic condition was not that great, but over the years there has been a steady rise in the economy which has made the country a suitable investment destination.

• Secondly, as an NRI you should look into the different options of investment. You may either invest in Direct Equity or Mutual Funds or Real Estate.
o Direct equity or Direct Investment means that one can directly buy shares in a company or invest in shares through a broker or sub broker.
o Indirect investment or Mutual Funds means that one can buy mutual fund.
o Real estate investment trusts or REITs are also considered as indirect investment. It is one of the most popular form of investment for NRIs.

• Thirdly, another important factor to be considered before making an NRI investment is tax.
Tax is usually made on Dividends and on Capital Gains on Mutual Funds.
o Dividend refers to the distribution of the profit earned by a company to their shareholders.
o There are two types of Capital Gains- Long term and Short Term:
When an NRI investment is made in Mutual Funds and an asset is kept or held by the investor for a year or more than it is a Long Term Capital Gain. If it is sold within a year itself, it is a considered a Short Term Capital Gain and the tax on it is 15%. Long Term Capital Assets are exempted from tax.

• Fourthly, an NRI should also consider the type of bank accounts available. You can either consider a NRE account or NRO account based on your preferences. These preferences takes into consideration  three main factors:
o The currency one wishes to deposit- In case of the NRO account, foreign funds cannot be transferred, unlike in the case of an NRE account.
o Fund Repatriation is another factor that determines the type of account that one should opt for. In case of an NRE account, principal as well interest can be freely repatriable, while in the case of an NRO account, the interest is taxed in India @30%.
o Another factor to keep in mind is the Funds that one wishes to invest in a bank are acquired from Indian sources and if they can be repatriated from the country or not.

Keeping mind these points will help an NRI make a wise and profitable investment.