How you can get yourself a cheaper home loan

Getting an approval for your home loan was once a hectic process. With the fast development in the technology world, the finance and banking world has also changed significantly. In this fast developing world, many private banks arouse and made lending easier to common people competing with the nationalized bank.

If you are seeking information on the cheapest home loan rate simply type the keywords on the Google search tab and you will instantly get all the best home loan deals based on the information you provide.

If you are aware about the home loan industry you will also be aware of the changes that happen often. Interest rates can remain steady, or rise, or fall, which will impact on loan interest rates as well.

In case if the BR (base rate) rises, it will apply to both existing and new customers, whereas the increase in spreads will apply to new borrowers only. The Reserve Bank of India defines the spread as an extra amount the banker adds to cover credit risk or profit mark-up, etc.

If you have already taken loan and if your lender raises the spread then you can shift to the older spreads by closing the existing loan and can sign a new one, or else you can shift to a new lender. However, the existing lender will allow shifting to the lower spread by paying a switchover fee, to retain you.

The aggregators, who provide bulk customers to the lenders, will also negotiate for better spreads with the lenders. An Individual borrower who has good reputation with his credit score can also negotiate with the lenders for better spreads. If you convince the lender that you have a better offer from a competitor, then chances are there that you might be offered better spreads in order to retain you.

Mr. Vipul Patel, a Home Loan Advisor of a Mortgage firm says that there is no standard formula for banks and banks can go down to 25 bps (base points) of margin over the BR, if the customer has a good credit history, or property values, or disposable income.

SBI to go for Massive Development of 22% in its Bangalore Home Loan Section

Ongoing promising trends in Bangalore’s real estate section have prompted State Bank of India to go for about 22 % hike in home loan portfolio, which would amount to nearly 2,200 crores in this fiscal term. Activities are in full swing from their end to make this happen at the earliest. This is likely to be a far-reaching move by India’s largest lender as about ninety-nine percent of their home loan sales are happening in the Bangalore city.

Ashwini Mehra, SBI Bangalore’s Chief General Manager further elaborated on plans to open new processing centers in the outskirts of city as well. The Bank has seen a steady growth and is much ahead of other nationalized home loan providers in Bangalore. The areas on focus in terms of expansion are likely to be Peenya, Hebbal or Yelahanka side.

SBI enjoys dominating presence in Tier II cities as well and is willing to explore the probabilities in regions like Belgaum, Mangalore, Mysore, Gulburga, Hubli etc. The real estate in Mangalore and Mysore is showing significant development and SBI is trying to create the same results in Belgaum, Hubli or Gulbarga.

This is in recognition of growing interest in Bangalore properties by tier II residents.

RBI asks Banks to Link Home Loans according to Stages of the Construction.

To safeguard the interests of buyers and contain the fallout of "innovative" housing financing schemes, The Reserve Bank of India has asked all banks to link the disbursal of home loans according to the stages of construction.

Because of the higher risks linked with customer suitability issues and such lump-sum disbursal of sanctioned housing loans, banks have been advised that the disbursal of housing loans sanctioned to individuals should be closely related to the stages of construction of the housing project/houses...,"

Upfront disbursal "should not be made in cases of incomplete/under-construction/green field housing projects"

The announcement follows the introduction by some banks of "innovative housing loan schemes" in association with developers/builders, where upfront disbursal of housing loans is made to builders without being linked to the various stages of construction.

Also, under such schemes, the interest/EMI on the housing loan availed of by the individual borrower is serviced by the builder during the building period. RBI said that “These loan products are popularly known by names such as 80:20 and 75:25 schemes.

The RBI said such home loan products are expected to expose banks and their borrowers to additional risks.

The risks consist of disputes between borrowers and builders; default and delayed payment of interest/EMI by the builder on behalf of the borrower, and non-completion of the project on time.