Smart ways to reduce the property loan burden

It is a great feeling to own the dream house. However, paying a significant portion of your salary for home loan EMI is a huge financial burden which weighs down a monthly budget of a person. And to keep paying the sum of money for the tenure of your property loan which is usually a period of 10 to 15 years, feel infuriating. So, how to lighten your debt burden? Here are easy steps save money in the long run.

• Closer look at your financial plan: Before considering a property loan and financing options, it is essential to have a closer look at your financial plans. Check the number of investments you have and the returns you are getting. If your investments are taking care of your short, medium and long-term financial goals, then you can think about directing the surplus towards the property loan. While choosing property loan, tools like home loan EMI calculator can help you get an idea about the amount you need to pay for your property loan.
• Higher down payment: While getting your loan sanctioned, opt for making a large down payment; it will help cut down the principal amount. Remember, interest payment is calculated on the principal. So, you will need to pay lower interest with the smaller principal, thus, lowering the burden of EMI. A large down payment might seem a bit difficult; however, it will prove beneficial in the long run, and you can save significantly in EMI payments.
• Research: A little time invested in researching about property loan companies before availing a property loan can help you find lower interest rate offers and save a lot. If you have already taken a property loan and want to lower the interest rate now, then you can think about the transfer of loan. You can go for other financial institution that might be willing to offer you a loan at a lower interest rate. Therefore, refinancing your property loan at a reduced interest rate can be a smart way to lower your interest repayment burden. Remember, you will need to consider the charges for switching the loan including legal fees, processing fees, etc. before finalizing your option. 
• Choose EMI amount and tenure wisely: Selecting an extended loan period means lower EMI, as principal and interest are divided over a longer period. You need to understand something important; you will have to pay EMI and interest even if your monthly income is less or inconsistent at times. Your monthly EMI amount can be smaller but you may have to pay more over your loan duration. On the other hand, shorter loan tenure will reduce your absolute interest payout; however, it will increase your EMI burden. So, go with the EMI amount that you can afford. Affordability should be your primary factor while selecting your loan EMI amount.
• Early Prepayment: This is the way to reduce your debt burden significantly. Prepaying part of your loan in the first months/years of the loan period can decrease your principal. Thus, you can save you interest on later payments. Furthermore, making partial payments whenever possible can help you save a lot in the long run. Another useful trick to reduce the burden is to keep the habit of planning one more EMI (than the usual number of EMIs) every year.

So, what are you waiting for? Think wisely and act smartly to ease your property loan burden.

Building a dream home on your own plot of land?

A plot and home construction loan can help finance the building of your dream home just the way you wanted it.

Many people dream of having their own villa or bungalow. In their imagination, the house is big and airy, with large rooms and spaces that provide a comfortable living experience. There is a shaded garden or backyard, a separate car parking space and a dear little walkway leading from the road to the house.

This dream can become a reality for those who show the foresight to purchase a plot of land anywhere in the country. The plot of land can hold their dream house, which can be built as per their aesthetic preference. However, buying the plot is not easy – the buyer may not have the necessary finances on hand to buy both the land and then to construct a house on it. When this happens, it is time to take a land purchase loan.

What is a land purchase loan?

It is a loan product that helps potential home builders finance the construction of their dream home on their own plot of land. It facilitates the purchase of non-agricultural land for the purpose of building a house on it.

The best housing finance companies in India offer land purchase loans at competent rates of interest and with a host of benefits to boot. The loan helps the home buyer buy the land of his choice, basis a thorough vetting by the financial institution. The land is checked for municipal and Government permissions, market value, byelaws, and buyer’s income profile, among other factors.

Further to the land purchase loan, the financial institution can also offer a home construction loan that helps the borrower build their dream house from start to finish.

The plot and home construction loan is disbursed in periodic phases, over the construction cycle of the house.

Are there any benefits of taking this loan?

The best housing finance companies in India offer land purchase loan and home construction loans at competent rates of interest. The loan product is quite affordable and the application process is quite simple. Once the applicant and the land/ready plot is evaluated, the approval is granted quite quickly. The applicant can also check their eligibility before applying for the loan, on the financial institution’s website.

The loan tenure is up to a period of 30 years if the applicant is a salaried individual, and 20 years for self-employed individuals. Besides, there are no pre-payment charges if the applicant takes a floating rate of interest.

3 Major Reasons You Should Buy a House to Call Your Very Own

Owning your own home is a big reason to be happy, since it not only enhances your future financial security, it also gives you the pride of ownership.  Once you buy a house of your own, you can focus on fulfilling your other needs. like saving for your child’s education or marriage. Easy and quick availability of loans for homes and lower interest rates offer you the option of investing in real estate and buying a house for your personal use.

Positives of Buying a Home

The debate about owning a home versus living in a rented one has been an ongoing one, with the final decision depending on the individual circumstances, including the person’s income, family size, the nature of their job and several other factors. Buying a home involves several complex decisions, including arranging the necessary funds followed by the actual transaction, its tax impact, and its impact on your other expenses, etc.

• Pride of Ownership: In the Indian society, owning a house is considered a matter of pride and indicates that you are financially secure. This proud feeling of owning a house is much better than living in a rented home, which brings with it several tensions. Owning a home means you can decorate and maintain it the way you want to, attach permanent fixtures according to your needs and tastes. In contrast, if you live in a rented home, you need to follow the instructions given by the landlord, besides living in a house that has been designed and maintained according to his needs and tastes.
• Appreciation Potential and Financial Security: Owning your own place provides a sense of security, especially financially. You know you do not have to worry about paying rent in case you lose a job or are short of money. Also, in case of dire emergencies, you can always sell off or mortgage your home to raise the necessary funds. Lastly, real estate has good appreciation potential over the long run and can be sold off to generate some good profits. Investment in a home also offers a good hedge against inflation.
• Easy Funding Options Available: While buying a home requires you to collect all your savings and use them, easy availability of loans for homes in recent years has changed the situation. The Indian government has introduced several measures and schemes to boost the housing segment and is aiming to provide affordable housing to everyone by 2020. Some of the measures include lowering of interest rates, simple terms and conditions, and quick processing of loan applications. All this has made buying a home easier and within the reach of people who otherwise could not afford to make outright purchases of houses. Taking a home loan means you just have to divert funds that you were using to pay rent towards the EMI of your loan.

While there are a lot of benefits of buying a home, the decision should be taken considering the time for which you are planning to stay in that city (a time frame of at least ten years is required to make such an investment), have adequate savings to make the initial down payment, your other critical goals for life, etc.

Avoid these insurance related mistakes

We list four common insurance-related mistakes that one may make, resulting in the purchase of an unsuitable policy.

That one must buy insurance in today’s uncertain times is a given. However, the potential to make several mistakes while buying life insurance is immense. The reasons are varied – from lack of information to deliberate concealment of facts – and they can all result in you buying the wrong insurance policies.

Broadly, the following are four common mistakes most buyers make when taking insurance:

1. Equating insurance with investment. Most people (mistakenly) equate inssurance products with investment products. At the outset, let us establish that insurance cannot be viewed as an investment – it is expected to primarily provide protection, not function as an investment option. If you want high returns, pick such investment options as ELSS, mutual funds, etc.
2. Looking only at getting the premiums back. The reason many people sign up for expensive or unsuitable insurance products is that they wish to have a maturity bonus, at which point they can get all their paid premiums back. While this may work towards fulfilling some financial goals, it may result in you buying a plan that you don’t need or which is too expensive. It also leaves you vulnerable to future financial uncertainties, because you may pick a policy whose sum assured is not commensurate with the family’s needs. Instead, it is better to buy a term plan online – you pay lower premiums and get a high sum assured, which can take care of your family in the future.
3. Taking inadequate coverage. Depending only on office-provided insurance is a big mistake. The insurance plan given by the place of work is often insufficient to meet your family’s future needs. Or you might be tempted to pick a low premium plan – with a low sum assured – simply because it is more affordable. Hence, it is a wiser move to buy a term plan – it provides a large amount of money as sum assured, which can safeguard your loved ones.
4. Falsifying information. Insurance companies take down information about the potential customers as regards their health profile, age and other data. Some customers are tempted to provide incorrect information to get lower premiums and higher coverage. For example, a smoker might attest to be a non-smoker so as to get a lower premium. Or a 35-year-old might try to pass off as 25-year-old to get more coverage. However, falsifying information never works – insurers conduct rigorous checks and incorrect data is flagged down at once. It might also result in the termination of the policy.

Reasons why one must opt for a term plan

A robust financial planning has become an integral part of our lives with such an unpredictable life. Things might go topsy-turvy at any moment for anyone of us, and our loved ones might need to bear the hardship. Term plans are just the smart solution to cover the death risks while making things easier for your near-dear ones. 

Term plans have become popular over the years as they offer a few additional benefits that you cannot get with the traditional life insurance policies. Here are some of the reasons why one must buy it:

•        Easy to understand:

This simple type of life insurance is easiest to understand and have a straightforward structure. It is the oldest and the least expensive plan that covers the risk of death. Like your vehicle insurance or medi-claim, it is a no return scheme. In simple words, the nominee will get the full sum assured if the claim comes within the insured period, or otherwise, there is no cash value or maturity value of the plan. 

It offers coverage for a definite term or period like 10, 20 or 30 years. 

•        Cost-effective 

The premium for term insurance is very low as compared to that for cash value policies. Term policies are becoming a commodity at a fast pace in today’s competitive market as they can be easily compared with each other on the basis of price. Buyers have fewer information queries for term insurance, and this makes the term market modest as compared to cash value policies. 

Furthermore, they offer tax benefit. Even though the premium paid for the term insurance is small, it is eligible for tax benefit. 

•        Perfect plan for all

Ideally, a term plan is suited for persons who are the sole breadwinner of the family with high financial liabilities. In general, good insurable health, high financial obligations, moderate income and dependent spouse and children are a few factors triggering the choice of term insurance plan. Term insurance is also a better option to save costs for individuals on the threshold of new business venture or careers. 

You can buy a term policy online quickly. Online plans are gaining immense popularity, because of ease of access and it eliminates the need for any mediation of an agent with the insurance company.

In short, a wisely chosen term plan is a must have in your financial portfolio. It lets you reap the benefits of comprehensive protection with tax benefits at economical premiums

Remember, never think a term insurance plan premiums as an expense; rather you are eventually planning a feasible way to protect your near dear ones and that too at a small investment. Like all other insurance products, it is always advised to start planning at a young age to get the maximum benefits. It lets you avail the longer term coverage benefits like for 30 years at low premiums. So, what are you waiting for? Start planning now!

Nikki Lauda: The Dark Side of the Sporting World

During the third test match between Australia and Pakistan that was played in the first week of January 2017 at Sydney Cricket Ground, Australia's opening batsman, Matt Renshaw, had to leave the field as he was diagnosed with a concussion after being hit on the helmet multiple times. These blows on the 20-year-old youngster from Queensland has once again brought into the spotlight the risk of injuries in the sporting world and the question is, should players opt for a term insurance policy before taking on a career in sports?

Renshaw's injury might not be severe but what the world witnessed in 1976, certainly was. On August 1, 1976, Niki Lauda, the Austrian Formula 1 racer, met with probably the worst on-field incident in the history of sports and scripted an inspirational comeback that is still used as the best example to explain the importance of term insurance in sporting careers.

The Nightmare of Nurburgring

Niki Lauda was the biggest name in the driving circuit during the mid-1970s. He shared an intense rivalry with fellow driver James Hunt. After winning the first six races and drawing the next two of the 1976 season, Lauda looked set to win his second consecutive title. By the time the German Grand Prix was to be held in Nurburgring, he had almost double the points that Hunt had.

However, things went ugly during the second lap of the Nurburgring race. Niki Lauda's Ferrari met with a horrific accident in the second lap. He lost control of the car, crashed into the wall and burst into flames. The car drifted into the middle of the track, where another car smashed into it. During the accident, Lauda’s helmet came off.

He was trapped inside the vehicle, where temperatures rose to 800^oF, for nearly one minute before other drivers dragged him out. Despite almost losing his right ear, hair on the right side of the head, eyebrows and eyelids, he made a return to the truck within 6 weeks.

Lesson to be Learned

In the final race of the season, Lauda retired after just two laps, as Hunt won the title by one point. The reason he gave was that he was worried about his family. That's the other side of a glorious career no one tells you about.

On November 27, 2014, Australian opening batsman Phillip Hughes lost his life on the field after being hit by a bouncer, while 19 players and staff members of the Brazilian football team Chapecoense were killed in a plane crash on November 30, 2016. This is why, in the modern day, it is important to have an online term insurance plan before taking to the field, given how uncertain life is and how much an accident can cost you and your family.

People Living in Tier 2 Cities in India Should Consider Term Insurance

According to a recent study, Ahmedabad, Bhubaneshwar, Chandigarh, Coimbatore, Jaipur, Kochi, Indore, Nagpur, Vadodara and Visakhapatnam were identified as the top 10 emerging cities of India. While Coimbatore has over 25,000 small and medium enterprises, Visakhapatnam was found suitable for industries such as mining, heavy manufacturing, etc.

Jaipur was counted as a significant service sector investment, while Ahmedabad was hailed as an attractive investment for the manufacturing sector. Another study by Cushman and Wakefield revealed that the growth in tier II cities is being aided by increasing disposable income of people, which has created immense opportunities for the companies looking to grow.

This is positive news for the insurance market as well, which is still trying to break into the tier II cities. If you are planning the financial future of your family, products like term insurance might be the right option to begin with.

Benefits of Term Insurance

• Low Premium: One of the reasons why rural insurance or tier II insurance is low in India is that people believe they are unable to afford it. However, the advantage with term insurance is that it is the least expensive form of insurance and provides coverage for the lowest premium. The cost does increase during renewal but it is still an affordable option. Since most term policies are structurally similar, they can be easily compared to choose the best possible option.
• Best Alternate Available: It is the best alternative for temporary life insurance needs. If you want protection for a fixed term of 10 to 15 years, then it is your best investment option. The policy holder gets similar benefits to that of a traditional policy.
• Flexibility: It is much easier to opt out of a term plan than a traditional policy. If you stop paying the premium, the policy is terminated automatically and the cover ceases. This is particularly beneficial in the context of rural insurance, where people may not have a fixed income.
• Tax Benefits: Although the premium paid is lower, it is still eligible for tax benefits under Section 80C of the Income Tax Act, just like endowment policies. The savings you get in the premium can also be invested in other tax efficient schemes.

A term policy can also be purchased to meet a specific financial obligation, like the repayment of a loan. Also, if your financial goals change, it can be converted into a traditional policy. It is undoubtedly the cheapest way to protect your family and requires minimum effort and money on your part.