ATM :: How to reduce your home loan interest rate

RoofandFloor | AUGUST 09, 2017 10:00 IST | The Hindu

ATM

Nothing compares to the joy you experience when months of patience leads to the discovery of your dream home. This is followed by a home loan application, with the final choice being governed by the interest rates on offer.

While the current home loan interest rates available in the market have seen a reduction, even a little difference between the rates offered by the lender can be the difference. You might feel like you managed to strike gold with the rate you received from your lender, but here are a few things you can look out for to reduce your interest rate even further.

Shorter duration

While a shorter home loan tenure may increase your EMI, it ensures that your principal amount is repaid earlier. Since the rate of interest is calculated on the principal, once the bank recovers the principal amount, the absolute interest pay out decreases marginally. However one must be aware that higher EMI reduces your ability to borrow in future. With the regulator ruling prepayments on floating rate home loans should not be charged any penalty, the borrower can higher prepayments / EMIs keeping the base tenure longest.

Set EMI targets

Make it a goal to pay an extra EMI every year. This will help to get to the finish line much before than expected. Not only that, in the months your finances seem to have a better cushion, add the surplus to your EMI as it will help reduce your principal amount as well as the interest.

Increase your EMI annually

With your annual salary appraisal, get into the habit of increasing your EMI every year by at least 5%. This will allow you to repay the principal much faster and reduce your interest.

Refinance your housing loan

If you come across a financial institution whose housing loan interest rate is lower than the one being offered by your current lender, then think about switching to the other lender.

Your interest repayment burden can easily be reduced by refinancing your home loan at a lower rate of interest. However, before you take the plunge, do check the legal fee and the prepayment penalty associated with the process. It would be wise to do a cost analysis to make sure that the savings from a lower rate of interest are higher than the amount spent during the refinancing process.

Move to marginal cost of funds based lending rate

Post-April 2016, all banks moved from base rate to MCLR or marginal cost of funds based lending rate, as it allows borrowers to benefit from changes in the rate of interest.

If you took a loan before April 2016, then ask your bank to switch your loan to MCLR. Banks tend to levy taxes as well as a conversion fee of 0.5% on the outstanding amount that needs to be repaid, so a cost analysis would again be beneficial.

Though every borrower tries to avail the lowest possible rate of interest, make sure the option you settle for fits comfortably with your monthly financial budget. While your aim should be the repayment of the principal amount at the earliest, don’t set an EMI amount that starts to seem like a burden. Once that happens, you are bound to miss payments!

This article is contributed by RoofandFloor, part of KSL Digital Ventures Pvt. Ltd., from The Hindu Group

Source: https://goo.gl/gk2P4H

NTH :: Income Tax Filing Date Extended. You Can Claim HRA Without Landlord’s PAN

Taxpayers who missed the earlier ITR (income tax return) deadline of July 31 can now file their tax returns by August 5.
Business | NDTV Profit Team | Updated: August 02, 2017 09:57 IST

NTH

The government has extended the deadline for filing of income tax return (ITR). Taxpayers who missed the earlier deadline of July 31 can now file their tax returns by August 5. Can you claim HRA (house rent allowance) if the landlord is not providing you his or her PAN? If the annual rent paid by the employee exceeds Rs. 1 lakh per annum, it is mandatory for the employee to report the landlord’s PAN to the employer. The tax law also says that in case the landlord does not have a PAN, a declaration to this effect from the landlord along with the name and address should be filed by the employee.

Tax experts say that an employee can still claim tax benefits under HRA in his or her tax return. “The requirement for furnishing PAN of landlord is only to one’s employer only. However, once a person is to file his/her income tax return, there is no requirement to furnish the PAN of landlord,” says Sandeep Sehgal, director of tax and regulatory at Ashok Maheshwary & Associates LLP.

Even if the company may not allow HRA exemption to the employee, due to non-availability of PAN or declaration by the landlord about not having PAN, still the employee has the option to claim so while filing his or her income tax return, he says.

Mr Sehgal however says that it could attract scrutiny from tax authorities. “The tax authorities can examine the cases to verify the genuineness of the claim made by the employee,” he says. “It is expected that HRA claims will be closely scrutinised henceforth considering the consistent introduction of measures during past few years. In fact, the chances are greater if the claim doesn’t appear in Form 16 but claimed in the return.”

To substantiate the claim, the employee needs to keep a record of the rent agreement/lease deed, rent receipts, intimation to the society for the occupancy etc., says Mr Sehgal. Also, it is advisable to ensure that the payments are made through bank as cash transactions may not be considered genuine, he adds.

Source: https://goo.gl/TPMZVo

NTH :: RBI makes home loans above Rs 75 lakh cheaper

Mayur Shetty | TNN | Updated: Jun 7, 2017, 03:10 PM IST | Times of India

NTH

MUMBAI: In a move that will encourage banks to lend more for housing in large cities and make high value home loans cheaper, the Reserve Bank of India reduced the risk weightage on home loans above Rs 75 lakh to 50% from 75% earlier.

“Considering the importance of the housing sector and given its forward and backward linkages to the economy, it has been decided as a countercyclical measure, to reduce the risk weight on certain categories. It has also been decided to reduce the standard asset provisioning on such loans,” RBI said in its monetary policy.

In its monetary policy review the RBI retained the repo rate at 6.25% and the reverse repo rate at 6%. The marginal standing facility (MSF) – an emergency funding facility continue to remain at 6.5% as also the cash reserve ratio of 4%.

In another move that will ease liquidity in the banking system by close to Rs 50,000 crore, Reserve Bank of India has reduced the statutory liquidity ratio (SLR) – the prescription for minimum holding of government securities. As against investing 20.5% of their deposits in gilts, banks will now have to invest only 20% with effect from June 24, 2017. RBI said that the reduction was aimed at allowing banks to comply with the international norms on liquidity coverage that come into effect from January 2019.

It was widely expected that the central bank would keep rates on hold. However, economists believed that RBI would ease its stance from `neutral’ to `accommodative’ to send a message that easy money conditions would prevail. The central bank however continued to maintain a neutral stance on the ground that easing of prices might be temporary. It also pointed out that fuel prices have been hiked since the inflation numbers were published and prices might rise further.

Source: https://goo.gl/6c974Q

ATM :: 5 reasons why mutual funds have tanked up on banking stocks

Despite the red flags staring at most Indian banks, mutual fund managers do not seem to bother about them. Reports say that the allocation to the banking sector by mutual funds has reached an all-time high of Rs 1.47 lakh crore at the end of June.
Shishir Asthana | Moneycontrol Research | Jul 28, 2017 06:14 PM IST | Source: Moneycontrol.com

ATM

In a recent survey conducted by Moody’s Investor Service, 70 percent of market participants pooled said that India’s banking system was the most vulnerable in South Asia. Stress in the banking system has made headlines for over three years now. Analysts, experts, and economists have all predicted doomsday which has not yet come. However, to be fair to experts the balance sheet numbers of the banks have continuously deteriorated in most of the cases.

Despite the red flags staring at most Indian banks, mutual fund managers do not seem to bother about them. Reports say that the allocation to the banking sector by mutual funds has reached an all-time high of Rs 1.47 lakh crore at the end of June.

Why would funds like to invest in banks which everyone fears will implode? Here are five reasons we think banks are on mutual funds’s radar.

Valuation: Given the current valuation in markets, very few sectors offer a good risk-reward bet. With Nifty over 10,000 and market price-to-earnings in the top quadrant, there are few sectors and stocks that offer value. While Bank Nifty has touched a new high of 25,030, there are stocks in the sector, especially in the public sector space, that offers better valuation but higher risk.

Liquidity: Mutual funds in India are witnessing heavy inflows. New investors and higher investment through systematic investment plan (SIP) is compelling mutual funds to take more risks. Despite record investments in the banking sector, mutual funds are still sitting on cash levels of 5.7 percent on an aggregate basis. Some funds have cash positions ranging between 8-18 percent. Peer pressure and rising markets compel them to invest.

Index weightage: One parameter that every fund manager is ranked on is his performance with respect to the index. As weightage of banking stock in the index is high at near 30 percent, fund managers are compelled to buy banking stocks in order to be close to the index performance.

Too precious to fail: Though asset qualities of most banks are questionable these banks are all too big to fail. For the government and the central bank, it will be very embarrassing to allow a bank to fail. Both the central bank and the government have been trying to recapitalise banks, tweaking the rule books, bringing in new schemes to help banks clean up their books. Bankruptcy law is now cleared and cases are registered. This is expected to go a long way in recovery and solving the problem with bigger non-performing assets. Apart from these measures, the government has also initiated merging of weaker banks with the stronger ones, in turn, creating a bigger and stronger bank.

Proxy for growth: The banking sector has traditionally been considered as a proxy for the economy. Every activity in the economy requires money. Banking sector credit growth has historically been between 2-2.5 times GDP growth. However, with the toxic asset problems and other sources of non-banking finance available in the market, the ratio has fallen to nearly 1.6 times the GDP. This ratio is expected to improve as banks start lending again in line with the growth in the economy.

Source: https://goo.gl/fRA8CU

 

NTH :: Availing government’s home loan subsidy

India Infoline News Service | Mumbai | July 30, 2017 11:44 IST
The National Housing Bank and Housing and Urban Development Corporation (HUDCO), which are the nodal agencies for the subsidy scheme, are implementing the scheme through various banks and housing finance institutions.

NTH

The Government of India launched a home loan subsidy scheme for urban dwellers in August 2016. The National Housing Bank and Housing and Urban Development Corporation (HUDCO), which are the nodal agencies for the subsidy scheme, are implementing the scheme through various banks and housing finance institutions.

The scheme offers a subsidy of 6.5% on the interest on home loan, subject to or a maximum amount of Rs 2.20 lakh, depending on the rate of interest. Hence, if the rate of interest on the home loan is, say, 8.5%, the actual rate of interest payable by the borrower is just 2.5% (8.5% less 6.5%).

The scheme can be availed by persons belonging to economically weaker section (EWS) whose annual household income is less than Rs 3 lakh and by those belonging to lower income group (LIG) whose annual income is between Rs 3 lakh and Rs 6 lakh. The maximum age limit for the scheme is 70 years. Also, the maximum loan amount eligible for subsidy is Rs 6 lakh and the maximum tenure of loan is 15 years. The maximum size of the house should not exceed 30 sq. metres (carpet) for EWS applicants and 60 sq. metres for persons belonging to LIG. The loan can be availed for the purpose of buying under-construction or ready-to-occupy home from a builder or for self-construction of a new house or extension of an existing house.

To be eligible, the borrower should not have any home in his/her own name or in the name of his/her family members.

Disclaimer: The contents herein is specifically prepared by ‘Dalal Street Investment Journal’, and is for your information & personal consumption only. India Infoline Limited or Dalal Street Investment Journal do not guarantee the accuracy, correctness, completeness or reliability of information contained herein and shall not be held responsible.

Source: https://goo.gl/qhdx85

NTH :: Need PAN of your bank to avail home loan benefit? Here’s the list

ECONOMICTIMES.COM|Updated: Jul 19, 2017, 03.57 PM IST

NTH

The need to disclose one’s permanent account number (PAN) has become essential in almost all financial transactions. But, when it comes to quoting bank’s PAN to avail certain tax benefits on home loan, not many could be aware of the same. And, locating the correct PAN of the bank may not be an easy task as well. Here’s a list of all bank’s permanent account number (PAN).

As a salaried individual, if you have taken a home loan and looking to get the tax benefit on the principal repaid and the also on the interest paid, providing certain details about the home loan such as home loan lender’s name, date of loan disbursement etc, to your employer was a necessary requirement. In addition to such details, one has to furnish the PAN of the lender as well. Locating the lender’s PAN may not be an easy task for many. Here is a list of banks with their PAN to help you furnish complete details to your employer.

As per the Rule 26C of the Income Tax Act, it has become mandatory from 1st June 2016, for the employee to furnish certain details to the employer for claiming the tax benefits on salary income. For this, the employee needs to fill and submit Form 12BB to one’s employer to claim tax benefits or rebate on investments and expenses.

The Form 12BB is basically a statement of claims by an employee to claim tax deduction on leave travel allowance (LTA), house rent allowance (HRA), deductions under chapter VIA (Section 80C, 80D etc) and interest paid on home loans.

Among other things as mentioned above, in the Form 12BB, one has to furnish specific details about the home loan:

(i) Interest payable/paid to the lender (during the financial year)
(ii) Name of the lender
(iii) Address of the lender
(iv) Permanent Account Number (PAN) of the lender

Use the information on this page to locate the PAN of your banker.

In case you want to confirm it, you can click here to verify it from the government website.

Need PAN of your bank to avail home loan benefit? Here's the list

Source: https://goo.gl/UBPdcP