26 questions one needs to know about Electronic clearing service!

What is Electronic Clearing Service, ECS

As the name suggests, electronic clearing service, ECS is an electronic process through which money can be transferred from one bank account to another. According to RBI, this mode is usually used for regular payments and receipts, like distribution of dividend, interest, salary, pension etc. This mode is also used for collection of bills for telephone, electricity, water, various types of taxes, payment of EMIs, investments in mutual funds, payment of insurance premium etc. 


There are two types of ECS, like most other banking transactions, ECS credit and ECS debit. 

Electronic clearing serviceAn ECS credit is used by a bank account holder, usually a large company or an institution for services like payment of dividend, in terest, salary, pension etc. If your mutual fund pays you dividend to your bank account, of all probability it is being paid through ECS credit.


ECS debit, on the other hand, is used when a company or an institution is getting money from a large number of people. 

For example if you are investing in a mutual fund scheme through systematic investment plan (SIP), and every month a fixed amount of money goes out of your bank account, it must be through the ECS debit process.This could be used for payment of utility bills like electricity, telephone etc.


Electronic Clearing Service, ECS
Electronic Clearing Service, ECS


Q.1. What is Electronic Clearing Service (ECS)?

Ans : ECS is an electronic mode of payment / receipt for transactions that are repetitive and periodic in nature. ECS is used by institutions for making bulk payment of amounts towards distribution of dividend, interest, salary, pension, etc., or for bulk collection of amounts towards telephone / electricity / water dues, cess / tax collections, loan instalment repayments, periodic investments in mutual funds, insurance premium etc. Essentially, ECS facilitates bulk transfer of monies from one bank account to many bank accounts or vice versa. ECS includes transactions processed under National Automated Clearing House (NACH) operated by National Payments Corporation of India (NPCI).

Q.2. What are the variants of ECS? In what way are they different from each other?

Ans : Primarily, there are two variants of ECS – ECS Credit and ECS Debit.

ECS Credit is used by an institution for affording credit to a large number of beneficiaries (for instance, employees, investors etc.) having accounts with bank branches at various locations within the jurisdiction of a ECS Centre by raising a single debit to the bank account of the user institution. ECS Credit enables payment of amounts towards distribution of dividend, interest, salary, pension, etc., of the user institution.

ECS Debit is used by an institution for raising debits to a large number of accounts (for instance, consumers of utility services, borrowers, investors in mutual funds etc.) maintained with bank branches at various locations within the jurisdiction of a ECS Centre for single credit to the bank account of the user institution. ECS Debit is useful for payment of telephone / electricity / water bills, cess / tax collections, loan installment repayments, periodic investments in mutual funds, insurance premium etc., that are periodic or repetitive in nature and payable to the user institution by large number of customers etc.

Q.3. At how many places in the country is ECS Scheme available?

Ans : Based on the geographical location of branches covered, there are three broad categories of ECS Schemes – Local ECS, Regional ECS and National ECS.These schemes are either operated by RBI or by the designated commercial banks. NACH is also one of the form of ECS system operated by NPCI and further details about NACH is available at NPCI web site under the linkhttp://www.npci.org.in/clearing_faq.aspx.

Local ECS – this is operating at 81 centres / locations across the country. At each of these ECS centres, the branch coverage is restricted to the geographical coverage of the clearing house, generally covering one city and/or satellite towns and suburbs adjoining the city.

Regional ECS – this is operating at 9 centres / locations at various parts of the country. RECS facilitates the coverage all core-banking-enabled branches in a State or group of States and can be used by institutions desirous of reaching beneficiaries within the State / group of States. The system takes advantage of the core banking system in banks. Accordingly, even though the inter-bank settlement takes place centrally at one location in the State, the actual customers under the Scheme may have their accounts at various bank branches across the length and breadth of the State / group of States.

National ECS – this is the centralized version of ECS Credit which was launched in October 2008. The Scheme is operated at Mumbai and facilitates the coverage of all core-banking enabled branches located anywhere in the country. This system too takes advantage of the core banking system in banks. Accordingly, even though the inter-bank settlement takes place centrally at one location at Mumbai, the actual customers under the Scheme may have their accounts at various bank branches across the length and breadth of the country. Banks are free to add any of their core-banking-enabled branches in NECS irrespective of their location. Details of NECS Scheme are available on the website of Reserve Bank of India at http://www.rbi.org.in/scripts/bs_viewcontent.aspx?Id=2345

The list of centres where the ECS facility is available has been placed on the website of Reserve Bank of India at http://www.rbi.org.in/Scripts/ECSUserView.aspx?Id=26. Similarly, the centre-wise list of bank branches participating at each location is available on the website of Reserve Bank of India at http://www.rbi.org.in/scripts/ECSUserView.aspx?Id=27

ECS (CREDIT)

Q.4. Who can initiate an ECS Credit transaction?

Ans : ECS Credit payments can be initiated by any institution (called ECS Credit User) which needs to make bulk or repetitive payments to a number of beneficiaries. The institutional User has to first register with an ECS Centre. The User has to also obtain the consent of beneficiaries (i.e., the recipients of salary, pension, dividend, interest etc.) and get their bank account particulars prior to participation in the ECS Credit scheme.

ECS Credit payments can be put through by the ECS User only through his / her bank (known as the Sponsor bank). ECS Credits are afforded to the beneficiary account holders (known as destination account holders) through the beneficiary account holders’ bank (known as the destination bank). The beneficiary account holders are required to give mandates to the user institutions to enable them to afford credit to their bank accounts through the ECS Credit mechanism.

Q.5. How does the ECS Credit Scheme work?

Ans : The User intending to effect payments through ECS Credit has to submit details of the beneficiaries (like name, bank / branch / account number of the beneficiary, MICR code of the destination bank branch, etc.), date on which credit is to be afforded to the beneficiaries, etc., in a specified format (called the input file) through its sponsor bank to one of the ECS Centres where it is registered as a User.

The bank managing the ECS Centre then debits the account of the sponsor bank on the scheduled settlement day and credits the accounts of the destination banks, for onward credit to the accounts of the ultimate beneficiaries with the destination bank branches.

Further details about the ECS Credit scheme are contained in the Procedural Guidelines and available on the website of Reserve Bank of India at http://www.rbi.org.in/Scripts/ECSUserView.aspx?Id=1

Q.6. What is a MICR Code?

Ans : MICR is an acronym for Magnetic Ink Character Recognition. The MICR Code is a numeric code that uniquely identifies a bank-branch participating in the ECS Credit scheme. This is a 9 digit code to identify the location of the bank branch; the first 3 characters represent the city, the next 3 the bank and the last 3 the branch. The MICR Code allotted to a bank branch is printed on the MICR band of cheques issued by bank branches.

Q.7. How does a beneficiary participate in ECS Credit Scheme?

Ans : The beneficiary has to furnish a mandate to the user institution giving consent to avail the ECS Credit facility. The mandate contains details of his / her bank branch, account particulars and authorises the user institution to afford credit to his / her account with the destination bank branch.

Q.8. Is it necessary for user institutions to collect the mandates from beneficiaries?

Ans : Yes, in addition to the consent of the beneficiaries, the mandate also provides important information related to bank account details etc. which are useful for the user institution to transfer funds to the right accounts . A model mandate form has been prescribed for the purpose and is available in the ECS Credit Procedural Guidelines.

Q.9. Is there scope for the beneficiary to alter the mandate under the ECS Credit Scheme?

Ans : Yes. In case the information / account particulars contained in the mandate undergo any change, the beneficiary has to notify the changes to the User Institution so that the correct information can be incorporated in its records. This will ensure that transactions do not get rejected at the beneficiary’s bank branch due to inconsistencies/ mismatch in the data sent by the user institution.

Q.10. Can ECS be used to transfer funds to Non Resident External (NRE) and Non Resident Ordinary (NRO) accounts?

Ans: Yes. ECS can be used to transfer funds to NRE and NRO accounts in the country. This, however, is subject to the adherence to the provisions of the Foreign Exchange Management Act, 2000 (FEMA) and Wire Transfer Guidelines.

Q.11. Will beneficiaries be intimated of credits afforded to their account under the ECS Credit Scheme?

Ans : It is the responsibility of the user institution to communicate to the beneficiary the details of credit that is being afforded to his / her account, indicating the proposed date of credit, amount and related particulars of the payment. Destination banks have been advised to ensure that the pass books / statements given to the beneficiary account holders reflect particulars of the transaction / credit provided by the ECS user institutions. The beneficiaries can match the entries in the passbook / account statement with the advice received by them from the User Institutions. Many banks also give mobile alerts / messages to customers after credit of such funds to accounts.

Q.12. What will happen if credit is not afforded to the account of the beneficiary?

Ans: If a Destination Bank is not in a position to credit the beneficiary account due to any reason, the same would be returned to the ECS Centre to enable the ECS Centre to pass on the uncredited items to the User Institution through the Sponsor Bank. The User Institution can then initiate payment through alternate modes to the beneficiary.

In case of delayed credit by the destination bank, the destination bank would be liable to pay penal interest (at the prevailing RBI LAF Repo rate plus two percent) from the due date of credit till the date of actual credit. Such penal interest should be credited to the Destination Account Holder’s account even if no claim is lodged to the effect by the Destination Account Holder.

Q.13. What are the advantages of the ECS Credit Scheme to the beneficiary?

Ans : ECS Credit offers many advantages to the beneficiary–

  • The beneficiary need not visit his / her bank for depositing the paper instruments which he would have otherwise received had he not opted for ECS Credit.

  • The beneficiary need not be apprehensive of loss / theft of physical instruments or the likelihood of fraudulent encashment thereof.

  • Cost effective.

  • The beneficiary receives the funds right on the due date.

Q.14. How does the ECS Credit Scheme benefit User Institutions?

Ans : User institutions enjoy many advantages as well. For instance,

  • Savings on administrative machinery and costs of printing, dispatch and reconciliation of paper instruments that would have been used had beneficiaries not opted for ECS Credit.

  • Avoid chances of loss / theft of instruments in transit, likelihood of fraudulent encashment of paper instruments, etc. and subsequent correspondence / litigation.

  • Efficient payment mode ensuring that the beneficiaries get credit on a designated date.

  • Cost effective.

Q.15. Are there any advantages of the ECS Credit Scheme to the banking system?

Ans : Yes, the banking system too benefits from ECS Credit Scheme such as –

  • Freedom from paper handling and the resultant disadvantages of handling, presenting and monitoring paper instruments presented in clearing. Ease of processing and return for the destination bank branches.

  • Smooth process of reconciliation for the sponsor banks.

  • Cost effective.

Q.16. Is there any limit on the value of individual transactions in ECS Credit?

Ans : No. There is no value limit on the amount of individual transactions.

Q.17. What are the processing / service charges levied under ECS Credit?

Ans : The Reserve Bank of India has deregulated the charges to be levied by sponsor banks from user institutions. The sponsor banks are, however, required to disclose the charges in a transparent manner. With effect from 1st July 2011, originating banks are required to pay a nominal charge of 25 paise per transaction to the Clearing house and destination bank respectively. Destination bank branches have been directed to afford ECS Credit free of charge to the beneficiary account holders.

ECS (DEBIT)

Q.18. Who can initiate a ECS Debit transaction?

Ans : ECS Debit transaction can be initiated by any institution (called ECS Debit User) which has to receive / collect amounts towards telephone / electricity / water dues, cess / tax collections, loan installment repayments, periodic investments in mutual funds, insurance premium etc. It is a Scheme under which an account holder with a bank branch can authorise an ECS User to recover an amount at a prescribed frequency by raising a debit to his / her bank account.

The User institution has to first register with an ECS Centre. The User institution has to also obtain the authorization (mandate) from its customers for debiting their account along with their bank account particulars prior to participation in the ECS Debit scheme. The mandate has to be duly verified by the beneficiary’s bank. A copy of the mandate should be available on record with the destination bank where the customer has a bank account.

Q.19. How does the ECS Debit Scheme work?

Ans : The ECS Debit User intending to collect receivables through ECS Debit has to submit details of the customers (like name, bank / branch / account number of the customer, MICR code of the destination bank branch, etc.), date on which the customer’s account is to be debited, etc., in a specified format (called the input file) through its sponsor bank to the ECS Centre.

The bank managing the ECS Centre then passes on the debits to the destination banks for onward debit to the customer’s account with the destination bank branch and credits the sponsor bank’s account for onward credit to the User institution. Destination bank branches will treat the electronic instructions received from the ECS Centre on par with the physical cheques and accordingly debit the customer accounts maintained with them. All the unsuccessful debits are returned to the sponsor bank through the ECS Centre (for onward return to the User Institution) within the specified time frame.

For further details about the ECS Debit scheme, the ECS Debit Procedural Guidelines – available on the website of Reserve Bank of India at http://www.rbi.org.in/Scripts/ECSUserView.aspx?Id=25 may be referred to.

Q.20. What are the advantages of ECS Debit Scheme to the customers?

Ans : The advantages of ECS Debit to customers are many and include,

  • ECS Debit mandates will take care of automatic debit to customer accounts on the due dates without customers having to visit bank branches / collection centres of utility service providers etc.

  • Customers need not keep track of due date for payments.

  • The debits to customer accounts would be monitored by the ECS Users, and the customers alerted accordingly.

  • Cost effective.

Q.21. How does the ECS Debit Scheme benefit user institutions?

Ans : User institutions enjoy many benefits from the ECS Debit Scheme like,

  • Savings on administrative machinery and costs of collecting the cheques from customers, presenting in clearing, monitoring their realisation and reconciliation.

  • Better cash management because of realisation / recovery of dues on due dates promptly and efficiently.

  • Avoids chances of loss / theft of instruments in transit, likelihood of fraudulent access to the paper instruments and encashment thereof.

  • Realisation of payments on a uniform date instead of fragmented receipts spread over many days.

  • Cost effective.

Q.22. What are the advantages of ECS Debit Scheme to the banking system?

Ans : The banking system has many benefits from ECS Debit such as –

  • Freedom from paper handling and the resultant disadvantages of handling, receiving and monitoring paper instruments presented in clearing.

  • Ease of processing and return for the destination bank branches. Destination bank branches can debit the customers’ accounts after matching the account number of the customer in their database and due verification of existence of valid mandate and its particulars. With core banking systems in place and straight-through-processing, this process can be completed with minimal manual intervention.

  • Smooth process of reconciliation for the sponsor banks.

  • Cost effective.

Q.23. Can the mandate once given by a customer be withdrawn or stopped?

Ans : Yes. Any mandate in ECS Debit is on par with a cheque issued by a customer. The customer has to maintain adequate funds in his / her account with the destination bank branch to ensure the ECS Debit instructions are honoured when presented. In case of any need to withdraw or stop a mandate, the customer has to give prior notice to the ECS user institution well in time, so as to ensure that the input files submitted by the user do not continue to include the ECS Debit details in respect of the mandates withdrawn or stopped by customers. The process flow to be followed for withdrawing / stopping mandates is detailed in ECS Debit Procedural Guidelines.

Q.24. Can a customer stipulate any ceiling on the amount of debit, purpose or validity period of the mandate under the ECS Debit Scheme?

Ans : Yes. It is left to the choice of the individual customer and the ECS user to decide these aspects. The mandate can contain a ceiling on the maximum amount of debit, specify the purpose of debit and validity period of the mandate.

Q.25. Is there any limit on the value of Individual transactions in ECS Debit?

Ans : No. There is no value limit on the amount of individual transactions that can be collected by ECS Debit.

Q.26. What are the processing / service charges levied under ECS Debit?

25Ans : The Reserve Bank of India has deregulated the charges to be levied by sponsor banks from user institutions. The sponsor banks are, however, required to disclose the charges in a transparent manner. With effect from 1st July 2011, originating banks are required to pay a nominal charge of 25 paise and 50 paise per transaction to the Clearing house and destination bank respectively. Bank branches do not generally levy processing / service charges for debiting the accounts of customers maintained with them.

Pradhan Mantri Awas Yojana Credit Linked Subsidy Scheme

Pradhan Mantri Awas Yojana- Credit Linked Subsidy Scheme

Housing For all by 2022. Interest Rate Subsidy on Home Loans.

The year 2016 ended with the honorable Prime Minister Narendra Modi’s much awaited speech. The speech gave hopes to the poor, women and senior citizens. The housing policy schemes by the P.M., made easy for the poor to have a home of their own. The new policy of home loan interest rates subsidy to the needed, raised hopes in availing a home with the help of home loan. That too for comparatively lower interest rates.

So, here are more details about Pradhan Mantri Awas Yojana and Credit Linked Subsidy Scheme.

Pradhan Mantri Awas Yojana (PMAY)  – Features and Eligibility Criteria

  1. This scheme is valid in urban India (towns, cities, metros) for urban poor of income below 6,00,000/ year and age between 21 years to 58 years.
  2. Women play vital role in this scheme. A family comprising of husband, wife and unmarried children. Beneficiary should not own a pucca house either in their name or in the name of any member of their family in any part of India to receive central assistance under the Mission Meeting income criteria defined under the scheme
  3. Credit Linked Subsidy is available for housing loans availed for new construction and addition of rooms, kitchen, toilet etc., to existing dwelling as incremental housing.  The carpet area* of house should be constructed or enhanced under this scheme should be upto 30 sq.meters for EWS(Economically Weaker Section) category and upto 60 square meters for LIG(Lower Income Group) category.
  4. For identification as EWS/LIG beneficiary under the scheme, an individual loan applicant should submit self-attested certificate/affidavit as proof of income.

interest-rate-subsidy-_loanyantra-com

Credit Linked Subsidy Scheme(CLSS) – Features and Eligibility Criteria

Any citizen of India can enroll for CLSS under the following conditions. The beneficiary, at his/her discretion, can build a house of larger area but interest subvention would be limited to first Rs. 6 lakh only.

This new policy of Credit Linked Subsidy Scheme (CLSS) is applicable for the Lower Income Group (LIG) of household income less than Rs.3,00,000 and the Economically Weaker Section (EWS) of household income less than Rs.6,00,000, not only for limited square feet.

So, now let us go into details of how the CLSS scheme works.

Any eligible applicant who choose a carpet area within  60 sq.m(645 sqft) of a flat/house then the applicant gets an home loan interest rate upto INR 12,00,000/- availed from the bank.

And if any eligible applicant is applying for 2 bhk of 975 sqft super built up area which has 644 sq.ft of carpet area, then the flat might costaround Rs. 40,00,000. Now, the applicant can enjoy interest rate subsidy on housing loan for Rs. 12,00,000.

The possible ROI as per Honorable PM speech is 4% less than the current market rate for housing loans. The non subsidized interest rate follows the existing market interest rate, which is currently 8.5%.

Example for CLSS Indetail. 

If any qualified applicant having gross salary of Rs.50,000/- per month and age is 30 years, the person is eligible for 37.88 lakh for maximum tenure of 28 years tenure and 30 lakh for 15 years tenure(know more and calculate your eligibility  http://loanyantra.com/Home-Loan-Calculator.aspx ).

So, the applicant, out of Rs. 40,00,000 has to pay down payment of 20% of the market value, which is Rs. 8,00,000. For the rest of Rs. 32,00,000/-, the applicant can go for a home loan. Under Pradhan Mantri Awas Yojana (PMAY)  Credit Linked subsidy scheme(CLSS) Rs. 12,00,000 will be subsidy interest and other Rs. 20,00,000 (Rs. 32 lakhs – Rs. 12 lakhs ) go as a non subsidy which has existing market rate of interest.

Carpet Area*: Area enclosed within the walls, the actual area to lay the carpet. This area does not include the thickness of the inner walls.

NOTE : Under the Mission, beneficiaries can take advantage under one component only.

Housing and Urban Development Corporation(HUDCO)  and National Housing Bank(NHB) have been identified as Central Nodal Agencies (CNAs) to channelize this subsidy to the lending institutions and for monitoring the progress of this component. Ministry may notify other institutions as CNA in future.

How to Enroll and Apply for Credit Linked Subsidized Scheme (CLSS).

Banks have a separate application for this kind of loan. Follow the official link to  download the application. http://www.tn.gov.in/exwel/forms/app5.pdf

If an applicant can qualify under Pradhan Mantri Awas Yojana (PMAY) for Credit Linked subsidy scheme(CLSS), the applicant can apply through http://loanyantra.com partnered banks and get assured lower interest till you close the loan.

 

 

 

Affordable Housing Scheme

The central bank has increased the Affordable housing scheme, housing loan limits for priority sector loans to Rs 35 lakh from Rs 28 lakh in metropolitan centres, and to Rs 25 lakh from Rs 20 lakh in other centres.

Affordable housing loans will soon become cheaper with the Reserve Bank of India (RBI) extending the ambit of priority sector lending to loans of up to Rs 35 lakh.

The priority sector lending tag, will not only reduce equated monthly instalments on loans, but will also ensure easier access of bank credit for consumers, especially for the economically weaker sections and lower income groups.

However, the overall cost of the residential unit should not exceed Rs 45 lakh in metros and Rs 30 lakh in other centres, the Reserve Bank of India said during its monetary policy announcement on June, the 6th, 2018.
This will also align the scheme with the housing-for-all scheme of the centre.
A circular in this regard will be issued by the end of this month, said the Reserve Bank of India.

Loanyantra provides you the fastest disbursal from the major banks and financial lenders at the best interest rate and the lower interest rate. Under PMAY Scheme, the interest rate subsidy is provided to make the common man meet the sky rocketing home prices and own a home of his/her own.

To become eligible for the affordable housing scheme, and the interest rate subsidy scheme, you should know how the scheme works and where and how you can avail the scheme.

How Pradhan Mantri Awas Yojna(PMAY) will work:

PMAY Housing Scheme will work by providing central assistance to Urban Local Bodies (ULBs) as well as other employed agencies through States/UTs for

  • Building onsite Rehabilitation of the existing slum-inhabitants by commencing private participation for using poor land area as a resource.
  • By providing Credit Linked Subsidy
  • Initiating Affordable Housing in Partnership
  • Granting Subsidy to the beneficiary for individual house construction/enhancement.
  • Subsidy- 1 Lakh – 2.30 Lakh

The scheme will provide a credit linked subsidy of Rs 1.00 Lakh to 2.30 Lakh to the home buyers.

  • The subsidy will be generated by central government treasury.
  • Credit linked subsidy granted to LIG and EWS segments of urban population.
  • Credit linked subsidy interest rate is  4% below the market rate when compared with Current market rate of interest on housing loans and will last for a period of 15 years from the date.
  • Subsidiary is being implemented as a Central Sector Scheme whereas other components as Centrally Sponsored Scheme (CSS).

Technology Sub-Mission of Pradhan Mantri Awas Yojna(PMAY)

All the construction under Pradhan mantri Awas yojana (PMAY) will adopt latest technologies for building new units or apartments. Government will setup a technical cell from the Building Materials and Technology Promotion Council (BMTPC) under the Ministry to support this Technology Sub-mission.

  • Well researched layout designs and prepared building plans appropriate for various geo-climatic zones.
  • Taking up modern, innovative eco-friendly technologies.
  • Green buildings concepts using natural resources.
  • Earthquake and other disaster resistant technologies . Simple concept of designs should be adopted to ensure adequate sunlight and air ventilation.

Three Phases of Pradhan Mantri Awas Yojna(PMAY)

PMAY Phase 1: From April 2015 to March 2017, begin the development of total 100 cities that must be completed during this phase.

PMAY Phase 2: From April 2017 to March 2019, after Phase 1, the development of total number of 200 more cities will be covered.

PMAY Phase 3: From April 2019 to March 2022, All the remaining cities of India will complete its PMAY housing development process.

The Primary Features Of Pradhan Mantri Awas Yojana

  • Preference will be given to females applicants for house allotments.
  • Ground floor of the houses will give preference to physically differently abled or to senior citizens.
  • Construction developers should strictly follow eco-friendly development technologies.
  • Affordability – Grant subsidy range anywhere between INR 1 lakh and INR 2.30 lakh to LIG and EWS section of urban population.
  • 4% less rate of interest from the market value on loans.

How Loanyantra helps you in Getting the Correct Loan Product From the Right Bank –

Affordable Housing Scheme is implemented across many cities for the urban poor. Search for Affordable homes and apply for loan to get a better interest rate. All you need to do is just finish your research and finalise on property and we will take you along every step of loan process till you close the loan. Let us know your details of the project. We check your eligibility, your emi, and tenure. The banks come up with attractive interest rate. Choose a bank product after discussing with our experts. Get instant loan approval and enjoy the fastest disbursal ever. Get eligible for Credit Linked Subsidy Scheme and also extra discount form Loanyantra team. Reduce your EMI and your burden.

For more info on PMAY- CLSS with example, Please go through the below link

Interest Rate Subsidy on Housing Loans

All you need to do is just give a missed call to 040-71011991. And get a call back from the loanyantra team to proceed further with  a hassle-free approach.

 

 

RBI and Repo Rate and Bank Rate – Loan

First time in Modi’s regime, RBI has increased the Repo rate by 25 basis points which is now 6.25. Since 2014, till the recent Budget 2018, RBI either reduced the repo rate or maintained status quo. Let us know more details about how the Repo rate, home loan, personal loan interest rates are interlinked.

What is Repo Rate?

Repo rate is the rate at which the RBI lends money to the banks. As we pay interest to the bank s when we take loan, the same way the banks pay interest to the RBI when the banks take loan. So, that interest rate at which the banks pay to the RBI is called Repo rate.

Impact of Repo rate hike on banks and banks rates.

So, the repo rate increase means, the banks need to pay more interest to the RBI. So, for the banks it is time to increase the revenue. The source of revenue to banks is Public. So, banks calculate their earnings, profits and then increase their source of income from lending (home loan, personal loan, etc) by increasing the lending rates.

Repo rate hike and the Banks Home loan, auto and other personal loan interest rate hike – 

Earlier this week, some banks, including the State Bank of India (SBI), Punjab National Bank (PNB), HDFC and ICICI Bank increased their benchmark lending rates or MCLR by up to 10 basis points per cent, making loans costlier for consumers.

SBI chairman Rajnish Kumar said that it was good that the rate hike has been done with now. He does not anticipate further rate hikes this year unless global oil prices rise. “This is the time that they could have done the rate hike “ he told The Indian Express.

Every time there is a repo rate cut, SBI is the first bank to pass on the benefits to the customers by reducing the lending rates. Which is followed by other major banks like ICICI and HDFC.

This is the first time we have seen these major banks increasing the lending rates before the increase in the RBI repo rate. Hence, it is anticipated that within near period, there will not be any increase in the lending rates by the major banks like SBI, ICICI, HDFC, AXIS Bank.

The home loan interest rates were never below 9% before 2014. In the near recent times, the home loan interest rates have reached to the maximum of 8.7%.

So, it is still advantageous, for all those who want to buy home, go for home loans and get the best one that suits you better. As, though the repo rate has increased, the lending rates remain the same, atleast for a while.

Hurry and fix your loan, home, auto or any other personal loan at the best interest rates ever. Do your research with Loanyantra.com., know the interest rate trends, and the market trend. Get the best fit loan from your favourite lender. All you need to do is just give a missed call to 040-71011991. Our relationship manager calls you and you can discuss in detail and get the best product with low interest rate.

 

Home Loan Interest Rate

What is Home Loan Interest Rate?
Home Loans have become the best medium to buy homes. Banks and NBFCs offer various home loan schemes and alluring interest rates that attract the home buyer. The key deciding factor for a customer to avail home loan from a particular financial institution is determined by the interest rate. The interest rate is charged on the principal loan amount.

What determines interest rates on Home Loan?
It is the bank that decides their lending rates. This depends on their cost of funds and NIM or Net Interest Margin which the banks need to earn a profit and cover their operation cost.

RBI decides on the repo rate and the reverse repo rate through which the banks or the financial institutes determine the lending interest rates or home loan interest rate. If RBI reduces the Repo rate, the banks also reduce the lending interest rates. If the RBI increases the Repo rate, the banks  also increase the lending rates. As the repo rate and reverse repo rate control the liquidity of the funds in the economy. RBI increases the Repo rate, the rate at which the RBI lends money to the banks, to control inflation, to control the money outflow, and vice-versa with reverse repo rate.

An important point to note here is that home loans to salaried employees are offered at a lower rate as compared to those who are working in the unorganized sector; the prime reason for this is the stability of income of salaried employees.

The home loan interest rates calculation by the nationalized banks is presently based on MCLR or Marginal Cost of Lending Rate method. To this rate, the spread is added and then the final interest rate is mentioned to the customers or borrowers. And the NBFCs use Prime Lending Rate (PLR) calculation method.

Types of Home Loan Interest Rates
There are two kinds of home loan interest rates:
Fixed Interest Rate Loan- This rate of interest remains fixed and the borrower has to pay a fixed EMI during the home loan tenure. The market fluctuations don’t impact the home loan rate. A major point of concern when it comes to fixed home loan rates is they are 1-2.5% higher than the floating rate of interest. If a borrower has fixed home loan then he/she doesn’t get the benefit if the home loan rates go down. Their EMI remains unaffected by it.
Floating Interest Rate Loan- As the name indicates, floating rate loans have interest rates that change with the market condition. The are highly susceptible to market fluctuations. If the base rate changes, the floating rate also gets changed along with it. They are usually cheaper than the fixed rates but being highly influenced by the market condition they may vary as the RBI changes the rates.

home loan interest rates
Home Loan Interest Rates

Factors affecting your eligibility, home loan and interest rate – 
1. Income – No matter how small your income is. It depends on your lender how much they can finance the property based on other factors.
2. Credit score – Though you are eligible with respect to every other factor, if you have a bad credit score, rest everything fails. Hence, it is a usual practice to check the credit score while checking your eligibility. Even if you have a very bad score, 6 months of good repayment again can help you get a good credit score through which you can apply for a loan.
3. Location of the property – Home loan sanction varies according to the place and state of the property located. Getting a loan for a gated community in urban India is easier when compared to the loan for a plot in rural India.
4. Loan amount – According to the property you choose, the amount that can be availed for loan is decided. Most of the national banks fund 80% of the price of the property and some of the NBFCs can fund 90% of the price of the property. You can go with national banks or private banks, if you have all the documents of the property in right place.
5. Type of loan – If you are already with a home loan and you still look for financing your expenses, there are many other loan options you can opt for but only if you meet the eligibility. You can go with home improvement loan, top-up loan or even personal loan to meet your ends. Interest rate for each loan varies.
6. Loan tenure – Loan interest rate, emi amount, tenure are the major factors to determine the loan. Everything is inter-related. Now lenders offer tenure upto 30 years so that you can have low emis according to the existing interest rate.
7. Type of interest rate – Fixed interest rate is a bit higher than the existing interest rate. Floating depends in the market trends. Hybrid interest rates are those loan products which offer fixed interest rate for the first five years and change to floating after 5 years automatically. You should be aware of how the interest rate is changing ang when it changes. If you keep your tenure constant, your emi keeps changing according to the interest rate you opted for.
8. Employment type – The interest rate, whether fixed or floating, depends on your employment type. For those of self-employed individuals, the interest rates are a bit higher when compared to the salaried individuals. Also for the women borrowers, the interest rate is 0.05% low. So, it is suggested to take loan on your wives name or mothers name or sisters name to enjoy the low interest rates.
9. On-going promo offers – To attract the loan borrowers, now lenders promote their products by no processing fees period or zero legal charges, or less interest rates for just one month, etc. It is advisable to wait for such times if you can, and opt for loan during such time. Any little amount reduced on our expenses will always pave way for something good.

Calculate your EMI.

When you apply for a home loan, the first thing you check is, calculate your budget, the expenses and surplus, etc. The same way, banks judge your repayment capacity by checking your eligibility by calculating your EMI. Loanyantra shows your approximate EMI as you enter your salary details, interest rate and tenure.

Calculate your Equated Monthly Instalment (EMI), http://loanyantra.com/Calculators.aspx, before even applying to any bank. Know different banks interest rates, and calculate and adjust exactly for your budget and fix for your favourite lender. Even Rs.1000, less also make difference when you can save on your EMI. Get expert advice from Loanyantra as to which bank provides special offers and know the right bank according to your requirements. Calculate your emi for any type of loan, personal loan, balance transfer, home loan or part payment all in one go.

Know your Tenure – Earlier were the days when home loan tenure used to be 20 years. Now, to make the home buying easy and affordable to every one, the emi should be low, so the lenders in India now increased the tenure to 30 years. So, if you want to reduce the emi, increase your home loan tenure to 30 years but try to repay before your retirement. Calculate your emi based on the tenure change. Decide on how much you need for expenses and how much you can pay for the loan based on the tenure. Tenure and emi are inversely related. If tenure is increased, emi is reduced. If tenure is reduced, emi is increased.

Check your Eligibility for Home Loan –

Home loan lenders first check your eligibility before even asking for any property documents. Usually, any lender would look for your credit score and salary to know your repayment capacity. Next step is to look at the property’s details by legally verifying the documents.

If you are not eligible for the loan from your lender, understand that either you applied for the loan amount more than you are eligible for or your credit score is bad. Pay your pending bills so perfectly at the right time for 6 months and check your credit score. This increases your credit score.

You might lose eligibility even if your property fails to clear the legal check. So, when you apply for the home loan, loanyantra can suggest you the best lender according to your requirements. You might like the property or it might fit in your budget or it is your ancestral property which doesn’t have all the required documents. So, there are lenders who might lend you for a home loan even at the best rates and at competitive home loan interest rates. So, get eligibility, know your eligibility, calculate your eligibility and get the instant loan and fastest loan disbursal from loanyantra.com.

Documentation for Home Loan –

1. Passport-size photographs of the borrower and the co-applicant if any.
2. Completely filled application issued by the financial institution.
3. The latest or the last three months salary slip as asked by the bank
4. Bank’s last six-month statement showing salary credited.
5. ID proof like Pan card, Adhaar card (mandatory), driving license, voter ID, Passport and employment ID card in case of salaried professional.
6. Proof of address
7. Proof of Age (Either of these): 10th or 12th Marks Cards, PAN Card or Voters ID Card.
8. In case you are self-employed or a businessperson, then you have to submit documents which prove the existence of your business and academic qualifications along with the financial statements.
9. Bank statements which show that home loan EMI deduction. Usually, it is of last 12 months.
10. Loan statement of the company and the entire set of documents related to the property that is currently in possession of the home loan provider.

Documentation for home loan is necessary, you are required to go through some paperwork, which assures the lender that you can repay the loan amount. Banks or other financial institutions require you to submit certain documents for home loan so that they can proofread it and also adjudge your credibility for home loan. Make sure that all the documents are correct and appropriate as the approval of the bank depends on your repayment capabilities which are decided by the documents.

Loanyantra.com helps you in every step. Start your research with Loanyantra.com. Let us know your requirements. Get all the suggestions you need and choose the best from the major lenders in India. All you need to do is just give a missed call to 040-71011991. You get a call back from our relationship manager and you can discuss in detail about your requirement.

 

 

 

Myths About NBFCs / Banks Vs NBFCs

Why would you prefer going for a home loan only with a bank rather than with an NBFCs?

This question was pondering in my mind since the time I had met a cousin of mine. He was really worried to apply for a loan from an NBFC. I think, after the Sharada scam, the RBI is really strict and clear about the rules with regard to NBFCs. Earlier, the minimum net worth for NBFCs was retained at Rs.25 lakh. Now, since March 2017, all NBFCs are to attain a minimum net-owned funds of Rs. 2 Crore, to ensure the ability of the NBFCs to have good financial standing .

Also you can check the list of NBFCs involved in providing home loan, in the link provided in the official RBI website.

Myths about NBFCs

So, as discussed above, we find NBFCs too are safe to opt. With the emerging economy and population, India needs support financially. Banks could satisfy this need only to a minimum extent and to only a particular group. This made the need for other financial service providers (NBFCs) which are regulated by National Housing Bank.

A coin has both sides. Similarly, banks and NBFCs, have both pros and cons. One should think wise, customize and pick up the best fit. Let us discuss in detail about them.

Home Loan Borrowers – Who should opt for a bank?

  • Apart from the 80% loan amount, if you can meet the  20% down payment amount of the property, the stamp and registration amount. 
  • If you have enough time to wait till the sanction of the loan.
  • If your property has all the required legal documents.
  • If your chosen bank provides a lower interest rate when compared to an NBFC.

Home Loan Borrowers – Who should opt for an NBFC?

  • If you want 80%  loan on home value which includes the stamp and registration charges also.
  • If you are running out of time.
  • If you are satisfied with the interest rates.

Home Loan Borrowers – New customer Vs Existing Customer

Neither the banks nor NBFCs offer the same interest rate to the existing customers as they offer the new customers.

Existing customers can convert to the present interest rate by paying a minimal amount. Usually it is 0.5% – 1% of the outstanding loan amount.

Earlier were the days, where you find NBFCs interest rate in double-digit. With the awareness and competition on the shelf, NBFCs are slowly positioning themselves to become viable alternatives to traditional banks for procuring loans.

Plot loan

Plot Loan India –

In the Indian context investing in buying land or plot hold on age-old and trusted investment. The ideology of buying land and building a house still holds prominence in our nation. But as easy it may appear, buying land is a daunting task if you are new to it. Buying a plot is a costly affair, so most of the people tend to take a loan for the same.

Similar to home loans and other loans there are a series of paperwork that one needs to complete before availing the plot loan. So here is the complete list highlighting about plot loans, its eligibility criteria, and documents. It will help you understand in-depth about plot loans and requirements around it so that you can easily get a loan to buy plot/land.

What is a Plot Loan?

They are also popularly known as a land loan. These loans are unique banking product designed to facilitate the purchase of land or plot. One must not get confused between plot loan and land loan as these two are entirely different aspects of loans. Although, you may find similarities in the documents and eligibility criteria the interest rate and other aspects of plot loan are different from a home loan.

When judged on the parameters or ease of availing the loan, the home loans are easy to avail as compared to the plot loans. The primary reason behind this is that land loan is not only about the purchase of land but also the subsequent development of the property. Plot/Land loans come at a higher risk as compared to a home loan. The moneylender requires security about the ROI. Thus, if one wishes to increase their chances of obtaining the plot loan, it is beneficial to assure the return on the purchased property.

The undeveloped property is a risk for the lender. Thus, they trust more on developed properties. For example, if one wishes to get plot loan for farming purpose, then the probability of obtaining the loan is higher as compared to getting a loan for property which does not have any substantial plan on its development in future.

Leading Banks providing Plot/Land Loans-

As already mentioned, people often opt for plot or land loan for buying land. Some banks and NBFCs can give you plot loan. However, you need to compare their rate of interest processing fees, check your CIBIL score, etc., before applying for the same. Here is the list of banks that you can have on your radar if you wish to get a plot/land loan:

  1. ICICI Bank
  2. Punjab National Bank or PNB
  3. State Bank of India
  4. DHFL
  5. IDBI
  6. Axis Bank
  7. HDFC Bank
  8. Federal Bank etc.

Features of Plot / Land Loans – 

  • Location & Type of Property: You have home loans for various purpose, but when it comes to land/plot loan it can only be availed for buying a residential plot. An important point to note about plot/plan loan is that the land must be present within the limits of the respective municipality.
  • Loan to Value Ratio (LTV): It is the amount of loan you can get against a property. The LTV for a home loan can range between 80%-85%, but for the plot loan, it can be up to 70% of the plot value.
  • Tax Benefits: Well, if you have thought that the plot loan will not give you any tax benefit, then the good news is that it does give you some rebate, only if you wish to construct a house on the land. The tax deduction will only apply to the construction amount of the loan and after the completion of the construction.
  • Tenure: Plot/land loans are of shorter duration as compared to the home loans. The tenure of plot loan an stretch up to 15-20 years.
  • Loan Amount Limit: There is an upper to the plot loans offered by the bank. Different banks may have a different upper limit so make sure that you run through the policy papers and other documents before applying for plot loan.
  • Clauses Included: There is a catch in the plot loan. For example, if you get the loan, you would be required to start the construction work on it within a specified period. It is mentioned in your loan document, so make sure that you run through the paper to get more clarity on it.
  • Prepayment Charges: There is a possibility that the bank may charge a prepayment penalty.
  • Interest Rates:  Similar to other loans, the interest rate for plot loan may vary from bank to bank. Although the range remains the same, the exact percentage may vary. Make sure that you do a thorough study by comparing the interest rates offered by different banks so that you get the best one by your side.
  • Down Payment: When we talk about downpayment then for plot loans, it may be higher because the LTV for plot loan is only 70% as compared to home loans which shoot up to 85 %.
  • Higher interest rates for NRI: NRIs constitute a major segment of people who invest in land. But, it’s not necessary that all bank may provide them the loan. Some banks do provide a loan to the NRIs, but that comes at a higher interest rate.

Eligibility for Plot loan – 

The eligibility for land/plot loan is very similar to a home loan. Here is what makes you eligible for plot loan :

  • You must be the resident of India
  • Your age must be above 21 years
  • Good CIBIL score (it may vary from bank to bank)
  • If you are a salaried individual, then you must satisfy the income criteria as specified by the bank.
  • In case you are self-employed with the bank where you have applied for a loan then you must be employed by the bank for a specified period to become eligible for plot loan.

Documents for Plot loan – 

Here we have listed the documents that you are required to submit when you apply for plot loan:

  • Filled the application form
  • Photograph of the applicant
  • ID proof- Adhaar card, passport, voter card, driving license, etc.
  • Residence proof- like electricity bill, phone bill
  • Bank statement of last six months
  • Form 16
  • Identity and address proofs
  • If you are a salaried person, then you need to submit the copies of your salary slip as income proof.
  • Last six months bank statement reflecting credited salary
  • In case of a self-employed individual, you must submit last three years’ IT return along with sales receipt to show your income proof.
  • The borrower may also be required to submit site ownership documents in the sellers’ name. It includes the following documents :
  • Original ownership document of the land
  • ‘No Encumbrance’ Certificate for the plot
  • Plot layouts which are duly approved by the Town Planning Authority
  • Land records
  • Revenue receipts
  • Tax receipts for taxes paid by the landowner

What do you need to know about Plot Loan Interest Rates?

Similar to a home loan, the plot loans also come with certain interest rates. This interest rate may vary from one bank to another. Thus, it’s advisable that you must check the interest rate before applying for plot loan. Another important factor that you must take into consideration is the type of interest rate, where it’s floating or fixed. The interest rates play a key role in impacting the EMIs. Thus, it is the first thing that you must take into account the moment you start applying for plot/land loan. You can also use the plot loan EMI calculator which will help you find out the EMIs and based on it you can figure out the bank from where you would like to take the loan or decide the amount of loan.

Plot Loans Interest Rate – 

When it comes to the interest rates offered by the bank, then it ranges from 9.95%-12% percent. It may be floating or fixed; you must inquire with your desired bank about the same. Another important point to note about plot loan is that the NRIs get the plot loan at a slightly higher interest rate as compared to the Indian residents.

Snapshot at some of the leading plot/land loan provider and their key features –

Many banks and NBFCs can provide you with the plot. Although there are many other banks in the league here, we have shortlisted the popular ones.

Bank Name Rate of Interest Processing Fee Loan Amount Tenure
SBI Floating – 8.30% – 8.65% ₹2,000 to ₹10,000 + applicable tax  upto 50 cr. 1-30 years
HDFC 8.45% – 8.70%Floating Up to 0.5% (max. ₹11,800)One time fee 5L – 10Crs 1-30 years
ICICI 8.50% – 8.85%Floating 0.5% (max. ₹11,800)One time fee 5L – 10Crs 3-30 years
Axis 8.35% – 11.75%Fixed/Floating 0.50% (min. ₹10,000)One time fee 5L – 10Crs 1-30 years
DBS 8.5% – 8.5%Floating ₹ 10000+ taxesOne time fee 50L – 5Crs 1-25 years
PNBHFL 8.40% – 10.20%Fixed/Floating Up to 0.50% (min. ₹10,000 + GST)One time fee 8L Min 1-30 years
CANARA BANK 8.35% – 8.55%Floating 1,500 to ₹10,000 30 years
DHFL 9% – 9.75% 5,000 to ₹20,000One time fee 1L – 5Crs 1-30 years

 

The list of banks doesn’t end here; you may choose from the number of other banks and NBFCs. But, it’s always good to compare the interest rate of various banks so that you may find the right bank to support your dream of buying a plot.

HDFC Plot Loan

Eligibility Individually or Jointly
Tenure of Plot Loan Maximum 15 years
Maximum Loan amount If it is up to 20 lac, you will get funding which is 90% of the cost of property, If it is Rs.20.01 lakh – Rs.75 lakh then you will get funding which is 80% of the cost of property, for the amount above 75 lac, HDFC funding is 75% of the cost of property
Documents Required You need to submit the following documents :

  • Allotment letter copies
  • Approved drawing  of the property you were willing to purchase
  • Sale deed from the architect
  • ID proof like Adhaar card, driving license, passport, voter ID
  • Address proof- electricity bill, phone bill, property documents
  • Last six months bank statement
  • Title deed

SBI PLOT LOAN

Eligibility You must be an Indian national and above 21 years of age. The borrower must also have records f repaying the loan for at least two years.
Tenure of Plot Loan Maximum 9 – 10 years..
Loan amount The loan amount is based on the cost of the plot. The bank offers loan which is up to 85% of the cost of the plot.
Documents Required
  • ID Proof like Adhaar card, Voter ID, Driving license
  • Income proof like last six months bank statement, IT returns, Form 16, salary slips
  • Property related documents like title deeds, allotment letter.

ICICI PLOT LOAN

Eligibility The applicant must be a resident of India and 21 years of age. An individual can be salaried or self-employed
Tenure of Plot Loan 3-30 Years
Loan amount 5L – 10Crs
Documents Required
  • Identity Proof like Adhaar card, Driving Licence, Voter ID
  • Income Proof like salary slip, bank statement, Form 16
  • Property related documents like title deeds, allotment letter, drawing of the plot.

Plot Loans Through Loanyantra.com – 

Loanyantra is a great way to help you find the right loan provider. Apart from finding the right lender and helping you find out the most cost-effective way to buy land, we also help you with the complete paperwork so that there is no hurdle in the process of loan application and approval. Based on your requirement, we also provide you the complete information about the current interest rate so that you can get the complete insight into it. To know more about our company and services you can contact us today. Remember, Loanyantra is a complete one-stop solution when it comes home loans, plot loans, paperwork, etc.

Plot loan purchase, plot loan calculator, plot loan emi calculator, plot loan documents, plot loan Icici, Icici realty loan, loan for agricultural land purchase Icici, hdfc plot loan, SBI plot loan, construction composite loan, know everything from Loanyantra.com. Get every minute detail about ICICI plot loans, HDFC plot loans, SBI plot loans and many other. Know about bank’s loans interest rates that are linked to MCLR which are auto corrected according to the economy’s growth and interest rates that are lonked to base rate. Get the lower interest rate ever. Calculate your emi on plot loans and know your eligibility. Plot loan documents are same as the home loan documents. And get instant approval. Apply online paperless and get instant approval. You can select a plot and get loan on the plot but you have to construct your house within two years on the plot. This realty loan from ICICI bank fulfils your dream if constructing a house on your own. Construction composite loan is availed to buy a plot and construct a home on the plot. Together is called construction composite home loan. The whole amount is not disbursed at a time but partially disbursed according to the phases of construction. And the customer is required to pay pre-emis on the loan disbursed. The documents for land loan include your original basic documents like aadhar card, address proof, etc and also the title deed of the plot.  For example, ICICI bank Agriculture loans, krishi loan offers loan to meet all the agriculture needs like buying equipment, meeting working capital needs, etc. The interest rate varies from 10.00%- 14.50% as of May 17th 2018. You can repay the loan within four years or even less than that.  Know more about each product from Loanynatra.com. All you need to do is just give a missed call to 040-71011991. Calculate your emi for bank plot loans and construction loans.

 

How does personal loan affect your credit

Know how Personal loan affect your credit and manage your loan through Loanyantra. Every now and then, you need a little help with your finances. A personal loan is one way to smooth your finances or get extra cash for a purchase. An unsecured personal loan can allow you to accomplish some of your goals without the need for collateral, or to share a specific purpose with the lender.

Personal loan interest rates, loan amount and tenure details – 

Bank Name Personal loan Interest Rate Minimum Tenure- Maximum Tenure Personal Loan Amount
Citi Bank 10.99% – 15.99% 1-5 years Max-30Lakhs.
Axis Bank 15.50% to 24% p.a. 1-5 years Min- Rs 50,000

Max-Rs 15 lakhs.

STANDARD CHARTERED BANK 10.99% – 14.49% 1-5 years Max- 30lakhs.
HDFC Bank 10.99% – 20.75% 1-5 years Max- 25Lakhs
FULLERTON 14% – 33% 1-4 years Max- 15lakhs
HSBC 11.29% p.a. to 17.5% up to 5 years Max- 30 lakhs
ICICI 10.99% to 22.00% per annum 1-5 years Max- 20lakhs
IDBI 12.75% to 13.75% up to 5 years Min- Rs. 50,000

Max-10lakhs

SBI 12.90% – 14.90% 5 Years Min- 25,000

Max- 15 lakhs

The above table lists the lenders with whom loanyantra.com has tie-ups. About every bank’s personal loan interest rates, you find at the end of the article.

But whenever you get any loan, it’s important to consider the impact on your finances and on your credit. It is always better to consider the personal loan affect on credit.
Before you apply for a personal loan, consider the credit score factors that are likely to be a part of the equation. Any debt impacts your credit — and that means a personal loan can affect your situation as well.
But that doesn’t mean the effects of a personal loan will be all negative. In fact, when used properly, a personal loan can have a net positive impact on your credit, and that means it can also have an effect on your life and finances beyond just your credit rating.

What happens to your credit when you apply for a personal loan? How does personal loan affect your credit?

When credit score calculated by CIBIL, there are five main credit score factors that each carry a specified weight:
Payment history: 35%
Amounts owed: 30%
Length of credit history: 15%
New credit: 10%
Credit mix: 10%
With a personal loan, the main things that affect your credit score fall under the categories “length of credit history” and “new credit.” When you apply for a personal loan, that represents an inquiry that will show up on your credit report and impact your credit score.

Things change if you are making a lot of credit inquiries in a short period of time, however. The more loans you apply for in a short timeframe, the bigger the impact on your credit history.
Your new credit will also have an impact on your credit history. Part of the calculation of credit history is the average age of your accounts. A new credit account, like your personal loan, brings down the average age of your accounts.
However, the impact shouldn’t be too huge, as long as you don’t have a lot of newer credit dragging on your score.
Once you get your personal loan, it’s important to pay attention to how you manage personal loan affect credit score, since that’s what will matter most to your credit score going forward.

Don’t let a personal loan bring down your credit score

Simply getting a personal loan isn’t likely to have a long-term negative impact on your credit. You might be surprised to discover that a personal loan can actually help your credit score in the long run.
Of the credit score factors, the most important item is your payment history.
As long as you make your loan payments on time and in full, your score will be impacted positively. The more on-time payments you have, the better your credit score.
With a personal loan, factors that affect credit score most are the payments you make and the mix that your loan adds to your credit profile.

Adding a personal loan to your credit mix can actually give your score a little boost. While credit mix is only 10% of your score, it can still provide a little help. Showing that you can handle an instalment loan as well as a revolving credit loan (such as a credit card) can add to your score.
The opposite is true, too. If you miss payments on your personal loan, you will be penalized. When you get any type of credit, it’s vital that you make regular payments in order to prevent damage to your credit score.
A personal loan is most dangerous to your credit when you don’t make payments.

Only borrow what you need

Any time you borrow money, it is important to limit your loan to what you need to accomplish your goals.
A personal loan can be a way to consolidate your debt to make it easier to pay off, or to help you smooth your cash flow while you restructure your finances. No matter what you use your personal loan for, don’t borrow more than you can handle and avoid paying late.
Your instalment loan won’t have the same impact in the credit utilization measure of your credit score, but it can still impact decisions about your finances in the future.
Lenders and others look at your credit file for red flags. If you have a large personal loan, it can affect your ability to get other credit and financial products, even if you have a good credit score. Lenders and others assess risk, and a large personal loan can make you a bigger financial risk.

Personal loans can help your finances, and even provide a boost to your credit, but you need to be careful about how you apply for and use them.

Personal loan interest rates (as of May 08th 2018)

Bank Personal Loan Interest Rates
Citibank 10.99% – 16.49%
SBI Personal Loan 12.50% – 16.60%
HDFC Bank Personal Loan 10.99% – 20.00%
ICICI Bank Personal Loan 10.99% – 22.00%
RBL Bank 13.99% – 16.00%
Canara Bank 13.65% – 13.65%
Dena Bank 13.00% – 14.00%
Union Bank of India 14.40% – 14.40%
Vijaya Bank 12.50% – 13.50%
Andhra Bank 13.05% – 14.30%
Allahabad Bank 13.10% – 13.10%
Bajaj Finserv 11.99% – 15.50%
Standard Chartered Bank 11.49% – 20.00%
Bank of Baroda 11.60% – 16.60%
Corporation Bank 12.75% – 13.75%
IDBI Bank 13.20% – 13.75%
Indian Bank 14.35% – 14.85%
IDFC Bank 11.00% – 19.50%
Axis Bank 11.25% – 24.00%
Tata Capital 11.99% – 18.00%
Fullerton India 14.00% – 34.00%
IndusInd Bank 11.99% – 23.00%
Kotak Bank 11.50% – 24.00%
IIFL 12.99% – 19.99%
Yes Bank 11.99% – 20.00%
Bank of Maharashtra 15.10% – 15.10%
Federal Bank 13.32% – 15.12%
Indian Overseas Bank 12.70% – 15.25%
Syndicate Bank 14.20% – 14.20%
Karur Vysya Bank 13.90% – 16.40%
Punjab National Bank 12.25% – 15.25%

Why go through Loanyantra for a personal loan –

Loanyantra, an online platform for all your financial needs. It is India’s first ever fintech company to manage your loan till the closure. Usually, you find personal loan interest rates are a little higher when compared to any other loan interest rates. Here is when loanyantra helps you getting a personal loan at the best rate and also get alerts as long as you are in the loan about the current market interest rates. Also avail wonderful offers like cashback and referral offers by getting a loan through loanyantra.com.

Home Loan Balance Transfer – Eligibilty, Calcualtor, Documentation

HOME LOAN BALANCE TRANSFER

Home Loan Balance Transfer is switching your lender or transfer your balance loan amount from one bank to other bank for quite some valid reasons. Buying a home was never as easy as it is today. Home loans are a great way for people to fulfill their dream of buying a home. However, home loans are dependant on EMI, tenure and interest rate. The home loan interest rate, 2018 varies from 8.35% to 12 %. And interest rate changes according to the RBI’s repo rate which depends on the economy’s growth. EMI depends on the tenure of the home loan. Tenure can be fixed to 20 years to 30 years. So, the EMI varies according the interest rate and tenure of the home loan. Over a period you might feel burdened with the pressure of EMI payment because of the change of interest rates, in such cases, one can opt for home loan balance transfer.

Home loan balance transfer is an excellent facility given by the banks to people to transfer their home loan from one bank to another where the interest rates are lesser. But, before getting ahead, let’s have an understanding of home loan balance transfer.

WHAT IS HOME LOAN BALANCE TRANSFER?
This term is popularly known as refinancing or Balance Transfer. It allows you to reap the benefits of lower interest rates offered by other banks of financial institutions. Usually people having a remaining home loan amount transfer it to another bank or NBFC which is offering a lower interest rate. To sum it in simple words, home loan balance transfer is the process of transferring the outstanding loan amount. It saves the borrower from the pain of high interest rates.

WHAT ARE THE KEY FEATURES OF BALANCE TRANSFER:

  1. It involves transfer of outstanding home loan from one lender to another lender.
  2. It requires payment of processing fee which is about 1% of the loan transferred amount which is remaining loan amount.
  3. The entire process of balance transfer of home loan involves similar paperwork and other formalities as it is in the case of home loan.
  4. One can only apply for home loan balance transfer only after certain number of years of availing home loan. This time period is pre-determined and is mentioned in the original home loan agreement.

The Home Loan Balance Transfer, also called the ‘refinancing’ of a Home Loan, may be advisable under certain circumstances. However, it may not always be the ideal solution for the problems you face with your lender.

For more information – http://loanyantra.com/blog/what-is-re-financing.html

BENEFITS OF HOME LOAN BALANCE TRANSFER

The first and the foremost advantage of home loan balance transfer is, it saves your money. Usually, people go for the option of balance transfer if they find any lender is offering a lower interest rate as compared to their current lender. The difference of interest rates, the tenure of the home loan amount and outstanding amount are the contributing factors in the process of home loan balance transfer.

It is always advisable to make a switch of banks or lenders for your home loan, after you have thoroughly analyzed the interest rate difference between the two lenders. Once you find that there is going to be a significant difference, you must go ahead. If you are going for home loan balance transfer, you must first know the rules for the same and also do the cost-benefit analysis. It means that this process of refinancing must bring down your monthly EMI or lessen the time period and also decrease the cost of acquisition.

REASONS FOR HOME LOAN BALANCE TRANSFER-

Do you experience atleast one among the below mentioned reasons –

  1. Frustrated about the lender because of delayed and laid back customer solutions for queries and requests?
  2. Paying more than the existing rate of interest?
  3. Attractive products with other lenders?
  4. More discounts and benefits with other lenders?

If you feel yes, for any of those, then you have to surely look out for a balance transfer option with reduced EMI every month which helps you to plan something more important in your budget. Cutting down the total amount of money to be paid as the interest on the loan which means it in turn reduces the tenure of the home loan also. Also apply for home loan balance transfer to avail attractive discounts and benefits offered by another lender. Save time, money and energy with Balance transfer.

When Can You Go For A Home Loan Transfer

ELIGIBILITY CRITERIA FOR HOME LOAN BALANCE TRANSFER –

Similar to other loans, to avail the home loan balance transfer one must be eligible and hence it becomes important to know about the eligibility criteria for refinancing or home loan balance transfer. Anyone who has availed home loan is eligible for home loan balance transfer. An important point to note here is that if you have regularly paid your EMIs of home loan, you can go for home loan balance transfer. Although the criteria by most of the lenders remain the same, you may find some difference with each lender.

But, here is a generic eligibility criterion for home loan balance transfer :

  1. Firstly, you must be an Indian national above 21 years of age to be eligible for home loan balance transfer. The age bar is between 21 to 60. For a self-employed individual the age slab is up to 65 years.
  2. You must have an excellent credit rating. Irrespective of the fact that you had good credit rating at the time home loan application, if the credit rating decreases after applying for home loan, you might not be able to avail home loan balance transfer facility.
  3. If you are a salaried professional, you must be employed with your current professional for a certain number of years. Usually, this period is two years.
  4. You must have the capacity to repay the loan.
  5. Some banks may ask for Minimum sum gross family income as mentioned by the lender.

HOME LOAN BALANCE TRANSFER RULES

The rules for home loan balance transfer include submission of all the documents and papers (discussed later), submission of ID and address proof, good credit history, good CIBIL score and surety that as an individual you would be able to repay the loan amount to the bank or NBFC.

As per the RBI guidelines for home loan balance transfer and home loan, the money lenders or the banks are not allowed to charge anything for prepayment of floating interest rate loans. Thus, the home loan balance transfer charges as per RBI guidelines are also influenced by this decision.

DOCUMENTS FOR HOME LOAN BALANCE TRANSFER

Home Loan Balance Transfer Documents required by the banks or NBFCs :

  • Passport-size photographs of the borrower and the co-applicant if any.
  • Completely filled application issued by the financial institution.
  • The latest or the last three months salary slip as asked by the bank
  • Bank’s last six-month statement showing salary credited.
  • ID proof like Pan card, Adhaar card (mandatory), driving license, voter ID, Passport and employment ID card in case of salaried professional.
    Proof of address
  • Proof of Age (Either of these): 10th or 12th Marks Cards, PAN Card or Voters ID Card.
  • In case you are self-employed or a businessperson, then you have to submit documents which prove the existence of your business and academic qualifications along with the financial statements.
  • Bank statements which show that home loan EMI deduction. Usually, it is of last 12 months.
  • Loan statement of the company and the entire set of documents related to the property that is currently in possession of the home loan provider.

Just like your home loan or any other loan, in case of home loan balance transfer you are required to go through some paperwork, which assures the lender that you can repay the loan amount. Banks or other financial institutions require you to submit certain documents so that they can proofread it and also adjudge your credibility for home loan balance transfer.

All these documents provided by the borrower is revalidated and vetted by the bank or NBFC. You must make sure that all the documents are correct and appropriate as the approval of the bank depends on your repayment capabilities which are decided by the documents.

HOME LOAN BALANCE TRANSFER PROCEDURE

The process of balance transfer of home loan involves a few basic steps –

Your first step for home loan balance transfer is to send an application for Home Loan transfer to your current bank. They should then provide a No Objection Certificate (NOC), foreclosure letter, a statement specifying the outstanding balance on your Home Loan, a statement of your EMI payments so far, and a list of the loan related documents available with them.

For balance transfer, you have to submit the documents to the new bank, along with whatever else they may ask for. This might include your KYC documents, income proof, a no objection certificate from the builder/developer if they are being repaid through the Home Loan.

The new lender will then verify all the information, and do a complete reassessment of your creditworthiness and property. Once the loan is sanctioned, the representatives of the two banks will meet. The new bank will hand over the cheque for foreclosing the old loan and the previous lender will hand over all the relevant documents to the new lender.
Now, your Home Loan is with the new bank and you can enjoy the benefits offered by the switch.

HOME LOAN TRANSFERS TO SBI, ICICI, HDFC BANKS – 

Usually, people look for Home loan transfer to the top most lenders in the market like :
SBI or State Bank of India
ICICI Bank
HDFC Bank

STATE BANK OF INDIA HOME LOAN BALANCE TRANSFER  – SBI is one of the most trusted banks in India and offers great benefits and advantages. The SBI home loan balance transfer scheme with a low-interest rate is one of them. The SBI is one of most convenient and easily accessible bank. SBI home loan balance transfer charges are Up to 0.35% of your outstanding loan amount (maximum ₹11,500) (one-time fee).

ICICI BANK HOME LOAN BALANCE TRANSFER : ICICI BANK is also one of the leading private banks in India. ICICI offers benefits like top-up loan amount up to 100% of the original home loan. Apart from this, ICICI bank offers to lure interest rate and simplified documentation. The ICICI home loan balance transfer charges are 0.5 % of your outstanding loan amount(Maximum. ₹11,500) (one-time fee)

HDFC BANK HOME LOAN BALANCE TRANSFER : HDFC BANK is one of the leading home loan providers in India. You get an option of the top-up load which doesn’t exceed Rs. 35 lacs on your current outstanding amount, The series of benefits by HDFC banks include lowered interest rate, customized repayment options, and simplified paperwork. HDFC home loan balance transfer charges are up to 0.5 % of your outstanding loan amount.

HOME LOAN BALANCE TRANSFER CHARGES FOR THREE MOST POPULAR BANKS:

SBI HOME LOAN BALANCE TRANSFER FEES

Processing Fee
  • 0.35% of the outstanding loan amount
  • Minimum Rs.2,000 or Maximum  Rs.11,500

ICICI BANK HOME LOAN BALANCE TRANSFER CHARGES

Processing Fee 0.5 % of outstanding loan amount or Maximum. ₹11,500 (One-time  fee)

HDFC HOME LOAN BALANCE TRANSFER CHARGES

Processing Fees •    For a self-employed professional it is Rs. 3000 or 0.50% of the outstanding loan amount, whichever is higher along with the taxes.

•    Self-employed non-professionals it is Rs.4,500 or 1.50% of the outstanding loan amount, whichever is higher, plus the applicable taxes.

Salaried individuals it is  Rs.3000 or 0.50% of the loan, whichever is higher, plus the applicable taxes.

 

COMPARATIVE ANALYSIS OF HOME LOAN TRANSFER OFFERS

BANK HOME LOAN TRANSFER INTEREST RATES PROCESSING FEES LOWEST EMI PER LAC FOR 30 YEARS
SBI 8.35% 0.50%
Minimum Rs. 10,000 – Maximum Rs. 10,000
Rs.758
ICICI 8.45% 1.00%
Minimum Rs. 5,000 – Maximum Rs. 5,000
Rs. 765
Bank of Baroda 8.40% 0.50%
Minimum Rs. 7,500 – Maximum Rs. 20,000
Rs. 762
HDFC 8.40% 0.50%
Minimum Rs. 10,000 – Maximum Rs. 10,000
Rs. 762
LIC Housing Finance 8.50% 0.50% Rs. 769
Union Bank of India 8.30% 0.50%
Maximum Rs. 15,000
Rs.755
Syndicate Bank 8.55% 0.13%
Minimum Rs. 500 – Maximum Rs. 5,000
Rs. 772
Axis Bank 8.40% Minimum Rs. 10,000 – Maximum Rs. 25,000 Rs. 762
DHFL 8.35% 0.50%
Minimum Rs. 2,500 – Maximum Rs. 20,000
Rs. 758
PNB Housing Finance 8.85% 1.00%
Maximum Rs. 10,000
Rs. 794
Indian Overseas bank 8.40% 0.53%
Minimum Rs. 8,900 – Maximum Rs. 13,350
Rs. 762
South Indian Bank 9.00% 1.00%
Maximum Rs. 10,000
Rs. 805
Federal Bank 8.95% 0.50%
Minimum Rs. 3,000 – Maximum Rs. 7,500
Rs. 801
Central Bank of India 8.45% 0.50%
Maximum Rs. 20,000
Rs. 765
United Bank of India 8.45% 0.59%
Minimum Rs. 1,180 – Maximum Rs. 11,800
Rs. 765
Canara Bank 8.65% 0.50%
Minimum Rs. 1,500 – Maximum Rs. 10,000
Rs. 780
Vijaya Bank 8.65% 0.50%
Minimum Rs. 1,000 – Maximum Rs. 20,000
Rs. 780
LT Housing Finance 9.90% 2.00%
Minimum Rs. 4,999
Rs. 870
Punjab and Sind Bank 8.40% 0.25%
Minimum Rs. 1,000 – Maximum Rs. 15,000
Rs. 762
IDFC Bank 8.65% Minimum Rs. 2,500 – Maximum Rs. 2,500 Rs. 780
Bank of Maharashtra 8.65% 0.50% Rs. 780
Reliance Capital 10.00% 1.00%
Minimum Rs. 3,000 – Maximum Rs. 6,500
Rs. 878
PNB 8.35% 0.50%
Minimum Rs. 20,000 – Maximum Rs. 50,000
Rs. 758
Syndicate Bank 8.55% 0.13%
Minimum Rs. 500 – Maximum Rs. 5,000
Rs. 772

HOME LOAN BALANCE TRANSFER EMI CALCULATOR :  

Before opting for a balance transfer, calculate your EMI, as per the interest rate and tenure. Switch homes only when you make really a prominent impact. Do your math and then enjoy the benefits. Make sure you are on the right path. Use Loanyantra’s balance transfer calculator and choose your lender.

http://loanyantra.com/Balance-Transfer-Calculator.aspx#Balance-Transfer-Calculator

HOME LOAN BALANCE TRANSFER AND CO-BORROWER : 

While you refinance your home or look of balance transfer, your chosen lender will also look for your credit score. At the same time, the lenders look for your co-borrower’s credit score too. So, carefully choose and your co-borrower while you opt for loan balance transfer.

How to add a co-borrower when you refinance a home?

HOME LOAN BALANCE TRANSFER FOR NRIs – 

Home loan balance transfer for NRIs is also made easy as one can give the power of attorney to a reliable person. So, choose any lender and fulfil all the required steps and get the balance transfer from different banks done. Learn more –

Applying for Home Loan or Balance Transfer as an NRI / OCI/ PIO

LOANYANTRA.COM AND HOME LOAN BALANCE TRANSFER – 

Loanyantra.com is a name synonymous with providing simplified loan services to the people who are planning to buy home. Our one-stop solution web portal will guide you through home loan schemes, procedures, documentation and find out the best bank or NBFC that helps you avail loan at a lower interest rate. We will help you understand how much you can save in case you plan to do the home loan balance transfer and also find the right bank for the same. It is a great gate way to switch from an expensive loan to a lower interest rate. At Loanyantra we have helped many customers save money by helping them find a lender who offers lesser interest rate. To know more about how Loanyantra can help you, sign up with us today or just give  a missed call to 040-71011991. Know more how we manage your loan …

Online Quotes for Fresh Home Loan and Balance Transfer

 

 

 

When Can You Go For A Home Loan Transfer

Home Loans have become the most popular tool to achieve one’s dream of buying a home. With so many banks and HFCs offering tailored home loan solutions, people are now more inclined towards home buying. Banks and HFCs have home loan eligibility calculator that will help you assess how much loan banks will give you and what will be your EMI. 

Home Loan Transfer 

Balance transfer, home loan refinancing are interchangeably used with Home Loan Transfer. It helps the borrower to avoid higher interest rates by transferring to another lender which offers lower interest rates. Borrowers usually prefer this option to reduce the burden of interest rate and EMI. The good news is that all the banks and many HFCs in India offer the facility of home loan transfer.

Do You Know!

Although Home Loan Transfer appears to be a lucrative scheme yet one needs to try cost-benefit analysis before opting for a balance transfer.

Firstly, to avail the option of Home Loan Transfer, you need to be in the good books of the bank, make sure that you pay your EMIs regularly.

Secondly, balance transfer decision depends on the difference between interest rate offered by the two banks (one from where you have taken the loan and second from the bank where you wish to transfer your home loan).

Last but not the least, the outstanding amount of the home loan and the tenure left is also an important factor to consider before going for a Home Loan Transfer. Because, it is not a good deal if unpaid loan amount and tenure both are low. Though there are no prepayment charges levied, but while transferring the loan, calculate for the processing fees. It is calculated on the outstanding loan amount, usually, the maximum is Rs. 8,000.

home-loan-transfer_loanyantra-com
Calculate Before You Go For A Home Loan Transfer

Always calculate. For example, if 50 lac is outstanding loan amount and calculate-homeloan-transfer_loanyantra-comyour bank charges interest rate of 12 % then you have to pay a total of Rs 58, 01,513 as interest and you choose home loan transfer option to another bank offering interest rate of 11.5% for a time period of 15 years then the interest that you have to pay comes to be 55, 13,708 which means you save 2.87 lac.

This is a substantial amount and even if your bank levies a processing fee for home loan transfer, your saving is on a higher side. So,you can go ahead with balance transfer option.  

An important note which banks consider before lending is your credit score. Always check your credit score before applying for a balance transfer. It is important that your credit health score is good and you have all your bills cleared. 

Banks usually charge 0.5% of the loan amount or flat fees of Rs. 5000-10,000 as processing fee for home loan transfer.

How does home loan balance transfer help you?

Advantages of balance transfer includes the following :

  • It lowers the monthly installment
  • You can save on your interest and use for an important reason.
  • Makes your home loan more affordable
  • Banks and HFCs also offer customized solution that will match your requirement
Home Loan Transfer Process
  • Submit a request form to your current bank. The application also asks for the name of the new bank where you will be transferring the loan.
  • After this, the bank will look into your application and will issue an NOC (No Objection Certificate) that mentions outstanding loan amount.
  • This NOC is then submitted to the new lender and the new bank will study your credit history.
  • CIBIL score should be 700 points to get a loan. Once bank approves your application, all the property documents and other documents like ID proof, ITR etc. are transferred to the new bank.
  • Voila!!! You now have your home loan at a better interest rate and you are ready to smile even bigger now.

Our Role: LoanYantra is an unbiased platform where we offer you the best options pertaining to a home loan. Our home loan transfer service will help you find the right financial institution which will lessen your burden of home loan repayment. Moreover, we have up-to-the-minute information related to lenders and interest rate changes in particular.

Not only availing home loan transfer through loanyantra will make the process easier, but also we will keep a track of your interest rate till you close the loan and help you reduce it whenever possible which helps in saving on the home loan.

Talk to us and let us know your requirement about home loan transfer to serve you better.