Renting vs. Buying – should you make the big leap ?

The biggest decisions of your lifetime, gets simplified here!


Buying a new house is one of the biggest decisions anyone makes in their lifetime.

But the question that arises most often is whether to rent a house or to buy one. While buying a house requires immediate availability of funds, renting does not provide the same security of owning a home. Both cases present some compelling arguments.

The decision usually depends on your current financial condition, ease of moving, availability of homes and other such personal circumstances. Lets’ take a look at some factors that influence the decision of renting vs. buying a house.

Pros & Cons of Buying a Home
Buying a home is a huge financial commitment. However, the introduction of home loans has made this task much easier. Home loans allow you to make the big leap and own that beautiful home you always wanted.

Owning a home has a lot of emotional value attached to it as it provides long-term security and a sense of permanency to you and your family.

When you buy a house, there are a lot of other benefits too. Buying a house is a long-term investment for one, and you can expect high returns as the property prices are usually on the rise. This gives you the added advantage of a possible lower interest rate in the future.

In addition, when you take a home loan you can avail of tax benefits under Section 80C of the Income Tax Act. Lastly, your credit profile improves if you own a home.

The downside to buying a home is that you are committed to staying in the place for at least 10-15 years. Therefore, you should make sure you like the locality too, as moving to another home will not be that easy.

Additionally, if you are taking financial help to own a home, there are some initial costs that need to be incurred, including the down payment and additional fees.

And after the down payment, comes the monthly interest or the mortgage. Other recurring costs include home insurance and property taxes, although these are tax deductible. Maintenance also becomes your responsibility, so you have to pay for day-to-day expenses, such as costs for plumbing issues, chipped walls and other such breakdowns.

Advantages & Disadvantages of Renting a Home
On the other hand, renting a house gives you relative freedom from the responsibilities of owning a home. For all maintenance issues, you can simply call the owner and get it done. You do not have to pay insurance and property taxes per month either.

And say, if you want to move for any reason, you can just pack up and leave as there is very little procedure involved. You will, however, need to serve a notice as per the initial agreement.

There are some disadvantages to renting a home. The money that you pay as rent does not go towards any investment and therefore could be considered unproductive.

Dealing with the landlord on a daily basis can be a tedious task, and disputes on home-related issues are common. Your initial deposit can get wiped out eventually with the maintenance costs incurred. In addition, you do not get complete control of your home, that is, there are limitations on the way you can decorate or furnish your rented home.

Renting or Buying, Which is Right for You?
As you can see, renting vs. buying a house is a tough decision to make. It is therefore advisable to consider both options thoroughly, especially when the interest rates are low.

In which case there could be very little difference between buying and renting a home. Check your monthly outgoing before making such decisions. A simple comparison of your monthly rental and your monthly EMI will give you the answer.

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Top reasons for Personal Loan rejections

Top Reasons for Personal Loan Rejection

Who likes to wait in a long line, and then be told, you’re not eligible? We demystify the top reasons for Personal Loan rejections here.Taking Personal Loans is one of the best ways to finance your immediate requirement for cash. Banks or any other financial institutions however, will verify your profile against strict lending criteria, before approving a loan application. Getting a Personal Loan is therefore not easy and having a good credit history is extremely important.

Your credit score is determined by the Credit Information Bureau (India) Limited or Credit score. Sometimes though, your Personal Loan can be rejected even if your CIBIL score is high.

Here are Some of The Reasons For a Personal Loan Rejection

Reasons for Personal Loan Rejection

  • Insufficient Income
  • Bad Credit History
  • Invalid Details
  • Previously Rejected Loans

Insufficient Income:

Your income plays a major role in influencing the bank’s decision. If your income is unable to sustain your monthly repayments then your application for a Personal Loan is likely to get declined. The bank will also check your job profile to assess the stability of your current job. If you are on probation, have a temporary job, or are constantly switching jobs, you may not get pre-approval from your bank. If, however, you lose your job between the time you apply for the loan and the time your loan gets finalized, or if there are any other changes in your financial situation, the bank would have enough reasons for a loan denial even after giving you a pre-approval.

Banks will also consider the financial situation of the company you are working for. In addition, if you are already paying EMIs on another loan, then your income minus the EMI will be considered for the approval.

Bad Credit History:

Before lending any amount, any lender, whether a bank or another financial institution, will first verify your credit history. Defaults on loans taken earlier, loans that are overdue, court judgments, skipping EMIs, as well as late payment of electricity, telephone and credit card bills are all factors that impact your credit history. If you have been a loan guarantor to someone who defaulted, the bank will consider you as accountable.

Also Read : How to get a Personal Loan with bad credit

Invalid Details:

All the details provided on your application will be verified. If any incorrect details are provided, the bank will have a good reason to reject your request.

Previously Rejected Loans:

A loan application that has been previously denied gets reflected on your CIBIL record. This greatly reduces your chances for a loan approval. It is therefore advisable to hear from one bank before you apply to another. This gives you the opportunity to raise your credit score and apply again.

Also Read : How To Raise and Increase Your Credit Score

To avoid your loan application being rejected, always check your credit score before applying. You can get a copy of your credit record from CIBIL and sort out any issues thus found. Moreover, you must find out your bank’s requirements for getting a Personal Loan. For instance, you can ask your bank what is the minimum income required for a Personal Loan. Lastly, always validate all the eligibility details and documentation that you will be providing to the bank.

 Top reasons for Personal Loan rejection

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10 things to consider before investing in real estate

Our take on the safest and one of the most alluring investment options – Real Estate. Know more

Real estate investment is something that each of us ultimately plan for in the long run. Considering the steep rise in property rates, the fight to secure a place of your own is getting highly competitive. But with some intelligent planning and research, a decent investment in real estate is quite within reach.
Taking a leaf out of the books of some revered investment Gurus, here are the top 10 points a first time investor should question himself with.

1. Purpose

Let’s face it. Why do you want to buy a house? For personal use or wealth creation? Earning is one thing while creating wealth is a different ball game altogether. Real estate investment is the strongest avenue of creating wealth if done clinically and with discipline. When you put your money in the market to procure a house, you cannot procure the entire investment back in cash. Yes. That’s a fact. You will never see, the entire purchase amount with the earned profits sitting ducks in your bank account waiting for the Tax department to come and wean you off it. You will have to reinvest it elsewhere and this vicious chain will always continue. So why do people invest huge chunks of money in property? Simple, because, property and gold are the only assets where the value is incremental and not depreciating. Real estate is the high payer amongst the two and carries lower risk.

2. Clean credit history
Since you most likely will need to get a mortgage to buy a house or any other real estate, you must make sure your credit history is as clean as possible. Get a CIBIL score check score done. A few months before you start house hunting, get copies of your credit report. Make sure the facts are correct, and fix any problems you discover.

3. Are you EMI ready?

With basic 2BHK prices in a developed locality with basic amenities costing around Rs.35-40 lakhs, the monthly EMIs at the current rate of around 12% for 10 years will amount to Rs. 62k per month ( check your home loan EMI ). Are you ready to channel that large a chunk of your monthly earnings towards EMIs? Get a reality check done.

4. Down payment backup

While you look at buying a house, 80% of the cost of property will be taken care off by the house loan. And the remaining 20% will have to go from your pocket. Do you have that much of financial backup? If not, it’s time you start planning for it.

5. Location

Think through the location where you want to buy the house. Is it well connected to the local transport stations? Are schools, hospitals, markets and your work place within reach? How safe is the locality for you and your family members to live? No matter what your purpose of real estate investment is, these are the fundamental things that are essential from both residing as well as selling point of view.

6. Speed and scope for development

Does the locality where you are buying, look promising? Check with the residents in that area. Talk to real estate agents. Look out for development plans and projects about to finish in the near future.

7. Pre-approved loans

Getting pre-approved will you save yourself the grief of looking at houses you can’t afford and put you in a better position to make a serious offer when you do find the right house. Not to be confused with pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history. For Eg: Bajaj Finserv offers pre-approved home loans within 5 minutes of your application online. (Source: CNN Money )

8. Interest Rate

“Lock in” the interest rate.
What does “locking in” your interest rate mean? It essentially means that the lender is agreeing to provide you with your mortgage at that particular rate, and that it won’t go up (or down) between the time you lock it and the time that you close on your home. If your mortgage is fixed-rate, your interest rate will remain the same throughout the life of the loan. Mortgage interest rates fluctuate constantly, and you don’t want to start shopping for a house operating under a certain interest rate assumption, only to be unpleasantly surprised that interest rates have risen during your house hunt. (Source: CNN Money )

9. Balance transfer

Check for banks/financers that extend the balance transfer facility. This allows the borrower to transfer the outstanding home loan amount from one bank to another in case of fluctuation interest rates or dissatisfaction towards the bank services. But, the flipside to this facility is heavy documentation which is as good as applying for a new home loan. For Eg: Bajaj Finserv offers this facility of balance transfer

10. Loan Insurance

In case of sudden death of the borrower, the loan amount automatically gets transferred to his/her immediate next of kin. It is always a good practice to insure your loan amount so that your family and dependants do not have to bear the brunt of heavy EMIs

10 things to consider before investing in real estate

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5 reasons why you should invest in SIPs

Systematic Investment Plan or SIP is a method of investing a fixed sum at regular intervals in a mutual fund scheme. Know more

Whether the objective is wealth creation or investment, mutual funds allow investors to help generate better inflation-adjusted returns, without spending a lot of time and energy on it.

Systematic Investment Plan or SIP is a method of investing a fixed sum at regular intervals in a mutual fund scheme. It is similar to RD or a post office deposit. Systematic Investing in a Mutual Fund is the answer to preventing pitfalls of equity investment and still enjoying high returns. And it makes all the more sense today when stock markets are booming.

Let’s have a look at 5 prime reasons why one should consider investing in SIPs.

  1. Convenient way to invest regularly
    For early investors, pooling in a large sum of money is not economically feasible. SIP offers an easy and convenient way to invest by contributing small portions of money monthly. The major advantage here is lower and regular investment without cutting through your expenses.

  3. Long term perspective
    Permanent assets like, house or a vehicle require huge one-time investment. Raising such large sum of money requires a huge corpus. This is where the actual benefit of SIP comes into play. Small investments, over a period of time, result in large wealth and help fulfil our long term objectives.

  5. Brings down the average cost of buying
    Rupee Cost Averaging is the principle on which SIP works. The concept is to put small amount of money in the market when the market is low which will give large number of units and fewer units for the same amount when the market is performing well. The average unit cost of these two purchase timings comes out to be lower than the cost of one-time investment.

  7. No need to time the market
    As explained above, there is no need to time the market to invest through SIPs. Rupee cost averaging brings down the unit cost to a great deal in the end.

  9. Longer you invest, higher the returns
    The star benefit of mutual funds is that the safety of stocks increases with increase in investment tenure. For Eg: Investments that are done for 5 years give higher returns than investments done for 1 or 2 years. Hence it is always recommended to invest for a longer period of time.

Still have questions? Check out our end-to-end guide here to understand mutual funds investment

Bajaj Finserv Intelligent Home Loan

Bajaj Finserv Launches Intelligent Home Loan Series

Bajaj Finserv Strengthens its Home Loan Portfolio, by Providing 3 EMI Holiday

Pune, Aug 12, 2014:

Bajaj Finance Ltd (BFL), the lending and investment arm of Bajaj Finserv Ltd, has launched Intelligent Home Loan Series. The company’s first offering is 3 EMI Holiday, which provides a 3 month grace period to the customers, before starting the EMI payments. This option can be availed by both salaried and self-employed individuals. Bajaj Finserv has already disbursed loans worth Rs 77.5 crores, within the very first month of its launch, which was in June 2014.The objective is to increase the Home Loans book size, incrementally by 15% every month. The company’s current Home Loan book size is close to Rs. 3,500 crores. By the end of FY15, the overall loan book size of the company is expected to cross Rs. 28,000 crores.

The interest for the first three months will get capitalized. To put it simply, the interest component of the first three EMI’s, would be added to the principal amount. And, the repayment schedule would get calculated on this amount. There is no additional interest or charge to the customer for availing this option. Also, the loan tenor will remain the same.

Commenting on the launch, Deepak Reddy, Sr. Vice President Mortgages, Bajaj Finance Ltd. said “Even after stretching to the maximum loan tenors, the Home Loan EMI forms the biggest monthly outflow component for the customers. We understand that cash flow planning is one of the most critical factors and the 3 EMI holiday option would ensure that our customers are comfortable during the first 3 months of their property transaction.”

“At Bajaj Finserv, we constantly focus on customer delight, value added services and transparency. We aim to reach out to the maximum number of people and provide them with the comfort of efficiency, quick processing and bouquet of products for aiding their life needs. The intelligent Home Loan series is a testimony of our desire to launch new and innovative customer centric products at an accelerated pace”, said Rajeev Jain, CEO Bajaj Finance Ltd.

Down payment of Home Loan, stamp duty & registration etc. are integral parts of home buying. These expenses bog down the customer’s budget and make EMI payments stiff, within the first 45 days of taking a loan. Bajaj Finserv’s 3 EMI Holiday option has been introduced to give flexibility to the customers, thereby assisting in better financial planning.

This offering can be availed by Bajaj Finserv customers, with a Home Loan requirement 25 lacs to 15 crores. However, part prepayment or foreclosure of loan will be possible only when the 1st EMI gets cleared, after the 3 month grace period ends.

About Bajaj Finance Limited

Bajaj Finance Limited, the lending and investment arm of Bajaj Finserv Ltd, is one of the most diversified NBFCs in the Indian market, catering to more than 6 million customers across the country. Headquartered in Pune, the company’s product offering includes Consumer Durable Loans, Lifestyle Finance, Personal Loans, Loan against Property, Small Business Loans, Home Loans, Credit Cards, Two and Three Wheeler Loans, Loan against Securities, Fixed Deposits and Rural Finance which includes Gold Loans and Vehicle Refinancing Loans. Bajaj Finance Limited prides itself for holding the highest credit rating of FAAA/Stable for any NBFC in the country today.

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Bajaj Finserv introduces finance for consumer durable products in Gwalior

Bajaj Finance Limited (BFL) targets 9.3% of the Consumer Durable Finance market size of Rs. 60 crore in Gwalior. Read more.

Gwalior, August, 2014: Bajaj Finance Limited (BFL), the undisputed leader of Consumer Durable Finance, announced finance on consumer durable products in Gwalior, targeting 9.3% of the market size of Rs. 60 crore. A champion of the segment, BFL enjoys a share over 15% of the Rs. 65,000 crore consumer durable industry in India. The company has plans to tie-up with over 15 branded stores in Gwalior, where consumers can avail the benefits of this unique finance option. The consumer durable finance from BFL is available in places where other finance options are not.

Bajaj Finserv, with a current loan book of 8329 crore, has been growing at a constant rate of 30%, largely due to its interest free EMI finance on consumer durable loans. With this launch in Gwalior, Bajaj Finserv continues to consolidate its position as the leading consumer durable finance organization of India.

To avail an interest free EMI finance from Bajaj Finserv, a customer needs to simply walk into any of the consumer durables stores in the country, choose the desired product, and approach the in-store Bajaj Finserv representative. Within a few minutes, the person gets an approval on the loan. The customer pays the defined down payment for the selected product and the remaining amount, is divided into equal monthly installments. The customer can also choose from a range of loan tenors, ranging from 12 to 24 months. This brings down the cost of ownership and also helps the customer trade up. For example, if a person had a budget of 40,000, in case of a cash-down option, he would have managed to get a 32inch LED. With consumer durable loan, he can now trade up to a 46 inch LED and bridge the gap. What’s more, in this case, he may choose to make a down payment of even lesser than 40,000 preserve the rest of his savings.

We intend to establish a strong foothold in the Central India and Gwalior presents us with a huge business opportunity of 60 crore. Our technology platforms allow us to approve loans within 3 minutes while the costumer is in the shop, selecting his favorite product. For the customer, this life-event should be about buying his aspirational device without having to worry about the money he may need”, says Devang Mody, President – Consumer Finance, Bajaj Finserv.

Today, BFL disburses CD loans to more than 6 million happy customers across 110 cities in India. These loans are available on all major consumer durable products, that fall in the price range of Rs. 7,000/- to Rs. 5,00,000/-.

The company has gone a step further and introduced an innovative offering through the EMI card. The EMI card is available only for existing consumer durable loan customers. The existing customer can visit any of the Bajaj Finserv Lending affiliated stores and pay for his next consumer durable purchase, by simply swiping the EMI card. The customer already has a pre-assigned loan line on his account, which is determined through the internal policy framework and past behavior on his previous loan.

“We have invested deep in technology and process innovations to create long term sustainable advantages. This has allowed us to create win-win propositions for all members in the ecosystem. Our long-term strategic intent is to do more with our existing customer. EMI card is a proof point of how we approach innovation and our internal policy framework to create compelling long term brand propositions for our customers”, says Rajeev Jain, CEO Bajaj Finserv

About Bajaj Finance Ltd.

Bajaj Finance Limited, the lending and investment arm of Bajaj Finserv group, is one of the most diversified NBFCs in the Indian market catering to more than 6 million customers across the country. Headquartered in Pune, the company’s product offering includes Consumer Durable Loans, Lifestyle Finance, Personal Loans, Loan against Property, Small Business Loans, Home loans, Credit Cards, Two Wheeler and Three Wheeler Loans, Construction Equipment Loans, Loan against Securities and Rural Finance which includes Gold Loans and Vehicle refinancing Loans. Bajaj Finance Limited prides itself for holding the highest credit rating of FAAA /Stable for any NBFC in the country today.

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GPTW award details

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