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Union Finance Minister P Chidambaram presented his fifth Budget in Parliament on February 29.
Chidambaram said keeping inflation under check is one of the cornerstones of the government's policy. GDP growth, he said, has slowed to 8.4 per cent during the quarter ended December 31, 2007 as compared to 9.1 per cent a year ago.
Taking a cue from this year's Budget, some experts feel that real estate prices in most cities would come down as supply far exceeds demand.
So, is it the right time to go hunting for that dream house? With loan rates likely to stabilise, should you go for a second house? Is this post-Budget period suitable for taking other loans like personal loans, car loans etc?
Personal finance expert Harsh Vardhan Roongta answered many such readers' queries on Tuesday, March 4, 2008. Here is the transcript:
Harsh Roongta says, Hello and welcome to today's chat. As always will try to answer as many queries as my typing skills allow me to. Would earnestly request you to read the chat transcript as a question similiar to yours may already have been answered earlier. So let us get started.
rtyu asked, Dear Mr Roongta, will this Budget facilitate more loans?
Harsh Roongta answers, at 2008-03-04 15:56:55Well there is no direct linkage to loans anywhere in the budget except for the clarifications on the reverse mortgage loans. But the steep increase in IT exemption limits and the slabs is likely to leave much higher money in everybody's pocket. That will ensure that more people feel confident for buying homes or taking unsecured personal loans or car loans to improve their life styles based on thsi extra money in their pockets.
lalit asked, are the home loan & personal are going to reduce
Harsh Roongta answers, Home Loan rates have already softened and it is now possible to get single digit home loan rates for excellent credit profiles. In any case even the general rate has dipped to 10.25% - 10.50% from the earlier 10.50% - 10.75%. Personal loan rates have not yet reduced significantly but may go down if the general interest rates decline.
nupur asked, is this the right time for a home loan or the interest rates are expected to be cut in this monetary policy
Harsh Roongta answers, Most people anyway opt for a floating rate loan and hence theoritically they should be eligible for the reduced rates as and when the rates soften further (it is another matter that most consumers unless they are extra vigilant do not get the benfit of reduction in interest rates in spite of signing floating rates). In any case the right time to buy a home is when you can afford it and have a long term steady and stable source of income. This should not take into account the interst rate except from an affodability angle.
guest asked, I have seen the malpractices used by many banks to offer floating home loan at a much lower rate than given to existing customers. why is it so? why do govt allows such bad practices by the bank ?? what can we do to bring our interest rate equal to the new customers?
Harsh Roongta answers, It is futile to expect the government to solve all our problems. All consumers have the power of choice which they can exercise by threatening to shift lenders (and actually shifting the lender does not give you the rates that he is giving to his new consumers). Unless we (as consumers) are alert no amount of regulation is going to help us get our rights. So be vigilant and ensure that you do not loose out on any reduction being offered by your lender to his new consumers. Having said that the case for government regulation being bought in is strong but these efforts will get a phillip once aware consumers like yourselves start voting with their feet as far as the banks are concerned.
ramu1 asked, Dear Roongta, Pl. let me know, if 4 yrs back I have defaulted on credit card and named as Defaulter. How is it possible to get name cleared as defaulter in Crisil. Can you help through 'apnaloan'? What steps have to be taken up to clear the name. If not get cleared, what problems can occur. Pl. answer
Harsh Roongta answers, Once you have defaulted on the credit card that fact will be known to any potential lender to whom you may apply for any credit facility. This will make it almost impossible to raise further moneis for at least 3-4 years more till the default is wiped out of your record by passage of time. Your only alternative is to sekk secured loans (such as loan against jewelery or shares, securities, etc.) which also may not be easy to get. But if you manage to get it please ensure you pay dot on time so that you can build a good credit record which you can use for rasing further credit in the future.
abhsriva asked, hi harsh , i want to apply for hoem loan , there are several banks that provide home loan , can u suggest me some banks that have low floating rates of interest
Harsh Roongta answers, Home loan rates vary depending on your credit profile. The best way to get actual interest rate is to apply to several banks and get their interest rates after disclosing all your facts and figures. However if you wish to get a rough idea of the prevailing artes you can see this link. http://www.apnaloan.com/home-loan-india/rates.html
GuestOne asked, Dear Sir, As you said correctly, I have planned to buy a car of price little higher than my earlier budget. What should be the minimum RoI I should look for ? I huess the rate should be less than 10% - monthly reducing.
Harsh Roongta answers, Interest rates on cars can be shown to be artificially low by denying you some upfront discounts and using those discounts to reduce the ostensible interest rates. To get the best possible interest rates follow the 7 step process recommended in this link. http://www.apnaloan.com/articles/car-loan-india/car_loan_best_rates.html
karim asked, Dear Mr Roongta, I and my wife would like to apply a joint home loan for Rs 35 lakhs for a property of 45 lacs. We don't have any other liabiliy but also don't have any other big savings. Would you suggest to go for the loan or not? The joint monthly goss is arround 70K. Please suggest...
Harsh Roongta answers, You are likely to be eligible for the loan of Rs. 35 lacs based on the incomes provided by you. You can also use this link to caluclate your loan eligibility. http://www.apnaloan.com/loan-advice-india/simple-loan-eligibility.html On whether you should go in for that loan or not depends on your expenditure levels and other future financial goals. Prime facie it looks ok but you may want to consult a personal finance consultant to draw up a financial plan for yourself.
thopate_ganesh asked, i want take loan for purchasing a plot.There plot is having no N/A permission but ULC,1/12,Original sales deal is there so can bank will give me loan on pucchasing a plot or not?
Harsh Roongta answers, You will have great difficulty to get a loan to buy a plot that is not clearly marked as NON agricultural.
asked,
Harsh Roongta answers, Only owners or co-owners or eligible for tax deductions for repayment of a loan taken to buy a house property. As you are niether you will not be eligible for any tax deductions notwithstanding the fact that the bank certificate is in your name or that you are actually making the repayment from your sources.
asked,
Harsh Roongta answers, No., please see earlier answer
brajesh asked, Dear Mr. Roongta, Nice to have you back.. Have taken a loan from IDBI home finace limited @ 11.5% floating close to 6 months back.. Although some of the banks have reduced the PLR in past one month but IDBI has not followed the suit and thus not able to get the benefit of softened rate. Is it worth to switch to new hfc or should i wait for some more time ? Thanks
Harsh Roongta answers, 11.50% is exceptionally high. If your repayment track record has been good you should easily be able to get 10% - 10.25% interest rate. Switch your loan immediately.
Payal asked, Hi Sir, Which is the best bank to avail a home loan. I also need a flexibility to make part payments now and then with a less interest rate, please advice.
Harsh Roongta answers, There is no such thing as the best bank. If one particlaur bank indeed was the best the business of all other banks would stop. What is best for you may depend on your profile and your need. Most banks allow partial repayments without any fees. see this link for greater details on prepayment charges and interest rates. http://www.apnaloan.com/home-loan-india/rates.html
sr4459 asked, I am maintaining my a/c with SBI [Get Quote] for the past 15 years and the conduct of the a/c is good. I have been sanctioned a HTL of Rs.30.00 lacs and the bank has insisted me to issue 6 cheque leaves with blank date for the EMI. I have given Standing Instructions to debit the EMI with my a/c. My question is: Why the bank is insisting the cheques without date? Whether the same yard stick is applied in respect of loans sanctioned to Small Industries/Agriculturists/Traders whose loans are subsequently being written of out of the profit of the bank and depriving the shareholders stake. Whether the instruction is stipulated by the Government/RBI or the banks themselves framed the rules? I have also raised the query with the RBI who in turn advised me that they have referred the matter with the Banking Department and so far I have not heard anything from them though one month lapsed. Please clarify. Thanking you
Harsh Roongta answers, The reason for asking for undated cheques from you has to do with the legal system in India. The normal civilian process of recovery takes a long time (10 years +)whereas if you dishonour a cheque the bank can proceed for a suit under the negotiable instruments act which , at 2 years+ takes relatively lower time frame. Hence , despite the normal laon repayment being by way of standing instruction for debit, it is normal practise for most banks to ask for some blank cheques (called security PDCs)which can be used if you start defaulting on the loan amount. The number of such blank cheques differ from bank to bank but all banks take them. As far as small laons are concerned i am not fully cognizant with the practises but even there a blank promissory note is normally part of the standard documentation. I think if you are getting a good rate and if you mention the name of the bank and the amount on each cheque you may consider giving these PDCs.
subya asked, Hello Sir, Recently (aug 2007) I had taken loan from Indian Bank [Get Quote]. IU have handed over the sale deed to the bank on pledge. Last two weeks back, the Bank manager is asking me to register the property on bank's name and says the charges are to be born by me. He says the bank will register the property on my name after the full tenure. Is it legal?Please suggest Thanks K. Subbiah
Harsh Roongta answers, What probably the bank is aksing is for creation of a mortgage document in the favour of the bank (and not really changing the owner's name). This carries much lower stamp duty. Not all banks insist on creation of such a mortgage but in those banks that do insit on this the stamp duty (and registration charges, if any) are normally borne by the borrower and the loan doicument also normally provides so.
arvind2008 asked, Sir I have take Home Loan 12lakhs from ICICI at the rate 8.25% Floating in Year 2005, they increased the rate of interest 9.75% in middle of 2006 and now the rate is 11.75% why this happend, when I get my pervious EMI back? I have started with some 10600 and current i am payming 12200/- even the years also incresed to 20 to 24yrs nal says, hi Sir,is birla home finance a gud company to take a home loan
Harsh Roongta answers, Any compay that gives you a good rate (your existing arte of 11.75% os way too high) is a good company. You can use market places like apnaloan.com to makw banks compete for your loan.
ashish asked, Hi, I have a loan liability of 24 L for 20 years. I have around 4 L cash now. Do you suggest me to make a prepayment or hold on. Also I see a possibility of returning the entire amt in 5 yrs, should i go for it or keep the loan for tax benefts ? Pls advise. Thanks.
Harsh Roongta answers, Normally it always mak sense to prepay your loan. Use this link to look at tips on this score. http://www.apnaloan.com/articles/home-loan-india/Home_loan_prepayment.html You can also use the calculators tab on loan gure at www.apnaloan.com where you will soon find a calculator that will tell you by how much the prepayment makes sense.
uttamsingh asked, Hello sir, i have taken home loan from ICICI bank [Get Quote] in october 2007 and the same is disbursed me on time, i got registered the property in october itself, after two months i got notice from court that this property is already in debt, you can not buy this property. Now what should do, should i stopped paying EMI and file case against ICICI bank or ... pls suggest
Harsh Roongta answers, Dont you think you are being unfair with the bank (unless you have bought the proeprty from them)by stopping payment to them because there is a problem with the property title. After all it is for us as consumers to ensure that the title is clear and unless the bank (or it's associate agencies) have misled you on the property title in any manner it will not be fair to stop this payment. You will also suffer by being amrked as a defaulter in the credit bureau and will find it difficult to get a loan in the future.
red_siliguri@rediffmail.com asked, i want a personal loan but i have no photo ID & address proof we have rented house
Harsh Roongta answers, You will find it difficult to get a personal loan without proof of identity.
nehta asked, dear sir, i want to apply for housing loan,my tax returns previously were not high as i was not in a regular job , but now i have a job for the past 6 months with 15 lakh p.a. ctc .how do i apply for a housing loan ...& am i eligible for one with my salary slips ?
Harsh Roongta answers, Your eligibility calculations might be a little complicated. Why dont you use market places like www.apnaloan.com to talk to competing banks to find out your best eligibility.
dee asked, My husband and me had taken a home loan of Rs. 14.21 lac from Stan Chart 2.5 yrs ago at 7.5% floating. Currently it is 11.75% and they are not ready to reduce int rate. We have a very good repayment record. We want to switch the loan to some other bank and are also looking for a top-up. Plz advice how to go about
Harsh Roongta answers, 11.75% is way to high. Use market places like www.apnaloan.com to get banks to compete for your loan transfer (plus top up loan).
Suman asked, You asked, I am a 27 yr old married IT professional, and have a "investable" sum of Rs.7000 - 8000/- per month (will increase in future - with salary). I would like to plan for the following things - (1)Starting a family after 3 years (2)Child's education after 7-8 years (3)Purchasing a car after 3-4 years (optional). Could you give me an investment plan for achieving the above mentioned short-term goals? My current investment lies only with ICICI Prudential (ULIP) - with a annual premium of Rs.18000/- (2 years completed). I also have a pure life insurance coverage of 20 lakhs from LIC [Get Quote] (term insurance).
Harsh Roongta answers, Financial planning is a serious matter and cannot really be answered in a chat like this. You should definitely talk to a certified financial planner for this. As a thumb rule first have adequate risk cover (term life cover, critical illness policy, helath insurance policy, accidnet insurance polciy, etc.) before you consider investment options., Another thumb rule is that normally investment and risk cover should be considered separately (or in other words investnment in ULIPs should be re-considered)
Sumit asked, which bank offers the best interest rates for personal loans
Harsh Roongta answers, see this link. http://www.apnaloan.com/personal-loan-india/rates.html
asked,
Harsh Roongta answers, Yes if both are co-owners in the property as well. See this link for a detailed answer. http://www.apnaloan.com/taxtips/home-loan-india/deductionbenefitstocoowners.html
poonam asked, Sir, my husband is a press reporter and v r not able to get a housing loan.. can u suggest me something good by which a can have my dream house.
Harsh Roongta answers, If you have an existing good credit record (say on a credit card or a small loan)it may help. Also approaching PSU banks might also help. You can use market places like www.apnaloan.com for accessing competing banks (including public sector banks).
Jai asked, Hello Harsh, What is the maximum amount one should go for Home Loan.
Harsh Roongta answers, The question should actually be reverse. You should go in for the minimum amount of home loan that will still neable you to buy the home of your dreams.
Harsh Roongta says, Ok folks. I hope you had a enjoyable chat. I really enjoyed this interaction. If you still have some queries please go through these chat transcripts or logon to www.apnaloan.com
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