As per the income tax act, if resident owns more than one house then maximum one one house is considered as the self occupied. It means that if you own two flats in your name, for the income tax purpose you can show only one flat as the self occupied. Even if second house is not rented out or used for the personal emergencies, it has to be treated as the rented out and show extra income in the income tax statement.

What is Notional Rental Income?

In this case, a notional rental income has to be calculated and added to the total income. This will be shown under the head of other income. The question here is how this notional income is calculated. But, there is no clear or strict provision is provided in the income tax act to calculate the notional rental income. In the current scenario, most of the tax payers uses the neighbor’s rental amount as the notional value. Also this advantage gives extra freedom to the tax payers to manipulate the notional rental. If you want to understand the home loans and house property income, please read the following articles:

• Home Loans and Income Tax benefits
• Joint Home Loans and Tax Benefits
• What is EMI and pre-EMI?
• Can I get home loans from parents or relatives?

Notional income is one small part while handling the income from house properties. If you are knowledgeable on this subject, you can effectively save the tax amount and gain lot of money. I hope this post would have provided a basic idea on the notional income. If you have any questions, please write it in the comments section.

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This post is to publish the latest home loans interest rate offered by the Banks in India. Here I am not posting all the banks, but only the best or lowest interest rates offered by the banks. Note that these interest rates are frequently revised by the Banks, what I am posting here is the details collected from the starting of this month. If there is any change in the future, I would keep updating with new blog post on each bank’s revised interest rates. if you want to receive the updates on interest rates or any other investment related news, please subscribe here.

Floating Rate Home Loans

The below tables are floating interest rates offered by the leading banks in India for the tenure of 20 years and the loans amount is within 40 lakhs for salaried persons.

Fixed Rate Home Loans

• Learn About Home Loans

The below tables are fixed interest rates offered by the leading banks in India for the tenure of 20 years and the loans amount is within 40 lakhs for salaried persons.

It is expected that RBI would reduce the key policy rates by this month end, if that happens we can expect the further decline in the home loans interest rates. if there is any change on the interest rates, I will keep posted in this blog. if you want to receive the updates on interest rates or any other investment related news, please subscribe here.

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The home loans segment competition heats up to the peak. In the last couple of weeks many banks have reduced the home loans interest rates and offered various kick backs to stimulate the home loans disbursements, SBI India’s largest bank and market leader in the home loans wants to use the technology to acquire the new home loans customers. To attract the next generation customers, SBI has started working on the online home loans approval without the customer visiting the branch. This facility is currently under development stage and soon will hit the market. As you know, SBI has the lowest interest rates among the other banks, to survive in the competitive market they come up with many innovative ideas to stay in the race.

According the SBI source, the loan application would go through the four stage process. A customer can open the portal and submit the home loans application. While he submits the application, he has the option to choose the nearest SBI bank’s branch. All the branches will be linked to the online home loans application. The application submission process involves with the basic details like loan amount, income and Know Your Customer (KYC).

• Top 5 Rules for Home Loans
• Joint Home Loans and Tax Benefits

After submitting the application, it will go through the four stage validation process to approve the application. The following are the steps:

1. Online PAN verification (how to apply pan card online?)
2. Online enquiry with CIBIL  (How to Improve Your Credit History?)
3. Online verification of loan eligibility (all about home loans)
4. Evaluation of the customer based on internal risk scoring model and loan policy

If the above four stages are successfully passed, an email will be sent to the customer with sanction letter.  It is a digitally signed copy which is a valid proof that your home loan is sanction by SBI and it is awaiting for the disbursement. A bank employee would communicate to the customer and arrange for the loan disbursement. There is no need for a customer to walk in to the branch for the entire process.

Other than the loan application, SBI would also have a property search feature to find the suitable properties in the city. Customer can choose a property and apply for the loan. The listed properties are already approve by SBI for the home loans. Please note that SBI has the 26% market share in the home loans segment. It is not indicated that when this facility will be launched from SBI.

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In today’s announcement, SBI has cut 50% of the processing fees for home loans and auto loans. The competition on home loans segment is heating up after other major players in the home loans market HDFC, AXIS and ICICI has reduced the interested rates and announced lucrative schemes to attract the customers. Note that few weeks back ICICI has announced the cash back offers for the new home loans customers.

SBI has already offers the very lower rate on home loans among other PSU and private players in the segment. After RBI’s announcement on abolishing the processing fees on home loans, the switching between banks for the customers become much easier. This also creates lot of competition among the banks. Thanks to RBI for coming up with good ideas to help the customers!!.

• Learn About Home Loans

SBI will not charge Rs 1,000 as processing fees for loans up to Rs 25 lakh, Rs 3,250 for loans between Rs 25 lakh and Rs 75 lakh, and Rs 5,000 for loans above Rs 75 lakh. It would charge a flat fee of Rs 1,000 from borrowers who plan to switch to it. For car loans, SBI would charge a minimum of Rs 510 and a maximum of Rs 5,100 as processing fee. The reduced processing fee will be in effect till December 31.

If you would like to receive the future email from us, please subscribe here. Are you looking for tips to learn how to save the income tax, there is a good which talks about the 51 Tips for Saving Income Tax. If you have already availed any offers, please post it here.

• 60 of the important questions and answers about your home loan

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This has been frequently asked by our readers whether I will be eligible to allow my home loans payment against the TDS in my salary. It is very basic question to answer, read the following question to understand the context of problem raised by one of our reader.

I have taken a joint home loan with my father. The house is registered on both the names. In the bank’s home loan sanction letter, my names is printed as the second name while my father is the first name. My company is refuse to use the home loans repayment amount for considering the TDS on my salary. This needs to be adjusted on filing the IT returns. Please clarify my question.

This has been posted by many of our readers in the past. Even though I have provided good explanations on my previous posts about the home loans, in this post I will clarify the situation.

According to the Income Tax act 1961, an employer has to consider the home loans repayment of interest and principal while calculating the Tax Deducted at Source (TDS). The amount TDS will be paid to the govt. by company on behalf of employee. It is all very known process for you. The following conditions would be considered while calculating the TDS,

• Can I get home loans from parents or relatives?
• What is reverse mortgage loans?
• Right time to switch your home loans…

• The house must be in your name. There is no constraint on the share on the house.
• The home loan must be on your name. If you own the house and home loan is paid by your father, then you will not be able to claim the tax exemption on your salary.
• There is no matter whether you are the first holder or the second holder of the home loans account, what matters is how much portion of the home loans you are repaying to the bank. You must product the statements from the bank to claim the TDS. Note that, if you have the 50% share on the house, but you are paying the entire loan amount on the house, you will be eligible for the entire thing (subject to the maximum allowed by income tax law).
• Also you have to produce the possession letter to the company, otherwise you will not eligible for tax exemption.

I hope this post makes clear for the TDS applicable for the home loans exemption. If you have more questions on the home loans and tax benefits, please read our comprehensive post on home loans. If you want to receive the future articles on home loans, please subscribe here. Also read our book reviews for buying quality books on the personal finance.

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In the last week, ICICI bank has launched a limited period offer for the new home loan customers. The offer is 1% cash back on the EMI paid by them during the entire tenure. The offer is valid till 31st December, 2012. This initiative is taken by ICICI bank to lure more customers to take home loans from them. It is a good offer new home loan customers. There list of rules and regulations to get the cash back from the bank.

• Buy: Retire Rich Invest Rs. 40 a day

• This cash back offer doesn’t include the pre-EMI amount.
• The cash back will start accrue from the first EMI. However, the first cash back will be credited to the customers account only after completion of the 36 EMIs. That means after 3 years of the loan repayment.
• After the first cash back, there after every 12 months money will be credited to the customers account.
• If the customer is eligible for the cash back offer, either customer can choose the cash back benefits to credit their account or paying back the principal.

Learn About Home Loans

• For an example, customer can save Rs. 3.50 lakh on a 20 year home loan of Rs. 50 lakh.
• As a part of this offer, customers given the option to renew the fixed interest rate for the entire tenure. The renewal term will come after every 2,3 and 5 years. Customer has to renew the fixed rate within 30 days of the completion of term. Otherwise it will automatically change to the floating interest rates.
• Note: This offer is available till 31 December, 2012.

This initiative is taken by bank to compete with other banks. Most of the banks come up with the offers to attract the customers. Last month, its rival Axis bank launched a scheme wherein a home loan borrower will get 12 EMIs waived if he/she remains with the bank for 15 year or more.

If you or your friends are looking to buy a home loans, please refer them this offer. They would be benefited. If you would like to receive the future email from us, please subscribe here. Are you looking for tips to learn how to save the income tax, there is a good which talks about the 51 Tips for Saving Income Tax. If you have already availed any offers, please post it here.

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It is the new proposal from the Indian Banks Association (IBA) to Finance Ministry to amend the priority sector limit for the home loans. In the current scenario, Rs. 25 lakhs is the priority tag. Seeing the steep rise in the property price, banks want the increase in the limit for priority tag to help more customers to buy the affordable homes.

• Buy: 51 tips to save income tax

What is priority sector?

also read:

• Learn about home loans
• Home Loans and Income Tax benefits
• Switching Your Home Loans to Another Bank

In the every industry, there is certain limit of the loans will be considered as the priority sector to help the customer. If you are taking in to the home loans, Rs. 25 lakhs will be considered as the priority sector. Customers who want to buy the houses under this limit, will get the 85% of property price. It is due to the difficulty of the customers to pay the 20% down payment and stamp duty, and other charges.  To help them, down payment is reduced to the 15% of the total cost of the property price.

In the current scenario, the property prices have been shoot up to the higher levels. It is difficult for the middle class family to find a house under the limit of Rs. 25 lakhs. Keeping in mind, banks wants the priority tag must be increased to the Rs. 35 lakhs. It helps most of the customers for availing more loan from the bank. Also the interest rates,  may be given affordable for the priority sector customers.

• What is EMI and pre-EMI?

This will be reviewed by the Finance Ministry and circulated to the banks. There is no guarantee that it will be approved by the committee. Are you fall under this category, please write your thoughts in the comments section. If you want to receive updates, please click here.

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After a long period of increase in the interest rates, in the couple of weeks back, RBI has slashed the interest rates by 25 basis points. 100 basis points is 1 percentage. After the reduction, banks followed the interest rate action to cut base rates. It is good news for the home loans borrowers, since the home loans are linked to the base rates system. Base Rate System is for the banks to set a level of minimum interest rates charged while giving out the loans (Read: What is base rate system?).

In the last week, State Bank of India (SBI) has reduced 25 basis points for the existing home loan customers. But, it is 50 basis points for the new customers. In this case, the existing customers may wish to switch to the another bank if they are offering the lower rate. But, before making the switch, you need the calculation for understanding benefits on switching your home loans

If you have home loans with one bank, if you are looking to switch to another bank, probably you will have to pay a penalty of some percentage of the outstanding loan amount to that bank.

Read: switching your home loans

To understand the gain on switching the home loans, lets look into the basic example.  If you have taken a loan for Rs. 100000 for 5 years from SBI early this year. You would be paying Rs. 2150 as the monthly EMI. Now, you will have to pay Rs. 2137 after the 25 basis point cut. If it is Rs. 30 lakh, Ts. 390 will be save every month.  When the amount is increased, the EMI also still get lowered.

• Buy: 51 tips to save income tax
• Buy: Jago Investor

Existing customers can switch to the lower EMI options, since there is no pre payment charges for the home loans. Thanks to RBI for abolishing the pre closure charges on the home loans. This will be more useful only when the difference is more than 50 basis points. The savings will be higher when the new bank offers very low interest rates.

• Learn everything about home loans (this article provides comprehensive coverage on various posts on the home loans and income tax benefits, various types of home loans, joint home loans, etc.)

It is good time for the home loan customers to think about the reducing the EMI burden by switching to the suitable banks. Note that, the interest rates may further go down in the coming days, you may wait for some more time. Do the good analysis, before making the switch. If you have any doubts, please post it in the comments section. If you want to receive the updates from our blog, subscribe to our posts here.

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This post is in response to our reader Rakesh Patel‘s question about the home loans. He has written me the following question:

I would like to know about taking house loan from family or relative, I mean what is the procedure to get the house loan from family like mother or father, and how it will be helpful to get the tax exemption against this loan, Please help me out to understand the same, if possible

The answer for his question is simple. There is no complicated rule for this provisions. I have personally answered his question, but I would like to share with our readers.

Can I get home loans from parents or relatives?

Yes. if you are buying a house or constructing a house, you can get the home loans from your relatives. If you want to claim the tax benefits on the home loans, then you must get the certificate from the parents for the interest payment which is up to 1.5 lacs per year . Under section 24, one can claim the interest payments for the home loans taken from his relatives subject to the condition that one must submit the interest payment certificate. Without the certificate, income tax department will not accept the tax claim.

• Learn about home loans
• Why interest rates on loans are increased by the banks?

Also note that, when your parents are providing the certificate, they have to pay the income tax for receiving the interest from you. There is no deduction allowed under section 80C for the principal repayment to your parents. Only interest repayment can be claimed fro the tax deduction. As far as the principal payments are concerned, they would not qualify for tax benefit as loans only from notified institutions and banks are eligible for such deductions.

So, you don’t always take loans from the bank. It is possible to take loans from relatives too if the circumstances are favor of you. This is another good option available with the section 24. If you have any doubts, please post it in the comments section. Any one of you have got the loans from your parents?. If your answer is yes, please share your experience on income tax deduction here.

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Home Loans May Not Include Registeration Expenses

We are aware that while applying for the home loans we are eligible for including the registration and stamp duty expenses as the home price and banks are including those expenses on the total home loans amount. It is the procedure till now for all the banks. Also it increases the eligible amount for the home loans and buyers can use the excess amount for their registration and other expenses.

RBI has recently announced that these expenses are not considered as the value of the purchasing house. It is only the expenses incurred for transferring the documents and legal matters. So, banks are not required to include these expenses for sanctioning the home loans. It is a shocking news for the home buyers and planning to purchase the house recently. In this case, buyers has to arrange the money for these expenses and can not get it from the banks. This would increase the burden of the buyers and may increase the expenses at least 10-15% apart from the down payment.

also read:

• Top 5 Rules for Home Loans
• Home Loans and Income Tax benefits
• Switching Your Home Loans to Another Bank
• What is EMI and pre-EMI?

This topic is more debatable and everyone has their own opinion on these changes. Few has the opinion that to reduce the sales of houses and control the prices, RBI has done changed the rules.  But, how ever finally the end customers who are going to affected on this change. Already home prices are very high and it would make things more difficult for the buyers. We have to wait and how banks are treating these changes.

Please subscribe to our future articles here.

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If you are a home buyer in the last couple of years and paying the EMI amount, you would have noticed that the interest rates gone up several times and the EMI burden would have increased. At the time of buying the house, the interest rates are cheap and bought the house with low EMI, but now the situation is different. If you are a non-financial background and don’t have knowledge on basics of finance, then you are puzzling to find the reason for the interest rates increase.

The intention of this article is to explain the readers in very simple words, the reason for the frequent interest rate hikes and what are the changes in the market impact the interest rates. After reading this article, you would have some basic idea on the interest rates.

What is Repo and Reverse-Repo Interest Rates?

Repo (Repurchase) rate is the rate at which the RBI lends shot-term money to the banks. When the repo rate increases borrowing from RBI becomes more expensive.  Therefore, we can say that in case,  RBI wants to make it more expensive for the banks to borrow money, it increases the repo rate; similarly, if it wants to make it cheaper for banks to borrow money, it reduces the repo rate.

Reverse Repo rate is the rate at which banks park their short-term excess liquidity with the RBI. The RBI uses this tool when it feels there is too much money floating in the banking system.  An increase in the reverse repo rate  means that the RBI will borrow money from the banks at a higher rate  of interest. As a result, banks would prefer to keep their money with the RBI.

How to Control Inflation?

High inflation (What is Inflation?) is the rising concern on Indian Economy. If the inflation is not controlled by the govt. it would derailed the growth of Indian economy and result in recession. In order to contain the inflation, govt. and RBI must take number of precaution measures that would reduce the inflation and save the economy from the high risk.

If you look into the main reason why inflation is high, the products in the market is on high demand because the liquidity (cash available in the market) is more. Customers can easily get the loans and purchase the goods. As we have seen in the above sections, RBI would increase the key rates to reduce the liquidity in the market. When money available in the market is reduced and cost of borrowing the money is expensive, demand will be reduced and seller forced to reduce the prices. This could reduce the inflation.

But, it will not always the correct option to handle the inflation, unfortunately RBI decided to use the rate hikes weapon several times in a year. There are no action from the govt. to prevent the inflation, rather they increase the fuel prices. It is not going to come down unless god forgives this corrupted politicians and gives good monsoon this year;).

Banks to Increase the Interest Rates

I have explained the repo rates and why RBI needs to increase the repo rates. What I have explained is the basic or most common reason why RBI raises the key rates which is resulted in increase in the personal loan interest rates. There could be several other reason to change the key rates by RBI. So, now you got some idea on the rates related to RBI and need for increase in key rates.

Once RBI has increased the rates, now banks left with the less money to lend. If the rates are the same, it could affect their margin(profitability) because the total amount they can lend to the public is reduced. The only way to bring more money into the system is increasing the deposit rates. It will stimulate the people to invest their money to deposits like fixed deposit.

Now, banks got the money from public as the fixed deposit with more interest rates, when they are lending it outside, the interest rates should be higher to get the profit. This is the very basic understand why the interest rates are increased.

Summary

I hope this article would have given the basic understanding on how the interest rates hiked by the banks. It is important to understand if you are borrower from the banks, this knowledge will help you to anticipate any future hikes and try to repay the existing loans sooner. If you have any thoughts, please post it in the comments section.

Subscribe to our future articles here.

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Home Loans interest rates are shooting up to the top. RBI has increased its important rates several time within last year. It results in all the banks increasing the home loans interest rates sharply and making the big hole on house owners budget. That too who bought the house within past five years would have been very tough situation to adjust the increase in the interest rates. In this article I will write few tips which will be useful for the house owners to tackle the situation and save the money. If you have any ideas, please post it in the comments section.

Rise in Home Loans Interest Rates

It is difficult to digest that within last one year banks has increased interest rates of the home loans up to 2%. If it is only for the last year, think about the house owners who bought the house in the last 4-5 years time using the floating point method. They are paying the interest rates 5-6% more than what they bought at the beginning. It is not the small change, very difficult to manage by any middle class family person. It is the main reason why the housing default (not able to repay the loan and will be bad debt) will increase.

Read: More about Home Loans

Banks use very attracting interest rates at the beginning to lure the customers. Teaser home loans are one example for that. In the teaser home loans, the interest rates for the first two years will be very less, after that it will adjust with the market rates.

How it will impact?

Below table gives you the picture of difference in 3% interest rates increase.  It makes difference Rs. 197070 more to be paid as the interest. You have to plan how this amount would be paid, whether you have enough capacity to increase the EMI amount?

The following sections will explain how to manage this situation.

Increase the Loan Duration

This method is applicable only for those who can not afford paying the extra EMI (What is EMI?)  amount. For example, if Mr. X is paying the EMI of Rs.30000 p.m towards the home loans. If he has to increase his EMI to Rs. 35000 p.m. to adjust the interest rates hike, then if he can not afford the extra amount, he has to increase the tenure to few years and continue pay the same EMI amount.

Disadvantage on this solution is that you will be paying more interest amount. That will be loss for you.

Increase the EMI

If you feel that you have more capacity to increase the EMI amount, then it would be good idea. That too when situation like this, it is better to increase the EMI to your maximum capacity and try to close the home loans at the earliest. It will reduce the amount you have paid as the interest.

Prepay the Principal amount

It is the best idea to close the loan very soon. When you are paying the part of principal amount, there may be some restriction given by the banks like specific percentage of fees on the principal amount, maximum number of times in a year, etc. When you are taking the loan itself should be very clear on those terms.

For example, if you have got bonus or any other lump sum amount which is lying idle in the bank, you can utilize that amount to part pay the home loans principal amount. It will reduce the number of years you need to pay the loan.

Switch the Home Loans to another Bank

It is another good idea to tackle the situation. For this, you have to do small research on other banks interest rates and the switching charges. Normally, when you are switching you have to pay closing charges in the current bank and processing fees in the new bank. You need to calculate everything and if you find it profitable, then its better to move to the another bank. I have written separate articles on switching the home loans.

Not Good Time to Buy House

It is not the good time for the new buyers. The home loans interest rates are very high and it looks there is more rate hikes from RBI in the near future. Which would result in more rate hikes from the banks. Apart from this, real estate scenario also worrying, the house prices are very high and be very careful on investing on the houses.

This advice would not be suitable for every one, if you are the one who depends on the monthly salary and running your life with the budget, think twice before investing on houses.

Read: More about Home Loans

Summary

In this article I have wrote down few points which might be very useful for the home loans buyers. However, they need more analysis on themselves to come into any conclusion. If you have any thoughts on this article, please post it in the comments section.

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Introduction

Earlier I have written about the home loans insurance. But, this article don’t have any other specific details on the home loans and looks very basic material. So, I have planned to come up with some more details on the home loans insurance. In this article I will explain about the best way to get the insurance cover for your home loans and what are the rules involved in that. If you have any doubts please post it in the comments section.

Read: Learn About Home Loans

How to take home loans insurance?

There are two types of home loans insurance.

• In the first type (Insurance for total home loans amount):
  • If  Mr.X taken the home loans for Rs.1500000. Then he can take the term insurance for Rs.1500000. The cost for yearly premium for this amount would be Rs. 3790 and Rs.42870 for the single premium payment. HDFC offers this kind of insurance in the name of Term Assurance.
• In the second type (Insurance for outstanding home loans amount):
  • Only single premium type is available. In the above example, Mr. X has to pay Rs. 27110 and there is big difference with the first type. In this type you can not pay the premium every year.

Which one to Choose?

In the above two types, which one would be good. It is always better take the insurance cover for the entire home loans amount. Because, in the second case family will get only the remaining amount, but in the first case if the policy holder dies at any time the family gets the entire Ra.15 lakhs.

First 45 days of taking the policy is very important. If the policy holder dies in normal way with in the first 45 days after taking the policy, his family will not get any amount from the insurance company. They will get money only if he dies in accident.

Summary

I hope this article will be useful for the readers. If you have any thoughts to say, please post it in the comments section. I would be happy to answer your queries.

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I have been writing more article on the home loans and tax related tips in this blog. If you are the old reader for this blog, would have more knowledge on the topics. I would like to bring out old topics and high light in this article. It would help the new readers to quickly go through all the home loans related articles. Also I will come up with some more interesting articles on home loans tips. If you have anything on mind, please post it in the comments section.

About Home Loans

• Buy: Jago Investor: Change your Relation with Money

There is no explanation needed for the home loans. This type of loan is taken for constructing new house or repairing the existing house. But, we can wisely deal with the financial knowledge to save our hard earned money. The following are few links talks about the home loans and what are the process followed:

Home loans consultation for JUST Rs. 500

• Documents required for Home Loans Application
• Check list for Home Loans
• Submit Original documents for Home Loans
• Top 5 Rules for Home Loans

Home Loans and Tax Planning

Nowadays, most of the home buyers if you ask the second reason why they are buying new house is to show the investment while submitting the tax proofs. In fact, that is not the good way to see the investment, if you buy house only for the tax reduction, then you need to spend time on learning about the savings and investments. Better to discuss with financial consultant. We are not going to discuss on that here, this section summarizes the list posts that talks about the tax planning using the home loans. The following list of topics discuss on the investments on home loans and sections 80c and 24b on saving the tax exemptions.  The topics are more interactive and informative, please post your thoughts after reading the story.

• Home Loans and Income Tax benefits
• Home Loans and Income Tax Benefits – Part 2
• Tax Benefits on Home Improvement Loans
• Joint Home Loans and Tax Benefits

Processing Fees and Other Charges

There are couple of charges are fees applicable for applying the home loans. Normally processing fees would be levied on certain percentage of the total home loans amount. This would vary from the different banks. Don’t forget to ask the bank about the % of processing fees. Sometimes banks offer special customers the 0% processing fees, that means you need not pay any fees to processing the home loans.

Apart from processing fees for home loans, there are several other charges like switching to other banks, etc. The following list of articles explains the topics.

• Switching Your Home Loans to Another Bank
• Processing Fees for Home Loans

Other Types of Home Loans

Apart from normal home loans, there are several other types of home loans can be taken to repair the house, and extending the existing home loans, etc. This all can be used for the tax planning too. The following topics discuss about that.

• What is Home Loans Top Up?
• What is Reverse Mortgage?
• What is Mortgages?
• What is Reverse mortgage?

Home Loans Eligibility

If you are salaried person or have the proofs like IT returns, etc. for your income then you will be eligible to get the home loans. But, the question arises how much amount you are eligible?. It is purely depends on your monthly income and your EMI repaying capacity.  The following article talks about the EMI and pre-EMI concepts.

• What is EMI and pre-EMI?

Protection For Your Family (Home Loans Insurance)

It is one of the important part on buying the home loans. Many buyers not even consider taking the insurance cover for the home loans. It would hit their family when he is no more. Nowadays most of the banks tie up with the insurance company and offer the home loans insurance at the time of buying the home loans.

• Insurance Cover for Home Loans

Summary

I have almost summarized all the articles I have posted related to the home loans, tax benefits, types of home loans,etc. This would help you to understand the home loans and come to a conclusion.  I would like to get some feedback from you, please post it in the comments section.

Home loans consultation for JUST Rs. 500

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In this article I will be writing about the tax exemptions for the home improvement loans. I have written many articles related to the home loans and income tax benefits. There are two sections talking about the home loans and tax exemptions related topics. One is Section 80c (Home Loans Principal Payment) and another one is Section 28b (Home Loans Interest Payment). In my previous article I have explained in detail about the home loans taken for constructing the new house. In this article I will explore few new rules applicable for the reconstruction or home improvement loans. If you have any doubts, please post it in the comments section. If you like the article, subscribe to our future articles here.

Home Loans Articles

1. Home Loans and Tax Benefits
2. Tax Benefits on Home Improvement Loans
3. What is Home Loans Top Up?
4. Information on Home Loans

Home Improvement Loans

Typically home improvement loans are used for extending the existing homes like constructing balcony, kitchen or even you can use that money to paint your house or beatification work. It will be just work like the home loans when in the home loans you will have to work with builders here the money goes to construction contractors. To avail the home improvement loans first you have to estimate the amount required for extending the house and then submit the plans to your financier(bank). They will be verifying with the constructors about your estimation and visit your home. Some banks will sanction the loan only if you submit the receipts of payment to the contractors.

Tax Benefits on Home Improvement Loans

1. The good thing is you can claim the tax benefits for home improvements loan as like the home loans.
2. There is an income tax benefit on the interest component of the home improvement loan up to Rs 30,000 under Section 24 of the Income Tax Act, if it is self occupied.
3. In case of the property is rented out, there is no limit on the tax deduction. For example if you have to pay the total interest on the home improvements loan as Rs.195000. The total income from the rented house is Rs.100000. Then you will be eligible for the tax deduction of Rs.95000 (195000-100000). Note that this exemption is not coming under the allowed limit of Rs.150000 for home loans interest. That is the separate component on income tax act.

Summary

In this article I have written about the home improvement loans and the tax benefits on the loans. This would help many readers to make awareness on the other areas on the home loans part. I would like to answer all your questions posted on the comments section. Thank you for the reading!!!

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Introduction

In this article I will be writing about the Reverse Mortgage and how it can help you in the retirement. This product is has low awareness among the public. Nowadays few banks started making awareness to the public to sell the reverse mortgage products. This article explains the basic concepts on reverse mortgage. If you like the article please subscribe us.

What is Reverse Mortgage?

This product is most useful for the senior citizens  when they are looking for the money after the retirement. The process is to get the monthly income by giving the house to bank as the security. Bank will take the property after you and your spouse’s dismissal. The following are the key facts about the Reverse Mortgage.

• In India only three banks sell this product: SBI, Punjab National Bank(PNB) and Central Bank of India.
• SBI gives 90% of the property value to the customer.
• PNB provides 80% of the property value to the customer.
• The main disadvantage of this plan is only for 20 years. After the period banks will take the property.
• Central Bank of India came up with the life time support. For that they provide only 60% value of the property.

Summary

I hope this article will be useful for the senior citizen who are not aware of the products. If you have any doubts, please post it in the comments section.

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RBI had announced the base rate system which will set the interest rates for the bankers to lend their borrowers. Earlier the rate is known as the Prime Lending Rate(PLR) for the banks. Normally the banks can not lend the money below the PLR to avoid any loss or risk. But, banks started offering the loans cheaper than the PLR to lure the customers. This is also called as the Teaser Loan Rates where the actual loan rates will increase in the later period of time. That will put the extra burden on the borrowers.

RBI come up with the new base rate system where banks can lend the loans based on the new rating system. Earlier it announced that the new system will be effective from April 1,2010. After hearing the request from most of the banks to postpone the new system implementation for another few months, recently RBI announced that the new system will be effective from July 1, 2010.

Also RBI had agreed to exempt the three categories of the loans under this system as follows:

• Staffer Loans
• Loans against Fixed Deposits
• Loans under the differential rate of interest scheme

After the implementation of the new system, it is expected to be increase in the interest rates on the various loans. It includes the home loans which currently offer the teaser rates like 8% for first two years and later the new rates will be effective.

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Introduction

In this article I will be writing about the tax exemption for the home loans under section 80c. I will not write about the interest payment on home loans. That is not come under the section 80c. If you are the regular reader for this site, I have written many articles explaining the home loans and tax benefits. This article presents few quick tips for the principal payment for home loans. If you have any doubts, please post it in the comments section. Subscribe to our free email updates.

Principal Payment on Home Loans

The following are important facts about the principal payment on home loans:

1. There is maximum limit of Rs.100000 can be deducted for the principal repayment.
2. You can claim for more than one houses, but the maximum limit will be Rs.100000.
3. You can not claim the deduction, if the house is under construction. The money paid is lost for ever.
4. Registration charges and Stamp duty can be added to the home loans principal amount.
5. The loan must be taken from the financial institutions.

Summary

I hope this article would have helped you to gain basic knowledge on the principal part on home loans. If you are looking for more information, please read our home loans related articles. Thank you for reading this article!!!If you have any doubts, please post it in the comments section.

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After the announcement from other major banks like SBI, ICICI and HDFC to reduce the home loans interest rates, now IDBI bank joined the party to reduce the home loans interest rates effective from 16th December, 2009.

It is offering 8.25 per cent fixed rate for all its new loans till March 2012. The offer is applicable to all new home-loan customers applying on or before March 31, 2010, and taking a part or full disbursement during the offer period, an IDBI Bank press release said.

Presently IDBI Bank is offering 8.75 per cent for loans up to Rs 30-lakh, 9 per cent for loans between Rs 30- lakh and up to Rs 50-lakh and 9.25 per cent for loans above Rs 50-lakh.

You can read the IDBI Press Release

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Kotak Manhindra Bank announced a new home loans offer including a loan product at a fixed rate of 8.49% p.a. for 30 months (from the date of disbursement of the loan), and subsequently, the applicable floating rate for the balance term.

The applicable rate after 30 months will be the retail prime lending rate (RPLR) less the spread of 5.5%. Assuming the current RPLR continues, after 30 months, it will be at 9% p.a. floating rate. This is a limited period offer till Jan. 31, 2010. The rate of 8.49% p.a. is applicable for all new loans irrespective of the loan amount.

For salaried customers, the bank is also offering very attractive floating rates starting from 7.99% p.a. depending on loan amount.

While the fixed duration loan rate will remain the same irrespective of the loan amount, the floating rate will vary with the loan amount. Presently Kotak Mahindra Bank Home Loans are available in Mumbai, Delhi, Bangalore, Hyderabad, Ahmedabad, Surat, Pune and Chennai.

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India’s major private bank ICICI Bank have entered the interest rate war in the home-loan market with their fixed-cum-floating rate schemes.

ICICI Bank has launched a home-loan scheme under which 8.25% interest rate will be fixed for the first two years. The floating rates will apply after 2 years. These rates will be applicable to loans sanctioned between December 2009 and January 2010. The clients will have to make sure that the first disbursement takes place before the end of March 2010.

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Introduction

In this article I am writing about the important details about the SBI home loans. Last week I discussed with one of the SBI guy for getting the more details about the SBI home loans interest rates and other information. It is obvious that SBI provides less interest rates compare to other banks. It would be good idea to switch your home loans to SBI if your current home loan provider taking the highest interest rates. Post your ideas in the comments section. Please subscribe to our future articles here.

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Introduction

In this article I am writing about the interest rates increase for the home loans in the coming months. It is expected that there will be rise in the interest rates from this year end. This article explains the reason why rates will be increased and the current situation of home loans industry.  If you have any doubts please post it in the comments section. Subscribe to our future articles here.

Home Loans Interest Rates

As we know, the inflation of the country is already in the positive mark and it keeps increasing. It is predicted that home loans interest rates may rise with in next 6-8 weeks of time. It seems it will be on this year end.

When inflation is increasing, RBI will increase the interest rates. It will do that by this year end or early 2010. If you are planning to buy the new houses, please plan it accordingly.

Restriction on Home Loans

Nowadays getting home loans are not easy. Banks are imposing so many restriction to the customers to eligible for the loans. In the recent economic crisis, many people lost jobs and many got reduced their salary. Because of this reasons customers not able to pay the EMI regularly. It leads to the huge loss for the banks.

Previously 40-50% as the payment for the EMI is accepted by the banks. But, now they are not accepting more than 30% as the MI. This will also reduce the loan amount for the customers.

No Tax Exemption for Home Loans from 2011

If you have taken the home loans, you are aware that there is tax exemptions for the principal and interest payment on the home loans. Our govt. is working on the new proposal called as “New Direct Tax Code” which is expected to be implemented from the year 2011. It has lot of changes from the existing tax system. One among them is “Completely Removing the tax exemption for the Home Loans“. The proposal is in draft stage and make have changes. If that happens, it is going to be very difficult to take the home loans.

Summary

I hope this article will be useful to know the future of the home loans and its interest rates. If you have any doubts please post it in the comments section. Thank you for reading this article.

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Introduction

If you are looking to get the home loans to buy a new house, then its good news for you. Many of the banks already slashed their home loans interest rates to lure the customers. The offer is targeting the festive season and will be over by end of this year. If you have any plan please use this opportunity to get loan at cheaper price. Subscribe to our future articles here.

Bank Of India

BOI comes up with star home loans. which can be availed till 31 December. For a loan of up to Rs 50 lakh, the rate of interest will be 8.50 per cent in the first year and 9.25 per cent in the second.

Union Bank of India (UBI)

As per the offer, for home loans up to Rs 50 lakh, the bank will charge a fixed rate of 8.50 per cent for the first three years.

ICICI Bank

ICICI Bank launched a special offer for all new home loans. As per the new offer, the bank will charge an interest rate of 8.75 per cent for loans up to Rs 20 lakh. For loans of Rs 20 lakh-50 lakh, the new interest rate is 9.25 per cent. Borrowing above Rs 50 lakh will attract 9.75 per cent interest rate.

State Bank of India (SBI)

State Bank of India (SBI) cutting rates by 50-75 bps on high-value home loans. Earlier, SBI had launched a new home loan scheme offering 8 per cent for 1-5 years, depending on the amount, with zero processing fees, as against an average of about 10 per cent charged by others.

Summary

Apart form these players Punjab National Bank, housing finance majors LIC Housing Finance and HDFC also reduced the interest rates. I hope this will be useful for the customers to buying new home of their dream. If you have any concern please post it in the comments section.

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Bank of Maharastra(BoM) announces Mahabank Platinum Housing Loan Scheme for the home loans customers.

The new rates will be applicable for loans sanctioned between 16 September and 31 December, a press release issued here said.

For loans upto Rs30,00,000, the new interest rate for the first two-years will be 8%, for the third year 8.5%, for the fourth year 9.5% and for the fifth year 9.75%.

The average interest rate for the first five-year period will be 8.75%. The rate will be reset at the end of every fifth year, the release said.

For loans above Rs30,00,000 the interest rate for the first two-years will be 8.25%, for the third year 9% and for the fourth and fifth year 9.75%.

Average interest rate for the first five-year period will be 9%. The rate will be reset at the end of every fifth year, the release said.

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