For housing loans, now pay a larger pie of property value

Prospective home loan seekers will now have to shell out 25% to 30% of the value of a property as against 20% until now with the Reserve Bank of India asking banks to exclude stamp duty, registration fee and other levies from total cost.
Effectively, this means that the 'loan to value' ratio has come down by 5-10% for home loans from what it was earlier.
Stamp duty and other levies vary from state to state. In Maharashtra, for example, stamp duty is 5%, while in Bangalore it is 8%, Kolkata 7% and New Delhi 4%.
In Mumbai, value added tax (1%), service tax (2.6%), registration fee and stamp duty add up to 9-10% of the cost of the property.
Experts believe the RBI's latest move is aimed at curbing speculation in the property market. They point out that in December 2010, in order to check excessive lending by banks, RBI had directed commercial banks against lending more than 80 per cent of the value of a loan against property above Rs 20 lakh and not more than 90 per cent for loans below Rs 20 lakh.
While imposing the new set of curbs, the RBI has said, "This overstates the realisable value of the property, as stamp duty, registration and other documentation charges are not realisable. Consequently, the margin stipulated gets diluted."
Property experts say the RBI's move does not bode well for developers as it may lead to a further drop in home sales. "In the short run, the decision will put additional strain on the home buyer, at least till economic conditions improve," said Pranab Datta, vice chairman of Knight Frank, a property consultants firm.
"It is unfortunate that inspite of clarity on importance of the need to provide shelter, RBI has issued such anti-housing guidelines," said Lalit Kumar Jain, national president of Confederation of Real Estate Developers Association of India.
However, Om Ahuja, CEO (Residential) with JLL, another property consultants firm, believes the new notification will not impact home sales.
"So far, individuals used to put in 20% of own money. Now they will have to pay for stamp duty and registration from their own pockets. I think borrowers can do that without much issue as their loan amount also decreases," said Ahuja.

Exploring better alternatives for Personal Loans

Acquiring a personal loan is intended for financing is intended for financing and managing a person’s financial needs. For taking finance, a person may apply for a loan or a credit card to purchase shares or any asset like home, vehicle etc. But, before deciding about the financial goals, a person must assess his or her financial situation. While using credit card or personal loan in financing, proper plan for management of debt burden is imperative.
Correct information should be given in the credit report. The most common errors that occur in the credit report are outdated information, which can stay on the report for seven years, and inaccurate marking like erroneous late payment, repossession and bankruptcy.
Prior to applying for a loan with a financial company, it must be ensured that best rates and terms are selected especially for first time borrowers. First time borrowers must initially determine how much to borrow and for how long to take for repayment. Lenders usually impose higher interest rates for loans on small amounts and so it makes better sense to apply for higher amounts of loans and use the surplus cash to invest with higher rate of interest. If that is frightening, it is advisable to write a budget of all the expenses including monthly bills and daily living costs. Then the expenses should be subtracted from the net income and 75 percent of the left over amount can be set apart for the monthly loan payment keeping the rest 25 percent as a buffer for other expenses.
In fact, there are viable alternatives to personal financing that can save money. For example homeowners can explore mortgage products and refinancing also will help to some extent. For a relatively lower amount, applying for a credit card can come in handy for people with poor credit if the intention is to pay off the debt in a short span of time. If the application for personal loan has been rejected, it is advisable to wait for one or two months before applying again.
Apart from all these hassles, to avoid dealing with emergency purposes-most of the personal loans are for this purpose -it is good if a small "emergency fund" is developed by entailing a few dollars away every month as savings.

Real Estate and Retail loans fall, Interest Rates hike

RBI found unequal rise in loans and real estate sector, Infrastructure sector. Banks provides lending to NBFC’s at high mass.
Banking regulator not found any clue of explosion in economy, but because of these the trends goes towards asset and liability mismatched.
Banking sectors concerns about inconsistent growth of credit in real estate, Infrastructure, NBFC and retail segment sector.
Bank credit to NBFCs saw 50 per cent growth in 2010-11, compared to last year. Loans to the infrastructure sector may reasonable. According to RBI data, credit growth to NBFCs on a y-o-y basis in September set at 46.2 %, considerably higher than 18.5 % in last year, while loan growth to the commercial real estate sector go up 12.6 % in September, The data also showed personal loans, or retail loans, increased by 15.2 % on an annual basis in September. Most types of loans, personal loan, housing, advances against fixed deposits, advances against shares, bonds and car loans, registered step up growth.
“Growth in infrastructure and personal loans raises risks to the banking sector, as these loans may raise asset-liability mismatches. The RBI also said the rollover risk of maturity of foreign currency convertible bonds may be an issue in need of attention.
Growth Table

	Real Estate	NBFC	Personal loans	Infrastructure
Sep 24,10 over sep 25,09	7.90%	18.50%	8.60%	47.39%
Sep 23,11 over sep 24,10	12.60%	46.20%	15.20%	20.30%
Sep 24,10 over mar 26,10	10.30%	10.80%	5.00%	23.62%
Sep 23,11 over mar 26,11	2.30%	4.70%	3.40%	7.28%

SBI Diwali Offers On loans and Gold 2011

State Bank of India (SBI) has brought many exciting offers this Diwali to help you celebrate the festival of lights in a grand way. These include car loans, home loans and gold sale.
"We are offering the purest form of gold coins at competitive rates in the market. All coins will be available at 1% discount," SBI's (Patna Circle) chief general manager Jeevandas Narayan said at a press conference here on Saturday.
SBI gold coins are available in denominations of 2gm, 4gm, 5gm, 8gm, 10gm, 20gm, and 50gm to suit the demands of customers. Customers can avail discount on all these denominations till October 30, 2011 only. A total of 110 SBI branches in Bihar and Jharkhand will be selling gold coins this festive season.
"We will set up exclusive counters on 'Dhanteras' at all gold coin selling branches to deal with the rush of customers. These branches will be kept open till 9pm on Dhanteras day," Das said. Currently, 2gm gold coin (99.99% pure) costs Rs 5,965 and 50gm coin Rs 1.43 lakh. SBI aims to sell over 50kg of coins on Dhanteras.
The bank also has offers for those wanting to avail car loans. SBI Car loan at an interest rate of 11.25% per annum till the end of this year. It will charge no prepayment penalty and no processing fee for it.
SBI home loan (below Rs 30 lakh) SBI will be charging 10.50%, which is a concession of 0.25%. Among its other features are free personal accident insurance up to Rs 40 lakh and no prepayment penalty.
Jeevandas also announced the launch of Vishwayatra Foreign Travel Card (VFTC) for SBI customers who want to go on foreign tour.
"Customers who have VFTC will get dollars when they use it to withdraw money in the United States. They will get currency of the particular foreign country which they are in. Customers can get these cards at 14 different major SBI branches (where foreign exchange facility are available) in Bihar and Jharkhand," Das added.
SBI has installed four permanent Self Service Kiosks (SSKs) to make transactions easy this festive season. One SSK each has been installed at its branches at Gandhi Maidan, Kadamkuan, Telco Colony in Jamshedpur and Ranchi branch. SSKs will perform various non-financial transactions, including pass book printing.
The bank has also come out with offers for NRIs, under which they can open accounts with SBI at zero balance and also avail various other services.

Choose the Best Deals this Diwali for urself

Previous couple of months has been tough for seller and customers due to high interest rates. But with festive season round the corner, festival season is considered auspicious for shopping, which means there will be more buyers.
Special Discounts and offers this diwali–
Discounts available during the festive season
• Buy Any products on Easy EMI’s Options.
• 0% processing Fees on loans and other goods.
• Get Cash Discounts on any purchase.
• Offers on Electronics Goods, Foods, Sweets Etc.
• Reliance Retail, Big Bazaar and Malls offers Discounts on hosted things.
• 0% Interest Rate on Credit Card EMI’s. (*Conditions Apply)
• Banks Charges Low Interest Rates and 0% processing fees on Home, Car and Personal loan to woo Customers.
Finally, But use credit card judiciously. Credit card is not free money but the most expensive money

Tornado Clouds dim Indian Economy

I have just returned home after three weeks of travel. And while it was exciting and eye-opening, it has also been grueling and exhausting. The last leg of my trip took me to Chennai in India.
I have often written to you about how India is booming and galloping along. And while that is true, I have noticed a distinct flaw in the armor now. India is slowing down at a rapid pace. We see that in the industrial production (IP) numbers, we see that in the slowing capital investments and we see that in the overall GDP numbers.
What is rescuing India today is the very healthy monsoon season that has just concluded in September. As I have mentioned a fair bit (about 33 %) of India’s GDP is dependent on monsoons. And we have had a few years of excellent monsoons here. That is holding up the Indian GDP above the 7.5 % or higher.
The industrial side of the equation has been hit hard by the relentless pressure of interest rate hikes by the Reserve Bank of India (RBI).
Property markets have hit a plateau, if not in slight decline. Even the CD rates have peaked and each incremental raise in rates does not translate into higher savings.
New home loans are running at 12 % and car loan can range 15 % or higher. It is no surprise that new car sales are struggling and home prices are in decline. And despite the pleas of the business community, the RBI stands steadfast in its attempts to crush inflation.
The twin deficits (trade and fiscal) are beginning to get worrisome and I can see the perfect storm developing for India. Despite the Indian rupee not being fully convertible, India is particularly sensitive to the global cues. The world seems to be descending into the second recession (if you can call the recovery a real recovery). And the risk aversion that has gripped the markets has hit India hard.
The Indian rupee has dropped by nearly 15 % in two months. The stock market has also seen enormous amounts of outflows by the Foreign Institutional Investors (FII). Dalal Street has narrowly escaped bear market territory, having declined by 19.5 % during the past three months.
And I do not believe we have seen the worst of it yet. If Europe continues to dilly dally, we will see the euro take another dive. And it will take the Indian rupee and Dalal Street with it.
What frustrates me is that India trades with Europe as others do, but is not directly affected significantly by the European slowdown. It is the market sentiment that is driving the market in frenzied moves.
While in the longer run, India will offer its investments at highly discounted rates, at this time, I would be sitting on the sidelines in cash.
This is actually a good time to send U.S. dollars into India awaiting the next leg up. Cash accounts can earn up to 6.5 % while waiting for the right moment to enter the markets.
I am taking advantage of this pause and sitting on the sidelines with the surplus cash. I have not completely exited the markets and have some long term value investments on the books. But cash allocation is significant portion of my portfolio today.
I do not believe India is down for good. It is pause waiting for the world to calm down a bit. A cooling down period if you want to call it that.
Today’s news of Slovakia holding Europe and Euro to ransom does not help any cause. But of France and Germany can get their act together before the end of October, we may have an incredible Christmas in India.
Source: Moneynews

Get a loan against the rent you are yet to receive

If you have rented out a property to an individual or a company, it can come handy during an emergency. You can get a loan against the rent you are yet to receive in the future from your tenant. Such a loan would be cheaper than a personal loan and your tenant will pay the equated monthly
Installments on your behalf. While most banks provide loans against rent receivables only if property is rented out to reputed firms and banks, some banks such as Indian Overseas Bank and UCO Bank provide a loan even if the premise is rented out to individuals.

Loan features
How much do they provide? Banks provide loans in the range of `50,000 to a few crores. The amount you can avail depends upon the quantum of future rental income that you would receive in keeping with the tenor of the lease.
Repayment tenor: This could be as high as 10 years depending on the lease tenor as well as your repaying capacity.
The cost: The rate of interest varies between banks but in general it is 50-100 basis points less than that charged on personal loans. You also need to pay processing fees which again varies from bank to bank and depends on the loan amount.

THE DOCUMENTATION
Normally, a bank enters into a tripartite agreement with you and your tenant, whereby the tenant agrees to pay the rent directly to the bank. The bank also signs a separate term-loan agreement with you. You would be required to submit a few documents including the tenancy agreement, authorized building plan, title deed of the property, your bank statements , I-T returns and PAN number.