Loan Against Property: 5 things you need to know

Businesses need funds for their growth and expansion at all times. In case a business is not eligible for a business loan but they own property, another option they have is a loan against property. This type of loan is also an option for homeowners who are looking for funds.

Loan against property is a type of loan in which any property is put up as collateral. This is a secured loan. Since a property is put up as collateral, the loan amount under such loans is quite high.

If you’re looking to take a property loan, here are some things you should know:

1. Unconditional loan:
A property loan is like a personal loan with a lower rate of interest. Since this loan is secured, it is lower risk for the banks and thus commands a lower intererst rate. However, loan against property is an unconditional loan. What this means is that the lender does not put any conditions on the final use of the funds. These funds can be used for any purpose, whether personal or business.

2. Documents required:
Lenders require the following documents for the purpose of a loan against property:

• Property ownership papers
• Income proof (income tax returns, salary slips, bank statements for the past 6 months)
• Address proof (Passport, Voter ID, Aadhar Card, Electricity bill, Telephone Bill, Gas bill, ration card, Property documents)
• Identity proof (PAN card, Voter ID, Drivers License, Passport, Aadhar Card)

With these documents, you need to fill up the form for property loan. In case of a business that is looking out for a commercial property loan, then the income documents need to include the accounts and financials of the business.

3. Eligibility criteria:
Most lenders specify a minimum age of the applicant which ranges from 21 years to 25 years. The maximum age of the loan applicant is between 65 years to 70 years. This means the loan applicant must not reach the maximum age when the loan is outstanding. Both salaried and self employed people are eligible to apply for this loan. Since this is a secured loan, the lender has an element of comfort. However, while scrutinizing the loan application, the lender will be sure to conduct proper due diligence of the loan applicant’s ability to repay the loan.

4. Loan amount:
The loan against property is a secured loan. The value of the loan depends on the value of the property that is mortgaged to the lender. Most lenders will lend between 50% to 70% of the market value of the property. This means it is possible to get quite a high loan amount for such types of loans.

5. No tax benefits:
A home loan is eligible for interest and principal repayment tax benefits. Even though a property loan is a secured loan, it has no tax benefits. However, the purpose for which the loan amount has been used is important. If a commercial property loan is taken to invest and grow the business, then the interest can be charged as an expense.

Importance of investment in financial instruments

Investing money is one of the best ways to grow your corpus. By smartly investing your money in different avenues, you can grow it to meet different life goals such as education, wedding expenses, travel funds etc.

There are different types of investment products in which a person can invest his money. These can be either financial products or tangible assets. Tangible assets mean investment in a house, office complex, plot of land, construction of a building, gold etc. However, financial products are intangible in the sense they cannot be seen or felt.

Investing in financial assets is not only a quick way of growing your money, but it is also a highly regulated mode to grow your capital. These assets grow quickly and are a stable form of return. Return on many financial instruments is fixed which means your capital will have an assured growth and an income coming into your account. Financial instruments are convenient because they are online investment where everything can be managed in a few clicks.

Lastly, financial instruments are also a medium of growth for the country. Investing in financial instruments gives capital to companies seeking funds for further expansion and growth. This in turn benefits the country.

But which financial instruments are excellent online investment? Here are some of the best investment options in India:

1. Mutual Funds:
Under mutual funds, money pooled from different investors is collected and invested in a range of different assets. Mutual funds may invest in equities or in fixed income instruments of different durations.

2. Equities:
These are shares in an individual company. The price of equities increases or decreases based on performance of the company and the demand for the shares in the market. Equities can be invested in an initial public offer when the company lists on the stock market for the first time or from the secondary market where shares are traded.

3. Derivatives:
These include futures, options, interest rate swaps, currency swaps etc. These are technical instruments which need knowledge for investment.

4. Savings bonds:
These are fixed coupon bonds issued by the Government to provide guaranteed income to the investors.

5. Capital gains tax saving bonds:
These bonds can be invested in to save on capital gains incurred from selling a capital asset.

6. Inflation indexed National Savings Securities:
These securities are issued by the RBI and they give the investor a fixed return above the inflation rate. This gives the investor a guaranteed return over and above the fluctuating inflation rate.

Investing in these instruments requires study and precision. In case you don’t have the required expertise, you can avail specialized investment services that help you grow your capital based on your goals and risks.

How to open NPS account?

National Pension Scheme is a scheme that provides a monthly pension for the subscriber after retirement. Under the NPS, the subscriber has to make a contribution every year which gets invested in different funds. On retirement, a part of the corpus can be withdrawn by the subscriber while the balance has to be invested in an annuity scheme that gives monthly pension to the subscriber.

The first step to investing in the NPS is to open an account. Opening an account is an extremely simple process. There are two ways to open an NPS account:
Online account opening:

It is possible to open an account for NPS online. This process can be done on the NSDL website. There is a form to be filled up with details of the person such as :
• Account type i.e Tier I or Tier II
• Individual or corporate subscriber
• Citizen or Non Resident Indian
• Name of existing bank
• Personal details such as name, gender, date of birth, country, marital status, mobile number, email address, family details
• Bank details such as name of bank, bank branch, account number, IFSC code
• Nomination details such as name of nominee, relation to the subscriber etc.
• Identity details i.e PAN number, Passport number, Voter ID

After all these details have been filled up, a scanned copy of the subscriber’s signature has to be uploaded. Along with this, KYC documents also have to be uploaded. After this, the system takes the subscriber to a payment gateway to make the minimum contribution of Rs. 500 to the account.

Offline account opening:
An offline account opening procedure exists for people who can’t open their accounts online. For this, the subscriber has to visit any Point of Presence Service Provider (POP-SP) designated under NPS. The list of such POP-SP is given on the NPS website.
At the POP-SP, the subscriber needs to fill up a form with all the mandatory details. Along with this, a photograph needs to be stuck on the form. The required KYC details need to be attached and the minimum contribution amount has to be paid.
NRIs can also open an account under National Pension Scheme. They need to update details of their Non Resident External (NRE) or Non Resident Ordinary (NRO) account and add a scanned copy of their passport to their application.

To open an NPS account, you need a Permanent Retirement Account Number (PRAN) . A card containing the PRAN and the subscriber details will be sent to the subscriber by post or courier. Once the PRAN is received, the subscriber has to either e-sign it or physically sign it and courier it to the Central Recordkeeping Agency or CRA for their records.

What are the benefits of a personal loan EMI calculator?

A personal loan is a type of unsecured and unconditional loan. This means the borrower can use the funds for whatever reason without the lender raising any objection. Since this is an unsecured loan, the lender does not need to put up any security for the loan. This makes personal loans one of the best ways to raise funds when they are urgently required.

Taking any loan without proper financial planning is not recommended. When it comes to taking an unsecured loan like a personal loan, financial planning can be achieved by using a personal loan EMI calculator.

What is a personal loan EMI calculator?
A personal loan calculator is a calculator that finds out the monthly installment amount for a given principal, interest rate, and tenure. Using the calculator can help a prospective borrower find out the monthly installment amount for different combinations.

Here are some of the benefits of using a personal loan EMI calculator:

1. Easy to use:
A personal loan calculator is very easy to use. It requires only three inputs, the principal amount, the rate of interest and the tenure of the loan. Once these three items have been entered and submitted, the calculator throws out the EMI amount. In case of any error, it is easy to rectify the same and resubmit.

2. Helps compare the EMI for different lenders:
By entering the rates of interest from different lenders, a borrower can find out the impact on the EMI. This helps to find out the best lender and the best personal loan offer. However, it is better to use the personal loan EMI calculator before applying to different lenders. Multiple personal loan applications can adversely impact the credit score of the borrower.

3. EMI schedule:
Some personal loan calculators also provide an EMI schedule which shows the amount paid per month and the breakup into principal repayment and interest payment. This helps to understand the total amount paid out for the loan. It also helps with making decisions such as increasing or decreasing the loan tenure.

4. Free of cost:
Using a personal loan EMI calculator is free of cost. Lenders do not charge the customer to use such calculators on their website. This makes it one of the best tools to ensure that the right amount is applied for a personal loan.

5. Calculate total interest:
Personal loan interest calculators also show the total interest paid over the duration of the personal loan and the breakup every month. This can help to decide whether to pre-pay the loan or whether to foreclose it. Checking the total interest payment for different interest rates can help to negotiate better with the lender as well.

How to invest in Atal Pension Yojana?

Atal Pension Yojana is a social security scheme that provides monthly pension to its subscribers. It is a defined contribution scheme where a fixed contribution is made for a defined number of years and pension is received after the subscriber turns 60 years.

The scheme was launched by the Government of India primarily for the people in the unorganized sector. Under this scheme, the subscribers can get a pension between Rs. 1,000 to Rs. 5,000 per month depending on their contributions to the scheme. The contributions to the scheme depend on the monthly pension and the age of the subscriber when he joins the scheme.

A subscriber can join APY when he turns 18 years and the maximum age for joining is 40 years. This scheme is primarily managed with the Aadhar number of the subscriber and his mobile number. Any Indian citizen can open an APY account in a bank or the post office.
In case the subscriber dies after 60 years, the spouse gets monthly pension till the spouse’s death. In case both the spouse and the subscriber die, then the nominee will get pension based on the accummulated balance. If the subscriber dies before reaching 60 years of age, then the spouse has an option to quit the Atal Pension Yojana or to continue subscribing to it for the remaining years.

How to invest in Atal Pension Yojana?
To invest in APY, you will need to open an APY account. This account can be opened either online or offline in any bank or post office where you maintain a savings account. In case you do not have a savings account in that particular bank, you will have to open a new account.

Open APY account online:
Some of the leading banks allow the customer to open an APY account online. Once this account is opened, you need to transfer the minimum initial contribution to keep the account activated. The yearly or monthly contributions will have to be paid into this account. These contributions can be paid either via credit or debit card, net banking, mobile banking, UPI.

Open APY account offline:
Any Indian citizen can visit a bank branch or post office branch to open an APY account by filling in a form and submitting the relevant documents. The amount of initial contribution and associated charges will also have to be paid at the time of account opening.

Yearly contributions can be made by online transfers to the scheme or by depositing cash or cheque directly into the APY account. However, it is worth noting that if contributions are not made in time then there are penalties that the subscriber has to incur.

How does a loan EMI calculator work?

With the digital revolution in banking, each lender has their own websites with exhaustive content for their customers. Whether it is informative posts about their products, or blogs about finance and banking, major banks are going the next step to woo their customers. One of the most important tools that banks provide to their customers online is a loan EMI calculator.

A loan EMI calculator is a calculator that shows the monthly installment amount based on certain loan parameters. The loan parameters that an EMI calculator requires are:

• Principal outstanding
• Rate of Interest
• Loan tenure in years or months

Once these details are input in the loan calculator and submitted, the calculator shows the EMI amount for the duration of the loan. Some EMI calculators also show the break up between principal repayment and the interest payment in each installment. Now, there’s no need to wait till the loan has been sanctioned to check the amortisation schedule. It is already available in a few EMI calculators on the internet. Another important point to remember is that these loan calculators are completely free of charge and are available for everyone who visits the bank website, whether they are the bank’s customers or not.

But how do these loan eligibility calculators work? These loan calculators work on the basis of a simple formula:

P x R x [ (1+ R)^ N] / [ (1+ R) ^ N-1]

Where:

P= Principal or loan amount

R= Rate of Interest on loan

N=Tenure of loan in years

The EMI amount depends on the rate of interest and the tenure. A loan EMI calculator can be used to find out which lender’s loan offer is the best and which combination of loan tenure and rate of interest leads to the least amount of interest being paid out.

Some home loan eligibility calculators also require the customer to put in monthly or yearly income details as well as the age. The calculator uses this to automatically calculate the amount of loan that the applicant would be eligible for. When it comes to loans for two wheelers or three wheelers, some loan EMI calculators require the model number and the company name so that the value of the loan can be decided based on the price of the vehicle being purchased. Once all these details have been fed into the loan eligibility calculator, it calculates the loan amount that the customer is eligible for and redirects the customer to fill up a form to request a call back from the bank’s customer representatives.

Here’s why you should book your FD online

One of the safest and most popular avenues to park excess funds for a short period of time is a fixed deposit. For many senior citizens, keeping their money in a fixed deposit is an excellent way of ensuring a consistent monthly return on their funds. A fixed deposit offers a stable rate of return and regularity of interest payments.

With the digital revolution in banking and the spread of internet and mobile banking, it has become possible to book an FD online without visiting the bank branch. Booking the FD online has its own set of benefits, especially for techno savvy users.

Here are 5 reasons why you should book your fixed deposit online:

1. Convenience:
Booking your FD online is now possible in just a few clicks. Customers of a bank can book a fixed deposit either using internet banking or mobile banking. It is possible to choose the tenure and get the interest rate while booking as well. The amount is automatically debited from the account and a fixed deposit is created instantly.

2. Online FD certificate:
If you book a fixed deposit online, the receipt and FD certificate for the same is sent by the bank on your registered email address. This reduces the hassle involved in taking care of the certificates. It can easily be accessed online in case the need arises.

3. Fixed Deposit rates:
One advantage of opening a fixed deposit online is the transparency in FD interest rates. The FD booking system automatically shows the rate of interest based on the tenure. Most lenders have their fixed deposit rates displayed clearly on their websites which makes it possible for a customer to check which bank’s fixed deposit can yield a higher rate of interest.

4. Fixed deposit renewal:
In case of online fixed deposit, there is no need to renew the fixed deposit manually every time it matures. Most fixed deposits have an option to automatically renew the fixed deposit. The different options that the customer can choose are:

• Renew principal
• Renew principal and interest
• Do not renew

Depending on what the customer chooses, the fixed deposit is either renewed or liquidated on maturity. In case the do not renew option is chosen, the fixed deposit plus the interest amount is credited to the account. This option can also be changed anytime.

5. Easy liquidation:
There is no need to visit a branch to liquidate a fixed deposit booked online. In case of premature liquidation, the procedure is very convenient and happens in a matter of a few clicks. However, interest at a reduced rate is paid out in case of a premature withdrawal.