ICICI Bank, is India's second biggest bank, and was among the first players to cash in on the retail loan boom and accounts for nearly one-third of the market, has announced to lower the equated monthly installments (EMIs) for a large number of its borrowers by raising the tenure of their home loans.
Bank has sent letter to borrowers explaining that the step taken is a "customer-friendly gesture" in response to customer feedback.
Earlier the bank had raised the benchmark reference rate or the prime lending rate for floating rate borrowers in February and March 2007, following which many borrowers are paying higher EMIs.
In the letter it was stated, "Subsequently, we have received a lot of feedback from customers that they would prefer to increase the tenure rather than increasing the EMI."
The offer was open from April.
Verifying this, a senior bank executive said, "Borrowers with a good track record have been given the option based on the feedback received from some of them. Borrowers also have the option to pay the EMI that they have been paying and not opt for a longer tenure."
The bank offer has come at the time when most of the sectors like information technology and even financial services are seeing lower increments this year.
Meanwhile the bank, has expressed its move as routine and the executive said, "There are many sectors that are doing better. The Sixth Pay Commission recommendations may be implemented this year. The economy is stable. What you are seeing is some precautionary check on spending. But we have not seen any impact as people were paying the higher EMI. For everyone, a home loan is top priority when it comes to repayments."
Although this year, most of the banks had reduced interest rates on indication from the government, but ICICI Bank did not cut rates.
Due to which the interest differential between an ICICI Bank mortgage and a home loan offered by a public sector had increased forcing some borrowers to shift to players that charged lower interest.
The ICICI Bank executive clarified that the move is not aimed at reducing the EMI differential.
The executive explained, "During a period of 18 months, the interest cost went up 350 basis points and what you saw in February-March this year was a 25-50 basis point reduction. That does not affect a borrower since they have to pay a prepayment charge to go to a new lender".
Wednesday, May 14, 2008
Friday, May 9, 2008
Find the best interest rates on home loans
Today investing in real estate is considered as lucrative and sensible. Most of the home owner’s especially young salaried employees have built or purchased their homes with borrowed money. It is not difficult to get a HFC or bank sanction home loan but the most important issue is how to decide which bank is offering the best home loan rate?
Through internet it has become easy to find information about anything but virtually it is not possible to visit websites of every individual bank as there are over 100 banks and non- banking institutions.
Besides this most of the sites do not give extensive information and also do not regularly update the data. While surfing net I came across rupeetimes.com. On this site I got all the information related to home loan rates. I could even compare the rates offered by all major banks in India.
This site enables you to compare rates offered by different banks, and then you can choose from fixed and floating rates and compare them. You can choose the tenure and know the rate according to it.
For instance I wanted to take the loan for the tenure of 1-5 years. On the site I selected the tenure and the bank name ICICI bank and selected the option fixed rate. I got the complete information about the rate, eligibility, min. loan and the max. loan the bank gives. Along with ICICI bank I could see the information of other banks also. Like this it became easy for me to choose the right bank to apply for home loan.
On this site apart from home loan there is a tool to compare rates for credit cards, home loan, auto loan, personal loan, fixed deposit, and educational loans.
Through internet it has become easy to find information about anything but virtually it is not possible to visit websites of every individual bank as there are over 100 banks and non- banking institutions.
Besides this most of the sites do not give extensive information and also do not regularly update the data. While surfing net I came across rupeetimes.com. On this site I got all the information related to home loan rates. I could even compare the rates offered by all major banks in India.
This site enables you to compare rates offered by different banks, and then you can choose from fixed and floating rates and compare them. You can choose the tenure and know the rate according to it.
For instance I wanted to take the loan for the tenure of 1-5 years. On the site I selected the tenure and the bank name ICICI bank and selected the option fixed rate. I got the complete information about the rate, eligibility, min. loan and the max. loan the bank gives. Along with ICICI bank I could see the information of other banks also. Like this it became easy for me to choose the right bank to apply for home loan.
On this site apart from home loan there is a tool to compare rates for credit cards, home loan, auto loan, personal loan, fixed deposit, and educational loans.
Tuesday, May 6, 2008
Charges related to home loan
Home loan have charges attached to it about which some of us do not have a clear idea. Here we have tried to explain about those charges so that you have clear picture about them and know exactly what do they mean?
EMI in some cases is charged from the month of final payment of loan. Some banks calculate it from the month following that. The borrower should decide about EMI depending on his cash flow position. The time period from which the EMI will be charged has an impact on the total interest cost to be paid by the borrower over the loan tenure.
There are two types of rate – floating and fixed.
Floating interest rate: - An interest rate, this move up and down with the rest of the market or along with an index. This contrasts with a fixed interest rate, in which the interest rate of a debt obligation stays constant for the duration of the agreement.
A floating interest rate can also be referred to as a variable interest rate because it can vary over the duration of the debt obligation.
Fixed interest rate: - A loan or mortgage interest rate that will remain at a predetermined rate for the entire term of the loan.
When you take home loan the repayment time period, EMI and the interest rate, all these are finalized. In case of interest rate you can choose from the two types of rates fixed or floating. Later on there can be chances that you might want to switch over from a floating rate to fixed rate (because the interest rates are likely to go up) or vive versa (in case the interest rates are expected to come down) then the bank charges penalty amount from the borrower.
The bank fixes the time period for the repayment of the loan and the borrower has to complete the installments with in that period. In case the borrower income increases and plans to pay the balance installments of the loan before the time period then some banks charge prepayment penalty in case the loan is repaid before the full term or certain agreed minimum period. This is done because it disturbs the cash flow and income estimates of the bank.
The amount can vary from 1-5 percent of the outstanding amount of loan. Some banks waive off these charges under some conditions. The charges are payable on the balance amount outstanding and not on the total amount of loan sanctioned.
If you are punctual in repaying the installments i.e. paying all installments on time then some banks as an incentive can waive off of last one or two installments.
EMI in some cases is charged from the month of final payment of loan. Some banks calculate it from the month following that. The borrower should decide about EMI depending on his cash flow position. The time period from which the EMI will be charged has an impact on the total interest cost to be paid by the borrower over the loan tenure.
There are two types of rate – floating and fixed.
Floating interest rate: - An interest rate, this move up and down with the rest of the market or along with an index. This contrasts with a fixed interest rate, in which the interest rate of a debt obligation stays constant for the duration of the agreement.
A floating interest rate can also be referred to as a variable interest rate because it can vary over the duration of the debt obligation.
Fixed interest rate: - A loan or mortgage interest rate that will remain at a predetermined rate for the entire term of the loan.
When you take home loan the repayment time period, EMI and the interest rate, all these are finalized. In case of interest rate you can choose from the two types of rates fixed or floating. Later on there can be chances that you might want to switch over from a floating rate to fixed rate (because the interest rates are likely to go up) or vive versa (in case the interest rates are expected to come down) then the bank charges penalty amount from the borrower.
The bank fixes the time period for the repayment of the loan and the borrower has to complete the installments with in that period. In case the borrower income increases and plans to pay the balance installments of the loan before the time period then some banks charge prepayment penalty in case the loan is repaid before the full term or certain agreed minimum period. This is done because it disturbs the cash flow and income estimates of the bank.
The amount can vary from 1-5 percent of the outstanding amount of loan. Some banks waive off these charges under some conditions. The charges are payable on the balance amount outstanding and not on the total amount of loan sanctioned.
If you are punctual in repaying the installments i.e. paying all installments on time then some banks as an incentive can waive off of last one or two installments.
Subscribe to:
Posts (Atom)