THE RIGHT TIME TO BUY A HOME!

People normally wait for a right time to buy a new home or property as per there budgets. We understand that everyone has to plan carefully for house purchase, while considering monthly income, current EMIs and expenses. But sometimes we wait for so too long and we miss the opportunity. For example if you are saving to buy a new house for two years, but the meanwhile time the REAL ESTATE price is also increasing. So, waiting will not serve our purpose or fulfil our dreams of new house.

HERE, we can work with a one solution among multiple by identifying an under construction property which may be come at lower cost and you will also get sufficient time to arrange your fund or pay the down payment in multiple trenches.

Thankfully, now a days funding norms are in the range of 80-90%* of FAIR MARKET VALUE & the rate is also in range of 6.85%* onwards for any loan amount (Salaried and Self Employed).

Team Loan2Business can help you to arrange an customised Home Loan solutions with best-in-class services with simplified documentation and loan process. We can also help you to avail loans for purchase of new house, construction on NA plot and extension of house as well.

Loan Against Property (LAP)

To availed loan against property (LAP), purpose might be any as meeting expenditure on education, setting up a business ,marriage, healthcare, etc. other than speculative purpose. This is a secured loan that banks/NBFCs provide against residential or commercial property. This facility is applicable only for pre-owned property, no matter if the person are salaried or self-employed in a business or professional setup.

LAP loan is available at low-interest rates as compare to personal or unsecured business loan with tenures in range of 15 to 20 years. For loan bank/NBFCs will have to furnish the necessary documents as well as credit history, repayment capacity and marketability of the property to be mortgaged.

After an sufficient track record with bank/NBFC you can also apply for a ‘top-up’ loan, but this would depend on factors such as repayment history of a pre-existing home loan and outstanding balance on that loan, monthly income and loan to property value ratio. However, a fresh property appraisal is not required as the property is already mortgaged with the lender.

Points to remember before taking home loan in 2021

In this COVID-19 pandemic, the price of real estate has drastically crashed, also the rate of interest in home loan with multiple banks/NBFCs has also reduced. But with the fall in rate of interest in home loan the property market has turned into a buyer’s market.

If you’re are planning to buy own home in 2021, we have lined up few points to consider before going for home loan.

1] Go with the financial institution were no preclosure or part-payment fees are applicable

2] The tenure of home loan should be more, as few banks are going up to 30 years* maximum, in this case you’re per month emi burden will be less and you can pay part-payment to reduce the principle as per bank norms

3] Find out the relatively lowest rate of interest option with different Bank/NBFC

4] There are special offers for women applicants available with Bank/NBFC for home loan

5] There are few banks/NBFCs where they can fund up to 90%* of the property value for home loan

What does a banker check while giving a loan?

While giving a loan, a banker checks the following details :

Ratios as mentioned below –

Along with the ratio’s analysis, bank check following details as well:

If the banker finds that you will not be able to pay the interest and repay the loan, you’re your proposal will not get sanctioned.

So, you need to prepare yourself according to the banker because if you make things easy for a banker, then the banker will give you loan easily.

We as a team of Mind Visio calculate all your ratios beforehand and present all ratios to your desired bank for loan process. This will make the process fast and banker will understand how much borrowing you can avail.

RATIOS FOR CHECKING YOUR CAPACITY TO TAKE MORE LOANS

a. Interest Service Coverage Ratio

Interest Service Coverage Ratio = Income/ Interest Amount

Let us understand this with the help of an example.
Suppose you have taken a loan of Rs. 1 crore. You need to pay Rs. 10 Lakhs per year as an interest and your income is Rs. 20 Lakhs per year.

Your interest service coverage ratio is:

Interest Service Coverage Ratio = Rs. 20 Lakhs/Rs. 10 Lakhs = 2 times

So, you can easily give the interest 2 times in a year and thus, you have the capacity to take more loans. Interest service coverage ratio will be more if your income is more.

Taking the above example, if your income is Rs. 50 Lakhs per year and you need to pay Rs. 10 Lakhs per year, then your interest service coverage ratio is:

Interest Service Coverage Ratio = Rs. 50 Lakhs/Rs. 10 Lakhs = 5 times

Your capacity to take the loan increases with an increase in the interest service coverage ratio.

b. Debt Service Coverage Ratio

It is similar to the interest service coverage ratio; but, in this ratio, your loan is also serviced along with your interest.

Debt Service Coverage Ratio = Income/ Interest Amount + Principal Loan Amount

For example:
You have taken a loan of Rs. 1 crore, you pay an interest of Rs. 10 Lakhs per year and you repay Rs. 5 lakh per year as the principal amount of the loan. Your income is Rs. 20 Lakhs per year.
So, your debt service coverage ratio is as follows:
Debt Service Coverage Ratio = Rs. 20 Lakhs / Rs. 10 Lakhs + Rs. 5 lakh = 1.33 times

In the same case, if your income is Rs. 50 Lakhs per year and you pay Rs. 15 Lakhs per year including the interest and principal amount, then the debt service coverage ratio is:

Debt Service Coverage Ratio = Rs. 50 Lakhs / Rs. 15 Lakhs = 3.33 times

Your capacity to take the loan increases with an increase in the debt service coverage ratio.

c. Debt to equity ratio

It is the ratio that tells how much money an entrepreneur has raised from the market (i.e., the equity) with respect to the money he has invested in the business (i.e., the debt).

Debt to equity ratio = Debt/Ratio

For example:
If an entrepreneur has invested Rs. 100 in the business and raised Rs. 1000 from the market, then his/her debt-to-equity ratio is:

Debt to equity ratio = 1000/100 = 10 times

On the other hand, if an entrepreneur has invested Rs. 100 in the business and raised Rs. 200 from the market, then the debt-to-equity ratio is:

Debt to equity ratio = 200/100 = 2 times

Your capacity to take the loan increases with a decrease in the debt-to-equity ratio.

So, you need to take care of all these three ratios to check your capacity to take more loans. You can calculate these ratios with the help of your balance sheet and profit and loss account.