Prepay your personal loans, Take top -up

The home loan and personal loan cannot be clubbed since both are different products. You can ask your home loan lender to give you a top-up loan on the security of the house and use that to prepay your personal loan. You will be eligible for a top-up loan only if your income is sufficient to repay both the home loan and the top-up loan and the property value is sufficiently large to provide an appropriate margin for both loans put together. If your existing home loan lender is not willing to consider your request, you can shift your loan to another lender with a request for a top-up loan which is likely to come at the same rate on the home loan.
* I had applied for a credit card from the bank in which I have a savings account. But they have rejected my application. What could be the reason behind such action?
Before issuing credit cards or for that matter any credit facilities, banks obtain the credit report of the applicant from the Credit Information Bureau of India Ltd (CIBIL). A bank can reject the credit card application if the applicant has a bad credit record or inadequate income. You are entitled to know the reason for the rejection of your application from the bank. Ask for a formal rejection letter and if the bank refuses, then you can file a complaint to the banking ombudsman at bankingombudsman.rbi.org.in. You can get a copy of your credit report from CIBIL using this link www.cibil.com/ credit-score to download the form.
* I am a 44-year-old businessman, with an annual inco-me of Rs 3.5 lakh. I have a life insurance cover of Rs 12 lakh. Please tell me if this cover is enough; if not please suggest me an action plan.
Considering your age and annual income, you need to take a life cover of at least 12 times of your annual income — i.e Rs 42 lakh. So you need to take an additional life cover worth Rs 30 lakh. A term insurance policy for a 44-year-old non-smoker for 25-year term — if bought online — would be cost you upwards of Rs 11,289.
I have been investing in Reliance mutual fund growth SIP since last three years. The return is not satisfactory. I can continue my contribution to SIP for the next three to five years. Is it advisable to continue my SIP or withdraw in loss?
Never stop an SIP when the market is down. Generally, investments made in the downturn reduce your average cost and produces excellent returns over the long term. So you should definitely continue the SIP though you can review whether the fund chosen by you is still appropriate or not. Reliance MF-Growth is a mid-cap fund. By looking into the fund performance, it has not beaten its respective benchmark returns.

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%

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

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.

Tips for get a low rate personal loans

Personal loans are handy when you are in a spot and need some urgent cash. However, personal loan are tricky and you need to know as much as possible about their basics before applying for one.
Before you choose your personal loan:
Calculate the inexpensive loan offer: Personal loans come with very high interest rates ranging from 14% to 24%. Compare personal loan interest rates and get the complete picture by understanding the annualized interest rates for each offer.
Then figure out the total amount of repayment you need to shell out with all the offers before opting for the loan of your choice.
Processing fee et al: You need to keep in mind the processing fee and other fees that will be levied when you apply for your personal loan.
Prepayment penalty check: Ask upfront if there would be any penalty payments for prepayment of the loan at any point in time. More often than not loan consumers tend to pay up their loans earlier than planned to be rid of debt. Hence, its important to know if your personal loan offer allows part prepayments.
If that is the case, then you should be aware from what time frame in the loan period you can start prepaying and understand the cost you incur due to such prepayments in part or full.
EMI and tenure: Evaluate all loan offers. The first condition for loan offer selection is the total money outflow that the loan will cost. The second factor is the EMI. A loan offer with a lower EMI and a longer tenure may seem attractive, as it could be easy on your purse strings, however not all such loans prove to be cost effective in the long run.
Hence, first calculate the total loan cost and then try to opt for a higher EMI, which you can comfortably manage to enable shorter loan tenure.

Gold loan: A more precious debt option

If you have gold jewellery to offer as collateral for personal loan, procedural hassles are minimal and banks don't check your credit score.
The amount of documentation and the excessive verifications before your personal loan gets processed can be a nightmare.
Here is where your jewels can lend a hand, specifically gold.
With the current interest rate fluctuations, opting for a jewel loan as against a personal loan is more lucrative. Not only are your overall costs reduced, this will save a lot of your time.
The Credit Information Bureau (India) Ltd  Score which reflect an individual's credit history are beginning to play an important role in acquiring personal loans. However, a jewel loan requires no such score.
While the requisite documents for a jewel loan differ across lenders, most normally require no more than a proof of income or address.
The clincher: the interest rates between a jewel loan and a personal loan can differ by as much as 5-8 per cent for the same amount loaned.
Some lenders charge a nominal fee for processing and others a small fee as closing charges. Co-operative banks require you to be a member, charges for which, again, can be as low as Rs 5.
Jewel loans can be availed of at co-operative banks, public sector banks, private sector banks and other private lenders. Some banks, however, offer it only in certain regions, the only disadvantage.
While private lenders process the loan in less than a couple of hours, some co-operative and public sector banks may take up to a day to issue the loan.
In any case, the time is much less than the minimum three days of processing time for a personal loan. Loan to value, or the maximum ratio of a loan's size to the value of the asset, for a jewel loan is on par with that of a personal loan.
The Reserve Bank of India has no strict policy on jewel loans.
In late 2007, the RBI had issued a notification which permitted bullet repayment (a lump sum payment of the principal at maturity) of gold loans.
Subject to specific guidelines from the apex bank, each bank may fix its rate for gold, reflecting the market price at that point of time.
Care should be exercised if you have defaulted on a loan earlier, be it personal or any other. Your jewels might not be returned at the end of the loan tenure if you approach the same branch.
Approaching another branch or bank in this case would be one solution, as they would not have any record of your default history.
A State Bank of India official, however, cautioned that some time in the near future, they would start looking at Cibil scores before approving a jewel loan.
The loan tenure is not uniform across banks. With private lenders like HDFC Bank and some co-operative banks, the tenure is annual.
Non-banking financial companies like Mannapuram Finance have one-month tenure. But, an advantage with monthly renewals is that the loan value also increases every month with the appreciation of gold.
At SBI, the individual must repay some amount of the principal along with the interest every month, as non-repayment for a continuous period of three months will render the loan a non-performing asset.
Considering the advantage a jewel loan offers in terms of a rent-free locker, a little bit of juggling can even help you save renting a locker for your jewels! (Obtain a fixed deposit on the loan, which should work out lesser than the rent charged on lockers.)
Of course, it makes more sense to opt for a jewel loan from a public sector bank or a co-op bank, as some private lenders have had a history of shutting down and not returning the gold.

Personal loan and loans of personal use

Personal loans are loans supposing by financial institutions without objects or security. Personal loans are unsecured loans for personal needs and can be used for any purpose. In India, personal loans are normally at the level of life are to manage, weddings, business graduation losses and investments in opposite monetary arrangements. These personal loans are really gentle and encounter all your needs. The volume of the personal loan of Rs 50 000 can Vary – R. 20 lacs and the generation of the amends of the loan varies personal 1-5 years.
In India, high-interest in isolation loans since the bank takes a incomparable series of risks, by personal loans without security. In India, personal loans from banks such as SBI, ICICI, HDFC and monetary institutions like Reliance etc. This supposing banks / monetary institutions rest on personal loans for people with seductiveness rates of in between 16-25%.
You can request for loans and might not benefit from these personal loans immediately. It is not required to the unchanging use of borrowed money divulge I. e for the role of borrowing for home loans. The banks are endangered that if the borrower does not pay off the loan with seductiveness before the due date or not, and they reliable by a review of income, practice or business and other factors of the borrower.
The support process is in the personal loan fast cumulative loans in more aged to others. Personal loan and other charges on credit by the lender, the stroke on the overall cost of personal loans and contingency as a more aged with the banks. You can additionally request online to the information accessible on personal loans. The particular websites of assorted banks and finance associated websites for other applicable information to guide the people for a personal loan.

personal loan disbursals down to 4.7%

Growth in personal loans was muted in 2009-10, data from by the Reserve Bank of India’s (RBI) macroeconomic report shows. However, education loan and home loans have not as fared as badly as the rest of the personal loan constituents.
Personal loans grew 4.7% annually as on February 26, 2010, as against a 6.6% growth a year ago. Loans to education sector grew by 31.2% (33.8%) annually while housing loans grew by 8.3% (6.4%).
The Macroeconomic and Monetary Developments in 2009-10 report, is a background to the annual monetary policy statement for 2010-11 that will be announced today.
“Low home loan (teaser) rates helped the growth in disbursements,” said Hatim Brochwala, banking analyst, Khandwala Securities. During the recovery from the global economic downturn, the housing loan segment witnessed a tide of teaser home loan schemes from banks which offered low fixed interest rates in the first few years and floating rates thereafter.
Most of these schemes have been discontinued but some have been revised with changes in interest rates and tenure.
“Teaser rates may not stay for more than 2-3 months as interest rates are going up. So the growth in home loans may come down slightly,” said Brochwala.
Growth in educational loans can also be attributed to higher demand. “During the downturn, many people went for further studies for which they had taken bank loans,” said M Narendra, executive director, Bank of India. “Now that the economy is recovering they can effectively use their higher qualifications pursued during the time of recession,” he said.
“The government has been emphasising on education loans, which is reflected in its guidelines stating that an educational loan can only be rejected by the highest authority. So almost all educational loans applied for are sanctioned,” said C S Jain, head (personal banking), IDBI Bank. Moreover, loans of up to Rs 4 lakh do not need a security, according to RBI guidelines.
The personal loans segment also includes advances against fixed deposits, credit cards and consumer durables.
The credit card segment took a hit due to heightened caution on the unsecured loans front by banks post recession. Issuances were restricted to individuals holding salaried accounts or having multiple relations (fixed deposits account, insurance etc.) with the bank in some cases. This segment declined by 28.3% annually.

Personal loans for jobless, Live Tension free life

Living a tension free life during unemployed status is very hard to live as a person has to be thrifty and stingy. During such time, a person can bear all this except meeting of high-end needs and desires. To sort out such a problem, unemployed or jobless people can avail personal loans for unemployed. Under this option, the borrowers can avail either secured or unsecured loans.
Secured Personal loan option is availed by those jobless people who have valuable collateral to boost on. The collateral can be anything that can fetch good amount for meeting the necessities. Usually, the lender accepts home, building, real estate, etc as asset against the loan. The borrower can avail amount depending upon the collateral’s value. Larger the collateral value larger will be loan amount with flexible repaying option. The interest rate charged is quite feasible as lender feels secured for his amount.
Usually, the borrowers can avail amount ranging from 50000- 150000. This amount has to be repaid back in flexible period of time say 1-10 years. The interest rate charged is quite feasible in nature. The amount can be extended according to the equity value of collateral. The borrower can avail 125 % of amount from his collateral.

ICICI Bank aims at 15% growth

After having raised its ratio of low-cost deposits and pared unsecured loans, ICICI Bank plans to grow its balance sheet size by 15% in 2010-11, improving upon this year’s flat growth.
The bank would continue to grow its retail loans portfolio, project finance and working capital loans but would see the share of unsecured loans shrink, CEO & MD Chanda Kochhar said at the Idea Exchange programme of The Indian Express on Monday.
“The focus this year has been to change the composition of deposits and assets. We would probably end up with a flat balance sheet, but within that one could see a substantial change in the mix, with CASA (current account savings account) deposits going up and wholesale deposits coming down. Similarly, on the assets side, the secured loans might go up and the proportion of unsecured Personal loan and credit cards could come down,” Kochhar said. The bank’s CASA ratio has improved from 28% in 2008-09 to 38% now, she said.
She said the bank’s asset base will increase in 2010-11, with the pick-up in investments and credit demand in the second half of the next fiscal. “My estimate is that in these businesses (home, car loans and project and working capital finance) that we want to grow, we will be able to achieve 20-22% growth. Because some parts (unsecured loans and credit card) of our balance sheet will come down, net-net we may grow at 15% in the coming year,” Kochhar said. This would expectedly help ICICI Bank improve the market share it has been losing to rival banks.
While State Bank of India’s market share of assets rose from 15.9% in 2007-08 to 18.4% in 2008-9, ICICI Bank’s share fell from 9.7% to 7.2% during the years. HDFC Bank raised its market share from 2.6% to 3.1% in the same period. ICICI Banks’ asset base declined to Rs 3.8 lakh crore in 2008-09 from Rs 4 lakh crore in 2007-08. In the first quarters of the current fiscal, the asset base went further down to Rs 3.56 lakh crore.
She also expected investment to become the next driver of economic growth, supplementing the consumption-led growth seen in the past.
“The peculiar thing about India is that investments are being driven by underlying demand. Unlike other countries which have to force investment today, I think our investments are just fundamentally driven by demand and that is why they are much more productive.”
She said corporates are gearing up to invest and there is an up-tick in loan approvals. When asked what reform measures are needed to boost investment, she said procedural changes in areas like land acquisition, model concession agreements, termination clauses and dispute resolution would be of tremendous help. “That is more important for us to kick start investments. I don’t see big-bang reforms are required,” she added.
On the new banking licences proposed by the government, she said, “I think competition is always good for the customer. But what one has to see is the prudence and regulations in giving licences to new players. I am sure the RBI will take all that into account and come up with the detailed guidelines.”...

Caution is key word at banks as NPAs fly

Banks’ non-performing assets have shot up nearly 30% at the end of calendar 2009 from a year ago due to stress in many sectors and farm loan waiver, indicating sharply lower profits for banks and possibility of curbs on exposure to sectors that have contributed to the bad assets.
In a reply to the Rajya Sabha, the government said the overall NPAs have increased to Rs 80,023 crore at the end of December 2009 from Rs 61,647crore at the end of December 2008, an increase of over 30%. “Banks will be more cautious towards lending to sectors such as real estate, exports and even retail loans,” says a senior banker with a private bank. A number of private banks have already curtailed their retail lending, specially personal loan.
A recent report by Fitch ratings on ‘banks’ restructuring loan portfolio’ pointed that restructured bank loan worth Rs 30,675 crore may turn bad in 2010-11 and further push up banks’ gross non-performing assets (NPAs) on an average by one percentage point.
State-owned banks, however, feel that the rising NPAs will not impact their profitability and that NPAs are minuscule as compared to the total advances.
“If you look at our figures, the gross NPAs are at 1.8% of our total advances. Besides, all banks have been making provisions for these loans, which have been reflected in third quarterly results. There will be some caution but it’s not over-exercised,” said CGM Punjab National Bank, RIS Sidhu.
The bank reported a flat 1% increase in the net profit to Rs 1011.31 crore for the third quarter of this financial year.
Country’s largest lender, State Bank of India (SBI) also feels that increase in NPAs would not result in lending curbs. “There are no indications that loans to a particular sector has totally gone bad. Every sector has reported bad assets and there seems no reason to stop lending to any particular sector,” said chief financial officer SBI, SS Ranjan.
Incidentally, the gross NPAs to gross advances for the public sector banks has also shown an increase of 0.27% as compared with last year.
In a move that could put more pressure on PSBs, the government has allowed an extension for loan repayments to large farmers under the Agricultural Debt Waiver and Debt Relief Scheme. The total amount under the one time settlement (OTS) for large farmers is estimated at Rs 10,000 crore.

Personal loan as a short-term finance option

In the last few weeks, calls from telemarketers have already gone up asking you to sign up for personal loans. The difference this time is that most banks want to lend to their own customers and in many cases, customers are being offered pre-approved loans to cut down on processing time.
While a personal loan is a short-term finance option, it is often used by many for long-term needs. In the process, a borrower ends up paying up a higher interest amount if he fails to clear the loan on the due date. On the contrary, a personal loan can be a handy option if chosen with care.
How to make better use of a personal loan?
Some tips to help you make better use of a personal loan:
Compare total interest payable
A personal loan with an interest rate of 14-28 percent is a better option than a high cost credit card loan as the latter charges interest in excess of 35 percent.
The same holds good for those who are in the habit of taking hand loans which carry higher rates. For such borrowers, a personal loan would be a cost-effective option and more importantly, it enables the borrower to repay the loan in totality.
Repay the loan in short to medium terms
Often, salaried professionals use a personal loan as a component of property investment. The margin money of the property cost is funded by a personal loan.
The idea is good provided the borrower is in anticipation of some funds coming in a few months later, and is in a position to clear the loan. Or else, the loan amount should not be more than a few lakhs so that it does not pinch the borrower considerably.
For instance, if a property investor is short of funding to the extent of Rs 2-5 lakhs for a property which is valued in excess of Rs 50 lakhs, the implications would not be severe. On the contrary, if the borrower depends on the personal loan to take care of more than 25-30 percent of the property cost, the chances are that he would be unable to repay the loan in the short to medium terms.
EMI a determining factor in personal loan
Keep track of EMI
Unlike other loan products, the EMI is the determining factor in a personal loan.
Since the loan is for a shorter period of time, the EMI is much higher, which is also the reason why some struggle with their cash positions after signing up for a personal loan. Hence, a personal loan should be determined by the EMI component rather than just eligibility.
This will help the borrower to be realistic with the loan repaying capabilities and not get into a default.
Keeping good credit track record
Be a good borrower
Signing up for a personal loan may be the easiest thing to do but make sure to be a good borrower as non-repayment or lack of commitment towards repayment can tarnish the creditworthiness. With banks providing details of all borrowers to the common database under the Credit Information Bureau (India) Ltd (CIBIL), a negative entry relating to payment history can make it tough for all future loans.
Also, borrowers need to make sure to complete the documentation relating to disputed loans as a failure to do so may make it difficult for future borrowing.

Personal Loan v/s Credit Card Withdrawals

V/S                                        
A personal loan is easy to get, but do your research on cost, term and services.
Personal loans enable you to take care of instant necessities without much hassle. You do not have to provide security or guarantor; you can utilise the amount of loan for any purpose, except speculation. But, before taking, you should plan your requirements and assign the operating expense to be met with this loan.
The amount approved will depend on your eligibility, based mostly on your income. The repayment is monthly and the tenure varies from one to five years. Since personal loans do not require any security or hypothecation of resources, the banks charge higher interest rate compared to other secured or protected loan like home loan.
On the other hand, let's say you want to take the loan money through your credit card. How does this compare?
Foremost, withdrawing cash using a credit card can be very costly if you do not repay quickly. Interest rates on credit card loan withdrawals can range from 20-40 per cent on an annual basis. For nearly all cards, the interest rate on cash withdrawals and credit outstanding for purchases made are the same. But here is the kicker - for the purchases you make through your card, you get an interest-free period to pay back. Cash withdrawals on your card have no such benefits; interest is charged from the moment you withdraw the cash.
And, do not forget the transaction charge, levied on the withdrawal at the ATM. The average interest rate charged for a personal loan is in the range of 12-22 per cent , whereas the average interest rate is 20-40 per cent for withdrawal from a credit card.
Therefore, unless in a very real emergency where you need instant cash, it is advisable to not withdraw cash on your credit card. It is always better to go for a personal loan. It is the fastest of all retail loan products and the interest rates are a lot lesser than those on credit card withdrawals.

How Personal Loan process works.

A personal loan is easy to get, but do your research on cost, term and services.
Personal loans enable you to take care of instant necessities without much hassle. You do not have to provide security or guarantor; you can utilise the amount of loan for any purpose, except speculation. But, before taking, you should plan your requirements and assign the operating expense to be met with this loan.
The amount approved will depend on your eligibility, based mostly on your income. The repayment is monthly and the tenure varies from one to five years. Since personal loans do not require any security or hypothecation of resources, the banks charge higher interest rate compared to other secured or protected loan like home loan.
The process of Apply for personal loan is explained below:
Get in contact with a lender but first check which bank is offering the best rates and services. You can compare personal loan interest rates with any other reputed price comparison site like www.deal4loans.com. After listing a handful, get in touch with as many lenders as possible and know their offers. Then, negotiate for the best rate. Check if there are any unique offers. After finalising the lender, their direct selling agent will visit and collect documents supporting proof of income, residence and identity. You may have to create copies of income tax returns, salary slip, bank statements, ration card, passport, driving licence and other relevant documents. These requirements vary from banks to banks.
Then, a field examiner will visit your home to double-check the facts provided. It is essential that you are present during this visit, else, he could report that the facts provided do not add up.
Once the lender is satisfied with the authenticity of your documents, the loan is approved. The amount is then disbursed by cheques or demand drafts (DD).

LOANS AGAINST LIFE INSURANCE POLICIES

There are many banks providing home loan but loan will cover maximum 85% of your property value. Your dream house cannot be 100% funded by a home loan as Banks are not allowed to do so.
This is to serve two purposes. Firstly, 85% limit ensures that the person taking the loan has a significant risk in the house. Secondly,  in case of fall in property prices, lender (viz. bank) has sufficient security against the loan. Although this will make it difficult for the borrowers with insufficient savings to make down payments though they are earning decent salaries.
It is possible to take another loan to cover the complete funding but then it has to be borne in mind payment of  EMIs (Equal Monthly Installments) of both the loans. Study say that an individual’s EMI should not exceed 50-65% of his gross income.
Another point to remember is that a personal loan affects home loan repayment capacity. Mortgage lenders regard the loan eligibility based on the repayment capacity.
Income, age, qualifications, work experience, the number of dependents, job profile, spouse’s income (if any), assets, liabilities (which include personal loan), continuity of occupation and savings history are few elements considered while assessing the repayment capacity. So the alternate could be to borrow against liquid asset like life insurance as they come at a cheaper cost than personal loans and credit card.
Infact this could prove to be the best option if the Insurance Company lends the amount. Then you could benefit in two ways, firstly, the low interest rate and secondly, convenient repayment schedule. But, one can borrow against an endowment policy only (not term policy or unit-linked plan). LIC allows one to borrow 90% of the surrender value of the policy on which an interest of 9% is to be paid half yearly.
Alternatively one can choose to deduct the loan amount at the time of claim payments. Or, a loan can be raised by pledging the insurance policy with a bank.
In both the cases, in the event of ones death, the benefits will repay the loan outstanding and any surplus left-over is paid to the nominees.

Personal loan rates and deals by Bank.

Banks are currently not as aggressive on their personal loan as they were before the start of the financial crisis. This despite the surplus liquidity in the system as well as lower credit off take. No wonder, things like ‘pre-approved’ personal loans and loans on the customer’s ‘track record’ seem to have almost become a thing of the past. Even personal loan rate don’t seem to be as attractive as they were just a year before.

Still personal loans have their own charm. Particularly because they always come handy in times of need and crisis. This, however, doesn’t mean that you should be willing to pay more interest on them. It is, in fact, your responsibility to check out the latest interest rates being offered by various banks and go for the best or at least a good deal.
Click here for get more on personal loan.