December 2018 witnessed changes in the securitization guidelines for lenders and is likely to benefit the home loan and loan against property sector. Here’s all you need to know about this change and the availability of home mortgage loans.
What are the changes in securitization?
In December 2018, the RBI relaxed the securitization guidelines. The holding period for loans having a maturity period of 5 years or more stood at 1 year but now has been reduced to 6 months. This is likely to open up roughly Rs.60,000 crore of the mortgage loan portfolio for securitization, which includes both home loans and loans against property.
Why has there been a change in the guidelines?
The change has come due to the series of defaults following the actions of infrastructure lending and development firm IL&FS. The amount of liquidity in the sector tightened up, which led to a downturn. The change increases the number of assets with the shorter holding period and promotes investing in debt security.
What is the current situation?
This change will help the home loan and loan against property industry pick up the pace. This is in addition to the fact that housing credit grew by 16% in the financial year 2018. The number of home loans taken in India has increased due to initiatives such as PMAY, which was launched in 2015, and the new state regulators for the real estate sector put in place thanks to the RERA. Further, the stamp duty cost for women buying a home has reduced to promote the purchase of property by women with a concession of up to 2% by many states. All this has increased the amount of housing finance offers that you can avail.
What are the simple ways to pay off your debt early?
By availing credit you can finance your needs easily and on time. However, due to recurring financial setbacks, you may have accumulated small or large debts. Irrespective of the size of debt it is important for you to service it as soon as possible to reduce your expenses and improve your credit score. So take a look at a few ways in which you can clear outstanding debt quickly and efficiently.
- Pay high-interest debts first
It is essential for you to prioritize repayment. For this, you must make a list of all the outstanding loans and list the ones that have the highest interest rates. With a list in place, you’ll be able to clear your debt in a more focussed manner, by paying the loan with the highest interest first. By following this approach you will be able to bring down your interest burden considerably.
- Increase your EMIs as and when your income rises
With every appraisal, you can increase the EMI amounts due on your loan. This will help you clear them faster, without making a lump sum payment. However, before you do this ensure that it won’t cause you to default on other debts that you owe.
- Use investments to make pre-payments
If you are worried about your debt damaging your finances, use your income from investments such as mutual funds or shares to make pre-payments towards the principal. This will help you make repayment simpler and lower the total interest payment as well. You can also take a loan against certain investments to make a lump sum payment. Also, you can sell gold holdings or real estate to get access to money instantly. However, these investments help you fulfill bigger goals over time, especially long-term ones. So, liquidate them judiciously and only as a last resort.
- Consolidate your debt with a loan against property
When you have multiple loans to repay you can avail a loan against property for debt consolidation. This way you can get substantial funding at a low-interest rate and gain from having to pay interest on a single loan instead of many. With a Loan Against Property from trusted lenders like Bajaj Finserv you can get a high sanction of up to Rs.3.5 crore if you are self-employed and up to Rs.1 crore if you are salaried. Further, you can enjoy easy online account management and a Flexi Loan facility. This is a feature that allows you to borrow as you need and pay interest only on the amount that you use.
Now that you know the benefits of debt consolidation with a loan against property in India, you can apply for one either online or offline after checking your loan against property eligibility. But before applying, check your pre-approved offer to know the loan amount kept ready for you. By entering just your name and phone number you can ease the process of availing finance and save time too.
What is the outcome?
With the recent shift in effect, housing finance companies can raise more funds through securitization, which increases the amount of liquidity they enjoy. Smaller companies can also leverage this to gain momentum in their operations, such as selling mortgage loans, as the debt market is expected to further stabilize. Most importantly, it encourages banks and NBFCs to increase their portfolios of housing finance with the extra window provided.
The changes also make getting instant mortgage loan approval easier. To access substantial finances, you can take a Loan Against Property from Bajaj Finserv and enjoy a high-value loan amount up to Rs.3.5 crore. With an increased tenor duration and nominal mortgage loan interest rate, you can repay the amount comfortably without compromising on your lifestyle. You can use the mortgage loan calculator or the loan against property EMI calculator to know the exact amount payable at the end of your tenor. Get the loan amount within 72 hours after approval completely hassle-free. Start now and check your pre-approved offer online to enjoy customized deals and instant application.