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Bank of Baroda Lowers Home Loan Interest Rate
5 Steps to Apply for a Home Loan
You may have heard people say that real estate is the best kind of investment. Its value appreciates over time, and you also get several tax benefits under various Sections of the Income Tax Act of India, 1961. But with ever-escalating property rates, you may not have sufficient savings to buy a property on your own. Thankfully, you can approach Bank of Baroda for a Home Loan. The bank offers a wide variety of Home Loans at affordable interest rates. You can get financing of up to 90% of the property's value and repay the loan in affordable Equated Monthly Instalments (EMIs) over tenures lasting up to 30 years. To get you started, we have outlined the bank's Home Loan application process here.
5 Steps on How to Apply for a Home Loan
Eligibility
Before you begin the Home Loan application process, you need to ensure that you are indeed eligible for the loan. The bank determines whether you qualify for a Housing Loan after considering several factors such as your age, employment status, income, and monthly expenses. You have to input these details in the Bank of Baroda Home Loan Eligibility Calculator. The calculator instantly computes whether or not you are eligible for the loan. If you qualify, it calculates the maximum loan amount you can get. Note that the calculator only computes a rough estimate of the loan amount. The bank determines the actual loan amount you can get, after assessing the loan application form.
Document Submission
After getting a rough estimate of the loan amount you can get, you can move to the next step in the Home Loan application process. You need to fill the loan application form. You can fill the form online, directly through the bank's website. You have to provide your personal and financial details, based on which the bank confirms the maximum loan amount for which you are eligible. You also have to provide your necessary documents such as your ID, age, and income proof documents etc. You have to also submit property documents like sale or title deeds, NOC or the allotment letter etc. You need these documents irrespective of whether it's a new or existing property.
Property Evaluation
Since a Home Loan is a high-value investment for the bank, the bank does its bit in evaluating the property. A surveyor appointed by the bank visits the property's site and checks the market value of the property. While the bank surveys the property, it would help to have free and clear titles. Bank also appoint a lawyer to check that the title deed and other documents are clear from leagal angle
Documentation
The bank provides a format for you to draw up the loan agreement. All costs and charges relating to the Home Loan, including the loan processing fees, stamp duty charges, loan administration charges, etc., should be borne by you. You may factor in these charges as part of your loan amount as well. The Home Loan agreement document comprises details such as the bank's loan amount, the levied interest rate, the EMI payable, and the loan tenure. It also includes other essential terms and conditions regarding prepayment, default, collateral, etc., which you must read carefully.
Home Loan Disbursal
In the final step of the Home Loan application process, the bank disburses the loan amount. Based on the type of Home Loan you have applied for, the money will be disbursed either to you or the builder. The bank also determines whether the loan amount should be disbursed in partial instalments or as a lump sum. Once the loan amount is disbursed, your Home Loan is officially underway. It begins when you pay your first EMI and ends when you pay the last.
Types of Home Loan
Having explained how to apply for a Home Loan, let us look at the different types of Home Loans offered by Bank of Baroda. These are of 9 types:
The Standard Home Loan that enables you to buy a new, existing pre-owned, or under-construction property.
A Home Construction Loan enables you to construct a house on a piece of land owned by you.
A Home Loan to buy a plot of land, on which you will construct a property in the future (within 36 months).
A Home Extension Loan allows you to enlarge the size of your existing house, build extra floors, etc.
A Home Improvement Loan helps to finance the costs associated with renovating your existing house.
A Top-up Home Loan can get you additional financing on your existing Home Loan.
A Balance Transfer Home Loan allows you to transfer your loan from another lender to Bank of Baroda and benefit from a reduced interest rate.
A Pradhan Mantri Awas Yojana (PMAY) Home Loan allows you to get subsidised interest rates on your Home Loan. This funding type is useful if you belong to the economically weaker section, a light-income group or a medium-income group per PMAY policies.
A Pre-approved Home Loan wherein you can first get approval for a loan and then finalise the property based on your eligibility.
Documents for Home Loan Application Process
Besides knowing how to apply for a Home Loan online, you should also be aware of the documents you need to submit while applying for a Home Loan. These include:
Your age proof documents
You need to provide any government-approved document with your date of birth mentioned on it. Age proof documents help banks assess if you are in the 21-65 years age group (at the time of repaying the final EMI) to be eligible for the loan. This document could be a PAN Card, Aadhaar Card, Passport, Driving License, etc.
Your identity proof documents
Any Government-approved document featuring your photograph is accepted as a valid identity proof document. It could be your PAN Card, Aadhaar Card, Passport, Driving License, Voter ID Card, etc.
Your address proof documents
Any Government-approved document featuring your current/permanent address is accepted as a valid address proof document. It could be your Aadhaar Card, Passport, Driving License, Voter ID Card, Ration Card, Utility bills, etc.
Your income and employment proof documents
You need to provide documents validating your employment, such as your offer letter and designation, salary slips, increment letters, etc. If you are self-employed or a business owner, you need to provide your bank statement, profit and loss statements, proof of business documents, etc. All applicants must also provide their income tax returns for the last three years.
Property-specific documents
Finally, you must provide all documents related to the property you intend to buy such as the No Objection Certificate supplied by the society or builder, the original sale deed, letter of allotment, bank statements and receipts showing advance payments, etc. If you are taking a Home Construction Loan, you must also provide a document on estimating the costs associated with property construction, approved map etc.
Factors to Consider Before Applying Online for Home Loan
Now that you know how to apply for a Home Loan online, you should consider the factors mentioned below before beginning the Home Loan application process.
Consider the bank's lending rate and the maximum loan amount you can get based on your income.
Consider your credit scores and ensure they are above 701 points to get an affordable Home Loan interest rate along with the repayment tenure of your choice.
Consider repaying any existing loans and credit card bills to enhance your credit score, and by extension, your eligibility.
Consider opting for a longer-tenure loan to reduce the monthly instalment amount significantly.
As is apparent, the Home Loan application process is quite simple and straightforward. Now that you know how easy it is to apply for A Bank of Baroda Home Loan visit the Home Loan Section of our website to get started.
What are the consequences of missing a home loan EMI? (And how to get back on track?)
5 Steps to Apply for a Home Loan
You may have heard people say that real estate is the best kind of investment. Its value appreciates over time, and you also get several tax benefits under various Sections of the Income Tax Act of India, 1961. But with ever-escalating property rates, you may not have sufficient savings to buy a property on your own. Thankfully, you can approach Bank of Baroda for a Home Loan. The bank offers a wide variety of Home Loans at affordable interest rates. You can get financing of up to 90% of the property's value and repay the loan in affordable Equated Monthly Instalments (EMIs) over tenures lasting up to 30 years. To get you started, we have outlined the bank's Home Loan application process here.
5 Steps on How to Apply for a Home Loan
Eligibility
Before you begin the Home Loan application process, you need to ensure that you are indeed eligible for the loan. The bank determines whether you qualify for a Housing Loan after considering several factors such as your age, employment status, income, and monthly expenses. You have to input these details in the Bank of Baroda Home Loan Eligibility Calculator. The calculator instantly computes whether or not you are eligible for the loan. If you qualify, it calculates the maximum loan amount you can get. Note that the calculator only computes a rough estimate of the loan amount. The bank determines the actual loan amount you can get, after assessing the loan application form.
Document Submission
After getting a rough estimate of the loan amount you can get, you can move to the next step in the Home Loan application process. You need to fill the loan application form. You can fill the form online, directly through the bank's website. You have to provide your personal and financial details, based on which the bank confirms the maximum loan amount for which you are eligible. You also have to provide your necessary documents such as your ID, age, and income proof documents etc. You have to also submit property documents like sale or title deeds, NOC or the allotment letter etc. You need these documents irrespective of whether it's a new or existing property.
Property Evaluation
Since a Home Loan is a high-value investment for the bank, the bank does its bit in evaluating the property. A surveyor appointed by the bank visits the property's site and checks the market value of the property. While the bank surveys the property, it would help to have free and clear titles. Bank also appoint a lawyer to check that the title deed and other documents are clear from leagal angle
Documentation
The bank provides a format for you to draw up the loan agreement. All costs and charges relating to the Home Loan, including the loan processing fees, stamp duty charges, loan administration charges, etc., should be borne by you. You may factor in these charges as part of your loan amount as well. The Home Loan agreement document comprises details such as the bank's loan amount, the levied interest rate, the EMI payable, and the loan tenure. It also includes other essential terms and conditions regarding prepayment, default, collateral, etc., which you must read carefully.
Home Loan Disbursal
In the final step of the Home Loan application process, the bank disburses the loan amount. Based on the type of Home Loan you have applied for, the money will be disbursed either to you or the builder. The bank also determines whether the loan amount should be disbursed in partial instalments or as a lump sum. Once the loan amount is disbursed, your Home Loan is officially underway. It begins when you pay your first EMI and ends when you pay the last.
Types of Home Loan
Having explained how to apply for a Home Loan, let us look at the different types of Home Loans offered by Bank of Baroda. These are of 9 types:
The Standard Home Loan that enables you to buy a new, existing pre-owned, or under-construction property.
A Home Construction Loan enables you to construct a house on a piece of land owned by you.
A Home Loan to buy a plot of land, on which you will construct a property in the future (within 36 months).
A Home Extension Loan allows you to enlarge the size of your existing house, build extra floors, etc.
A Home Improvement Loan helps to finance the costs associated with renovating your existing house.
A Top-up Home Loan can get you additional financing on your existing Home Loan.
A Balance Transfer Home Loan allows you to transfer your loan from another lender to Bank of Baroda and benefit from a reduced interest rate.
A Pradhan Mantri Awas Yojana (PMAY) Home Loan allows you to get subsidised interest rates on your Home Loan. This funding type is useful if you belong to the economically weaker section, a light-income group or a medium-income group per PMAY policies.
A Pre-approved Home Loan wherein you can first get approval for a loan and then finalise the property based on your eligibility.
Documents for Home Loan Application Process
Besides knowing how to apply for a Home Loan online, you should also be aware of the documents you need to submit while applying for a Home Loan. These include:
Your age proof documents
You need to provide any government-approved document with your date of birth mentioned on it. Age proof documents help banks assess if you are in the 21-65 years age group (at the time of repaying the final EMI) to be eligible for the loan. This document could be a PAN Card, Aadhaar Card, Passport, Driving License, etc.
Your identity proof documents
Any Government-approved document featuring your photograph is accepted as a valid identity proof document. It could be your PAN Card, Aadhaar Card, Passport, Driving License, Voter ID Card, etc.
Your address proof documents
Any Government-approved document featuring your current/permanent address is accepted as a valid address proof document. It could be your Aadhaar Card, Passport, Driving License, Voter ID Card, Ration Card, Utility bills, etc.
Your income and employment proof documents
You need to provide documents validating your employment, such as your offer letter and designation, salary slips, increment letters, etc. If you are self-employed or a business owner, you need to provide your bank statement, profit and loss statements, proof of business documents, etc. All applicants must also provide their income tax returns for the last three years.
Property-specific documents
Finally, you must provide all documents related to the property you intend to buy such as the No Objection Certificate supplied by the society or builder, the original sale deed, letter of allotment, bank statements and receipts showing advance payments, etc. If you are taking a Home Construction Loan, you must also provide a document on estimating the costs associated with property construction, approved map etc.
Factors to Consider Before Applying Online for Home Loan
Now that you know how to apply for a Home Loan online, you should consider the factors mentioned below before beginning the Home Loan application process.
Consider the bank's lending rate and the maximum loan amount you can get based on your income.
Consider your credit scores and ensure they are above 701 points to get an affordable Home Loan interest rate along with the repayment tenure of your choice.
Consider repaying any existing loans and credit card bills to enhance your credit score, and by extension, your eligibility.
Consider opting for a longer-tenure loan to reduce the monthly instalment amount significantly.
As is apparent, the Home Loan application process is quite simple and straightforward. Now that you know how easy it is to apply for A Bank of Baroda Home Loan visit the Home Loan Section of our website to get started.
Lost your job due to Covid 19? Here's how to pay your home loan EMIs
5 Steps to Apply for a Home Loan
You may have heard people say that real estate is the best kind of investment. Its value appreciates over time, and you also get several tax benefits under various Sections of the Income Tax Act of India, 1961. But with ever-escalating property rates, you may not have sufficient savings to buy a property on your own. Thankfully, you can approach Bank of Baroda for a Home Loan. The bank offers a wide variety of Home Loans at affordable interest rates. You can get financing of up to 90% of the property's value and repay the loan in affordable Equated Monthly Instalments (EMIs) over tenures lasting up to 30 years. To get you started, we have outlined the bank's Home Loan application process here.
5 Steps on How to Apply for a Home Loan
Eligibility
Before you begin the Home Loan application process, you need to ensure that you are indeed eligible for the loan. The bank determines whether you qualify for a Housing Loan after considering several factors such as your age, employment status, income, and monthly expenses. You have to input these details in the Bank of Baroda Home Loan Eligibility Calculator. The calculator instantly computes whether or not you are eligible for the loan. If you qualify, it calculates the maximum loan amount you can get. Note that the calculator only computes a rough estimate of the loan amount. The bank determines the actual loan amount you can get, after assessing the loan application form.
Document Submission
After getting a rough estimate of the loan amount you can get, you can move to the next step in the Home Loan application process. You need to fill the loan application form. You can fill the form online, directly through the bank's website. You have to provide your personal and financial details, based on which the bank confirms the maximum loan amount for which you are eligible. You also have to provide your necessary documents such as your ID, age, and income proof documents etc. You have to also submit property documents like sale or title deeds, NOC or the allotment letter etc. You need these documents irrespective of whether it's a new or existing property.
Property Evaluation
Since a Home Loan is a high-value investment for the bank, the bank does its bit in evaluating the property. A surveyor appointed by the bank visits the property's site and checks the market value of the property. While the bank surveys the property, it would help to have free and clear titles. Bank also appoint a lawyer to check that the title deed and other documents are clear from leagal angle
Documentation
The bank provides a format for you to draw up the loan agreement. All costs and charges relating to the Home Loan, including the loan processing fees, stamp duty charges, loan administration charges, etc., should be borne by you. You may factor in these charges as part of your loan amount as well. The Home Loan agreement document comprises details such as the bank's loan amount, the levied interest rate, the EMI payable, and the loan tenure. It also includes other essential terms and conditions regarding prepayment, default, collateral, etc., which you must read carefully.
Home Loan Disbursal
In the final step of the Home Loan application process, the bank disburses the loan amount. Based on the type of Home Loan you have applied for, the money will be disbursed either to you or the builder. The bank also determines whether the loan amount should be disbursed in partial instalments or as a lump sum. Once the loan amount is disbursed, your Home Loan is officially underway. It begins when you pay your first EMI and ends when you pay the last.
Types of Home Loan
Having explained how to apply for a Home Loan, let us look at the different types of Home Loans offered by Bank of Baroda. These are of 9 types:
The Standard Home Loan that enables you to buy a new, existing pre-owned, or under-construction property.
A Home Construction Loan enables you to construct a house on a piece of land owned by you.
A Home Loan to buy a plot of land, on which you will construct a property in the future (within 36 months).
A Home Extension Loan allows you to enlarge the size of your existing house, build extra floors, etc.
A Home Improvement Loan helps to finance the costs associated with renovating your existing house.
A Top-up Home Loan can get you additional financing on your existing Home Loan.
A Balance Transfer Home Loan allows you to transfer your loan from another lender to Bank of Baroda and benefit from a reduced interest rate.
A Pradhan Mantri Awas Yojana (PMAY) Home Loan allows you to get subsidised interest rates on your Home Loan. This funding type is useful if you belong to the economically weaker section, a light-income group or a medium-income group per PMAY policies.
A Pre-approved Home Loan wherein you can first get approval for a loan and then finalise the property based on your eligibility.
Documents for Home Loan Application Process
Besides knowing how to apply for a Home Loan online, you should also be aware of the documents you need to submit while applying for a Home Loan. These include:
Your age proof documents
You need to provide any government-approved document with your date of birth mentioned on it. Age proof documents help banks assess if you are in the 21-65 years age group (at the time of repaying the final EMI) to be eligible for the loan. This document could be a PAN Card, Aadhaar Card, Passport, Driving License, etc.
Your identity proof documents
Any Government-approved document featuring your photograph is accepted as a valid identity proof document. It could be your PAN Card, Aadhaar Card, Passport, Driving License, Voter ID Card, etc.
Your address proof documents
Any Government-approved document featuring your current/permanent address is accepted as a valid address proof document. It could be your Aadhaar Card, Passport, Driving License, Voter ID Card, Ration Card, Utility bills, etc.
Your income and employment proof documents
You need to provide documents validating your employment, such as your offer letter and designation, salary slips, increment letters, etc. If you are self-employed or a business owner, you need to provide your bank statement, profit and loss statements, proof of business documents, etc. All applicants must also provide their income tax returns for the last three years.
Property-specific documents
Finally, you must provide all documents related to the property you intend to buy such as the No Objection Certificate supplied by the society or builder, the original sale deed, letter of allotment, bank statements and receipts showing advance payments, etc. If you are taking a Home Construction Loan, you must also provide a document on estimating the costs associated with property construction, approved map etc.
Factors to Consider Before Applying Online for Home Loan
Now that you know how to apply for a Home Loan online, you should consider the factors mentioned below before beginning the Home Loan application process.
Consider the bank's lending rate and the maximum loan amount you can get based on your income.
Consider your credit scores and ensure they are above 701 points to get an affordable Home Loan interest rate along with the repayment tenure of your choice.
Consider repaying any existing loans and credit card bills to enhance your credit score, and by extension, your eligibility.
Consider opting for a longer-tenure loan to reduce the monthly instalment amount significantly.
As is apparent, the Home Loan application process is quite simple and straightforward. Now that you know how easy it is to apply for A Bank of Baroda Home Loan visit the Home Loan Section of our website to get started.
Car Loan Disbursement
Car Loan Disbursement
With a Bank of Baroda Car Loan, you can get financing of up to 90% on the onroad price of the car of your choosing, with an upper limit of Rs 1 crore. Whether you are a salaried professional or a business owner, a car loan is a facility you can make the best of. No additional collateral or security is required, as the car (financed) is hypothecated with the bank until the entire loan amount is repaid.
What is Car Loan Disbursement Process?
The process of getting a Car Loan is relatively simple. The first step is deciding which car it is that you wish to buy, after which you can check for eligibility for a Car Loan at various banks. After going through your options thoroughly, you can go with a Car Loan product that best suits your needs. Checking whether or not you are eligible for the loan reduces the chances of your application being rejected. Nowadays, almost all the information you need about loan products is available on the websites of banks.
The next step is the application, which can be done online or by visiting the nearest bank branch. If you go to the branch to apply for a loan, make sure you have all the necessary documents handy. Then there is the online application option which is hasslefree, quicker and paperless. The application process ends with the submission of documents.
Then comes the step of document verification and loan approval. These days, the car loan approval process has become almost instant. The bank verifies the customer's documents and checks his/her credit score to assess eligibility, following which the loan is approved. Next comes the loan sanctioning and disbursement.
Questions to Ask about Car Loan Disbursement
What are the benefits of a car loan?
Opt for a car loan from Bank of Baroda to benefit from quick processing, minimal documentation and speedy fund disbursal. Loan borrowers are not required to pay foreclosure charges or prepayment penalty, nor do they need to pay advance EMIs.
With higher limits on the Car Loan amount, you can apply for up to Rs 1 crore on new cars. So, if you have always had your eye on a luxury vehicle, our loan can take you one step closer to your dream.
Also, say goodbye to down payment worries, as you can get up to 90% financing on the car's onroad price with Bank of Baroda's auto loan.
Bank Of Baroda offers attractive interest rates on loans to all customers based on their credit scores. Additionally, existing home loan borrowers with a good credit history enjoy a concession of 0.25% on their car loan interest rate
Are there any prepayment charges for Bank of Baroda's auto loans?
You are allowed to prepay your loan without paying any prepayment charges.
What are the documents required to get a Bank of Baroda Car Loan?
The documents required are:
Photo ID with age proof (like, PAN card, passport, driving license)
Signed application form with 3 passportsized photographs
Residence proofs:
Valid passport
Voter id card
Driving license
Postpaid utility bill (gas bill and electricity bill)
Updated passbook or bank account statement
Notarised registered rent agreement
Bank statement for the last six months
If the applicant is a salaried individual
Last 3 months' salary slips
Form 16 or Income Tax Returns
If the applicant is a selfemployed individual
Balance sheet and profit and loss account, computation of income for the last 2 years
Income Tax Returns – last 2 years for Applicants, 26 AS, Traces
Business proof: Gomasta License, Registration Certificate, Service Tax Registration, among others
IT Assessment / Clearance Certificate, Income Tax Challans / TDS Certificate (Form 16A)/Form 26 AS for income declared in ITR
Conclusion
Car Loan disbursement occurs only after your car loan application is approved and you get a sanction letter. Applying for a loan online is more convenient since you need not visit the branch. If you are looking for conveniences and good interest rates on Car Loans, you can start with Bank of Baroda.
How to Apply for a Car Loan
How to Apply for a Car Loan
That expensive car you have your eyes on is now a possibility more than ever. You can get a loan from banks and other financial institutions to fund it. Not long ago, having a home of your own or a family car used to be considered luxurious most people found themselves unable to afford. But with the variety of loan products on offer these days, one does not have to have unfulfilled dreams anymore.
Are you planning to buy yourself a new ride? You can get up to 90% of the on-road price of the car of your choice financed with a Bank of Baroda Car Loan. Here's how to apply for a car loan
.
Car Loan Eligibility Criteria
At Bank of Baroda, you can get yourself a car loan to buy a car of your choice. These auto loans are available to all salaried employees, business people, professionals, farmers, corporates (partnership, private limited, public limited and trust), as well as NRIs and PIOs.
The borrower should also be at least 21 years old, while his/her age plus the repayment period should not exceed 70 years.
Documents Required
The documents that you need to keep ready when applying for a Bank of Baroda Home Loan are as follows:
Photo ID with age proof (like, PAN card, passport, driving license)
Signed application form with 3 passport-sized photographs
Residence proof
Bank statement for the last six months
If the applicant is a salaried individual
-3 months' salary slips
-Form 16 or Income Tax Returns
If the applicant is a self-employed individual
-Balance sheet and profit and loss account, computation of income for the last 2 years
-Income Tax Returns of the previous 2 years
-IT Assessment/Clearance Certificate, Income Tax Challans/TDS Certificate (Form 16A)/Form 26 AS for income declared in ITR
How to Apply for Car Loan?
The process is relatively simple and straightforward. Once you have decided upon the model you wish to purchase, look through the various Car Loan options. Bank of Baroda has competitive interest rates on their Car Loan products.
After finalising the bank or lender you wish to go with, you can either head to the bank branch or log on to their website to start the loan application process. To apply for a Car Loan from Bank of Baroda, visit the website. Keep the documents above handy, and also be sure to check your eligibility for the loan
.
Car Loan Approval Process
In this digital age, the loan approval process has become simpler and quicker, with most banks deciding upon loan applications almost instantly. Once the lender verifies your credit score and a few other things on their end, your loan application will go through, and the process of disbursal begins. In the online mode, the Car Loan fund transfer takes place in a matter of just a few minutes, with a couple of clicks to kickstart things. A car loan is granted based on the customer's credit score, income situation, other debt obligations and repayment history, among other things.
How to Calculate an EMI for a Car Loan
How to Calculate an EMI for a Car Loan
Most banks and financial institutions offer a range of car loan products these days, all available at competitive rates of interest. A convenient and straightforward way to get an idea of the amount of money you'll have to set aside each month is through an online calculator.
You have to pay off your Car Loan in Equated Monthly Instalments (EMIs) obligations, and an online EMI calculator helps you with an estimate. It becomes relatively easy to see how much your Car Loan EMI will cost you; all you need to do is enter the required loan amount and the interest rate at which the bank offers the loan.
However, it is essential to note that lender-specific charges like a processing fee or prepayment charges may be applicable
.
The interest on Bank of Baroda Car Loans is calculated on the daily reducing balance and is based on the applicant's credit score or CIBIL Bureau score. The minimum credit score required for the loan is 701. Moreover, the repayment period or tenure for car loans (maximum of 84 months) is determined by the EMI amount.
How Does a Car Loan EMI Calculator Work?
Bank of Baroda's online Car Loan EMI calculator is easy to use and reliable. This can be done before you purchase the car. The calculator is available on the bank's website, and it helps you calculate your estimated EMIs almost instantly. Here's how to calculate EMI on car loan using Bank of Baroda's EMI calculator:
- Enter the loan amount your wish to borrow
- Enter the rate of interest (typically starts at 8.60% p.a.
)
- Enter the tenure in months (with a maximum term of 84 months)
The formula to determine your Car Loan EMI amount
Besides an online car loan calculator, you can use a mathematical formula to calculate your monthly EMI.
E= PxR(1+R)^n/[(1+R)^n -1
]
where, P is the principal amount that you want to apply for R is the rate of interest per month n is the tenure of the loan in months E is the monthly payment or EMI
Benefits of Car Loan EMI Calculator
Better financial planning: Once you know how to calculate the EMIs on Car Loan, you can better plan your family finances. Knowing how much you would have to set aside for your EMI dues allows you to afford a car without having to stretch your finances too thin.
Easy to use, time-saving: A relatively complex calculation is done in a matter of just a few seconds. The online EMI calculator is quite user-friendly too.
Result accuracy: All you have to do is give the numbers asked for, and you can be assured of an accurate result.
Compare different loan tenures and interest rate combinations: By entering the loan amount and different interest rates or loan tenures, you can determine how much EMI you can afford.
Car Loan EMI Calculator Questions
What if I am late in paying the car loan EMI
?
Lenders charge a penalty on delayed EMI payments, the amount of which varies from bank to bank.
Why is it necessary to calculate EMI beforehand?
It is essential to calculate your EMI in advance to maintain stability in future payments. When you avail of the car loan, you promise the bank to pay a fixed amount at a fixed date every month. Before availing of the loan, you should consider the stability of your income, monthly expenses and the existing loan obligations to avoid any discrepancies in future payments.
What is the maximum tenure for which a Bank of Baroda Car Loan is available, and does it affect my EMI?
A car loan can be availed for a maximum tenure of 7 years. The tenure affects your monthly EMI. The longer the tenure of the car loan, the lower will be your EMI
Types of Car Loans
Types of Car Loans
Car Loans are for those looking to finance their car purchase at relatively attractive interest rates.
At Bank of Baroda, you can get financing of up to 90% of the on-road price of a brand new car of your choice if you opt for a Car Loan. Anyone can avail of a Bank of Baroda Car Loan, subject to their eligibility. These are available for a maximum loan tenure of 7 years, and the loan amount can be as much as Rs 1 crore. The bank gives a 0.25% concession on the interest rate to its existing home loan customers with a clean credit history. What's more, Concession of 0.50% in rate of interest on Car Loans to those applicant/s who offer minimum 50% of Loan limit as liquid collateral security e.g. Fixed Deposit of our Bank, NSC, KVP or LIC Policy.
The cars are hypothecated with Bank of Baroda until the full and final repayment of the entire loan amount.
Types of Car Loans in India
While there are generally three types of Car Loans available in India, there may be lender-specific customised options on offer. Most banks and financial institutions in the country offer new car loans, old car loans or Electric Car . Let's understand in brief these different types of car loans.
New Car Loan
As the name suggests, such loans are offered by banks to fund the purchase of new cars. You can get a car right out of the showroom without worrying about where to arrange the funds from. Banks will come to your rescue and offer loan options to choose from. You can compare interest rates and other charges being levied, along with some benefits associated with the loan product, and accordingly select your lender and loan option.
To promote Electic Vehicle Bank Bank of Baroda is offering concession in ROI.
Pre- owned Car Loan
Some banks also help you buy second-hand cars or used vehicles, although the financing available for the same would generally be lower than that available in the care of new vehicles.
Bank of Baroda offers Car Loans to purchase a new hatchback, sedan, MUV or SUV for private use. The documentation is minimal, and the interest rates and processing fee are among the best.
What is a Home Loan?
What is a Home Loan?
For those looking to own a home, banks and other financial institutions offer loans for that purpose at competitive interest rates. So if you already have that dream house in sight, the next step isn't too hard. You can use a Home Loan to buy a plot of land, a flat or an apartment, build your own home from the ground up, and even extend or renovate your existing residence.
Bank of Baroda offers loans for homes to residents and Non-Resident Indians (NRIs), let us take at the types of loans you can get:
Types of Home Loans
Home Loan Advantage
Now you can have a Home Loan sanctioned that will be linked to your savings account. How it works is you can apply for a Home Loan and reduce your interest burden by the balcne amount in your savings bank account . What's more is, no interest will be will paid on the linked Savings Bank account.
Home Improvement Loan
:
A loan isn't just to buy a new home; you can also get a loan to renovate or have repairs done in your current residence. Moreover, you can use a Home Improvement Loan from Bank of Baroda to buy new furniture and fittings. That makeover you wanted for your home is now just a few steps away. Tax benefits are also availbale.
Home Loan Takeover
If you have a Home Loan from any other bank, housing finance companies (HFCs), non-banking financial companies (NBFCs) and financial institutions (FIs), you can switch it to the Bank of Baroda for better floating interest rates. We offer easy takeover for loans where more than 12 EMI`s are already repaid and certain under conditions are fulfilled.
Pre-approved Home Loan
Want to have more flexibility to negotiate with builders and sellers? A Pre-approved Home Loan can help you do just that, as it gives you a loan sanction as it provides in-principal approval for the loan before you have finalised the property you wish to purchase.
Home Suvidha Personal Loan
To help you finance those home purchase-related costs, like insurance, registration, stamp duty or goods and services tax and club membership .Bank of Baroda offers Baroda Home Suvidha Personal Loan.
Pradhan Mantri Awas Yojana (PMAY)
Government of India's PMAY scheme aims to ensure housing for all in urban areas by 2022, a mission that is to be realised across the country. Bank of Baroda offers Credit-Linked Subsidy Scheme (CLSS) under the government's PMAY mission, wherein interest subsidies on housing loans are made available to certain beneficiaries. 1st time home ownership is promoted through this initiative of the government.
Interest Subsidy Scheme for Housing the Urban Poor (ISHUP)
:
Targeting mainly the EWS and LIG segments, the scheme aims to help address the said categories' home finance needs.
Credit Risk Guarantee Fund Scheme for Low Income Housing (CRGFS)
The government has set up a CRGFS Trust, which provides credit risk guarantees to lending institutions, against housing loans sanctioned to customers belonging to the EWS and LIG segments, without the need for any collateral.
Questions to Ask When Applying for a Home Loan
Here are some of the common questions applicants ask when they apply for a Home Loan:
What is the maximum duration/period for which I can get the loan?
Bank of Baroda grants a Home Loan for a maximum tenure of 30 years. The loan term will under no circumstances exceed the age of retirement or completion of 65 years of age, whichever is earlier. The Home Loan tenure also varies based on the loan amount and the income of the borrower.
Can I prepay the loan ahead of schedule?
Yes, you have the option to prepay the loan either in part or in full.
Who is eligible to avail of a Home Loan from the Bank of Baroda?
All resident and non-resident Indians (NRIs) between the age of 21 and 60 are eligible for a Home Loan from the Bank of Baroda.
How much does the Bank of Baroda lend?
The Home Loan amount is determined based on your repayment capacity. Other factors like age, income, dependents, assets, liabilities, occupation stability, continuity of income, savings, etc., also play an essential role
.
What is the mode of repayment?
You can repay your loan amount via Equated Monthly Installments (EMIs).
What is the security for the loan
?
The security for the loan is the equitable mortgage of the property to be financed.
Conclusion:
A Home Loan helps you buy a house where raising funds appear challenging. Moreover, at Bank of Baroda, the application process is online and convenient where you can upload documents from the place of your convenience. You also can view all the types of Home Loans on the bank's website.
What is a Home Loan Processing Fee?
What is a Home Loan Processing Fee?
Banks and lending institutions levy a onetime charge on the different types of Home Loan products. This charge, known as the Home Loan processing fee. It is generally not deductible from the loan amount, and the borrower pays it separately. This is a fee to cover the loan processing cost incurred by the lender or the bank. Some banks may waive such processing charges for a Home Loan as part of special offers.
In the case of Bank of Baroda Home Loans, we charge a unified upfront fee which consist of:
Document Verification/ vetting charges
Pre sanction Inspection (Contact Point VerificationCPV) charges
Onetime postinspection charges
Advocate charges for a legal opinion
Valuer charges for valuation
Bureau report charges
CERSAI charges
ITR Verification charges
Post sanction proceesing fee table of Processing Fees for Home Loan
S. No.
Area of Banking Service
Service Charges (excluding GST) w.e.f. 20.06.2019
1
Baroda Home Loan & Baroda Home Improvement Loan
Slab-wise
Up to Rs 50 lakh 0.50% of the loan amount: Minimum: Rs 8,500 (Upfront) Maximum: Rs 15,000
Above Rs 50 lakh 0.25% of the loan amount: Minimum : Rs 8,500 (upfront) Maximum: Rs 25,000
The above charges are unified processing charges which include inspection, valuation and legal fees.
The above charges are for all categories of borrowers under Home Loans.
2
Baroda Home Loan Top Up
0.35% Minimum: Rs 5,000 (upfront) Maximum: Rs 12,500
3
Takeover of Home Loan (Resident /NRI/PIOs)
Flat: Rs 8,500 (upfront)
4
Pre-Approved Home Loan (In- Principle Sanction)
0.25% - 0.50%Rs 8,500 (upfront). Suppose the borrower submits the property documents within the validity period of a pre-approval letter. In that case, the balance amount of unified processing charges applicable to Home Loan will be recovered from the borrower.
Charges other than Home Loan Processing Fees
Banks also levy other charges like Home Loan prepayment fees or loan conversion charges. However, in case of a Bank of Baroda Home Loan, there are no charges applicable if the borrower chooses to prepay the loan amount before the tenure is over.
Impact of Home Loan Interest Rates
There is no correlation between the processing fee and the interest rate. However, your loan amount does factor in calculating the processing fee. A Baroda Home Loan is charged at the prevailing floating rate which is linked to external benchmark of REPO( RBI) or MCLR . The interest rate is linked to the Baroda Repo Linked Lending Rate (BRLLR) and is reset annually based on your bureau score(cibil).
Why Bank of Baroda for Home Loans
With a Bank of Baroda Home Loan, you can enjoy a free credit card and concession of 0.25% for car loans. Additionally, the bank offers free personal accident and property insurance with a Home Loan. You can also opt for a group credit life insurance cover when you apply. This cover protects the family against the borrower's death, and the family is not required to repay the Home Loan to the extent of the claim amount. You can pay the premium for the cover along with the EMIs.
What is a home loan Top-up-edited
It's a new year and a new normal in the lives of most people. Yet buying a home of one's own continues to be one of the biggest aspirations. However, with skyrocketing prices of real estate, property purchase remains out of the reach of many individuals. For this very reason, homebuyers are now increasingly opting for Home Loans to fund their dream house purchase. Banks and several lenders these days offer housing finance at competitive rates of interest, subject to several terms and conditions.
Add to that a top-up on your existing Home Loan product. Many banks, like Bank of Baroda, have Top-Up Loan in their range of loan products. As the name suggests, existing Home Loan customers who may need extra funds can opt for a top-up on their running Home Loans. Their eligibility for the same is ascertained by the lender based on your relation with the bank , their repayment history and credit score, among other things. The money from such a loan can be used for various purposes, be it for a wedding, fund your child's education, or renovate/repair your home.
At Bank of Baroda, if you switch your existing Home Loan from another bank via a balance transfer, you can get a Home Loan Top-Up. The minimum is Rs. 1 lakh and a maximum of Rs 2 crore. A processing charge of 0.25% of the loan amount is applicable on a Home Loan Top-Up from Bank of Baroda (minimum Rs 5,000 upfront and maximum Rs 12,500 plus GST).
Are you wondering why you should you take a top-up loan? We try answering that question here. Keep reading to find out more.
Eligibility Criteria for Home Loan Top Up
An existing Bank of Baroda Home Loan customer (including NRIs, PIOs, staff and ex-staff members), who may have availed of a Home Loan under public scheme or staff housing loans, is eligible for a Top-Up Loan on a Home Loan. The applicant must be at least 21 years of age (and a co-applicant should be at least 18 years old, wherever applicable). For a resident Indian applicant, the borrower's age plus the Top-Up Loan tenure should not exceed 70 years, as per laid down norms mentioned under the Bank of Baroda Home Loan Product (the same should not exceed 65 years for in case of NRIs, PIOs or OCIs).
New customers who opt for a Balance Transfer Loan (called a Home Loan Takeover scheme at Bank of Baroda) are also eligible for a Top-Up Home Loan.
Benefits of a Top-Up Home Loan
Minimal documentation, swifter loan approval and disbursal
If you're an existing Home Loan customer, getting a Top-Up on your Home Loan is easier. There is minimal documentation involves since the lender already has most of the required paperwork with you. Plus, knowing your repayment history and credit score patterns makes it more convenient for the banks to go through your Top-Up Home Loan application. This makes a speedy and hassle-free loan disbursal possible. Approach your branch for a quick top up loan.
Attractive interest rates
If you opt for a Top-Up Home Loan, you can get funds at fairly lower interest rates than those available in case of any other personal loan option.
Available for longer tenures
Depending on the period left in your existing Home Loan, you can opt for a Top-Up Loan for a relatively long tenure compared to other loan options.
Can put funds to use for a wide range of purposes
You can use the funds from a Top-Up Loan in any manner you deem fit. The money can be used to finance another home purchase, renovation and extension of an existing house, and even fund medical emergencies, a wedding, or your children's education. No restrictions are placed on how you wish to utilise this option unless you plan to use for speculation or illegal use.
Lower processing fee as compared to personal loans
The processing fee levied by banks in case of Top-Up Home Loans is generally lower than that applicable in case of personal loans.
Conclusion
While one can argue the pros and cons of a Top-Up Home Loan, it does serve as a good source of emergency funds. Moreover, the fact that you can avail of the option on your existing Home Loan makes the process less cumbersome. So if you're moving into that new house right away and need some more funds to settle into your place, this may be an option you'd want to take a look at.
Bank of Baroda customers who wish to apply for a Home Loan Top-Up can visit https//www.bankofbaroda.in/apply-for-baroda-top-up-loan-resident-nris-pios.htm?33 and fill out the form to begin the process.
5 Steps to Apply for a Home Loan
5 Steps to Apply for a Home Loan
You may have heard people say that real estate is the best kind of investment. Its value appreciates over time, and you also get several tax benefits under various Sections of the Income Tax Act of India, 1961. But with ever-escalating property rates, you may not have sufficient savings to buy a property on your own. Thankfully, you can approach Bank of Baroda for a Home Loan. The bank offers a wide variety of Home Loans at affordable interest rates. You can get financing of up to 90% of the property's value and repay the loan in affordable Equated Monthly Instalments (EMIs) over tenures lasting up to 30 years. To get you started, we have outlined the bank's Home Loan application process here.
5 Steps on How to Apply for a Home Loan
Eligibility
Before you begin the Home Loan application process, you need to ensure that you are indeed eligible for the loan. The bank determines whether you qualify for a Housing Loan after considering several factors such as your age, employment status, income, and monthly expenses. You have to input these details in the Bank of Baroda Home Loan Eligibility Calculator. The calculator instantly computes whether or not you are eligible for the loan. If you qualify, it calculates the maximum loan amount you can get. Note that the calculator only computes a rough estimate of the loan amount. The bank determines the actual loan amount you can get, after assessing the loan application form.
Document Submission
After getting a rough estimate of the loan amount you can get, you can move to the next step in the Home Loan application process. You need to fill the loan application form. You can fill the form online, directly through the bank's website. You have to provide your personal and financial details, based on which the bank confirms the maximum loan amount for which you are eligible. You also have to provide your necessary documents such as your ID, age, and income proof documents etc. You have to also submit property documents like sale or title deeds, NOC or the allotment letter etc. You need these documents irrespective of whether it's a new or existing property.
Property Evaluation
Since a Home Loan is a high-value investment for the bank, the bank does its bit in evaluating the property. A surveyor appointed by the bank visits the property's site and checks the market value of the property. While the bank surveys the property, it would help to have free and clear titles. Bank also appoint a lawyer to check that the title deed and other documents are clear from leagal angle
Documentation
The bank provides a format for you to draw up the loan agreement. All costs and charges relating to the Home Loan, including the loan processing fees, stamp duty charges, loan administration charges, etc., should be borne by you. You may factor in these charges as part of your loan amount as well. The Home Loan agreement document comprises details such as the bank's loan amount, the levied interest rate, the EMI payable, and the loan tenure. It also includes other essential terms and conditions regarding prepayment, default, collateral, etc., which you must read carefully.
Home Loan Disbursal
In the final step of the Home Loan application process, the bank disburses the loan amount. Based on the type of Home Loan you have applied for, the money will be disbursed either to you or the builder. The bank also determines whether the loan amount should be disbursed in partial instalments or as a lump sum. Once the loan amount is disbursed, your Home Loan is officially underway. It begins when you pay your first EMI and ends when you pay the last.
Types of Home Loan
Having explained how to apply for a Home Loan, let us look at the different types of Home Loans offered by Bank of Baroda. These are of 9 types:
The Standard Home Loan that enables you to buy a new, existing pre-owned, or under-construction property.
A Home Construction Loan enables you to construct a house on a piece of land owned by you.
A Home Loan to buy a plot of land, on which you will construct a property in the future (within 36 months).
A Home Extension Loan allows you to enlarge the size of your existing house, build extra floors, etc.
A Home Improvement Loan helps to finance the costs associated with renovating your existing house.
A Top-up Home Loan can get you additional financing on your existing Home Loan.
A Balance Transfer Home Loan allows you to transfer your loan from another lender to Bank of Baroda and benefit from a reduced interest rate.
A Pradhan Mantri Awas Yojana (PMAY) Home Loan allows you to get subsidised interest rates on your Home Loan. This funding type is useful if you belong to the economically weaker section, a light-income group or a medium-income group per PMAY policies.
A Pre-approved Home Loan wherein you can first get approval for a loan and then finalise the property based on your eligibility.
Documents for Home Loan Application Process
Besides knowing how to apply for a Home Loan online, you should also be aware of the documents you need to submit while applying for a Home Loan. These include:
Your age proof documents
You need to provide any government-approved document with your date of birth mentioned on it. Age proof documents help banks assess if you are in the 21-65 years age group (at the time of repaying the final EMI) to be eligible for the loan. This document could be a PAN Card, Aadhaar Card, Passport, Driving License, etc.
Your identity proof documents
Any Government-approved document featuring your photograph is accepted as a valid identity proof document. It could be your PAN Card, Aadhaar Card, Passport, Driving License, Voter ID Card, etc.
Your address proof documents
Any Government-approved document featuring your current/permanent address is accepted as a valid address proof document. It could be your Aadhaar Card, Passport, Driving License, Voter ID Card, Ration Card, Utility bills, etc.
Your income and employment proof documents
You need to provide documents validating your employment, such as your offer letter and designation, salary slips, increment letters, etc. If you are self-employed or a business owner, you need to provide your bank statement, profit and loss statements, proof of business documents, etc. All applicants must also provide their income tax returns for the last three years.
Property-specific documents
Finally, you must provide all documents related to the property you intend to buy such as the No Objection Certificate supplied by the society or builder, the original sale deed, letter of allotment, bank statements and receipts showing advance payments, etc. If you are taking a Home Construction Loan, you must also provide a document on estimating the costs associated with property construction, approved map etc.
Factors to Consider Before Applying Online for Home Loan
Now that you know how to apply for a Home Loan online, you should consider the factors mentioned below before beginning the Home Loan application process.
Consider the bank's lending rate and the maximum loan amount you can get based on your income.
Consider your credit scores and ensure they are above 701 points to get an affordable Home Loan interest rate along with the repayment tenure of your choice.
Consider repaying any existing loans and credit card bills to enhance your credit score, and by extension, your eligibility.
Consider opting for a longer-tenure loan to reduce the monthly instalment amount significantly.
As is apparent, the Home Loan application process is quite simple and straightforward. Now that you know how easy it is to apply for A Bank of Baroda Home Loan visit the Home Loan Section of our website to get started.
Does a Co-Applicant's Income Improve Your Chances of Getting a Higher Home Loan Amount?
Does a Co-Applicant's Income Improve Your Chances of Getting a Higher Home Loan Amount?
A Home Loan is considered a once-in-a-lifetime opportunity for many people. That is why it would help to maximise your potential loan amount. The best to go about is to opt for a joint Home Loan. Let's find out what is a joint Home Loan and how you can improve your chances of getting a higher Home Loan amount.
What is a Joint Home Loan, and What is a Co-Applicant in Home Loans?
A joint Home Loan is one that you can take along with another applicant or a co-applicant. A co-applicant is simply an additional applicant who is just as involved in the underwriting and approval process of the same Home Loan. When you take a loan with a co-applicant, it is deemed as a joint Home Loan.
A co-applicant may be named as the secondary applicant on the joint Home Loan but may share the same loan repayment responsibilities and benefits that go with a Home Loan. Co-applicant may or may not be joint owner of the property. However a joint owner has necessary to be a co applicant even if he / she is not having any income (e.g. In case of house wife). If joint owner is not having any income, then eligible loan amount would be calculated solely on the basis of income of main applicant.
Having a co-applicant on your Home Loan can also increase your chances of getting the loan approved. Furthermore, it also helps you procure a higher loan amount to buy the house of your dreams. However co-applicant must be your close relative.
Benefits of Having a Co-Applicant in Home Loan
Having explained what is a joint Home Loan and the definition of a co-applicant, let's take a look at a few benefits of having a co-applicant on your Home Loan.
The bank considers the income of both applicants
When you apply for a Home Loan, the bank considers various factors that can affect your eligibility. This includes your income, outgoing expenses, credit scores, and so on. While you may be eligible for the loan, you may not get a higher loan amount as the sole applicant. But when you apply for a Home Loan jointly with another applicant, the bank also considers their income. A higher income typically results in a higher loan eligibility amount, enabling you to buy a better property without compromising.
A joint Home Loan reduces your loan burden by half
Another advantage of taking on a joint Home Loan is that your loan burden is reduced considerably. You and your co-applicant can devise a strategy that distributes the loan repayment equally. This way, if either of you is faced with unpredictable circumstances leading to a loss of income, the other can ensure that EMIs are paid on time. Doing this ensures you never default on your EMI payment.
Conclusion: Now that you know what a co-applicant is in a Home Loan, you should consider applying with one. A co-applicant reduces your loan burden and shares financial responsibility.
So are you looking for a Home Loan? Apply now with Bank of Baroda
Home Loan Eligibility Guide for Beginners
Home Loan Eligibility Guide for Beginners
Buying a house in today's real estate market may seem expensive, but it is not impossible. With Bank of Baroda's Home Loans, you can buy a ready-to-move-in home, an under-construction home or a plot of land and construct house whithin 36 months. You can even construct a house on any piece of land you own. The bank also provides the necessary finance to renovate your existing property. However, your loan is sanctioned only if you fit the bank's Home Loan eligibility criteria. Let's understand what is Home Loan eligibility, and the various criteria considered by the bank.
What is Home Loan Eligibility?
Home Loan eligibility is nothing but an assessment of your loan repayment capacity. To assess whether you can afford and then repay the loan in a timely fashion, the bank considers several factors. These include your age, your income, your credit scores, the type of loan you are applying for, among others. Based on these factors, the bank determines the maximum loan amount you can get. Some factors also help you procure a lower interest rate on your Home Loan. Let's take a look at each of these criteria individually.
Home Loan Eligibility Based on Salary / Income
Your salary is the first criterion on which the bank assesses your Housing Loan eligibility. You should be able to provide valid proof of your income to eligible for this loan. You could be a salaried employee, a self-employed professional or a business/practice owner such as a lawyer, doctor, chartered accountant, etc. Essentially, it would help if you had a regular income to be eligible for a Bank of Baroda Home Loan. What's more, you can apply for the loan jointly with another immediate family member (check with the bank for eligible joint holders), who is also stably and securely employed, to improve your eligibility.
The bank typically has a standard interest rate and loan amount allowance based on your income bracket. The interest rate is linked to the Baroda Repo Linked Lending Rate or BRLLR and varies as per your credit score. [For instance, if your net monthly income is Rs. 25,000 and you can produce credit scores exceeding 750 points, you may be eligible for a maximum loan amount of Rs. 15 lakh at interest rates starting at 6.85% p.a*. On the other hand, if you have good credit scores and your net monthly income is Rs. 75,000, you can get a maximum loan amount exceeding Rs. 57 lakh.] You may repay the loan in tenures lasting up to 30 years.
You can use the Bank of Baroda Home Loan eligibility calculator to check the maximum loan amount you can get based on your salary.
Home Loan Eligibility Based on Age
Your age is another crucial Housing Loan eligibility factor that banks consider. Typically, the bank requires you to be at least 21 years of age to apply for the loan. Also, your age at the time of final EMI repayment should not exceed 65 years. Your chances of getting a Home Loan sanctioned are higher when you are younger; typically in your twenties or thirties. This is because, in this age group, you would have established your career securely, and you would have the capability to repay a high-value, long-tenured loan like a Home Loan. Furthermore, when you apply for a loan in your twenties or thirties, you still have several years of gainful employment ahead of you. You would be drawing a monthly income, which helps you repay your EMIs on time.
When you apply for a loan in your 40s, you may be able to make a higher down payment or pay a higher EMI amount. You need to assess what works best for you and then apply for the loan accordingly.
Other Factors determining Home Loan Eligibility
Apart from your salary and age, several other Home Loan eligibility criteria that the bank evaluates while considering your loan application. They are as under:
The Number of Years You've Been Employed
Being employed for over three years with the same employer conveys to the bank that you are stably employed.
The Details of Your Employment
Typically, the bank consults your employer to assess your claim of employment. It also asks you to provide documents such as your offer letter, monthly income statements and salary slips, etc., to determine your eligibility. These documents help the bank evaluate your employer's reputation and decide the loan amount and interest rate you can get.
Your Credit Scores and Financial Management
Your credits score is perhaps the most crucial of all Home Loan eligibility criteria. It is nothing but an assessment of your financial behaviour and your creditworthiness. Your credit score helps the bank evaluate how you spend your money and your income-to-credit ratio, i.e., how often you use your credit card and whether you repay your credit card bills on time, whether you are repaying your other existing loans regularly. It would help if you typically had a credit score of over 775 points out of a possible 900 points to get a low-interest Home Loan. The bank may also sanction your loan request if your credit score is in the 701-774range, but you may be charged a higher interest.**
The Value of the Property You Intend to Buy and the Loan-to-Value Ratio
While the bank finances a significant portion of the value of the property you want to buy, you have to provide a down payment. Typically, you have to provide at least 10% of the property's value as down payment, and the bank finances the remaining 90 per cent. This is known as the Loan-to-Value ratio. With Bank of Baroda, you can get finance of up to90% for Home Loans up to Rs. 30 lakh. You can get up to 80% finance for loans in the Rs. 30 lakh to Rs. 75 lakh range. If you need a loan exceeding Rs. 75 lakh, you have to pay a down payment of up to 25% of the property's market value and can get loans up to 75% of the value of the property.
Tips to Enhance Your Home Loan Eligibility
While you cannot change the bank's Home Loan eligibility criteria, there are several ways in which you can enhance your Housing Loan eligibility. They are as under:
Repay Any Existing Loans You May Have
Your credit scores are reduced if you have any existing loans while you apply for another. As such, it is better to repay your current loans and then apply for a fresh Home Loan. Repaying existing loans demonstrates to the bank that you had taken on and repaid loans in the past, and makes you a credit-worthy applicant.
Apply Jointly With A Co-Applicant
When you apply for a Home Loan jointly with a co-applicant, the bank considers both your incomes. It also checks the credit scores and repayment behaviour of both applicants jointly. If both of you have credit scores exceeding 701 points, your eligibility will be enhanced, and you can even get low-interest loans if credit score is further higher.
Opt For A Longer Tenure Home Loan
Your Home Loan eligibility increases with a higher loan tenure. A higher tenure allows you to repay the loan in smaller EMIs. It also ensures the bank that you would be employed for a longer duration, enabling you to pay your EMIs on time.
Calculation of Eligibility for Home Loan
Now you can calculate your Housing Loan eligibility even before you apply for the loan. You can use an online Home Loan eligibility calculator, available on the Bank of Baroda website. Enter details such as your age, income, monthly expenses, other loans EMIs, and the value of the property you intend to buy. Once you submit these details and click on enter, the calculator computes the maximum loan amount you can get. You can apply for a Home Loan online, .
So, visit the Bank of Baroda website to check if you are eligible for a Home Loan. Apply for your Home Loan online and start the process of becoming a property owner!
*Subject to change at Bank of Baroda's discretion.
**Conditions apply
Home Loan Principal & Interest Rate Explained
Home Loan Principal & Interest Rate Explained
Bank of Baroda offers a wide variety of Home Loans that you can choose from, based on your requirements. The bank offers loans of several lakh to a few crore in various Indian cities and towns. With its streamlined, online process, you can now apply for the loan online through the bank's website. You can even get a pre-approval for the loan, select a property based on your eligibility, and submit your documents online. But before you take on a Home Loan, you should familiarise yourself with the various terminologies associated with the loan; two of which are most crucial. We are talking about the Home Loan principal amount and interest rates. Let's understand these in detail.
What is the Home Loan Principal Amount?
To put it simply, the Home Loan principal is the amount of money financed by the bank to help you buy a property of your choice. The property in question could be cost of newly constructed, a pre-owned property, or an under-construction property. It could also be a plot of land and construction thereon you want to buy. The bank also offers you the necessary finance to construct a property on a piece of land you want to buy, renovate or remodel your existing property. Such financing also falls under the umbrella of the Housing Loan principal amount.
As such, the Home Loan principal amount is nothing but the original amount of money you borrow from the bank as a loan. It is the actual loan amount. Depending on your eligibility, income, and the value of the property you wish to buy, the bank offers maximum financing of 75 to 90 per cent of the property's market value as the principal loan amount. You have to provide the remaining 10 to 25 per cent of the property's value as a down payment.
Example to Help Understand Home Loan Principal Amount
Let's say you want to buy a 2BHK in Pune City. The cost of the flat is Rs. 1 crore. After assessing your eligibility, the bank decides to offer you a loan amount of 75%, while you have to provide the remaining 25% as a down payment. As such, you would be eligible for a loan of Rs. 75lakh and you have to make a down payment of Rs. 25lakh. Thus, your principal on Housing Loan would be Rs. 75 lakh. This amount reduces with every EMI you pay towards Home Loan repayment.
Difference Between in Home Loan Principal & Interest
Having explained what is Home Loan principal, let's understand what interest rate on Home Loans is, and how it differs from the principal loan amount.
Interest is the amount of money the bank charges on principle of the amount loaned to you. The interest rate on a Home Loan is typically expressed as a percentage and calculated as the Home Loan interest.
What is EMI
The EMI you pay towards your Housing Loan comprises both the Housing Loan principal amount and the interest amount. With every EMI you repay, the principal amount reduces. Interest is charged on every month on remaining outstand principal. So gradually with repayment of every EMI, original principal amount is reduced and according every month amount of interest is reduced. Thus in later EMIs, portion of principal is higher and it increases further with every payment of EMI. In the beginning, a significant portion of the EMI goes towards interest repayment, while a smaller portion goes towards repaying the principal amount. This becomes apparent through the bank's amortisation schedule that shows you how your loan repayment is calculated. The amortisation schedule is nothing but a tabular representation of the loan repayment, highlighting the amount going towards the principal amount and interest repayment each month, even though the amount of EMI remains unchanged. As per the amortisation schedule, the amount going towards repaying the principal amount increases progressively every year. You can easily calculate the same with the help of an online tool known as the Home Loan EMI calculator.
So, if you're planning to take on a Home Loan, make sure you understand the concepts of Home Loan principal interest rate and EMI thoroughly. You can now apply for Bank of Baroda Home Loans conveniently. Click here to get started!
Home Loan Process at Bank of Baroda
Home Loan Process at Bank of Baroda
Owning a home gives you a sense of financial security. You can easily become a homeowner, thanks to a Home Loan. To make this type of loan more accessible to anyone in need, Bank of Baroda has made the loan application process even more convenient. Now, you do not need to visit the bank several times to get your loan approved. Indeed, you can get approval for your home loan from the comfort of your home. Yes, Bank of Baroda has streamlined the Home Loan process. You can start the loan application process online. Here are the steps you need to follow.
Home Loan Application Process
Visit the bank’s website to check your eligibility and EMI amount
The first step in the Home Loan process is to visit the Bank of Baroda website. Here, you can use the Home Loan eligibility calculator to check the maximum loan amount you can possibly get. You can also check your potential EMI amount by adjusting the sliders.
Fill the application form and submit the documents
Once you’ve checked your eligibility, you need to determine the type of Home Loan you need, and fill the loan application form accordingly. You can download the form from the Home Loan section of the website. You need to provide your necessary details such as your name, age, address, income and employment status, etc. You also have to provide copies of your basic documents such as your ID, age, and address proof, along with a scan of your passport-sized photograph and signature income documents, property documents etc. Once you send these documents, the bank verifies them.
Wait for the loan sanction letter
In the next step of the Housing Loan process, the bank sends you a sanction letter, mentioning the loan amount you can get. This letter is typically valid for 6 months, during which time you can avail disbursement
Home Loan Disbursal Procedure
Drawing up the loan agreement
After you’ve done your bit in the Housing Loan process, the bank takes over. It gives you the format to draw up the loan agreement. You need to execute the Home Loan documents in the manner as per state law. Some of states also require registration of documents. Ensure you read the loan agreement carefully as it contains all the terms of the loan, including how funds will be disbursed.
Funds are disbursed
Based on the clauses in the home loan agreement, the bank disburses the loan amount to you or the builder/seller. In case of loans for under-construction or ready-to-move-in properties, the loan amount is typically disbursed to the builder/seller. On the other hand, funds for Home Renovation loans are paid to you directly. If you opt for Home Construction or Extension Loans, the bank may disburse the funds in instalments, depending on how the construction is progressing. If you transfer your loan from another bank, the funds may be disbursed directly to your original lender.
Once the funds are disbursed, the Housing Loan procedure is officially completed. The loan lasts until you repay it in its entirety. As is apparent, the Home Loan procedure is indeed simple and straightforward. The partially online procedure makes it a great time and energy saver. So, visit the Bank of Baroda website to begin the Home Loan process today!
List of Documents Required for Home Loan
List of Documents Required for Home Loan
When you apply for a Home Loan, a bank needs proof to verify your identity and assess your creditworthiness, before sanctioning. It does that by requesting you to provide several documents. As such, you should ensure you provide all the documents required for Housing Loan as mentioned on the loan application form.
Here is a list of the primary Home Loan documents you need while applying for a home loan, along with specific documents required from salaried and self-employed Applicants.
Necessary Documents Required for Housing Loan
There are five types of primary Housing Loan documents you need to provide. These include
The duly-filled and signed Home Loan application form available at your nearest Bank of Baroda branch or the bank’s website.
2 Passport size photographs; one of which should be attested on the application form.
A copy of your identity proof document could be your PAN or Aadhaar Cards, passport, driver’s license, or voter ID card. Essentially, it should be any government-approved document with your photograph on it.
A copy of your age proof eligible for the loan could be your PAN or Aadhaar Card, passport, driver’s license, birth certificate, etc.
A copy of your address proof document could be your, Aadhaar Card, passport, driver’s license, bank passbook, utility bills etc. The document should have your permanent address mentioned on it.
List of Documents Required from Salaried Applicants
As a salaried individual, you need to provide all of the Housing Loan documents mentioned above. You also have to give a few additional, income-specific documents, enabling the bank to assess your eligibility. They are as under:
A duly filled Form 16
A letter from your employer certifying your employment status and the duration of your employment
Your salary slips of the last 3-6 months
Your filed IT Returns of the last three years
Investment proofs (shares, fixed deposits), if any.
Account statement showing credit of salary.
List of Documents Required from Self-employed Applicants
Self-employed applicants also need to provide a few additional documents certifying their source of income. These include
Business address proof
Their duly filed tax returns of the past three years
Company Balance Sheet, Profit and Loss Statements, duly audited/attested by a Chartered Accountant
Their business license/professional practice (for doctors, lawyers, etc.) documents
Copies of registration certification for establishments like shops, factories, clinics, offices, etc.
Account statement of business.
Property documents Required for Home Loan
Apart from your basic and income-specific documents required for Home Loan, you also have to provide the documents of the property you intend to buy through the loan. These include:
A No Objection Certificate (NOC) provided by the society or the builder
The original, registered sale deed, letter of allotment or stamped agreement of sale, provided by the builder
Occupancy Certificate for ready-to-move-in properties
Maintenance and electricity bills, along with property tax receipts
Original receipts showcasing any advance payments made to purchase the property
A copy of the building plan for purchasing flats, villas, bungalows, etc.
Original receipt showcasing the land tax paid, along with possession certificate issued by the relevant authorities.
Bank account statements showing any payments made to the seller or builder.
A detailed estimate of construction costs (in the case of construction loans).
To ensure your loan is approved without any hurdles, you must provide all the Home Loan documents mentioned in the loan application form. You may also be required to provide few other documents based on your employment, property type etc. So do you have your documents ready? Go ahead; apply for a Home Loan from Bank of Baroda today!
Reasons to Consider a Home Loan Balance Transfer
Reasons to Consider a Home Loan Balance Transfer
Home Loans make it possible for you to invest in a property of your choice. The property could be a ready-to-move-in home or an under-construction property, or a plot of land on which construction will be carried later on. You may also avail loan from any bank/NBFC. Even though you may have started repaying the loan availed from other bank/NBFC, there could be times when you may not want to continue with that lender. Fortunately, you can change your lender and move to another, offering a better deal, by opting for a Home Loan Balance transfer. Let's know more about it in this article.
What Is a Home Loan Balance Transfer And How To Transfer My Home Loan?
A Home Loan balance transfer is a unique facility that enables you to transfer your existing Home Loan to another lender. If you are unhappy with your current Home Loan provider or paying a higher interest rate, you can opt for a Balance Transfer. You can now complete the Home Loan balance transfer process online through the Bank of Baroda website. The entire process is streamlined for your convenience. You need to provide us with the details of your existing Home Loan, lender's name, and the loan amount you intend to transfer. Yes, a Home Loan balance transfer can prove incredibly beneficial. Let's understand when you should opt for it and the benefits of transferring the loan.
When to Opt for Home Loan Balance Transfer Process?
Having explained what is balance transfer loan, let's understand when you should opt for it.
When there's a chance to reduce the overall cost of your Home Loan
The most obvious reason to consider a Home Loan balance transfer is to reduce your Home Loan's overall cost. A Home Loan can work out to be quite expensive in the long run as it involves interest in each installment. So, if there is a chance to save money by transferring the loan to a new lender, you should consider it. However, it would help if you remembered calculating the cost of transferring the loan, the processing fees, etc., and then deciding to move the loan.
When there's a chance of getting a reduced interest rate on your Home Loan
You can consider opting for a Home Loan balance transfer if you come across a lender offering an interest rate lower than that provided by your original lender. When it comes to Home Loans, a lower interest rate can result in significant savings in the long run even by a few decimals. If your calculations show that a reduced interest rate can result in savings, you can opt for the balance transfer loan.
When there's a chance of changing your EMI amount or loan tenure
If you are struggling to pay your loan EMIs, and want to reduce the EMI amount, you can check for a lender who can offer a chance to modify the EMI amount. A lower EMI can make the loan more affordable but may increase the loan tenure. Alternatively, you can increase your EMI amount and reduce the loan tenure as well.
When you need additional loan amount for extension/repair/renovation
Benefits of Home Loan Balance Transfer
Now that we know what is balance transfer loan, let's look at its many benefits:
As mentioned above, opting for a Home Loan balance transfer from one lender to another can reduce your EMI amount to quite an extent.
A balance transfer loan can also result in a reduced interest rate on your Home Loan, which, in turn, promotes higher savings.
Opting for the Home Loan balance transfer process can also help enhance your CIBIL scores, proving beneficial when you need other loans in the future.
When you've paid all EMIs on time, opting for a balance transfer gives you the upper hand in negotiating the loan's interest rate and terms with the new lender.
Opting for a balance transfer is especially beneficial if you are not satisfied with your original lender's facilities and services.
To be eligible for a Home Loan balance transfer, you should ensure that you've paid all EMIs on time, without defaulting. The bank considers your credit repayment behaviour and your current credit score before approving your request. Indeed, a Home Loan balance transfer can result in significant savings. So, get the best Home Loan services with Bank of Baroda. Click here to transfer your existing loan from another lender to ours!
What are the Benefits of Applying for a Home Loan?
What are the Benefits of Applying for a Home Loan?
Buying a property is a significant milestone in life. And in today's world, you can fulfil this milestone quite easily, thanks to a facility known as a Home Loan. Yes, a home loan empowers you to become a proud owner of a property of your choice. Apart from helping you fulfil one of your life's major goals, taking on a home loan, comes with its share of other advantages. Let us take a look at the various Home Loan benefits.
The Many Advantages of a Home Loan
Here are some ways in which taking on a Home Loan can prove beneficial
Capital Appreciation
As we all know, property rates are always on an upward trajectory. As such, the actual market value of your home keeps on appreciating with time. A property that may have cost you several lakh today can be worth a few crore in the future. As such, real estate is an investment that keeps on giving, thereby increasing your net worth.
High Repayment Tenures
One of the best Home Loan benefits is that you can repay your loan in long tenures. Bank of Baroda permits you to repay your loans in tenures lasting up to 30 years or 360 monthly instalments. This way, you do not need to compromise on your monthly expenses and continue supporting your lifestyle.
No Penalties on Prepayment
Another advantage of Home Loans is that you can close or prepay your floating interest-rate Home Loan before your chosen tenure. You can pay extra instalments each year (when you come upon surplus money), and repay the loan before the scheduled term. In doing so, you do not have to worry about incurring any financial penalties. This way, you can be rid of your loan burden at any time.
No Need to Live in Rented Facilities
A Home Loan helps you buy your own property and prevents you from living in a rented facility and having to move every few months or years. It proves especially beneficial if you are living in a metro city where your monthly rent may be equal to an EMI. So you may as well apply for a Home Loan rather than pay rent.
You Get Various Tax Benefits
While speaking of the various benefits on Home Loan, we cannot ignore the tax benefits you get. For one, you can claim tax deductions of up to Rs. 1.5 lakh p.a. on the principal loan amount, under Section 80 C of the IT Act of India. The only condition to get this Home Loan benefit is that you should not sell your property for the first five years. Apart from the tax benefit on the principal amount, you also get a deduction of Rs. 2 lakh p.a. on your loan's interest component, under Section 24B. These benefits apply for you as the applicant and your contributing co-applicant.
How to Apply For Home Loan Online?
Along with the many Home Loan benefits mentioned above, there is one more that not many people know about. Today, you can apply for your Home Loan without visiting the bank. Yes, Bank of Baroda has made the Home Loan application process incredibly seamless for its customers. You can directly visit our website, browse through the different types of Home Loans we offer, and begin the loan application process online. Just fill a form mentioning your personal and income details and wait to hear from us. Remember to use the Home Loan eligibility calculator to improve your chances of getting the loan sanctioned.
Different Types of Loans for Your Home
Different Types of Loans for Your Home
With property rates rising with each passing year, it is almost impossible to buy one from your savings. Thankfully, you do not need to worry about exhausting all your savings to become a property owner. You can get the necessary funds with the help of a Home Loan. You can also get a loan for construction or land purchase. Each type of loan is designed to help fulfil a specific objective. You can choose the type of Home Loan that best serves your needs. Let us take a look at the different kinds of Home Loans provided by banks in India.
A Standard Home Loan
The Standard or Basic Home Loan is the most common type of House Loan. You can take this type of loan to purchase residential property, which could be brand new, under-construction, or even a pre-owned.
A Home Construction Loan
If you do not want to buy an existing property but instead build a house on a piece of land you own, you can also opt for a Home Construction Loan. In this type of loan, the bank disburses the loan amount in instalments based on how the construction progresses. You have to provide an estimate of the amount of money you need at every stage of construction.
Land or Plot Loan
Just as you can buy an already existing property with a Standard Home Loan, so can you buy a piece of land. This type of Home Loan is known as the Land or Plot Loan. To be eligible for this loan, you must ensure that the property documents like ownership, a title deed, etc., are clear as the bank is not responsible for checking the same. Further you are also required to construct residential house within 3 years. More on that below!
Home Improvement and Extension Loan
If you want to remodel your existing property, you need to apply for a Home Improvement Loan. You can apply for this loan if you wish to paint your home, fix a leaky ceiling and hanging wires, or give your property a face-lift. A Home Extension Loan enables you to enlarge your home's size by adding rooms, extending floors, etc.
Top-Up Home Loan
The Top-Up Home Loan is one where you can get more finance on your existing Home Loan for any purpose. For instance, you may want to construct a property while still repaying your Home Loan or remodel your house while still repaying your Standard Home Loan or you need fund for marriage of your daugher. To be eligible for a Top-Up Home loan, you should ensure that you've repaid all your EMIs on time.
Pre-Approved Home Loan
Bank of Baroda offers a special type of Home Loan known as the pre-approved Home Loan, wherein you can apply for the loan first and then start looking for a property based on the loan amount you are eligible for. The bank determines your eligibility based on your income and repayment capacity. This type of loan allows you to choose a property that suits your eligibility.
PMAY Loan
Banks in India (in partnership with the government) offer home loans at subsidised interest rates. Members of economically weaker sections, light, and medium-income groups are eligible for such a loan. This loan is known as the Pradhan Mantri Awas Yojana or PMAY loan, wherein qualified applicants can become owners of 'pucca' houses in urban and rural India. Family should not have any other residential house other than proposed to be purchased/constructed.
Balance Transfer Home Loan
Do you have an existing Home Loan with a bank or NBFC? Are you paying a high-interest rate on that loan? Now you can transfer your Home Loan to Bank of Baroda under a special type of House Loan – The Balance Transfer Home Loan. Transferring the loan to a bank offering a lower interest rate can reduce your Home Loan's actual cost.
How to Apply For Home Loan Online?
You can apply for different types of home loans online. Bank of Baroda offers standard home loans, top-up, balance transfers, pre-approved or PMAY loans. You need to visit the website to begin the online application process. Fill an online form and provide your personal and income details and the loan amount you need. The bank assesses your eligibility and informs you of the maximum loan amount you can get, as well as the interest rate you will be charged. The online process reduces the need to visit the bank frequently, with documents in tow - ????.
So what are you waiting for? Visit Bank of Baroda to choose the type of Home Loan that suits your needs. Begin the process of becoming a homeowner today!
How to buy a mobile phone on EMI using a Debit Card?
Did you know that it is possible to buy a mobile phone on EMI? Yes. It’s possible. All you need is a pre-approved customer to avail ‘On The Fly Debit Card EMI’ by Bank of Baroda, and the smartphone of your choice can be yours.
Buying a phone can be a costly affair these days. Some smartphones are expensive and we often have to end up saving to make the purchase or delay our purchase until we have sufficient funds. But now, with EMI offers on debit card, buying electronic goods and gadgets is easier than ever.
So, what are you waiting for? Go ahead and buy the smartphone on EMI using your Bank of Baroda debit card.
How does this process work?
Buying a smartphone on EMI using a debit card is simple and hassle-free process. Here’s how you can go about it
Debit Card EMI is live on 2 lakh+ POS devices of Pine Labs on reputed merchant outlet to buy the smartphone of your choice.
Choose your smartphone and proceed to make the payment using Bank Of Baroda debit card.
Select the EMI tenure between 3 months to 18 months.
Proceed to complete the payment.
The bank will process the conversion of your payment into regular EMIs
Your transaction is complete.
Features & Advantages
Buying your dream smartphone using Debit Card EMI is now easy, convenient and comes with a host of features. Check the list below to know more
Easy, accessible and convenient to use
Zero processing fees
No paperwork
Transactions up to Rs. 50,000 can be converted into easy EMIs
Users have access to over 100 brands, across 2 Lakh merchant outlets
Cashback Upto 16% is available on Brand EMI transactions
Rate of interest applicable is 16% p.a.
EMI by debit cards is an easy, convenient and affordable solution for buying high-value products, especially when you’re on a budget.
As more people make use of this facility to pay for smartphones and other electronic gadgets, EMI on debit card is rapidly evolving for affordability solution.
6 Effective ways by which your CIBIL Scores can Improve
One of the most important prerequisites for taking on any kind of loan today, is your CIBIL score. Whether it is a home loan, a vehicle loan, a personal loan or any other kind of loan
Applicant, banks always check one’s CIBIL scores. Also known as credit score; this is a document containing information about the borrower’s credit behaviour. Banks use potential borrowers’ credit scores to check whether or not they have been repaying their loans on time. Through the CIBIL scores they can check if a borrower has defaulted on any loan payments, missed paying any EMI and even get an idea regarding one’s financial conditions. If your credit scores are below 750 most lenders reject loan applications. So it is imperative to have good credit scores. Find out how to improve CIBIL score here.
Repay your debts on time
Whether it is your credit card bills or your loan EMIs, it is imperative that you repay your debts well in time. Missing out on repaying any outstanding debt can impact your credit rating. You especially need to be careful when it comes to paying loan EMIs because failure to do so, not only attracts penalties, but also affects your credit scores negatively. One easy way to pay your debt on time is to set reminders so that you don’t forget the loan repayment dates and never miss out on making timely payments. You can also set up automatic payments so that the loan amount is directly debited from your savings account every month.
Don’t take on multiple loans
A great way to improve CIBIL score is to ensure you do not take on multiple loans at the same time. Ensure that you’ve paid off your current loan before taking on another one. This prevents your credit scores from reducing. When you take on several loans at the same time, it shows your lender that you may not have sufficient funds to repay all of them. If you have only one loan to repay, the lender can feel confident in giving you the loan and your credit scores also remain unaffected.
Try to maintain a healthy mix of credit
Most people have to take on a variety of loans to fund the various life necessities. But when you take the loan, it is better to ensure that there is a healthy mix of secured and unsecured loans. While the home loan and car loan count for a secured loan, your credit card debt or personal loans are regarded as unsecured loans. It is necessary to maintain a balance since taking any loan in access can affect your credit rating.
Don’t utilize your entire credit limit
Another important point that pops up when we talk about how to improve credit score is credit limit utilization. One of the quickest and the easiest ways to improve credit scores is not utilizing your credit card to the extreme limit provided by lenders. Try to spend only 30% of the credit limit provided on your card per month. For instance, if you have a credit limit of ₹200,000 per month, you should try to restrict your monthly credit spends to only ₹60,000. When you exceed the 30% limit, your potential lender may get the idea that your spending habits are impulsive, which can also reduce your credit scores.
Increase the credit limit
If you demonstrate good credit repayment behaviour, your bank can reach out to you to increase the credit limit on your credit card. It is better not to turn down this increased credit limit. Increasing the credit limit doesn’t necessarily mean that you are going to increase your credit card spends. The idea is to have a higher credit limit but limiting your credit utilisation, and thereby improve CIBIL score. Doing this leaves a positive impact on your credit scores.
Ensure that your credit report is error free
While you may believe that your credit report is free of errors, there may be several unknown errors that may be reducing your credit score. For instance, you may have paid off your personal loan in full, but you may see that it is still unpaid owing to administrative errors. It is therefore important to check your credit score and ensure it is error-free before you apply for a loan so that your loan request is not rejected, thus further impacting your credit scores.
7 Step-guide to applying for a Home Loan
All of us dream of becoming homeowners. It is a way of ensuring lifelong financial security; the kind that does not come from living in a rented home. But buying a home is a complicated process. Whether it is years of savings to be given as down payment, or finding the right locality to invest in; the process of buying a home is elaborate. And since property investments take a huge chunk of savings, most of us rely on home loans. Yes, you can take out a home loan and pay it off in easy equated monthly instalments (EMIs) for tenures lasting up-to 30 years. Let’s understand the home loan procedure.
Step 1: Fill the application form
The process of taking a home loan begins with the borrower filling an application form. The application form is the most basic document in which you have to provide personal information about yourself like your name, address, phone number occupation, monthly and annual income and education details. You must also provide details about the property you wish to purchase, the estimated cost of that property and the down payment you can afford. Note that you have to furnish your ID proof, address proof, income certificates, ITR of the last three years, bank statements etc., with your application form.
Step 2: Verification of documents
After you submit your documents, the bank verifies the documents provided by you. This is an important aspect of the home loan process and banks may take up to 2 days to verify your documents. During this time, you may also be asked to visit the bank and appear for a face-to-face interview. This is the banks way of confirming that you are capable of repaying your loan within the stipulated tenure.
Step 3: Background check
Apart from verifying your documents, the bank also conducts an independent background check of the borrower’s credentials. To this effect, the bank may conduct an investigation basis the information supplied by you in the application form including your previous and current residential addresses, your place of employment, credentials of your employer, office contact details etc.
Step 4: Processing free payment
After the bank is convinced about your repayment capacity, it begins the housing loan process. As such, you must pay a processing fee which is an amount the bank collects to process your loan application. Banks typically charge anywhere between 0.25% and 0.50% of the principal loan amount +applicable GST as processing fees. The bank charges a processing fee because of the investigations conducted to check your eligibility and your Proposed Property’s Valuation and Search. This does not necessarily mean that your loan is approved
Step 5: The loan approval process
By far, the most crucial stage in the entire home loan process; the bank now decides whether to approve or reject your loan. To ensure that your loan is not rejected you must furnish all the listed documents truthfully. This is also the stage in which the borrower can find out the maximum loan amount as approved by the bank, as well as the interest rate charged according to various tenures. The bank communicates these details by sending you an official sanction letter confirming that your loan is approved.
Step 6: Processing the property documents
After you receive the official sanction letter approving your loan, you are required to submit the original property documents to the lending bank, which remain in the bank’s custody until the loan is repaid in full. The original property documents typically include the complete chain of ownership acquisition and transfers of ownership in sequence till your Sale Agreement execution, applicable NOCs from related authorities along with the seller’s name, ID and address proof, etc. The bank verifies the property documents before approving the loan. Bank also sends it’s representative twice to physically visit the property site, once before approval of loan and then after sanction of loan.
Step 7: Loan disbursal
The final step in the entire housing loan procedure is the loan disbursal stage. This includes the registration of the loan deal i.e. acceptance of Terms and conditions of Sanction by the borrower/s, the signing of the loan agreement/documents and the disbursement of loan as per terms stated in the Sale Agreement, including down-payment by the lender.
Advantages of personal loans to raise funds
There are times in everyone’s life when there is a sudden need for money. The immediate choice is generally to use a credit card or to borrow money from friends or family members.
With net-banking now in place and more lenders chasing fewer borrowers, raising money through other sources is now possible at a faster pace.
Gold loans are normally a preferred and cheaper source of the loan, where banks and gold loan companies process the papers fast to give the borrowers the money he or she needs. However, personal loan are now being offered at a faster speed too. There are lenders who advertise that they will disburse the loan within a day.
Under such circumstances, it is always better to go in for a personal loan rather than using your credit card to meet any emergency need. Firstly, because the personal loan is far cheaper than any credit card loan and secondly because the personal loan can be of a bigger size than what the credit card can offer.
But before one takes a personal loan it is important to have a good CIBIL score. With a CIBIL score of over 750, a person can be choosey in picking up the personal loan with the lowest interest rates. A person with a lower score may still get a personal loan but the interest rates may be higher.
The biggest advantage of a personal loan from the point of view of the borrower is that it is an unsecured loan. The borrower need not pledge or mortgage any of his assets to raise funds.
For an entrepreneur, a personal loan can act as a stop-gap arrangement till he is able to raise money from other sources to meet his urgent business requirements.
Like any loans, personal loans need to be repaid periodically in equated monthly installments (EMI). These loans can run from a short tenure of one year to a four-years loan. These days there are lenders who offer personal loans for a period of seven years also.
While taking a personal loan is easy, it should be taken only in case of emergency. Personal loans, being unsecured are costly. It would be foolish to buy an asset with a personal loan, especially when there are financial products available these days to buy a mobile or any other household equipment.
One should avoid using personal loans to repay loans that are cheaper in cost. But they can be used to repay higher cost loans like credit card bills or something similar.
If one is using personal loan to meet the operating expenses of the house then he or she is falling in a debt trap. One loan will lead to another and before the person understands it, he would have fallen in a debt trap. Rather than using the personal loan as a saviour to come out of the debt trap the person would have fallen in it using personal loans. Personal loans should be used only for intermittent emergencies.
Applying for an education loan – the procedure you need to follow
We have all heard the age old saying that the path to a great career and successful life is paved through a quality education. Holding a higher education degree opens up many career avenues and helps you secure your financial future. But with the ever-rising cost of college and university fees, students and parents have no choice but to take on an education loan to fund higher studies. Education loans cover a host of expenses related to higher education such as the tuition and examination fees, hostel fees (if applicable) cost of books and apparatus, conveyance charges and so on. Here’s the education loan procedure you need to follow.
Do your research and choose the lender
Before you begin with the loan application procedure, you need to get the admission offer letter from the school you wish to attend, finalise the lender and then visit them online or in person. Let’s say you choose bank of Baroda as your preferred lender.
Fill the loan application form
If you apply for the loan online, you can find the loan application form on the lender’s website. As per the instructions of the Department of Financial Services, Ministry of Finance, Government of India, all education loan applications (including applications received by Bank in physical format) are to be applied through Vidya Lakshmi portal, i.e. https://www.vidyalakshmi.co.in/Students
Appear for the interview round
The procedure to take education loan continues with the interview round. Whether you apply for the loan offline or online, the bank may call you to appear for a personal discussion. The student wishing to study further is considered as the principal loan applicant, which is why he/she must be present for this discussion. The bank generally asks student applicants some basic questions regarding their overall academic performance, the degree they wish to pursue and the school they wish to attend and so on. They also ask questions regarding the possible income that can be generated from their chosen field. Based on the information provided by the applicant, the bank decides whether or not to proceed with the loan.
Provide the documents
The bank also asks you to provide some documents as part of the Bank’s education loan procedure. You need to submit the admission offer letter provided by your chosen university. The bank will also do its due diligence and verify your enrolment.
The bank approves the loan
After verifying your credentials, your student loan may be approved. The student’s one of the parents/guardians are listed as co-borrower or guarantors and the bank also checks the guarantor’s /co-borrower’s credit scores before approving the loan. Additionally, the applicant must also sign a promissory note and other prescribed loan documents, assuring the bank that the loan will be repaid within the stipulated tenure.
Loan disbursal
The last step in the education loan procedure is loan disbursal. After all formalities are completed, the bank disburses the loan amount directly into the bank account of the university the student wishes to attend. Disbursement can be done partially (–semester wise) or fully, at one go.
Keywords used
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Computing Your Car Loan EMI Made Easy
Every individual’s journey to buy a car is unique. It begins with where the individual is in his/her career, and the choice of vehicle they want, which is mainly based on why they want the car. During the process, they also focus on how they can get a car loan that suits their requirement.
When you, as an individual are considering a car loan, you are likely to do your due homework in checking for affordability and the loan tenure among other factors. While it is essential to go for a car loan from a lender who has banking expertise in the sector of car or auto loans, so you get the best rate and comfortable repayment options, you can also use the EMI calculator like the Bank of Baroda’s Car Loan EMI calculator that will help you make a well-informed choice in picking your car loan.
In using a car loan EMI calculator, you need to key in three basic variables- the loan amount you are likely to need, the tenure or the repayment period that suits your finances and the rate of interest. Now, the rate of interest is what you get from the bank, while the other two are the ones you can play around with on the calculator. Here is why using a car loan EMI calculator works.
If EMI is more:
You can pick a longer loan term or
You can make the loan amount smaller
If you find the EMI is coming out to be lower, then you can plan for a larger loan value or a shorter loan term.
You can also use the PMT formula on Microsoft Excel to calculate the EMI (Equated Monthly Instalments), where PMT is your EMI, Rate is the rate of interest, Nper or number of periods is the total number of payments for the loan and Pv is the loan value or the principal. The formula is PMT (Rate, Nper, Pv).
You can keep trying the formula for various combinations and then choose the one with the lowest EMI, though this is a roundabout approach prone to human error.
Bank of Baroda offers car loans and has a wide range of benefits, irrespective of your loan amount or type of vehicle.
With a BoB car loans, you can ride home your dream car in a short period of time. Our loans are designed for those who may be unable to purchase a private vehicle due to paucity of funds.
You can benefit from quick processing, minimal documentation and speedy fund disbursal. Additionally, our loan borrowers are not required to pay foreclosure charges or pre-payment penalty, nor do they need to pay advance EMIs.
With higher limits on the car loan amount, you can avail loans for new cars based on your eligibility. So, if you have always had your eye on a luxury car, our loan can take you one step closer to your dream.
Also, say goodbye to down payment worries, as you can get up to 90% financing on the car’s on-road price with Bank of Baroda’s auto loan.
Bank of Baroda offer attractive interest rates on loans to all our customers based on their credit scores. Additionally, existing home loan borrowers with a good credit history enjoy a concession on their car loan interest rate.
How does an EMI on debit card work?
With the exponential growth and increase in online shopping and the number of products available, the modes of payment for these purchases have also evolved. It is no longer necessary to pay upfront in cash. One very popular option that people use is to convert purchases into installments on their credit card. This system has become one of the preferred ways to buy consumer durables. However, for those people who do not have credit cards or who do not have a high limit on credit cards, there is another option; EMI on a Debit Card.
A debit card is like carrying your savings or current account with you. It is directly linked to the account and every purchase made debits the account directly. This means a debit card does not have any limit as such. The amount available to be spent in the bank account is the amount available to be spent for purchase.
With an increasing number of debit card holders, merchants and banks have come up with an option to convert high value purchases into an EMI on the debit card. If you’re wondering how to get EMI on debit card, this is the guide for you.
How EMI on debit card works?
The EMI process is extremely simple. Each bank has a certain minimum amount of purchase that has to be made. Once the total purchase amount at a merchant exceeds this defined amount, the cardholder gets an option on merchant’s Platform to make payment through Debit Card EMI.
After you select your EMI option, you need to enter your card details and validate them with an OTP. After the OTP is entered, your purchase will be made through an EMI.
Then the customer is given an offer based on Pre- approved Limit showing the approved loan amount, Rate of Interest , down Payment by the customer and Tenure. This offer needs to be accepted along with giving consent for Standing instructions for loan EMI recovery from Debit card linked savings account. The merchant charges some convenience fee to the customer and once this convenience fee and down payment is made by the customer to the merchant, the purchase will be completed.
One important point to note about EMI on Debit Card is that the bank charges interest for this facility. The rate of interest on EMI will differ from bank to bank. It also depends on the balance in your account and your relationship with the bank.
If you’re wondering how to avail EMI on debit card, then you should know that banks auto approve customers for this facility. Flipkart customers can send a message on a number which checks if you are eligible for this feature or not. If you’re eligible for this feature, it will appear as a mode of payment at the checkout page. It is pertinent to note that you must use the same email ID and mobile number with the e-commerce portal as you do with the bank for them to verify and make that option available to you on checkout.
The interest on EMI is not the only charge associated with this account. Some Banks also charge a processing fee for this. Some banks may charge a foreclosure fee as well. This schedule of charges varies from Bank to bank. It is best to inquire with the bank about these charges before converting your purchases into EMIs.
All major e-commerce portals offer you the option to convert your purchases into EMI. But before you avail this facility, check if there is a no interest or low interest EMI option. If you’re ready to pay interest on these purchases, you can opt for this facility.
How Mortgage loans work?
Home loan or Mortgage loans is without a doubt the longest loan a person takes in his lifetime. Most other loans like personal, education and automobile loans are of shorter duration but a home loan can last for as high as 30 years. It is thus very important to understand all aspects of this loan.
Whenever one buys a home, the lender will use the home as collateral against a possible default in the future. The term Mortgage means passing the Charge on the property to the lender as a security.
Home is one of the few assets whose price does not fluctuate as much as of other financial assets. In fact, in a growing economy, the price of the home moves higher gradually every year. Hence, in this case, banks are relatively assured of recovering their money in case of a default. In most cases, banks do not ask for any other security when they disburse Mortgage loans.
There are various components of a Mortgage loan. First, the maximum amount of loan that a lender disburses is restricted by regulators. Some lenders consider the taxes, statutory charges, and insurance under the total value on which loan can be available. A borrower will thus have to clarify with the lender on the total amount that will be considered for calculating the loan value.
The amount that the bank will disburse will be the amount on which it will be charging interest. The consumer will have to repay the loan amount plus the interest that is charged over the years.
The interest that is charged on the loan is floating. This interest is normally calculated on a reducing balance basis. In the initial years, the lender would take more as interest and less of capital from the equated monthly installments (EMI) as the loan amount outstanding is almost full in the initial years of loan.
Consider a person has taken a loan of Rs 50 lakh from a bank for a period of 25 years. His EMI would work out to be Rs 41,000. When this Rs 41,000 is deducted from the borrower on a monthly basis, in the initial years less than 10 percent of the amount is deducted from the –Principal of Rs 50 lakh. A major chunk of the interest that a borrower pays on his loan is deducted in the first half of the tenure.
It is thus advisable to repay part of the mortgage loan or foreclose it in the first half of the loan tenure if one can afford the same.
Every month the interest is charged on the reduced Principal that is left over from the previous month. In banking terms, the remaining Principal is called the outstanding loan amount.
In India, there are no charges applicable for foreclosing a home loan. In other loans pre-closing a loan carries a charge.
At the time of availing the loan lenders generally give an amortization sheet which clearly mentions the interest and principal that will be deducted every month for the entire tenure of the loan.
How much home loan can I get as a salaried employee?
Real estate rates are rising with every passing day. It is no longer feasible for one to purchase a home simply with the help of their savings. You need to approach a bank to take out a home loan. But lenders need to be sure that you have the capacity to repay the loan, before passing your loan. To ensure you have the repayment capacity, they take a few important factors into consideration such as your net monthly income, credit scores, and credit repayment behaviour. If you are a salaried employee thinking how much home loan I can get on my salary, you need to read this article.
The role of your net salary
The key prerequisite for a bank to sanction your loan is your salary. Banks need to be convinced that you earn enough to be able to afford the monthly EMIs. This is why your gross monthly income is the most important factor for lenders sanctioning loans. Your net (in hand) income helps the lender assess the equated monthly instalment you can afford. Let’s look at it with the help of an example.
Let’s say your age is 30 years and monthly salary is ₹60,000 but you receive a net income of ₹55,000 post deductions. In this case, the ₹55,000 becomes your net monthly income and you would be sanctioned your loan based on this amount.
Now to answer the question how much home loan can I get, let’s build on the above example. Let’s say you approach Bank of Baroda to finance your home loan. On a net monthly remuneration of ₹50,000 and above, total deductions, including proposed EMI not to exceed 65% of the Gross Monthly income as per Bank of Baroda norms for Housing Loan,i.e Total monthly deduction of Rs.39000/- is allowed in your case and since there is already a monthly deduction of Rs.5000/-, you are left with Rs.34000/-for the proposed Home Loan EMI. The Bank may find you eligible for a Housing Loan of Rs.44,00,000(rate of Interest taken at 8.40%(otherwise applicable as per CIBIL score of applicant), present BRLLR of bank and loan Tenure is taken as 30 years maximum Tenure offered by Bank of Baroda) if you wish to purchase a flat/plot anywhere in India. , As you can see, Bank of Baroda would base your loan approval amount on following main factors: i.e. your age, your monthly income, your CIBIL score and the actual value of the property.
The role of your repayment capacity
Your net salary may answer the question how much home loan can I get on my salary, but is in not the only determining factor. A high monthly income does not prove to the lender that you have the capacity to repay the loan. To this end, they conduct their own assessment of your repayment capacity by looking at your bank statements. They prefer to check your typical monthly expenses, your credit card debt, your credit history and other EMIs you are paying and so on, to ensure that you are eligible for the home loan. Your monthly expense report helps lenders understand the amount of income you are left with every month after mandatory expenses and your income to debt ratio. They typically require you to have anywhere between 50%-75%income available for total deductions including your existing deductions plus EMI of proposed Home loan depending upon your Income slab to calculate your eligibility for the proposed Home loan. You have an option to add co-borrower who can be any of your earning close relative to enhance your loan eligibility. It is suggestible to have the co borrower as co-owner of the proposed property as well to avail Income Tax benefits available for Home Loan borrowers.
The role of your credit scores
The answer to the question how much home loan can I get and at what price (Rate of Interest) is incomplete without a mention of your credit scores. Also known as CIBIL score, your credit scores allow lenders to assess your credit repayment behaviour. It helps them check if you have defaulted on paying EMIs, how frequently you are using your credit card and whether you are paying your credit card bills on time, without defaulting. You typically require a credit score of 725 points or higher for your home loan to be considered.
How the Pradhan Mantri Awas Yojana Scheme is a futuristic, beneficial scheme?
We all dream of owning a home. Whether it is a small 1BHK or a bungalow, a home is the ultimate financial security one can have. It can provide you and your family a safe heaven, it can take care of the financial future of your children and it can also be used as collateral against various types of loans whenever you need money urgently. But with the sky-rocketing real estate prices, there are some sections of the society who cannot even dream of owning a house. In the words of Prime Minister Narendra Modi, the “Pradhan Mantri Awas Yojana is a significant step in making the dreams of the poor come true”. Let’s look at the many benefits of Pradhan Mantri Awas Yojana – Housing for all scheme.
It aims at Slum rehabilitation
The PMAY scheme is a well thought out scheme that ultimately benefits the nation and the economy. The main objective of the scheme is to eradicate the slum houses and replace them with ‘pucca’ or concrete homes, especially from the urban cities of India that greatly contribute to the GDP. With the help of this ‘in-situ’ slum rehabilitation scheme, the government is hoping to encourage slum dwellers to opt for formal urban settlements as opposed to slum dwelling and leverage the land that is losing value due to slum settlements.
It provides housing for all
One of the greatest advantages of Pradhan Mantri Awas Yojana is that it aims at providing permanent housing for all. Under this scheme, the government is seeking to construct as many as 2 crore affordable 1 BHK flats in some of India’s prominent urban areas. House construction has already begun in the States of Maharashtra, Tamil Nadu, West Bengal etc. The Government of India aims to uplift the general standard of living of the Indian population and eradicate poverty through these houses.
It promotes affordable housing for all sections of society
The PMAY scheme aims to provide affordable housing to all sections of society. These benefits are extended to applicants who do not own any home and fall within specific income groups and sections of society. Applicants are divided into various groups such as economically weaker sections of society (EWS), lower income groups (LIG) and middle income groups (MIG). The Middle Income Group is further categorised as MIG 1 and MIG 2 based on income levels. Additionally, it also encompasses minorities such as members of scheduled castes, scheduled tribes, other backward classes as well as women and senior citizen applicants, widows and members of transgender communities.
Homes are provided at subsidized interest rates
The most important benefit of PMAY scheme is the credit linked subsidy scheme. With a view to increase the flow of institutional credit, the government has launched a credit linked subsidy component to PMAY scheme. This enables the eligible urban poor (members from EWS, LIG, MIG 1 and MIG 2) to receive home loans for acquisition or construction at effectively much lower interest rates. Such borrowers can receive a substantial decrease in interest repayment. For instance, if a member of the above mentioned income group opts for a home loan he/she would be charged an interest rate of 8.40% p.a. For loan amount up to ₹600,000 ,he will receive an interest subsidy as per his eligibility. Interest subsidy will be credited upfront to the loan account of beneficiaries through lending institutions resulting in reduced effective housing loan and Equated Monthly Instalment (EMI). If one opts for a home loan over the amount of ₹600,000, they have to pay the regular interest rate on the amount exceeding ₹600,000.
It secures the financial future of women
Another great advantage of PMAY is that it encourages women to apply for loans and become home-owners. As per the scheme clause, if a married man is applying for the loan, he has to mandatorily register his wife as the co-applicant of the loan, even if she has no role in financing to purchase the property. This is done to secure the financial future of women, especially when they are older and widowed.
The benefit of eco-friendly housing
Developers and builders in charge of building houses under the Pradhan Mantri Awas Yojana Scheme, have been instructed to construct the houses with eco-friendly construction material and technology. The aim behind this is to ensure minimum damage on the environment around the construction site, including damage causes due to air and sound pollution. Homes are being built with sustainable, good quality material to eliminate the need for remodelling or renovation for as long as possible.
As you can see, there are many benefits of PMAY. Walk into a Bank of Baroda branch today to get more details about this scheme.
Keywords used
benefits of PMAY, advantage of PMAY, advantages of Pradhan Mantri Awas Yojana, benefits of Pradhan Mantri Awas Yojana, Credit Linked subsidy
How to apply for an education loan – a step by step guide
The cost of seeking a quality education is rising every day. Schools and universities charge fees to the tune of several lakhs of rupees, making it impossible for parents to fully fund their child’s education. High costs of education are especially a burden on parents whose children aspire to attend private institutions in India or prestigious universities abroad. In such a situation, the only respite is offered by banks which provide education loans. Such loans cover everything, from tuition fees and cost of books, apparatus etc., to lodging charges, dormitory fees, travel allowance and so on. Let us find out the step-by-step procedure to take education loan.
Step 1 – Filling the application form
Just like with any other loan, the first step is to fill an application form. The application form is a simple form in which you must provide your personal contact details as well as your academic details. Ensure that you provide accurate and truthful information in this form. As per the instructions of the Department of Financial Services, Ministry of Finance, Government of India, all education loan applications (including applications received by Bank in physical format) are to be applied through Vidya Lakshmi portal, i.e. https://www.vidyalakshmi.co.in/Students
Step 2 – Interview
The next step in the education loan procedure is the interview round. After considering your application, your bank typically calls you for a personal discussion or an interview. Note that the loan is offered to the student and co-obligation of parents/ guardian and the student is considered as the main loan applicant. You may be asked several questions pertaining to your academic performance, the institute you wish to attend, the course selected by you, future scope of your chosen course and so on. You must be honest and should be able to convince the bank that you are choosing a stream that has the potential to generate good income, thus enabling you to repay the loan.
Step 3 – Documentation
Before the loan is processed you need to prove to the bank that your chosen university has extended an offer of admission. This is the primary document that all banks ask for, even before one begins the actual loan application process. The bank can get in touch with the university to verify your enrolment. If your education loan amount exceeds ₹4,00,000, you would be required to provide some sort of collateral in the form of third party Guarantee if the required loan amount is upto Rs.7,50,000, and if it exceeds 7,50,000 you are required to provide collateral security equivalent to 100 % of the loan amount along with assignment of future income of the student for payment of instalments.
Assignment of future income of the student for payment of instalments is applicable to all Education Loans irrespective of Loan amount.
Step 4 – Loan approval
As per the education loan repayment procedure, banks offer the loan to the student applicant, and since the student cannot repay the loan until the course is completed, the bank considers parents/guardians as co-borrower of the loan. The Bank also verifies the credit history of the Co-borrower/guarantor before sanctioning the loan. Bank offers moratorium period equivalent to the course period plus one year and it is optional for the borrowers to serve the Interest on Education Loan during this moratorium period. Once the loan is approved, the borrowers will receive a Sanction letter from the Bank. Once the Borrowers accept the terms and conditions of sanction, Bank calls them for execution of loan documents and hand over of collateral security papers in original to the Bank if it is required as per terms of Sanction.
Step 5 – Loan disbursal
The final step in the education bank loan procedure is loan disbursal. Banks typically directly disburse the loan to your chosen university by way of Banker’s cheque, Demand draft or SWIFT message as per the location of the chosen University/Institution along with your margin if stipulated in Sanction.
How to buy a house in India? All you need to know.
Buying a house is a dream for a many people in India. However, the process to buy a house is not as simple as looking it up and buying it instantly. There are a lot of factors to consider and a fair bit of due diligence is required on the part of the buyer before the house is bought.
The process of buying a house can be condensed into these steps:
Figure out how much you can afford:
The first step on how to buy a house in India is to decide how much you can afford. Housing loans are extremely popular and easily available which means you can also factor in a loan value while deciding how much you can pay for buying a house. It is also important to take a look at your household budget while deciding this. You need to have enough funds left over for making investments and meeting household expenses since banks auto debit the EMI from your savings account.
Decide the location:
The price of the flat depends a lot on its location and the proximity to major roadways or an airport. Upcoming suburbs outside a major metropolitan city will be cheaper than buying a flat within city limits. However, you must factor in the time taken to commute from your place of work to your residence.
Check the resale values:
Checking the resale value of the flat is extremely important. This depends on a few things such as the builder’s reputation, the locality etc. It is easy to find resale values on different property portals. This especially helps in case you want to move in a few years or are investing for the purpose of investment.
Check your loan eligibility:
Real estate is extremely expensive in India and not many buyers can afford to buy it outright with their savings. This is where a home loan comes in. Most lenders have a home loan eligibility calculator on their website where you can check for your loan eligibility. The loan eligibility does not translate into the final loan amount since that depends on the actual property itself. However, these calculators are a good indicator of how much loan you can expect to get if you apply for it.
Registration and stamp duty:
Registration and stamp duty are costs that are paid over and above the purchase price of the house. These costs differ from state to state in India and each state has a formula for calculating them. It is important to factor these costs since this adds to the expense.
Agent:
You must decide whether to buy a house through an agent or directly. Agents prove to be helpful while finding buyers and sellers for flats, especially resale flats. However, they also charge a commission from both parties for the sale.
Property type:
You can either buy a flat in a new construction or buy a resale property. New constructions also have a risk of permissions attached to them. However, new constructions also come with more amenities.
Rental value of property:
If you’re looking to rent out the property, you need to calculate the amount charged as rentals from similar flats in the area. This will help you estimate your monthly earnings. It is better to buy a flat in an area that is conveniently located since such places will always have a demand for rentals.
Once you factor in all these points, you can then add up the total value of the house. How much money to buy a house in India depends majorly on the location of the flat and the city or town, but after considering these points, you can get a fair idea.
How to Get a Car Loan?
Now that you have zeroed in on your dream car after test driving a few of them, you probably cannot wait any longer to buy it. Now the next obvious question is, what are your financial options for buying the dream car? For many of us, a car loans seems like a comfortable financial option to consider, given that it leaves cash liquidity intact and you can get a car loans in easy EMI options at affordable interest rates, so it does not pinch your pocket much. Here’s a guide on what to do next!
First things first. Check if you are eligible for a car loans. Once you know you meet the eligibility criteria, it speeds up the process of getting a loan approved.
Am I eligible for a car loan?
Each bank has its own criteria for car loans. It could be minimum annual income or minimum years of employment among others.
For example, Bank of Baroda provides up to 90% financing for the said category of borrowers-
Salaried Employees
Businessmen, professionals and farmers
Directors of Private and Public Limited companies, Proprietor of Proprietorship Firms, partners of Partnership Firms.
Corporates (Partnership, private Limited, Public limited and Trust)
NRIs/PIOs
What are the documents required for a car loan?
Though documents required may vary from bank to bank, but most commonly, banks ask for the documents mentioned below along with the loan application form-
For Proof of identity, one of these documents van be produced:
Passport
Driving license
Latest three months old credit card statement.
Salary slip
Income tax assessment order
Utilities like electricity bill, landline bills-not older than 6 months.
Bank statement
Letter from employer/public authority (should be validated by bank)
iVoter ID card
Retired government employees can produce pension payment orders
Registered leave and license agreement or sale deed or lease agreement.
Please note, every time there is a change of address or change in any other detail furnished to the bank, the applicant will need to immediately notify it to the bank along with updated document proofs.
Proof of income:
Bank statement of the last three to six months
Salary slip and form 16 (for salaried persons)
Income tax returns (for self-employed persons)
Margin
Lenders require you to pay a portion of the price of the car, also called the margin, as the lender pays the rest, which becomes your loan value. In case of Bank of Baroda, the margin is 10% on the ‘on the road’ price of the car.
How to get a personal loan with a bad CIBIL score
With a number of lenders proliferating across the country borrowing money is no longer difficult. The number of phone calls we get on a daily basis selling personal loans is an indication of how the lenders are now chasing people to borrow.
However, it may be easy to borrow money as far as you are able to repay it. The moment you start defaulting on the loans, trouble starts. Even a delay in payment would mean trouble for the borrower.
A delay or default in repaying a loan affects what is called a bad credit score measured in India as CIBIL score. This score is very important for a personal loans as compared to any other form of a loan.
A personal loan is an unsecured loan which means the lender is taking a higher risk based on certain financial track record of the borrower.
The CIBIL score measures your credit worth. The range of the score is usually between 300 and 900. The closer the score is to 900 the better it is for the borrower while a score closer to 300 would mean that getting money from the official route will be difficult. Lenders are generally comfortable lending money to people with a CIBIL score of over 725.
Your CIBIL score depends on various factors concerning your borrowing track record. It does not depend on your salary. How you have financially behaved after taking a loan is the main -basis of CIBIL score. Defaults and delay, - can bring your CIBIL score down. More than any other loan CIBIL score is paramount in personal loans.
So does it mean that a person with a low CIBIL score has no option of getting a loan?
This may not always be the case. However, chronic defaulters would have trouble raising money from the official channel. But occasional delays or defaults can be managed.
Here are some of the ways in which one can raise money through personal loans despite a low CIBIL score.
Improve your income stream
In order to get incremental personal loans, the lender has to be satisfied that you have the ability to repay the loan. A new source of funds or a salary increment will go a long way in convincing the lender that there is enough cash flow to support a new loan repayment. One will have to convince the lender that the new income stream is a regular one and not a one-time income. Any documentary proof like a contract with the vendor from where the borrower is getting money will help in building up the case.
Even if the lender may see merit in the story they may agree to lend on a higher interest rate than the market rate along with some additional charges.
Go in for a smaller loan
Asking for a bigger loan after having a low CIBIL score will scare away any lender. A smaller loan with an adequate income stream may convince him to risk a small amount. Taking a small loan and repaying it regularly will not only convince the lender but also help improve your CIBIL score.
Collateral loans
While personal loans may be difficult, but not impossible despite a low CIBIL score, one can go in for a Collateral loan.
Loan against shares, gold loans, - Term deposits is easier to get despite a lower CIBIL score. The lender is comfortable that they have collateral as a guarantee against any defaults. In such cases, the CIBIL score does not matter. On the other hand, a regular payment on these loans can help in improving your CIBIL score.
How to remove car loan hypothecation after car loan repayment?
A secured loan is a loan in which an asset is hypothecated to the lender. Since the lender finances the purchase of the asset, the original purchase papers of the asset are with the lender. When it comes to purchase of a home, the asset’s ownership shifts to the borrower once he has completely repaid the loan. In gold loans, the gold is left under lock and key with the lender. Once the loan is repaid, this gold is given back to the borrower. However, it is not the same when it comes to a car loan.
In a car loan, the car purchased is hypothecated to the lender. The lender pays the funds to purchase the car. However, a car also has to be registered with the Regional Transport Office (RTO) before it can be driven on the road. In such a case, the name of the lender appears on the registration certificate (RC) of the vehicle/ in the records of Regional Transport Office. This means you need to take a few additional steps once the car loan is repaid for car loan hypothecation removal. Once the car loan hypothecation is removed and the car’s ownership is completely in your name, then you will have a clear title and ownership to your car. This is especially important while getting insurance. In case anything happens to the car, the Insurance claim will go to the owner of the car, which in case of hypothecation, will be in favor of the lender.
This is why car loan hypothecation removal is important.
How to remove hypothecation from RC after car loan repayment/termination:
Step 1: Repayment of car loan
In the hypothecation agreement of car loan, the name of the lender appears as the owner for the car. To start the procedure for removal of the lender’s name, you need to repay the car loan completely. The loan must be paid off and a nil balance must appear in the lender’s books.
If you are planning to prepay your car loan, it is better to inquire with the lender about their prepayment charges and conditions. Sometimes lenders have prepayment charges on these loans and this can go up to 2%.
Once you’ve completely paid off the loan, you need a no dues certificate from the lender. This certificate will state that you have completely discharged the dues to the lender.
Step 2: Collection of documents from the lender
Once the loan is repaid, the lender will give you the no dues certificate. Along with this, you need to collect:
No objection certificate:
This certificate states that the lender does not have any objection with car loan hypothecation removal. One important point to remember is that you must take multiple copies of the No Objection certificate. This No Objection certificate will need to be submitted to the RTO and to the Insurance company. You will also need one copy for your own records. Usually, the no objection certificate is valid for 3 months. So, you must approach the RTO immediately after you get the no objection certificate.
Form 35
This form is a notice of termination of hypothecation. This form also has to be made in triplicate or in 3 copies. Each state usually has its own format for this form which can easily be found online or at the RTO.
Step 2: Submission of documents to the RTO
Once you have the documents from the lender, you need to visit the Regional Transport Office or the RTO with a set of documents that includes:
Original form 35 signed and stamped by the borrower and bank
Original Bank No Objection Certificate
Attested copy of PAN
Attested copy of insurance policy of car
Original Registration Certificate
Address proof
Copy of Pollution Under Control (PUC) certificate
These documents will have to be submitted to the RTO. If your address does not match the address in the registration certificate, you will need to submit Form 33 which is for change of address.
Once you submit these documents to the concerned officer at the RTO, they will get them verified. You need to pay the respective fees to get the process completed. The officer will give you a time and date on which you can collect your updated Registration Certificate (RC)
Step 3: Collect your updated Registration Certificate
The date and time for the visit will be specified when the documents are submitted. When you visit the RTO on the specified date, you will get the updated RC. If there are any mistakes in the details, you can get them corrected and collect the RC on a future date. Once you collect your updated RC, you will have completed all car loan hypothecation removal formalities.
The 3 Easy Steps to Calculate EMI on Personal Loan?
A personal loan does not require the borrower to provide collateral and so it is an unsecured loan. Since these are unsecured loans, the rate of interest on these loans are believed to be quite higher than all other types of loans. The purpose or intention of a personal loan is to fund immediate financial contingencies. It could either be for business capital, marriage, education or even foreign trips, though the end use of the loan really depends on the borrower, as long as it is for a legitimate financial need.
Before you apply for a Personal Loan, you may want to get down to the basics, to shop for the best offers on personal loans in the market. Among the most popular ones is the Bank of Baroda’s Personal loan product which apart from having the pedigree of belonging to one of the oldest and largest Indian banks, comes replete with some amazing features like flexible repayment options, affordable EMIs (Equated Monthly Instalments) that sit easy on your pocket and sizable loan amount among others in the category of personal loans.
Calculating the EMI on personal loans
The EMI calculations mainly rely on three variables- the loan term or the tenure of the loan, the loan value and the rate of interest. The rate of interest is one of the aspects that comes determined by the bank.
Calculating using the PMT formula
This is a longer, tedious and round about approach to calculating the EMI on your personal loan. Here, you can run the PMT formula on Microsoft Excel to calculate the EMI, where
PMT is your EMI,
NPER or number of periods is the total number of payments for the loan
PV is the loan value or the principal
Rate is the rate of interest/12
The formula is
PMT (Rate, NPER, pv).
You can keep trying the formula for various combinations and then choose the one with the lowest EMI, though this is a roundabout approach that could be prone to human error.
Online EMI Calculator
Or a far easier option to calculate the affordable EMI, is using, for example, Bank of Baroda’s online personal loan EMI calculator.
Here, you will find a slider on the range of each of the three basic variables on your screen- the loan amount you are likely to need, the tenure or the repayment period of the loan that suits your finances and the rate of interest.
Now, the rate of interest is what you get from the bank, while the other two aspects, i.e., the loan amount and the tenure of the loan are the ones you can play around with here.
When you place the cursor on a particular value of the loan term, rate of interest and loan amount, the calculator throws up a monthly payment value, which is your EMI. You can move the cursor horizontally along the range provided to pick the various values.
Here’s why using a Bank of Baroda personal loan EMI calculator works.
If EMI is too high
You can pick a longer loan term or
You can make the loan amount smaller.
If you find the EMI is affordable or even lower than ideal then you can plan to repay faster by either
Taking a larger loan value or
A shorter loan term.
What Is A Personal Loan
A personal loan does not require the borrower to provide collateral and so it is an unsecured loan. The purpose or intention of a personal loan is to fund immediate financial contingencies. It could be for business capital, marriage, medical expenses or even foreign trips, though the end use of the capital really depends on the borrower, as long as it is for a legitimate financial need.
Eligibility for a personal loan?
Since these loans are unsecured- at what rate of interest you will get the loan and how much, whether or not you will get the loan-depend on the credit quality of the borrower. If you have good creditworthiness, you are likely to get the loan at an attractive rate of interest. If you have been a long time customer with the bank, with sound track record of financial discipline, you may also get a pre-approved personal loan sanction.
Bank of Baroda lists the following types of employees/self-employed individuals who are eligible for personal loans.
Employees of Central / State Govt. / Autonomous Bodies/ Public / Joint Sector Undertakings, Public Limited Co. / MNCs & Educational Institutions – with minimum continuous service for 1 year
Employees of Proprietorship, Partnership firms, Private Limited companies, Trust - with minimum continuous service for 1 year
Insurance Agents- doing business for minimum last -2- years
Self Employed Professionals (Doctor, Engineer, Architect, Interior Designers, Tech. and Management Consultants, Practicing Company secretaries etc) -- with minimum 1 year stable business.
Self Employed Business persons - with minimum 1 year stable business.
Some of the benefits of a personal loan are
Urgent financial requirement
If there is an immediate need for money, personal loans are the best option. They are considered better than credit cards or loans from family members or unorganized lenders, since the rate of interest is reasonable and the lender is a credible organization. Credit cards come with strict credit limits, which is not the case with personal loans. Funds taken from the bank as personal loan also resolve the issue of certain vendors not accepting payment through credit cards.
Breathing time for repayment
Also, the credit card bills need to be paid off by the due date which generally falls in the next month whereas you get some breather in repaying a personal loan EMI over a period of time, generally ranging from 3-4 years.
Flexibility of use
Funds from a personal loan are flexible in the way you use them. They can be used for several purposes- home renovation, travel, wedding and medical expenses or for any other purpose as per one’s personal obligations..
Loan amount
The loan amount you can borrow under a personal loan is also significant. For example, with Bank of Baroda offer personal loan amounts based on the eligibility of applicants
Confidential
Personal loans may also be private loans since these loans are often used to meet cash requirements or personal contingencies and thus kept private to a great extent.
Flexible repayment structure
These loans are generally of the nature of short to medium term loans and come with a flexible repayment structure.
Easy to get
For example, Bank of Baroda is popular for personal loans that are quick to get, fast processing, minimal documentation required and offered at attractive rate of interests. Most salaried persons, self-employed and professionals can apply for these personal loans.
What is an EMI?
A loan is always taken for a specific purpose, be it a housing loan, an automobile loan, an education loan or a personal loan. Whenever a loan is taken it has to be returned to the lender. These repayments are done in a specific format where the amount is deducted from the borrower’s account on a particular day of every month. The amount so deducted is also pre-decided and depends on various factors. This standardised deduction in financial terms is called as Equated Monthly Instalment or EMI.
The value of the EMI depends on four main factors. These are the amount borrowed, the rate of interest to be charged on the amount borrowed and tenure for which the loan is borrowed and the type of loan fixed or floating. If the loan is a floating one then there is one more component that affects the EMI which is called ‘Rest’.
All other parameters being equal higher the principal amount borrowed higher will be the EMI. Similarly, a higher interest rate would mean higher EMI, all other things being constant. If the amount borrowed and the interest rate is constant then a higher tenure would mean lower EMI and a lower tenure would mean higher EMI.
In the case of both the fixed and floating interest rate loan, in the first EMI outgo, the interest rate component is the highest and the principal is the smallest. By the time the borrower reaches the last EMI, the interest component is the smallest and the principal is the maximum.
In case of a fixed interest loan, the EMI remains the same throughout the period of the loan. While in the case of a floating interest rate loan, the borrower has the option of reducing the EMI amount periodically as per change in the interest rate or allowing the EMI to be constant and the period to reduce.
The borrower has the option of part prepaying his loan. Whenever this happens the option available to him is to either ask the lender to reduce his EMI amount from the date of repayment or to let the EMI amount remain the same but reduce the period of the loan.
In the case of a housing loan, the interest and principal that is being paid through EMI, is summed up at the end of the financial year to calculate its impact on tax benefits that the borrower can avail of.
In case a borrower defaults on any EMI the lender will impose a penalty on the non-payment or late payment that was missed/delayed..
In the case of regular - non-payment of EMIs, lenders will be taking more severe action to recover their money and the CIBIL score of the borrower is adversely effected, resulting in adverse effect on credibility of borrower for future loans.
The good part about EMI is that the borrower knows exactly the amount that will be going out from his bank account and on which date it will be deducted. The lender also benefits knowing the cash flow that will be coming into his account every month.
What is the best age to go for a Home Loan?
Buying a home is a dream for every individual across the globe. The only problem is affordability. Buying a house needs to fit the budget. One’s dream need to be realistic in order to achieve it.
From a lender’s point of view a person becomes eligible for loan if he is earning a sufficient income from a legitimate source. He has to have a steady source of income and enough saving after taking care of the regular expenses and other loans as he has, to repay the equated monthly installments (EMI) of the home loan. These factors are known as creditworthiness of the borrower and credit behavior of a borrower is assessed in India by what is known as CIBIL score.
The CIBIL score takes into account the credit history of the person, whether he had defaulted on his loans earlier and similar other points.
Another point that comes up is age which decides the tenure of the loan that is relevant for purchasing a property.
Age in isolation is not a factor, what the lender would also like to look at is the earning and repayment capacity of the person, quality of the property he is planning to buy and the loan amount he is seeking.
Let’s take the case of a house property which is worth say Rs 75 lakh which includes all taxes and statutory charges. Assume that the lender is willing to fund 80 percent of the amount, which in our case is Rs 60 lakh.
Now, let’s consider three person aged 25, 35 and 45 who approach the lender for the loan on this property.
These days the younger generation gets a good starting salary especially if he has a good education or is a professional. In our case let’s consider an average individual.
Clearly, a 25 year old person can take the loan for the longest period possible, which in India can be around 30 years. The middle-aged person can be eligible for the loan for 20-25 years. The eldest individual will get a loan with a tenure of 10-15 years maximum. The lender would consider the useful working life of the borrower before fixing a tenure.
Lenders generally hesitate to lend a housing loan to an elder person. Part of the reason is the limited working life he has in front of him and secondly because his obligations increases with age. Children’s higher education needs to be funded, their marriage and medical cost associated with him and his spouse which can lead to cash flow mismatch going forward.
However, if the older person has a strong income stream and needs money for a shorter tenure, lenders would be interested in it. They may or may not ask for more collateral against the property since in a small tenure window price fluctuations can act as an added risk.
Or they may consider taking a higher down payment which would mean a lesser exposure and time risk for the lender.
Another way the older person can improve the chances of getting a loan is by applying for it with a co-borrower. This way the risk of the lender is reduced and there are more than one income stream to take care of the EMI payment.
There is no fixed and ideal age for taking a home loan. Finally what matters is the affordability. As a rule of thumb the EMI outgo should not exceed 30 percent of the income. Anything higher would put stress on the financials of the individual.
Financial markets in India have now matured offering an individual multiple avenues of raising money. Having said that, assets like a home is best bought as early as possible in one’s life since after this he can concentrate on wealth creation.
Why is a CIBIL Score Important?
Started in 2000, CIBIL or the Credit Bureau is an authorized credit information company that tracks debt repayment history and provides a credit score accepted by a vast network of financial institutions as a valid benchmark to examine a potential borrower’s credit quality. Here’s why a CIBIL score is important:
Lender considers the CIBIL score before approving a loan
The information collected and maintained by the bureau is gleaned from data collected from banks and other lending institutions on a monthly basis. On the basis of this data, CIBIL issues a score. This score is shared with the lenders on request, when an applicant applies for a loan.
What is an ideal credit score?
The range is from 300 to 900. Any score higher than 750 is a decent credit score. If an applicant has a credit score higher than 750, he/she is likely to get the loan approved and may get an attractive rate of interest. A loan application may be rejected if the credit score comes out to be too low.
How to source your CIBIL report?
Apart from a CIBIL score, you can also get your CIBIL credit information report. The report details the credit quality of your auto loan, home loan, credit card, over draft facility and personal loans. It carries your personal details, employment details and account information. The procedure to source your CIBIL report is exactly the same as getting your CIBIL Score.
Components of the CIBIL report
CIBIL Score
The first part of your CIBIL report has your CIBIL score, which is a value between 300 and 900. A score closer to green that is above 750 is preferable.
Personal information
Another section contains your personal information like name, date of birth, PAN number, Passport details and gender.
Contact information
The contact Information segment will capture all your address and contact details.
Employment information
The employment section will provide details about customer’s income and occupation at the time of a previous loan sanction.
Account information
An important section of the report is the account information which details the material about the borrower’s credit cards, loans, name of the lender, type of loan (whether secured or unsecured) and all the accounts held by the borrower.
Consumer Dispute Remark
The borrower can also put in their remarks about a particular loan transaction in the Consumer Dispute Remarks for evaluators to see every time the credit report is opened for assessment. The comments are presented for a year.
Your Complete Guide -To The Home Loan Disbursement Process
Now that you have a thriving career, you are done living on rent. You have already picked your dream house.You have also narrowed down on the bank that you want to borrow your home loan from-like for example Bank of Baroda, based on low attractive interest rates, flexible EMI options and speedy processing and simple straightforward documentation. Now before you approach a financial institution, it helps to know how a home loan is disbursed. Here is a simple guide to the home loan disbursement process where we discuss the three stages of home loan disbursement.
Type of home loans
How the bank makes the disbursement really depends on what stage of construction the real estate property is at. If it is a resale or a fully constructed house, the bank may make full disbursement at one go but if it is partially constructed then the disbursement may also be done in tranches. Bank of Baroda home loans can be availed for different types of residential properties and purposes like
Purchase of a recently constructed house
Resale
Purchase of Residential Plot land
Construction of house
Home improvement/extension of rooms and area
The three home loan disbursement stages are:
Applying for the loan
First stage is the submission of the home loan application along with relevant original documents. The documents you would be required to submit include
Passport size photographs
Proof of identity, residence and age
Proof of office/business address
Bank statements of the last 6 months
Copy of Income Tax Returns of the last 2 years
Proof of investments such as insurance, fixed deposits or shares and stocks
Pay slips of the last 3 months for salaried persons
For business owners/self-employed persons: Verified copies of Balance Sheets, Profit and Loss accounts, IT Return, assessment orders, advance tax challans, (for both company/firm and personal account), VAT/GST Returns for the last 3 years
Copy of documents related to the property to be purchased
Home loan sanction
Once the application is submitted with the financial institution, the second stage is that of sanction and disbursement. The loan application will also go through technical and property verification, accompanied by inspections.
You receive the confirmation through a home loan disbursement letter, which is when you know that your loan application has been cleared. In the event that your loan application is incomplete or some documents relevant for the sanction are missing, you would be asked to furnish those before your loan is sanctioned. Documents like own contribution receipt, NOC or no objection certificates and sale deeds are legally examined by the bank’s legal experts. Once the lawyers approve of the legitimacy of the documents served, the loan application goes to the next stage of final approval.
Repayment schedule, down payment amount and dates
The bank officer will obtain the receipt of the down payment made by you and confirm the date when the first installment must be paid. Once the documents like the Credit Facility Application Form have been processed, the amount will be disbursed in single payment or in tranches..
Based on impressive credit scores of some of the old time borrowers, banks may also offer them pre-approved home loans.
Home Loans for Women (Benefits)
All of us dream of become homeowners. It is a way of ensuring lifelong financial security; the kind that does not come from living in a rented home. But buying a home is a complicated process. Whether it is years of savings to be given as down payment, or finding the right locality to invest in; the process of buying a home is elaborate. And since property investments take a huge chunk of savings, most of us rely on home loans, which often last for over 2 decades. However, women borrowers have it a bit easy thanks to government home loan schemes for women. Let’s find out how women can benefit from home loans designed for them.
Reduced Rates of Interest
If you’ve ever purchased anything on a loan, you will know that even a point’s difference in interest rates can amount to a lot of savings. If your interest rate on the loan is high, you always end up paying more. In such a case, even a slight reduction in interest rates can make a lot of difference. This also affects your monthly EMI which is further reduced. Under the government scheme, home loan interest rates for women are reduced by 0.05% by most banks in the country. While this may seem like a small percentile, consider the following example:
Let’s say you take out a home loan of ₹50,00,000 form a bank for a tenure of 20 years. The bank offers an interest rate of 8.65% to its male borrowers and 8.60% to its female borrowers. In this case, the interest outflow for men is ₹55,28,083, but due to the reduced 0.05%, the interest outflow for women is ₹54,89,953. As a result, the savings in interest outflow for women borrowers’ accounts for ₹38,130.
Reduced Stamp Duty Charges
Stamp duty forms a part of the property cost, and the reduced interest rate can make a huge difference in reducing stamp duty charges too. Most lenders provide 80%-90% finance on home loans, with a set percentage of money paid in stamp duty char.ges. But as per the home loan subsidy for women, a concession of 1%-2% is typically applicable on stamp duty charges. If a woman purchases a property worth ₹50,00,000, she can save ₹50,000 to ₹1,00,000 on stamp duty charges alone.
Tax Benefits
Both, male and female borrowers are eligible for tax deduction on home loan repayments. The maximum tax deduction permitted in principal and interest repayments is ₹1,50,000 and ₹2,00,000 respectively. If a woman borrower applies for a home loan along with her husband, she can receive tax deduction in equal measures.
Longer Repayment Tenures
While male borrowers are typically provided with loan repayment tenures of 20 years and a maximum age of 65 years to repay the loan, whichever is early; home loans for women are offered for tenures of up to 30 years or up to 70 years of age of the borrower, whichever is early.
Keywords Used
Home loan for women, home loan subsidy for women, home loan interest rates for women, government home loan schemes for women.
Difference Between Credit Card & Debit Card
4 Differences between Credit Card and Debit Card
When you open a bank account, you are provided with a cheque book, a passbook and an ATM-cum-debit card, also known simply as a debit card. After you’ve held your account with the bank for some time, the bank may even offer you a credit card. However, many people are often confused about the difference between debit and credit card and often assume them to be the same. So, we’ve listed the differences to help you understand. Let’s start with understanding the meaning of each card.
What is a debit card?
A debit card is a card that is linked with your savings or current bank account. When you open your bank account, the bank issues a card that you can use at ATMs and PoS terminals to withdraw money or pay for your expenses, respectively. The sums are automatically and instantly debited or deducted from your debit card. Banks provide free debit cards and charge a small annual maintenance fee.
What is a credit card?
A credit card is another type of bank card through which you can borrow money for a bank or financial institution. The issuer provides you with a line of credit, also known as a credit limit. This limit is determined based on your income and can be increased from time to time. The issuer bills you for your credit card expenses, and you need to pay them off by a stipulated date. If you fail to repay the sums borrower on credit, the issuer levies an interest rate on the money borrowed.
Credit card vs debit card
Having explained the meanings of credit and debit cards, let’s find out what is the difference between credit card and debit card. They are as under:
Bill vs account statement
People who have a credit card are sent a bill for the expenses incurred on the card each month. The issuer sends a bill explaining the minimum and total sums due. In the case of debit cards, the account holder can directly access the savings account to see the expenses incurred.
Linking the card
The debit card is linked to your savings account, whereas the credit card is linked to the financial organisation or issuing bank offering the credit facility.
Credit vs spending limit
Typically, credit card companies provide a credit limit, and you cannot borrow sums exceeding the credit limit. In the case of debit cards, banks issue daily cash withdrawal as well as PoS spending limits.
Interest charged
The credit card issuer levies an interest rate if one is unable to repay the amounts borrowed on time. However, in the case of debit cards, money is not borrowed on credit, so no interest is charged.
Apart from the points mentioned above, a significant aspect of difference between debit and credit card is that debit cards are provided free of charge by the bank. In contrast, credit cards may be availed through an application or by invitation only.
Education Loan Tax Benefit
All You Need to Know About Education Loan Tax Benefits under Section 80E of the Income Tax Act
Investing in a sound education has always been considered a worthy investment. A good degree can set you on the path of financial independence. But the costs associated with achieving a higher education degree cannot be ignored. As the cost of education continues to sky-rocket, students have little choice but to take out an education loan. Thankfully, the government offers some respite on education loans in the form of education loan tax benefits. Here’s all you need to know.
Section 80E of the Income Tax Act of 1961
Students intending to take a loan for higher studies, also known as an education loan, can avail tax deductions under Section 80E of the Income Tax Act of 1961. This section of the IT Act specifically caters to education loans. Students may avail education loan tax exemptions for pursuing higher education in India or abroad.
Students who’ve opted to go abroad for higher education often incur higher expenses as compared to those pursuing higher degrees in India. Apart from paying high tuition fees, they also have to incur costs such as boarding or dormitory charges, travel costs, purchasing study materials and equipment (engineering boards, laptops, etc.) Keeping all these expenses in mind, the government introduced Section 80E of the IT Act. Under this section, students can avail some relief in repaying the interest component of their education loan.
What is covered under Section 80E?
Under Section 80E of the IT Act, students can avail income tax benefit on education loan, when they become taxpayers. The tax benefit is extended on the interest portion of their education loan under Section 80E. The 80E specific deduction does not apply to the principal loan amount. While calculating the annual taxable income, students can deduct the entire amount paid as interest, while repaying the loan, i.e. the interest amount paid against the education loan is not taxed. You can avail deductions on the entire interest component of the loan.
Terms and conditions under Section 80E
To avail education loan deduction in income tax under Section 80E, you need to consider the below terms and conditions:
You can avail tax deductions on education loans taken on behalf of your children (biological and adopted) or your spouse.
Under 80E, you may also avail the deduction if you are the legal guardian of the student.
You can avail 80E deductions only if you’ve applied for the loan from a recognised financial institution like a bank or an NBFC, or a charitable institution.
You may not avail 80E deductions if an employer or a relative sanctioned the loan.
80E deductions are applicable only for individuals availing the loan and not Hindu Undivided Families (HUFs). Companies or firms can also not avail 80E deductions.
Final word: Today, most students have to rely on education loans to get into a good school. Keeping this in mind, the government also offers student loan tax deductions of ₹150,000 on the principal loan amount under Section 80C of the IT Act.
How to Claim Car Loan Tax Exemption ? | Bank of Baroda
Introduction:
Cars are considered a luxury product in India and many people avail loans to purchase their dream cars. But did you know that you can avail car loan tax benefit?
Yes, you read that right. Much like the education and home loan, car loan benefits in income tax. While cars purchased for personal use may not have car loan tax exemption, if you are a self-employed professional or business owner using the car for business purposes, you can claim exemptions. Loans on personal use cars are not eligible for tax exemption as cars are considered luxury products.
However, if you are a businessman/ woman and have taken a loan to buy a car for your business, you can claim the interest you pay as business expenses. The interest you pay in a year towards your car loan can be deducted from your taxable income. Apart from the interest deduction from taxable income, you are also eligible to claim tax benefits on the depreciation of your vehicle.
How to claim car loan benefits in income tax
In simple terms, if you are a business or are self-employed and you take a loan to buy a car for your business, you are eligible for tax deductions. How does tax rebate on car loan work?
For example, you own a business and have taken a loan for a car for your business. For this, you take a loan of Rs15 lakh at 12% for a year. Now let us assume your total taxable income, from your business, is Rs 25 lakh. You can then deduct 12% of Rs 15 lakh (Rs1.8 lakh) from your taxable income while filing your tax returns.
So when you are claiming tax rebate on car loan, deduct the interest you have paid towards your car loan in that year from your taxable income. The interest paid can be added as a business expenditure.
There are other ways to save taxes on car purchase, even if you have not sought a loan to buy the car. You can do so by showing your car as a depreciating asset for your business. You can add the depreciation as a business expense, too. The upper limit for depreciation is set at 15 % in a year.
Conclusion
For salaried individuals buying car for personal use, there is no car loan tax benefit. However, self-employed individuals or businesses can claim tax deductions for loan on car used for business purposes. While availing these tax benefits be sure that the car is being used for legitimate business purposes.
Know more about prepayment of a home loan!
If you are looking to reduce your debt burden, you should consider prepayment of home loan. As soon as your finances improve, you can choose to finish your home loan, either in part or in full. If you repay your home loan completely or in part before the scheduled tenure, it is called prepayment of home loan.
While most banks allow for a prepayment of home loan, some banks may charge a small fee for pre closure. It is, therefore, advisable to consider all the pros and cons of foreclosure before taking the plunge.
Who is eligible for a prepayment of home loan?
All home loan borrowers are eligible for pre closure, as long as their bank offers this facility. You can ensure that you have the option of prepayment of home loan at the time of taking the loan.
Most banks do not encourage prepayment as it causes a loss to them. When you decide to pay off a loan ahead of schedule, banks incur additional costs for rerouting the funds through credit channel. Therefore, banks may impose a fine for preclosing your loan.
That said, you are well within your rights to foreclose your loan—in part or full—if it gives you long-term benefit. If, even after paying the fine, you are saving on the interest you pay every month, it is worth foreclosing the loan.
How to do prepayment of home loan?
There are many ways in which you can prepay your home loan. You can either go all out and completely repay the loan ahead of schedule or you can pay off a part of your debt. You can also work on a combination of the two.
Start small, go up gradually: One way of prepaying your home loan is starting with a small prepayment in the beginning of the loan and to increase this amount every year at a constant rate. You can do so by saving through the year and spending your savings on prepayment.
Fixed prepayment: You can do this by prepaying a fixed amount towards your principal every year. This you have to do over and above your EMI payments. Plan your expenses through the year and make a fixed saving every year. Spend this saving on prepayment to reduce principal.
Higher EMI: Another way of reducing your principal is by paying more than your calculated EMI. Every month make a payment that is slightly higher than your EMI. This goes a long way in reducing your debt burden.
Full repayment: If your finances have improved tremendously or if you have been able to mobilise a large sum of money, you can completely pay off your loan ahead of your tenure. You may, however, have to pay a fine for full prepayment of home loan.
Home loan prepayment rules
The Reserve Bank of India (RBI), from time to time, revises the rules it has set for “Levy of foreclosure charges/ pre-payment penalty on Floating Rate Loans”. It specifies the conditions in which banks and housing finance corporations (HFCs) can charge prepayment charges.
When are banks and HFCs allowed to charge prepayment fees:
Home Loan is taken by non-individuals: When a company or firm borrows funds in the form of housing loan, it is not exempt from foreclosure charges.
Fixed-Rate Home Loan: If you have taken a fixed rate home loan, you will be levied a foreclosure charge for prepayment of home loan. A fixed-rate loan is when the rate of interest is the same throughout the loan tenure. Both banks and HFCs are allowed to levy a penalty on foreclosure of home loan. HFCs, however, can charge a penalty only if you are repaying the loan by borrowing from another bank or HFC. HFCs cannot charge any prepayment penalty if you prepay the loan with your own funds.
Dual rate home loans: Banks are allowed to charge a penalty for foreclosing a dual rate home loan, which is a combination of fixed rate and floating rate of interest. In such cases, the interest rate is fixed for the first few years and then becomes variable.
When are banks and HFCs not allowed to charge prepayment fees:
Floating rate home loan for individuals: Home loan prepayment rules state that prepayment charges or penalties are not levied on borrowers for taking a floating rate home loan. No extra charge is levied on either part or full payment of the loan.
Paying fixed rate home loan from HFCs with own funds: HFCs can not charge prepayment penalty on fixed rate home loan if the individual is repaying with his/ her own funds.
Dual rate home loan: Both banks and HFCs cannot charge a penalty if the borrower prepays the loan after it has shifted to variable rate scheme and has become a floating rate loan.
Prepayment of home loan may not always be the right decision. Only if the long-term benefits surpass the penalty to be paid, should you consider prepaying your loan. If you plan your prepayment well, you may be able to save a lot on interests.
What Is Overdraft Facility? All You Need To Know!
When you open a bank account, you are provided with a bouquet of financial services. The bank provides a cheque book and a passbook to help you manage and maintain your accounts. Furthermore, you are provided with an ATM cum debit card, net and mobile banking facilities and so on. The bank also offers a financial service known as the overdraft facility. But what is overdraft facility? Here’s all you need to know.
What is overdraft facility in bank?
Overdraft facility is a financial facility or instrument that enables you to withdraw money from your bank account (savings or current), even if you do not have any account balance.. Like any other credit facility, the bank levies an interest rate when you avail the overdraft facility. You typically have to pay a fixed interest rate to avail an overdraft limit.
What are the features of the overdraft facility?
Having explained what is overdraft limit, let’s find out its features. These are as under:
Banks offer overdraft facilities over a pre-determined limit, which may differ for every borrower.
Overdraft limit account is a running account in which you can deposit/ withdraw amount anytime up to the specified limit.
The bank levies the interest on the overdraft amount used by the borrower at predefined rate. The interest is calculated daily and billed/debited to your on monthly basis. The interest amount increases if you default on paying the due overdraft amount.
Unlike most loans wherein you have to pay a prepayment penalty for repaying the loan before tenure; banks so not levy any prepayment charges on overdraft limits. You can pay off the overdraft amount cumulatively without incurring any prepayment penalties.
You can repay the overdraft, in different amounts, whenever you have the money. The system of EMIs, which is prominent with most loans, does not exist in the case of overdraft limits.
While there is no minimum monthly repayment schedule in the case of overdraft loans, the amount owed by you should be within the overdraft limit.
Joint borrowers may avail overdraft limits. However, both the applicants are equally responsible for repaying the sanctioned Overdraft limit
Different types of collateral accepted by banks against overdraft loans
Overdrafts against your house or property
Overdrafts against your fixed deposits
Overdrafts against your life insurance policy
Overdrafts against your equity holdings
Overdrafts against your salary
Final word: As is evident, the overdraft facility is one that can truly help you when you need money. Banks also fix decent repayment tenures, so that you can repay the overdraft loan flexibly. However, before availing this facility from your bank, you must ensure that you find out the overdraft facility advantages and disadvantages and then proceed with the limit.