Home Loan Agreement Clauses

4 Home Loan Agreement Clauses you should definitely know

Knowing your Home Loan agreement and all the little clauses involved in it can go a long way in making the process of obtaining said loan smoother and hassle-free for you. It is imperative that you stay cautious and question each article and clause that you are unable to comprehend.

The Home Loan agreement is a massive document detailing all the different aspects of the agreement between a lender and a borrower like interest rate, repayment strategy, loan tenure, etc. Most people just brush past it without giving it a second thought, which is an incorrect approach. As a borrower, especially if it’s your first time applying for a Home Loan, you need to prick your eyebrows and go through the entire agreement with complete concentration.
Financiers like Bajaj Finserv offer Home Loans with benefits such as quick online approval, part prepayment facility and much more.

Four Home Loan Clauses in India You Should Definitely Look Out for

  • Reset Clause on Fixed Rates

    If you opt for a fixed loan, the interest rate remains constant throughout the loan tenure. But certain banks add a clause where they retain the right to change the interest rates depending on the market trends. The bank has the legal right to review rates at the end of certain number of year and make the changes they deem necessary. This essentially transforms your fixed loan to a floating interest loan. You need to go through each clause of the agreement carefully to figure out if the bank has tried to sneak in a Home Loan reset clause.

    read more about Fixed or Floating Interest Rate: Which is ideal for Home Loan

  • Notification Clause

    There are certain loan agreements where the lenders add a clause that asks the borrowers to notify the lending institution of any changes in his personal status such as employment or marriage well in advance. Since the financiers don’t define the exact period for ‘well in advance’, it can lead to confusion and ambiguity. The lender can take advantage of this fact and declare the non-disclosure as a default. If you come across such a clause in the agreement, have a talk with the lender and ask him to clearly define the period within which you are supposed to notify any change in the personal status.

  • Prepayment Clause

    Prepayment is always a tricky issue in the Home Loan agreement since the lender is losing out on interest payments. Most financiers charge a penalty to compensate for the loss, but might not be upfront about it. Check the entire agreement for any mention of a Home Loan prepayment clause and discuss it with the lender. Non-banking financial companies like Bajaj Finserv offer Home Loans with part prepayment facility, allowing you to finish off the loan quickly.

  • Security Cover Clause

    This clause allows the financiers to demand additional security when the property prices fall. Even if you are loyal on your EMI payments, this clause will force you to pay a security cover in addition to your loan amount and if a person fails to provide such a security then they may be declared a defaulter by the lender.These are some of the important Home Loan finance clause that you must watch out for in your loan agreement. Opt for the services of financial corporations like Bajaj Finserv that offer a relatively hassle-free experience and provide benefits like nil foreclosure charges and refinancing facility.

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What you should know about the Atal Pension Yojana

If you’re looking to apply for a pension scheme, you should consider the Atal Pension Yojana, launched recently by the Government of India. This program has been created for all citizens of India, and is focussed especially on those working in unorganised sectors with no formal pension provisions.

Apart from the Atal Pension Yojana, a number of government-announced insurance schemes were introduced as well in 2015. The Government, in the previous year, had also implemented the Pradhan Mantri Jan Dhan Yojana throughout the country.

The Atal Pension Yojana offers a number of advantages that are complementary to the benefits of Pradhan Mantri Jan Dhan Yojana. Below, we’ll be looking into how this scheme actually works.

A Few Benefits

This program provides guaranteed pension to subscribers after they’ve reached the age of 60. Depending upon the monthly payments you make, you’ll be eligible for a pension that ranges from INR 1000 to INR 5000. In some cases, the Indian Government will shoulder the burden and pay 50% of the subscriber’s annual pension payments or INR 1000, whichever is lower.

This co-contribution will only be made for those subscribers who don’t pay income tax and who aren’t covered by other statutory social security schemes. What’s more, the Indian Government will make these co-contributions for a duration of 5 years.

Are You Eligible?

This is one of the most frequently asked questions on Atal Pension Yojana. Simply put, this program is open to all savings account holders between the ages of 18 and 40. You can apply for this scheme today if you hold an account in a participating institution like Bajaj Finserv. In order to avail of the scheme, you essentially need to be in a position to make monthly pension payments for at least 20 years.

Things to Keep in Mind

Whether you’re 18 or 38, you need to make your monthly payments on time once you subscribe to the scheme. This is one of the ground rules for Atal Pension Yojana. You’re charged a penalty every time you delay making a payment. For instance, INR 1 is deducted as a fee when you miss making a monthly payment of up to INR 100. Similarly, you’re charged a fine of INR 10 when you delay a pension contribution of more than INR 1000 per month.

Remember, after 6 month of non-payment, your pension account will be frozen, and after 12 months, it’ll be deactivated. If the same continues for 24 months, then your account will be permanently closed.

The Atal Pension Yojana offers the opportunity of storing some money for the future. If you think it matches your needs, then you should definitely apply for the scheme at a trusted company like Bajaj Finserv.

How will extra payments reduce my loan?

When you take up a loan to help turn a dream into a reality, you may not realize that the interest chained to it will draw a lot of money from you. Now there are some ways to save you the hassle and repay the loan well before the scheduled tenure ends. Also, always be on the lookout for loans with low interest rates such as the ones offered by Bajaj Finserv. Further in this article are some tips to reduce your loan amount.

The best two ways to reduce your loan tenure or end it, for that matter, are by making a prepayment or choosing to foreclose the loan.

Loan Prepayment

If you come by some extra cash, you might want to consider prepaying the loan to save on the interest amount. Bajaj Finserv allows prepayment of the loan amount without any extra charges. The prepayment can only be done after your first EMI.

While there is no maximum limit on the prepayment amount, the amount should be at least equal to or higher than the sum of three EMIs. After making the pre-payment, the part prepayment calculator helps you calculate your new EMI, taking into account the new tenure period. This facility can help you keep a track of a loan and lift the burden of monthly payments off your shoulders at the earliest.

Loan Foreclosure

As the name suggests, loan foreclosure allows you to repay your loan amount completely, well before the tenure. With loan foreclosure, you can choose to make a full repayment of the loan amount in one single payment, cutting down the interest amount. In addition to your loan amount, interest rate and the tenure, inserting the number of EMIs you’ve paid off and the month in which you’d like to foreclose the loan, you can calculate the foreclosure amount using the foreclosure calculator available with Bajaj Finserv.

What’s more, if you take up a loan from Bajaj Finserv, you can choose to foreclose your loan without any extra charges.

So, these are a couple of ways you can learn how to reduce the cost of loans conveniently.

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Loans Against Fixed Deposits

Evaluating Loans Against Fixed Deposits

A Fixed Deposit (FD) is basically a type of deposit which gives you a higher rate of interest than a regular savings account. The deposits are made for a fixed period of time, and the interest is paid out only after the completion of this period. A Loan Against Fixed Deposit (LAFD) is one of the smarter options of raising funds by pledging your Fixed deposit as collateral with the lender, instead of breaking the Fixed Deposit lying in the bank. LAFD encourages you to take advantage of your Fixed Deposit and obtain funds on the merits of your FD.

fd apply

In India, a Loan Against Fixed Deposit is a very popular way of obtaining money from a reputed lender. With low interest rates and options to prepay your loan, the only charge you may end up bearing is probably a processing fee.

How to Apply for a Loan Against Fixed Deposit?

Loan against Fixed Deposit in India have gained considerable popularity in the country owing to their easy accessibility and low interest rates. Bajaj Finserv offers Loan Against Fixed Deposit which can be applied for online, eliminating the need of venturing out to visit a branch. If you are travelling and have access to the Internet, you can quickly fill the form online. Here are the steps you are required to follow:

  • Download and fill the online application form.
  • Submit the form along with FDR at the nearest branch of the lender
  • ECS mandate (only for Non-Cumulative FD)
  • Cancelled cheque (only for Non-Cumulative FD)

The application process becomes even easier if you have a FD account with the lender. It is a safe investment that provides you with many advantages. You can read them here. Even though applying and obtaining approval is not tough when it comes to Loans Against Fixed Deposits, do ensure you are eligible and meet the requirements put forth by the lender.

Also Read: Best Way to Take a Loan Against Your Fixed Deposit

Eligibility Documents for Loan Against Fixed Deposit

If you are a salaried or a self-employed individual you can apply for a LAFD. The lenders would give you a very specific list of criteria which determines your eligibility for the loan. Bajaj Finserv offers Loan Against Fixed Deposit with low interest rates and speedy approvals.

Loan Against Fixed Deposit rates are low in India. Financial lenders would offer Loan Against Fixed Deposits to you at a slightly higher interest rate than the rate at which you opened your FD. For example, if a financial institution pays a 9 per cent rate of interest on a three-year FD, then the rate of interest payable on the loan raised against it would be 11 per cent. Bajaj Finserv makes it so easy to calculate your EMIs as they offer you a loan against Fixed Deposit at 2% above your existing FD rate. To understand what your EMI will amount to, you can use a Loan Against Fixed Deposit Calculator.

To know more about your options, do read the low down on Personal Loans against Fixed Deposits.

Calculate FD Maturity Amount Invest in FD Check FD Interest Rate

Complications Home Loan Part Payment

Complications While Doing Part-Payment of your Home Loan

While a Home Loan is the easiest option you have to buy or build your dream home, the real challenge lies in repaying the loan. This might cause a significant hole in your monthly income for a long period. While the loan amount itself may be large, the added interest makes the amount payable even larger. A way to lessen your total interest payable and the loan tenure is part-payment of the loan.

Part-payment involves a significant fixed payment towards the principal amount of the loan. As the principal amount reduces, so will the interest amount. This seems like an easy solution to repaying your loan faster, but it does have its handicaps. Here, let us explore Home Loan part payment complications and ways to handle them effectively.

Things to Consider Before Making a Part Payment

Home Loan complications in India are the result of a considerable amount of red tape and excessive paperwork. These include rejection, low sanctioned amounts, high interest rates, and a large down payment.

Always consider the Housing Loan interest rates available in the market and make your decision on that basis. You can apply online for a Home Loan today with Bajaj Finserv which provides extremely reasonable interest rates.

Complications of Part Payment

Some of the most common Home Loan part payment problems faced by borrowers in India are,

  • Limited Number of Part Payments

    There is a restriction on the number of times that you can prepay in a year. This varies from one company to another.

  • Lock in Period

    A lock-in period is a period of time when you are barred from prepaying your loan. Any payment before this period expires may lead to an extra charge. Bajaj Finserv, on the other hand, allows you to prepay your loan after clearing your first EMI.

  • Communication Problems

    Always remember that any promise from the lender or customer service has to be in writing. A verbal assurance may initially sound good but is worthless and unscrupulous bankers can cause you to lose your investment.

  • Payment Amount

    To effectively plan your finances it would be wise to calculate the amount you can pay.

  • Lower Tenure or Lower EMI

    A lower EMI may lead to a higher interest amount in the long run. However, a lower tenure may lead to higher savings. This again is dependent on the lender and can be a complicated decision.

  • Foreclosure

    If you have paid the EMIs on time and are able to foreclose your loan before the completion of the tenure, make sure the part payments are such that you will end up with under a year of outstanding EMIs. Some lenders will levy extra charges for foreclosing your loan. Bajaj Finserv has nil foreclosure charges so you can close your Home Loan anytime.

In conclusion, part payments of your Home Loan come with their set of restrictions as well as benefits. Consider your financial position before you embark on this payment method to ensure it does not compromise your savings.

Transfer your Home Loan Online Home Loan Balance Transfer Calculator

No Deposit Home Loan

Getting a Home Loan Without a Deposit

When you apply for a Home Loan, you would need to pay a certain amount of money as a down payment towards the loan. In short, Home Loans require a minimum amount of funding from your end. In general, you need to pay 20% of the loan amount as down payment, this percentage varies from lender to lender. If you don’t have this cash on hand, there are a multitude of ways you can raise the funds. You can cash in on your life insurance policies or liquidate the shares you may have invested in. Here, we’ll be discussing how to get a no deposit Home Loan.

Depending on the market value of your intended property purchase, your Home Loan lender will offer a specific amount. For example, with relatively inexpensive properties the lender could offer funding of up to 90% of the market value of your property. Conversely, if the loan amounts are higher than INR 75 lakhs, the funding could drop to just 80%.

Therefore, in most cases, you will have to immediately pay a certain percentage of the deposit out of your own pocket. However, if you are looking for a way to get 100% funding, you need to find out if there are any lenders who offer ‘no-deposit Home Loans’.

Besides this, you need to take care of several factors before choosing the right lender for your Home Loan. After you furnish the required documents, most banks and financing companies will go through a rigorous process to gauge your repayment ability.

If you are planning to apply online for a house loan, consider an NBFC like Bajaj Finserv. With online approval in 5 minutes, Home Loans offered by Bajaj Finserv have made the process easier and hassle-free.

How to Get a Home Loan without Deposit?

Before you start thinking, ‘Where can I get a no-deposit Home Loan?’ you have to understand what the term means. Essentially, a no-deposit Home Loan means 100% funding from the lender. This sort of arrangement is generally sought after by first-time home buyers who have minimal or zero savings.

Since most lenders offer a maximum of only 90% funding, you might want to look at other means of raising a down payment. If you are short on time, here are some ways in which you can raise your down payment

  1. Taking a loan from your family or friends is the cheapest and least risky option.
  2. Sell any investment or asset that you have or use them as a collateral to obtain a loan against securities.
  3. Take a loan against an insurance policy.
  4. You could raise your deposit by taking a personal loan, although that could be risky due to the high interest rates you’ll have to pay in addition to your Home Loans payment.

With the lowest Home Loan interest rates, Bajaj Finserv has a unique offering; Home Loan+. Though part of the overall loan package, Home Loan + offers you a separate amount to help pay for the fittings and the interiors of your home.

Will a No-Deposit Home Loan Work for You?

Before you take your decision on a Home Loan, take the time to negotiate with your lender regarding your down payments. Some lenders could even reduce the down payment to 5% of the purchase price of your property. Property Dossier by Bajaj Finserv is a value-added service that offers all the information you need before and after a property transaction.

If you are still unable or reluctant to deposit a margin, you could choose from one of the options listed above to make your contribution to the loan. Carefully consider the pros and cons of taking a Home Loan with no deposit before you sign on the dotted line.

<< Click here to Check your Home Loan Eligibility >>

<< Click here to Calculate Home Loan EMI >>

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Is your home loan final disbursement lower than expected? Here’s why!

If you’re considering buying a home, chances are, you’re also considering a home loan. Finding the best kind of home loan can be quite the challenge, especially if you’re a first-timer.

The Home Loan ProcessAs a lot of people who have taken home loans know very well, the disbursement amount is often not the same as the amount agreed upon. There are a lot of reasons behind this, and it is something one should be prepared for.

Two very important aspects of a typical home loan are:

  1. An assessment of the applicant’s profile
  2. An evaluation of the property in question

The applicant must first submit personal documents such as identity and address proofs, and even employment details along with a thorough summary of their income. The applicant is then checked and approved based on their credit score. Using this information, a repayment capacity is agreed upon and accordingly, a home loan limit is set. Bajaj Finserv can help you get instant approval for a house loan with reasonable interest rates and 0.8% processing charges.

A sanction letter is then issued which includes information such as the limit of the home loan, the repayment tenure, the EMI amount, the interest rate applicable, etc. The sanction letter carries a date limit, before which the request for disbursement should be made. If this request is not made in time, the entire process will have to be repeated.

The Issues with Disbursement Once a property is finalized, the applicant has to present the necessary property documents to avail of the disbursement. These documents differ, depending upon the seller of the property. The lender then has the responsibility to carry out the final physical inspection of the property. They evaluate the cost of the property and decide upon a certain loan amount. This depends completely upon the loan-to-value ratio of the lender, which varies across different institutions.

Problems, however, can occur when the lender’s evaluation of a property returns a lower value than its sale price. This can lead to the lender disbursing a loan on the basis of his loan-to-value ratio, which may or may not match the amount the buyer requires. Since lenders only sanction loans for up to up to 80% of the property value, this can be a real problem. This occurs more often when resale properties are purchased.

Also, remember that lenders deduct a certain percentage of your loan towards processing and administration fees. Bajaj Finserv offers you a hassle-free path to home finance with their online Home Loan applications.

<< Click here to Apply for our Home Loan @9.5% >>

<Click here to check your Home Loan eligibility>>

Mutual Funds simplified

Making sound investments will go a long way in letting your hard-earned money work for your profit. Mutual funds are considered a safe route for investment. A good mutual fund definition would be ‘a collective investment put together and then invested in various instruments by a fund manager’. These instruments could be shares, stocks, bonds and more. Bajaj Finserv offers Mutual Funds that can enhance your financial portfolio and create a diverse investment package.

Before finalizing on a mutual fund, make sure you have a clear picture of why you need this investment—a short-term requirement, a retirement plan or even a fund for your child’s education. Also calculate how much you are willing to spend and the timeframe within which you require your investment to reap benefits.

Pick a Mutual Fund that Suits You

There are a range of mutual fund options to choose from. One of the types of mutual funds includes debt or income schemes where a part of your money is placed in debt instruments or government securities. If you would like to maintain access to your investment at any given time, you could opt for open-ended mutual funds.

Another type of mutual fund is an equity fund which involves higher risk, but gives excellent long-term benefits and can also work as a tax-saving device. Gold funds are also increasingly popular with investors, especially gold bars or gold-based security funds. There are also close-ended mutual funds where your money is locked in for a particular period.

Why Opt for Mutual Funds?

When you understand what mutual fund investment is, you will realize that it is secure and can accrue great benefits. Mutual funds are managed by a team of experts who are well-qualified in the fields of investment and capital appreciation. This ensures that your money is in good hands. Another reason to invest in mutual funds is that you can withdraw it whenever required or even get a loan against your investment. Because it is a collective investment, the risks involved in mutual funds are relatively lower.

Besides Mutual Fund investment, you can also choose Fixed Deposits, like the one offered by Bajaj Finserv, that cater specifically to your needs.

<<Click here to know more about our Mutual Funds>>

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