Home redesign need not be a lengthy, stressful process. The right ideas, a visual balance between colour and scale and sufficient funds at your disposal can help.

Your home is important to you. It is your refuge against the outside world, a place where you can be yourself. But over a period of time, your precious home begins to acquire a patina of age. The plaster cracks, paint begins to peel off, tiles become loose and the faucets start to leak. With these signs, your house indicates that it is time for a makeover.

You would like to break down a couple of walls, put in an extra loft, refurnish the bathroom entirely and carry out myriad other improvements. But you are sceptical about refurnishing your home, since it is often an expensive process. However, you can effect a remodel if you take a home renovation loan from a reputed financial institution. The home renovation loan pays up to 70% of the total estimate of repairs and refurbishing and can help you carry out the desired changes without further delay.

After you get your finances in order, you can consider the following ideas to redesign your home décor:

Explore odd corners and niches. In space starved homes, the odd-shaped nooks and spaces around pillars are often waste areas. Instead, put the space to good use: create seating around the pillar, put a quirky table put in the corner with a reading lamp, or simply highlight the space using a Chinese paper lamp or a whimsical painting.

Throw out your old furniture. The best way to redesign your home is to replace all your old furniture with new forms and colours that reflect your personality. Explore materials such as cane, metal and teak wood for your chairs and couches, and look for tables with in-built storage and seating options to save space. There are many innovative bed designs available in furniture shops and online portals, so be sure to check these out.

Get planters. Nothing infuses a calming touch to the home like the presence of a potted plant. You can use a variety of planters around the house, based on the space and overall proportions of the room. You can even hang plants in your windows, and add a pop of colour with little pots of flowering plants wherever possible.

Boudoir beauty. The bedroom is an intimate, private space that can be made lively with new bedding, added storage for extra sheets and pillows, colourful cushions on the bed, and also unusual reading lamps on your nightstand. Change the curtains and blinds to suit your overall colour scheme, and paint the walls in a muted or pastel shade – you don’t want loud colours in the bedroom.

Unusual showpieces. Your house now has all the requisite furniture and fittings. So you can proceed to the next stage of design: beautifying the home with little touches. Start by buying a centrepiece or an unusual bronze statue that you can place on the floor. Or you can arrange a series of coloured vases in a corner of your living room. Or better yet, you can simply install a little fountain in a corner of the house to attract positive energy. 

How will you fulfil your child's longstanding foreign education dream?

Taking a mortgage loan will provide you with sufficient funds to finance your child’s most important ambitions.

You will always remember the moment you first set eyes on your child. You gazed on his beautiful face, counted ten perfect fingers and toes, marvelled at the soft tuft of hair on his head…and you resolved that you would love your child till the last breath was left in your body.

Over the years, this promise translated into buying everything your child ever wanted, enrolling him in the best school, encouraging him in his sporting and musical pursuits, and ensuring that he had the best advantage in life. But now, your child is growing up fast and he has recently professed a desire to finish his education abroad.

Instead of meeting his announcement with joy, you are saddened – and a little frightened. Your precious baby is now grown up enough to go abroad and study, but you do not have the financial resources to help him do so. You do have some money saved up in the bank, but it is only a fraction of the total sum needed to finance his foreign education dream.

What can you do? Will you crush his dream and have him resent you forever? Or will you look for another avenue to raise sufficient funds – such as taking a mortgage loan?

Why take a mortgage loan?

A mortgage loan is a loan against property. It is a loan that uses one’s owned property as collateral or security to furnish the funds against it. It is easily available and quickly processed by major banks and financial institutions in India.

You can use the large fund of money provided by a mortgage loan to pay for your child’s foreign education. The corpus is sufficiently large for your child to study abroad and even specialise in the stream of his choice. So whether he wishes to become a doctor, an actor or even an artist, he can rest assured in the knowledge that his parents have set aside an adequate corpus of money for his education.

But while you go ahead and make your child’s dream come true, there are some points you have to keep in mind. Take the mortgage loan only if you are sure of repaying it. Checking your loan eligibility before you proceed will save a lot of time as well. 

The best investments for today’s times

An endowment policy steadies you in times of rising inflation and growing financial uncertainty.

The more each day goes on, the more you realise that rising expenses and high inflation only serve to drain all your resources. It feels like you are on a perpetual treadmill – you work so hard all day, you meet every possible deadline, but all your dreams remain just out of reach. You strive to save money but you cannot, you wish to make investments but you are left with insufficient funds. At some point in time, you begin to worry if you will ever be able to achieve any of your goals.

Your bigger worry is for your loved ones. How will they survive if something happens to you? In the face of insufficient money, how can they meet their expenses and realise any of their dreams?

At this juncture in your life, it is worthwhile to examine a useful financial product known as the ‘endowment plan’. This is a savings and investment plan that helps you grow your residual funds into a large savings corpus for the future. You might have considered investing in a bank fixed deposit or taking life insurance so that you may have surplus funds for the future. However the endowment policy is a better option in view of your financial goals.

Your endowment policy investment helps you grow a robust savings portfolio through periodic savings made over the long term. Additionally, there is the prospect of receiving life coverage at the same time.

How it works: The policy holder makes monthly or annual payment, as the case may be. One part of the monies paid is diverted towards the plan premium, while the remainder is invested in equities or other market instruments. This latter component gets the policy valuable returns over the long run – these returns are accrued in the form of bonuses and are sourced from profits that companies (that the policy holder has bought shares in) make. These returns result in an appreciable savings fund for investors.

While the policy holder creates a large savings fund, he also ensures his loved ones’ well being with an endowment plan: the policy comes with a death benefit as well as a maturity benefit. Hence, whether the policy holder is present in the future or not, the policy takes care of his family’s future needs. Meanwhile, the maturity benefit is counted vis-à-vis the terminal bonus and reversionary bonus therein.

Apart from the concept of encouraging savings to create a fund for the future, one can also get excellent tax benefits on investing in endowment plans. The tax benefits are granted under Sec 80C of the Income Tax Act, 1961 – this is further saving for you.

Why Should One Opt for a Loan Against an Insurance Policy?

The insurance sector has large market value in India, with the industry having seen incredible growth ever since liberalization. In fact, experts predict even higher growth in future. According to India Brand Equity Foundation, the insurance sector will reach the $280 billion mark by 2020!

There are two types of insurance plans to choose from, life policies and non-life covers. The life insurance sector is primarily seen as offering protection for the insured, but lately its role has moved beyond the traditional death benefit to also providing additional benefits, such as tax savings, investment and even a source of credit.

Life insurance policies can now be used as collateral against which loans can be raised. That is to say, you not only get long term benefits from life cover but it also solves your short term financial worries.

Features of Loans Against Insurance Policies

·         Such financing can be obtained only on the cash value of the life insurance policy. This means a loan through this method cannot be raised using a term plan. The acceptable policies are money back, unit linked and other plans where there is an investment angle involved.

·         The amount you can raise through your life cover depends on the value and number of premiums you have paid. The higher, the better is the general rule.

·         Any life plan is only eligible for use as a loan instrument only when it has reached its surrender value stage. This is generally 3 years. This surrender value decides the amount that will be sanctioned as loan. Usually 80%-90% of the surrender value is granted.

·         You are surrendering the rights of your policy to the lender, which the lender can use in case of any payment default.

How Your Policy Can Help

·         Interest Rates: The primary concern while selecting the source of credit is the amount of interest that will accrue. Compared to personal loans, the rates charged here are drastically low.

·         Risk Margin Calls: As opposed to raising credit against gold or shares, the value of the insurance policy remains unchanged. This minimizes margin value risks.

·         No Crunch in Equity: While using other forms of debt instruments, your property, assets or equity can be used as collateral, which then restricts your finances. With insurance policies, you continue to enjoy the benefits from your plan and raise a loan without any liquidity crunch.

·         Easy Processing: These loans are sanctioned in a very short time, generally in about 2-3 days.

Loans against an insurance policy are a safe bet for short term money needs. Just remember, the repayment is done within the policy duration and default in premiums for the policy should be avoided, since the insurance cover itself might be foreclosed by the insurer.

How does my credit score affect my home loan application?

A good credit score increases your chances of getting loans. Improving it is an important exercise for those seeking credit from lending institutions.

For a salaried or self-employed person with a regular income, it would seem like the easiest thing in the world would be to get a loan. One may need to borrow from the bank or a financial institution from time to time, and to fund a variety of personal and professional initiatives. With all lending institutions laying out the red carpet for customers looking for loans, it would appear that one merely needs to fill out the application form for the loan request to be processed.

But things are never as easy as this. There is an important factor known as the ‘credit score’ that is inherently at the root of all loan approvals. Even when one has the financial wherewithal to make repayments on a home or a business loan, lending institutions might reject the loan application or sanction far less funds. The applicant’s credit score is often to blame for this.

What is a credit score? It is a number derived based on a number of factors in a person’s credit history. These factors include the applicant’s age, the type of credit taken in the past, repayment history and patterns, if any new credit is being applied for, length of credit and total credit repaid. These determine the applicant’s credit score, which lending institutions examine in detail before deciding on approving the loan request. Hence, when you apply for a home loan, the lender will immediately pull out your credit score before proceeding further.

What weakens the credit score? A poor credit history is detrimental to your chances of securing a loan. Unpaid debts on loans and credit cards, erratic repayment patterns, property seizure in response to unpaid debts, etc. can all weaken your credit score. An applicant with a poor credit score is known as a ‘credit risk’ and lenders are cautious about extending credit to them. If the loan application is approved, one might be sanctioned a lower loan amount despite a high income, and at a higher rate of interest.

Can you improve your credit score? Remember that the credit score comes into play before the loan application is processed further, and it is often the starting point of the loan application process. Hence, it is important to clean up your credit history before you apply for a home loan. You can do this by repaying older loans before their tenure is up. Applicants who pre-pay loans are considered low risk individuals. Also take care to repay all credit card bills or cancel those cards that you no longer use – they are also counted in your credit history. Not defaulting on older loans is a key factor – lenders study repayment patterns and are satisfied when repayments are regular. The lender will also check if the applicant has any cheating or forgery cases lodged against him, or if there have been incidents of improper property papers being submitted, or if the documents submitted for the current loan request are genuine or not.

If you are applying for a home loan for the first time, the lending institution will examine if you have any owned assets that you can use as collateral, and what the quality of these assets is.

Are You Looking to Buy a House in a Tier 3 City?

Did you know that the 2013 Planning Commission report said that by 2031, 30%-40% of the urban population will be living in small or medium-sized towns? The rapid development spreading to tier 2 and tier 3 cities has led to a spike in real estate prices. People living in tier-3 cities in India may still find it difficult to afford a house if they fall in the middle or low income group. To solve their specific needs, specialized products are needed, such as a rural housing loan.

Qualities of Home Loan for the Rural Populace

• Target Customer Base: This type of financing is suitable for people residing away from major urban centers. The customers are generally agriculturists, blue collar workers, agriculture related workers, self-employed people and salaried individuals from remote areas. 
• Loan Amount: Since the need for financing is associated with real estate purchase in tier-3 cities, the amount offered as loan is governed by the prices applicable to the area. Since the market rates of properties are much lower here than the in tier 1 and 2 cities, the amount extended as loan is also not very high. Generally, rural housing loans range from Rs 50,000 to Rs 10 lakhs. This figure is within the affordability range of a majority of the people in the area.
• Usage: The amount raised through a rural housing loan can be used for a variety of purposes. The borrower is not only free to utilize the money for purchasing a property in the area but can get other important things done, like reconstructing, repairing and home improvement.
• Loan to Value Ratio: The value you receive on raising these loans generally hover around 70% to 80%, depending on whether the house is fully ready for purchase or whether the loan is obtained for the completion of construction undertaken for home improvement.
• Eligibility: Different banks require different types of checks before they agree to grant a loan to an individual. The criteria may be judged according to the gross annual income of the household (which is usually around Rs 1,20,000), surrogate income proofs and inquires carried out by the lending institution on the field.

Rural housing loans are created specifically to solve the problems of a specific target customer base. This type of product will help people from small towns acquire valuable long term assets, without having to shell out a majority of their savings or being burdened by an unaffordable repayment amount.

How can I get a loan against my shares online?

Taking a loan against your shares helps individuals and businesses stay aligned with financial goals and manage a cash crisis better.

Every individual or business is in need of periodic funding to improve cash flows and also align with financial goals better. Sticking to a financial plan is easier when reserves are ample. However, this may necessitate the borrowing of funds from banks or financial institutions from time to time.

In this context, it is pertinent to note the important role that shares play in offering immediate liquidity for one’s needs. Holding shares and stocks is useful for both individual investors and companies. Based on the quality of the shares one owns, a bank or financial institutions may extend credit to the business – this is known as a ‘loan against shares’.

Why take loan against shares?

The loan against securities is a term loan granted by financial institutions and banks against the equity shares you or your business owns. You need not disrupt your long term investment plan by liquidating immovable assets such as property; instead, you can avail of a more financially flexible option of taking a loan against your equity shares. It is a faster and more cost-effective solution (at least 100 to 200 basis points lower on interest cost) and saves your other securities, such as gold and property, from coming into the ambit of loans.

Businesses with concrete expansion plans, or those looking for funding to acquire new processes, equipment or skilled manpower to upscale their operations can consider the loan against shares option. It can also be put to use by salaried individuals for such personal requirements as financing children’s higher education or paying for children’s marriage, or even making the payments on a second home.

When you take a loan against shares, you need not sell your shares or give up the bonuses and other accruements on them. The shares are simply pledged to the financial institution or bank for the loan tenure. They are not owned by the lending institution in any form.

How to apply for it

You can apply for a loan against shares online by entering your details on the lender’s website and asking for a call back to know more about the product and its benefits. If you have the requisite information already, you can proceed to fill out the lender’s application form online and submit it to the nearest branch.

Meanwhile, you must dematerialise your shares. You can ask the lender for a list of approved shares and securities: no other securities will be entertained. Peruse the lender’s loan brochure thoroughly so that you are conversant with service charges, interest rates, and other fees. Also get your paperwork in order: the lender will ask to see bank statements for at least one year, income proof, balance sheets, profit and loss statements (in case of business loans), details of other loans taken, etc. 

Once the lender approves your documentation and shares, a current account will be opened in the business’s or individual’s name. You can collect the funds from here, and also pay your loan EMIs to this account.