Category Archives: Advantages of investing in real estate

Why switch Home loans with another lender?

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‘Home Sweet Home’ is what every one wishes to own one during life span. Owning a house can be a tedious and a life time achievement for some but it may be a regular buy for others.

Presently, it has become easier for aspirants to own a house, thanks to easy loan facility availability and easy repayment options coupled with rock-bottom interest rates. Interest rate has become the bone of contention amongst housing loan companies and banks. With stiff competitions in the offing, the beneficiary is the loan seeker who is being wooed by financial institutions with cropped interest rates, zero or very nominal processing fees or longer tenure for repayment with attractive EMIs. To expand their customer base, these institutions have resorted to customer snatching practices with offering lower interest rates and a plethora of other services. There can be many pros and cons of switching Home loans with another lender; here we shall give a level platform for both aspects:

Does loyalty pay:

Yes, it pays because the shifting client saves time and money on credit checks, authentications, revaluations, paper work and lot of other formalities besides initiating everything afresh. No, because one might miss a very attractive offer which is in the offing. It will be better to first have a tough negotiation with existing loan-giver before shifting to another one if the deal happens to be that attractive.

Time factor:

Tenure of loan is an important factor while deciding loan shift. If the existing loan is to expire in a short period, then it will not be feasible to shift as like interest time also plays an important role in cost effectiveness. Yes, it will be favourable for an aspirant who has recently started paying EMIs as switching loans to a better package will be very cost effective.

Switching costs:

Home loans when switched might become costly in comparison to the present depending on offered package. The factors of Stamp duty, processing fees, legal costs and expenses of fresh documentations should be in for consideration. Another factor up for consideration is pre-payment penalty charged by present lender. If these factors are favourable then it will be a wise decision to shift loans to another lender subject to other conditions being favourable too.

Keep an eye on CIBIL ratings:

A person who has presently taken a loan from some banking or financial institution should always keep a sharp eye on his CIBIL ratings. Generally, the worth for CIBIL ratings gains importance only when a fresh loan or loan switch is contemplated. Don’t be under an impression that CIBIL ratings will not alter once approval to loan is given and further when payment is smooth. There may be many other factors which might alter ratings. The potential lender will certainly consider CIBIL ratings while considering a switch over borrower.

Decision is yours:

A borrower of home loans is a wise person in his own esteem. He knows the benefits and inadequacies of whether to continue with present loan or switch loan to a new lender. Continuing with present lender has the benefit of acquaintance which might be of help even if there is a negative twist to CIBIL scores because, here, personal touch gets a priority over data facts. On the other hand one may rue over loss of a jackpot opportunity if the shift of loan is not affected.

Why invest in Real Estate?

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Real estate investment is simply the purchase of a future income stream from property. Here are some of the key reasons to invest in real estate.

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Attractive and Stable Income Return- A key feature of real estate investment is the significant proportion of total return, accruing from rental income over the long term. This helps reduce volatility, as investments that rely more on income return, tend to be less volatile than those that rely more on capital value return. Real estate is also attractive when compared with more traditional sources of income return.

Gain more leverage- Real estate is one of the few investment vehicles where using the bank’s money couldn’t be easier. The ability to make a down payment, leverage your capital, and thus increase your overall return on investment is incredible.

You can pass it onto your kids- When thinking long-term for your investment, you don’t just have to think your lifetime – you can also think about your children. These investments can be passed onto your children either before or after you pass away.

It’s an asset you can use- Investment or not, your property is still just that – a property. So, should events take a turn which means you have to move into that property, you can (pending rental agreements, of course) whether for the short term or the long term – and, if things change again, you can move back out, leaving your investment intact.

Increased tax deduction strategies- Rental property affords investors with another incredible opportunity to convert personal expenses to potentially valid business deductions. Don’t forget that rental real estate is a business. This means that travel expenses to check on your properties and payments to family members who manage your properties (such as students away at college) can be deductible and increase the tax benefits when it comes to cash flow and the future sale of the property.

The tax write-offs against your other income- Depending on your classification as an Active Investor or Real Estate Professional and your income level, there is a good chance your rental property will not only give you tax-free cash flow, but an overage of tax deductions you can use against your other income. With that said, this is something you want to discuss with your tax professional before investing so your expectations are realistic.