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Home Authors Posts by Shivam Tomer

Shivam Tomer

Shivam Tomer
Talks about : Real Estate News, Investment Tips, Proptech, Loan tips and Property Tips

Ways to reduce interest rates on home loan

Buying a home is a significant milestone, but the hefty price tag isn’t the only hurdle. Home loans come with interest rates, and those rates can significantly impact your monthly payments and the total amount you pay over the loan term. Here’s the good news: there are ways to bring that interest rate down.

Choose tenure wisely

While signing for a loan, be it home loan or personal loan or even loan against property, one factor to always keep in mind is to choose the tenure carefully to avoid paying higher interest against the loan taken. Loan tenure is the primary factor responsible for the interest that accrues, shorter the tenure, lesser the interest. Longer tenures like 25 to 30 years will surely bring down the actual outflow monthly but in the process will cost us higher.

People generally take home loans for a longer tenure to reduce the monthly EMI burden but opting for a longer tenure makes the person pay more interest. Using a home loan calculator will help to check how the interest rate and tenure can affect the overall payable interest on the principal amount. 

Make advance payments 

Nationalised banks and NBFCs often don’t charge for prepayment of loan or fore-closure charges on floating-rate loans. If the home loan is on a floating interest rate, making advance payments whenever your pocket allows will reduce the principal amount, therefore the total interest payable would also decrease. That is simply because, during the first few years after you take up a loan, a larger part of your loan EMI goes towards the interest payment while the smaller amount is adjusted towards the principal amount. However, some lenders may charge a certain percentage on fixed-rate loan prepayments. So, it is advisable to check with your bank/lender to know the prepayment charges before taking the loan.  

Compare interest rates 

It is necessary to do research on different home loan interest offers and compare rates before choosing a particular loan product or even the lender. You can compare the home loan interests on various third-party websites that can give you a clear picture of the rates and other charges levied by different lenders. Comparing home loan interest rates offered by various lenders will help you to choose the best deal. 

So, it is advised to compare the home loan interest rates for all banks before deciding on a particular bank or home loan to avoid paying a big amount of interest rate.

Go for Home Loan Balance Transfer 

You can opt for balance transfer (BT) if you have an existing loan and you feel that the current lender is charging a high-interest rate compared to the interest rate offered by another lender. In this case, you can transfer the remaining principal amount to the new lender and avail lower interest rate. 

However, sometimes it may involve file transfer charges, and you may also need to get a written consent from the current lender for balance transfer. This kind of transaction is only advisable if you feel you are geared up to clear the monthly EMI without giving it a miss. As any missed payments on balance transfer-based loans incur higher penalties. 

Pay big chunks on a down payment

Most banks and other financial institutions offer home loans up to 75% to 90% of the total value of the property and the rest 10 percent to 25 percent, is required to be paid by the owner. It is therefore advisable, that while investing in a property, instead of looking for a higher loan amount it is better to make a big down payment at the initial stage and lessen your burden of loan and subsequent interest. The higher you pay as down payment (DP), the lower the principal loan amount  would be, which directly reduces the overall interest you have to pay as well.

Negotiate with the lender

If you justify all the criteria with a good margin and have provided all the necessary documents, negotiate with the lender to reduce the interest cost. Financial institutions generally offer lower interest rates to borrowers who have low or zero existing EMIs, stable income sources, and good credit scores. A small difference in interest percentage can make huge savings in the long term. 

Improve your eligibility

Excellent repayment capacity, a stable income, and high credit scores can help negotiate better interest rates. Use the home loan calculator to get an estimate of the maximum amount you may be able to borrow. You can improve your repayment capacity by adding a close family member with a good credit score and income as a co-applicant. Pay off any outstanding debts to the possible extent, so that your monthly obligations are less than 30% of your income. Improve your credit score if you have a low credit score before applying for a home loan. 

Look for Better Deals

Lenders prefer customers with good credit scores to make sure the loan amount can be recovered on time. Banks often roll out preferential rates for existing customers or those with good credit history. So, if your score is above 700, there are chances that you may get better rates on your loan. If you have been a responsible borrower and have made all your repayments on time, chances are you will be offered lower rates on your next loan. 

If your credit history is not good enough, you may have to negotiate with the lender provided you have a good business relationship with the lender. Banks often lower their interest rates during festive seasons, and keeping a close eye on festive offers can be beneficial to grab a good deal. 

Increase your EMI

Some of the lenders allow you to revise your instalment annually. So, if you have taken a home loan from such a lender you can opt for a higher EMI if your income increases. This act will reduce the tenure of the loan and therefore the interest payable against the home loan will be substantially reduced. So, it is good to check with your lender whether they provide such options.


You can significantly reduce your interest paid by repaying your home loan earlier than the actual tenure and by following the guidelines discussed above. 

Also, make sure to read the terms and conditions as well as other fees and charges taken by your lender before signing up. Make yourself aware of all the tax deduction provisions under Income Tax Act 1961 and consider co-applying for the home loan to get maximum benefits through tax deductions, while repaying the home loan.

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The Ins and Outs of Tax Lien Certificates: A Guide to Profiting from Property Tax Liens

Tax lien certificates are those that are given to investors who demonstrate their interest in a property by contributing to the payment of the owner’s overdue property taxes with that property. When paying the unpaid property tax, the investor is given this certificate, and in exchange for it, he will get a certain amount in interest payments from the property owner.

Also, the holder of the tax lien certificate will have a claim over the property for which he has paid the property tax in the event that the owner does not pay the debt after a predetermined amount of time. The lowest bidder in the auction who is willing to accept the low-interest rate on its investments from the property owners is given this certificate by the regulating body.

How Does a Certificate of Tax Lien Work?

Let’s examine the procedure for investing in tax lien certificates.

It is a charge that municipalities impose on homes where the real estate taxes are persistently unpaid. In a tax lien certificate auction, the cities of the relevant areas are permitted to sell the tax lien for the full amount of the unpaid property tax.

Investors bid amounts in the auctions, and the tax lien certificate would be awarded to the highest bidder who offered the lowest rate of interest on the total amount of unpaid taxes. The successful investor will pay the municipalities’ unpaid taxes; in exchange, they will be entitled to recover the taxes paid, together with any interest, from the property owners.

Depending on the municipality and the area, the interest rate may change. The interest rates for these tax liens are typically between 3% and 8% for those sold in the tax lien certificate auction. These certificates, as well as the outstanding interest component, must be redeemed by the property owner within the redemption window of one to three years.

How to get tax lien certificates?

Let’s examine the investment process for tax lien certificates. It is not purchased on the open market. When the municipalities offer the tax lien certificate for auctions, these might be won by submitting bids in the auction market. The bids are made by the investors for various properties with unpaid property taxes, and the winning bidders will receive these certificates. The investor cannot purchase these certificates from a secondary market. The only way to purchase a tax lien certificate is to outbid other bidders for the property you’re interested in at an auction.


Consider Jules, a Florida property investor who owns a prime piece of land. Yet due to a lack of funds, he is unable to pay the property tax. John now enters the picture, wanting to make a profitable investment by purchasing a tax lien certificate for a property. John agrees to a return of 15% with a maturity time of 3 years and invests in the Florida property certificate of Jules. As a result, in the case given above, John will pay the property tax and receive the certificate back from Jules along with a 15% return after three years.


Low capital expenditure

Only the amount of the property’s overdue property taxes must be paid by the investors in order for them to qualify for the tax lien certificate, hence it only takes a little capital commitment. It becomes available to the investor upon making a payment of property tax to the local governments where the property is located on behalf of the owner that has been past due for a considerable amount of time.

Return on investments 

When the certificate is redeemed, the owner must pay the fixed rate of return on the investor’s investment in addition to the amount of property taxes that the investor has already paid to the municipality on the owner’s behalf.

Lumpsum amount on redemption  

When the owner of the certificate redeems it, the investor will get a lump sum payment in addition to the interest earned on his initial investment.

Right to buy property at a very low price

If the owner is unable to redeem these tax lien certificates by the due date of redemption, the investor has the option to buy the property. In a foreclosure, the investor will be able to purchase the property for pennies on the dollar.

Safe investments

As they are issued by municipalities and are presumed to be redeemed by the owner of the property at maturity, they are among the safest investments. Investors will have the option to purchase the property at a low price if it is not redeemed.


Let’s take a closer look at the drawbacks and risk associated with tax lien certificates.

No Recurrent Income

Under this, the investor’s investment does not consistently earn a return. At the time of redemption or certificate maturity for the tax lien, the owner will get a lump sum equal to the return on his investment.

Extremely slow process

This certificate’s issuance takes a very long time. Even the redemption of them takes a very long time. The process is slow because municipalities are the ones that issue the certificate; as a result, neither the issuing nor the redemption of the tax lien certificate are finished on time.

Low Rate of Return

Although these certificates offer a return on investment (ROI), these returns are still not as high as other options on the market that are available to investors.

High Competition

Due to the fact that these certificates are awarded based on bids, which are made by several investors, real estate agents, and money managers, there is intense rivalry among investors. As a result, new investors sometimes fail to return with the certificate, in contrast to other investors who frequently participate in similar markets and tend to place the winning bids.

As a result, the investor should consider the aforementioned risks when obtaining tax lien certificates.

Certificates of Deposit vs. Tax Lien Certificate

  • Compared to certificates of deposits, tax lien certificates have the potential to yield higher returns.
  • The risk is greater for the former than the latter.
  • Those with a higher risk appetite should choose the former over the latter.
  • The former need much investigation to be an effective investment. For the latter, there is no need for research.
  • Tax liens do not have the option to be purchased from brokers or banks as certificates of deposits do.

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Property Rights in Second Marriages: Rights of Second Wives and Children under Hindu Law

The Hindu Marriage Act of 1955 and the Hindu Succession Act of 1955, respectively, set down the rights of a wife and her children in relation to the husband’s property. The interactions between a second wife and her children, though, can be different.

The Hindu Adoptions and Maintenance Act of 1956 and the Hindu Succession Act of 1956 must be acknowledged when discussing a divorced woman’s rights on her husband’s property. The provisions of these acts grant women complete control over their husband’s assets following his passing. Even in the event of her remarriage or choice to adopt, the rights cannot be reduced or disputed. If the husband marries again, there are various subtleties that come into play. If the second wife and her kids don’t fit the legal requirements, their rights may be contested.

Second wife’s legal rights to her husband’s property 

We must first look at the legitimacy of the second marriage in order to ascertain the second wife’s rights. Polygamy is forbidden by the Hindu Marriage Act of 1955. The act stipulates that neither party may be officially married at the time of the second marriage and that both parties must dissolve their first marriage before getting married again. Hence, the second wife does not qualify for a portion of the husband’s property if this requirement is not satisfied.

Also, the second wife has the same rights as the first wife over the husband’s property if the second marriage is valid, that is, if the husband marries after the death of the first wife or after divorcing the first wife. This holds true for both the husband’s own property and his ancestors’ assets.

The laws governing the property rights of the first and second spouses and their offspring are quite complex, and the judge must rely on a number of different Government Acts to make a legal decision. These are a few situations where making a decision could prove challenging.

The legality of a husband’s property rights in various circumstances

Case I

A husband marries a second time without formally divorcing his first spouse

When the first wife and their children from the marriage are still living and the husband gets remarried without divorcing the first wife, they are entitled to the property. Following the patriarch’s passing, the property will be equally divided amongst the first wife, her children, the children of the second wife, and in very rare circumstances, the second wife. Regarding the second wife’s rights in this case, there is some ambiguity.

Case II

After the death of his first wife, the husband marries again

The children from the first marriage and the children from the second marriage, as well as the second wife, have the right to equal interests in the patriarch’s property after his death when the husband remarries.

Case III

The husband remarries following the divorce

All parties, with the exception of the first wife, receive an equal share of the patriarch’s property when the husband remarries after divorcing his first wife. These parties include the children from the first marriage, the second wife, and the children from the second marriage.

Case IV 

The husband and his first wife co-own the property

The following situations can occur when the in question property is jointly owned and is marital property:

  • Even after the husband’s second marriage, the first wife and her designated beneficiaries continue to be the legal proprietors of the property left over after the husband’s passing. Nonetheless, the Hindu Succession Act may be used by the offspring of the second marriage to assert a claim to a portion of the property.
  • The second wife can make a claim on the property when the first wife passes away because the husband will then become the sole owner.

Rights of the second wife’s children to the husband’s property

  • In the absence of a will or the owner’s intestate death, the Hindu Succession Law designates the following individuals as Class I legal heirs to the deceased person’s estates: the son, daughter, widow, mother, son of a predeceased son, daughter of a predeceased son, widow of a predeceased son, son of a predeceased daughter, daughter of a predeceased son, and son of a predeceased son.
  • The father’s immovable property, which included both his own acquisitions and his inheritance, will therefore be divided equally among the children from the first and second marriages under the law.
  • Remarriage without the legal culmination of the previous marriage is prohibited by the Hindu Marriage Act of 1955. So, if the second husband passes away without making a will, the second wife in those circumstances cannot claim any portion in the property of the deceased husband (intestate). Children from the second marriage, on the other hand, will be regarded as legitimate under Section 16 of the Act and will have the same claim to the father’s property as the children from his first marriage because, under the terms of the Hindu Succession Act, 1956, children in both cases will be Class I legal heirs in the event that the father passes away intestate.
  •  According to the Hindu Adoptions and Maintenance Act of 1956, the second wife and her children are entitled to maintenance even in cases of illegitimate marriage.
  • However, the second wife’s children from her prior marriages are not entitled to any of the deceased husband’s property.

As a result, the second wife’s property rights depend on the legitimacy of her marriage.

First wife’s property rights and inheritance after divorce or abandonment

The first wife and the children are still considered to be the legal heirs of the marriage if the first wife is abandoned or alienated, that is, left without a divorce. In certain situations, the second marriage is invalid, and the second wife has no legal claim to the husband’s inheritance or property. The offspring of the second wife, however, are entitled to the patriarch’s possessions.

Half-blood children’s property rights

Children of half-blood parents only have one biological parent; the other parent is either the mother’s other husband or the father’s other spouse. Property rights are granted to the heir closest to the property owner when a spouse has both biological and half-blood children. This scenario most frequently occurs after divorce or remarriage. Half-blood children are given secondary precedence over biological offspring in terms of ownership rights to property that belongs to the parent.

The children in both scenarios fundamentally have the right to the father’s immovable property, despite the fact that the ownership rights may appear to differ in the circumstances of first and second marriages. To avoid any unwanted situations, it is best to get in touch with a legal professional in the event of any inconsistencies.

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Under Construction vs Ready for Possession Property Investment

Investing in real estate necessitates a lot of research, legwork, and hefty investments. Hence, a decision of such high investment should be taken with utmost care. The buyer must consider several important factors while choosing between ready-to-move-in or under-construction properties. Almost all buyers get stuck upon this question while buying a property, a ready-to-move-in or an under-construction property, which is better? Both types of property fulfill their own objectives. It is crucial to understand the pros and cons of both property types.

This article is about ready-to-move-in and under construction properties to help buyers understand the difference and choose wisely. 

Returns on Investment

In case of an under-construction property, if the project gets delayed beyond a certain limit the buyer might need to spend more. The increase in price often exceeds the overall budget of the buyer. However, under-construction property makes payments easy, as it allows flexibility of paying in stages as the construction process evolves.

If buying a ready-to-move-in unit, a buyer can select a house within a fixed budget.

Besides, buyers can enjoy the benefit of tax exemption on the home loan on both principal and interest repayment in case of a ready-to-move-in unit. The tax benefits on the home loan for an under-construction property can be demanded only after getting the actual possession.

Appreciation on Investment 

Buying an under-construction property is usually a good choice as the launch price gives better returns due to an extended window between the buying and the delivery timeline of the project. Buying a property that is close to possession would be the better decision. An under-construction property closer to possession will earn a healthy appreciation in most of the posh localities.


Under-construction properties allow making a few possible customizations based on needs, except for the structural ones associated with compliance. However, this option is not available in ready-to-move-in homes. You have to purchase a home the way it is or else invest time and effort in searching for a home that meets the elements you want in your house.

One must consider and prioritize one’s needs. You can go for an under-construction home to customize the home to meet your needs. But if otherwise, you can buy a ready-to-move-in property.

Possession Concerns

The major concern associated with a lot of under-construction properties is delayed possession, although it doesn’t happen in every case. The arrival of RERA and the following heavy penalties imposed for failure to meet commitments have diminished cases to a significant extent.

Nevertheless, in some exceptional and genuine cases, the developers cannot help it, which results in customers having to bear the consequences.  

Whereas the ready to move in properties do not have such risks or uncertainties. You can move into your dream home as you make the payments. One should consider buying a ready-to-move home if one needs urgent possession.

GST Implications

GST applicability and rate are other essential considerations. Under construction properties with an agreement value of below 45 lakh INR require a GST payment of one percent. While above 45 lakhs INR incurs a GST of five percent of the agreement value, as GST increases the total cost of the home.

However, in case of a ready for possession home, the applicable GST is zero percent, and it comes in as a great reliever for home buyers.

Immediate Tax Benefits

In a ready-to-move-in property, you can avail of tax exemption on your home loan on both principal and interest repayment instantly while tax benefits on a home loan, for an under-construction property tax exemption, can be claimed only after the possession of a flat.

Pay Only EMI With No Down Payment

The most relieving thing about ready-to-move-in property is that you will have to only take care of the EMIs on the home loan, and not bother about anything else. In case of an under-construction property, EMI normally begins after the completion of construction work. Despite this, if there is any delay in the construction, then the EMI will start after the home loan gets dispensed.

Buyers must understand the purpose of the purchase to make the right decision between a ready for possession property and under-construction property.

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Why are NRIs Investing in Indian Real Estate Market?

The Indian real estate industry has grown significantly over the past 10 years, and Non-Resident Indians (NRIs) have significantly contributed to this boom. Due to hybrid work arrangements, a desire to return to their own country, and a desire for a higher standard of living, NRIs are more likely to buy a home in India. Read on to learn more.

Reasons for NRI Investment in India  

When NRIs buy homes in India, they can make domestic investments that help the economy of the nation. Foreign investors are a significant additional source of capital for the Indian economy. NRIs can now easily participate in the rapidly growing Indian real estate market through a professional and gain from it.

Indian Currency Value

The decline of the rupee has also spurred demand for homes as NRIs try to invest their money in real estate and hedge against currency fluctuations. The INR has been losing ground since 2018, when it fell 8.6 percent against the USD: 2 percent in 2019 and 2020; 1.5 percent in 2021. Since the beginning of 2022, the value of the rupee has decreased, dropping from Rs 74.40 to an all-time low of Rs 81.88 this year.

The rupee was already under pressure from an expanding trade deficit and rising fuel prices, but it also suffered from rising US interest rates and worries about a worldwide economic collapse. The rupee’s depreciation benefits NRIs, especially those who stay in countries with stronger currencies. They have an advantage because they can buy a residence for a lot less cash than it would cost them to live in the nation after changing their balance to the local currency.

An Accommodation

Second homes are also becoming more popular among NRIs as they are increasingly viewed as assets that might produce a steady income. Purchasing a weekend home was once considered an upscale and ambitious act. Yet now, weekend homes are becoming recognized as being more prudent and safe.

Offers good returns 

NRIs see investing in Indian real estate as a lucrative opportunity that will boost their earnings and help them diversify their holdings. Cities like Gurgaon, Bangalore, and Hyderabad, which are found in the US, Canada, the Middle East, Europe, and other Asian countries, have shown a definite preference for NRI investment. 

In Tier 2 cities, NRI interest in acquiring substantial homes in their hometowns has also surged. The pandemic changed the dynamics of Indian families. Since many people now choose to live with their parents and grandparents, the extended family system has been strengthened.

Simplified Purchasing Process 

Government investment in infrastructure has also boosted tier-two city growth and increased linkages. The linkages in tier-one cities are frequently stronger than those in tier-two and tier-three cities. Yet, due to the tremendous infrastructural growth in these locations, connectivity has improved, and there are more businesses in tier-two cities. Also, the digital infrastructure has changed along with the physical infrastructure.

In these new areas, broadband speeds have increased, mobile data costs have reduced, and there is more data availability.

Multiple options for properties 

NRIs see investing in Indian real estate as a profitable opportunity that will boost their financial returns and assist them in diversifying their portfolio. NRIs have made it obvious that they prefer to invest in cities in the US, Canada, the Middle East, Europe, and other Asian countries, such as Gurgaon, Bangalore, and Hyderabad.

The habit of working from home (WFH), which began during the epidemic, is also driving demand for bigger dwellings. Professionals often seek additional space in their homes to put up workstations.

Excellent Resell Value

The preference of NRI investors for real estate over other asset classes like shares and gold has been made obvious. Real estate is thought to be the most stable asset class in the current political and economic upheavals around the world.

Gold is a commodity with a global market, and its price has climbed in contrast to underperforming debt assets. The stock market has gone through several irrationally huge swings as the world struggles with war and a global recession. For NRIs, real estate is a safe investment that will yield gains over the long haul.


NRIs now have more faith in the government as a result of transparency reforms like the RERA Act (Real estate regulatory authority). RERA has made it feasible for real estate transactions to be more transparent. As a result, both local and NRI home purchasers now have more confidence. It is common knowledge that the Indian real estate industry has many challenges. One of the key problems is the lack of transactional openness.

The lack of confidence between buyers and sellers was the result. In order to solve this problem, Rera was created. The introduction of Rera has made it easy for people to buy or sell properties without a fuss or concern for being fooled or duped because all information about a property can be accessed on this site. Because of the enhanced openness and lack of any hidden fees involved with any transaction, both buyers and sellers are more confident, which raises property values and increases the number of transactions.

What encourages NRI investments? 

India’s growth has been accelerated in recent years by a significant change in the economy. India currently has a GDP of more than $2 trillion. 

A robust economy

India’s high-quality, resilient, and transparent economy, which is supported by a strong banking system, has allowed it to withstand the financial crisis. 

Reputable Market 

The Eminent Markets Indian Stock Exchange is one of the largest and oldest stock exchanges in the world. It is efficient, less expensive, has a modern setting, and boasts returns on investment of over 15% annually for the past ten years. 

Diverse investors

The thriving service sector has made several businesses more accessible for investment. Investors are also learning the necessary information to invest in knowledge-based businesses.

Dividend in statistics 

India is the youngest nation in the world, with more than 64% of its citizens of working age. Because of this, there is room for increased productivity and innovation, which will speed up economic growth. 

The rapid growth of the market 

Due to the market’s fast growth, traditional investments are being replaced by stock-based instruments among Indian investors. The market and stock valuation are growing, making now a great time to invest in India. 

Favorable market to investors

As a result of the Indian government being more welcoming to foreign investors and the RBI developing several laws and guidelines for encouraging FDI, or Foreign Direct Investments, NRIs are turning their attention to investing in India. 

Many projections predict that NRI investment in India will reach a record high of INR 96 crore in 2021. This record-breaking real estate investment is attributed to RERA’s commencement. NRI investors now have more faith in making investments in India. They benefit from having access to properties that have already been registered under RERA, dependable developers, and an easier participation process.

What led to the reversal of the NRI real estate investment in India?

For a variety of reasons, NRIs have been persuaded to invest in a lucrative area of the Indian real estate market.  

  • Strict regulatory control 
  • Significant drop in properties rates
  • More lucidity in the process
  • Major sectoral consolidation 
  • Decline in Indian Rupee value

Bottom line 

In the Indian real estate market, a transparent market has taken the place of an opaque and inefficient one. Thanks to technology, NRIs can now purchase and transfer real estate even if they are not physically present in India. India’s real estate boom, higher transparency standards, a declining rupee, and stronger real estate regulations are all contributing to the rise in NRI house demand. The real estate market’s strength suggests that this trend will continue for some time.

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Navigating the Sale of Leasehold Properties: Transfer Fees and Essential Steps

When they learn that there are additional stages required in the sale-purchase of a leasehold property, sellers and buyers are frequently caught off guard. It is crucial that either the seller or his or her broker informs the buyer that there will be additional transfer fees when purchasing a leasehold home or flat. To learn more, keep reading.

It is crucial to determine whether your home is leasehold or freehold before beginning the process of transferring ownership. It is essential since the type of property affects the sale process. Let’s first define freehold and leasehold properties before we begin the process.

Freehold Property 

A freehold property, as implied by its name, is unencumbered by the control of any party but its owner. As a result, the owner retains full ownership and can use the property any way they see fit, including renovating, selling, or transferring it. A freehold property’s owner can sell it without seeking permission from the authorities, and the selling procedure is also rather simple. Buyers typically favor freehold properties over leasehold ones since the property title is permanent.

How to sell a freehold property?

Let’s say you want to sell your house (i.e. transfer the ownership of your property). If so, you can proceed with the straightforward process of signing a sale agreement with the purchaser before executing and registering a sale deed at the relevant office of the Sub-Registrar of Assurances. Click here to read more specifically about this procedure.

Leasehold property 

As the name suggests, a government development agency typically leases the ownership of the land on which a property is developed. The land is leased to a different party for a specific amount of time, which can range from 30 years to 99 years and, in rare situations, even up to 999 years. For instance, the government agencies in Gurgaon, Ghaziabad, Bangalore, and Delhi give freehold lands whereas those in Noida, Greater Noida, and Navi Mumbai offer leased land.

The future of apartment buildings constructed on leasehold land is questionable because lease renewal fees are paid by the housing organization in question. Also, when the property draws closer to the conclusion of the lease time, buyers find it more difficult to obtain loans from banks.

How can you sell a leasehold property?

In a housing society, let’s imagine that you are the owner of a leasehold flat. You’ve identified a buyer, agreed on a price, and intend to proceed with the transaction.

Step 1: Preparation of the selling agreement and the “No Dues and No Objection Certificate” application are the first steps.

A “Sale Agreement” or “Agreement to Sell,” outlining all the terms and circumstances of the sale, will be drafted by the buyer’s attorney. The draft sale agreement will be sent to you by the attorney for your approval, after which both parties can proceed to the relevant Sub-Registrar of Assurances office and get the sale agreement registered.

You and the buyer will also need to file for a “No Dues and No Objection Certificate” from your housing organization. Make sure that you do not owe the society any maintenance or other fees that are past due. Amounts charged by housing societies as transfer fees can range from Rs 10,000 to Rs 25,000, depending on the type of housing complex (cheap, middle-class, or luxury). These fees are typically covered by the buyer. They may also want a copy of the sale agreement in addition to copies of the parties’ signatures on the application form and identity documents.

You and the buyer will also need to file for a “No Dues and No Objection Certificate” from your housing organisation. Make sure that you do not owe the society any maintenance or other fees that are past due. Amounts charged by housing societies as transfer fees can range from Rs 10,000 to Rs 25,000, depending on the type of housing complex (cheap, middle-class, or luxury). These fees are typically covered by the buyer. They may also want a copy of the sale agreement in addition to copies of the parties’ signatures on the application form and identity documents.

Step 2: Submit a “Memorandum of Transfer” application

After receiving the “No Dues and No Objection Certificate,” the interested government agency that owns the land and is the lessor must be contacted in order to request the “Memorandum of Transfer.” You, the owner of the leased property, have been given written approval by the relevant authority to transfer your ownership rights to the purchaser.

You can get the application form at that authority’s office or through its official website (if available). Both the buyer’s and the seller’s personal identification cards must be included with the application, along with a copy of the housing society’s No Dues and No Objection Certificate.

The buyer is responsible for paying the fees for obtaining the Memorandum of Transfer, which vary by area and can cost between Rs 2,000 and Rs 9,000 per sq m. The total fee is determined by multiplying the transfer fee per square metre by the size (in square metres) of the subject property. Visit the relevant Sub-Registrar of Assurances office to find out these costs. The transfer fees for plotted projects vary depending on the width of the road where the property is situated. Also, according to the master plan, plots facing green belts fetch higher transfer fees.

Step 3: Varification at the office of the relevant government agency

Following your application, you and the seller can be given a date on which you must both appear in person at the designated location of the governmental authority. The concerned officials will inquire about your desire to transfer the property to the buyer and ask you further questions of a similar nature. Within one to two weeks after that, you will receive the “Memorandum of Transfer” paperwork.

Step 4: Complete and file the sublease deed

After the buyer has paid you the full sum for your property as well as the required stamp duty, the buyer’s attorney will prepare and print the sale deed. The concerned sub-registrar in the office of the Sub-Registrar of Assurances shall inspect all documents and sign the sublease deed after you and the buyer have both signed it. The required registration fees will subsequently be paid by the purchaser.

The original registered sub-lease deed, which the buyer must maintain, will be provided by the sub-office registrar within one to two weeks. The seller must make a photocopy of each page of the sublease deed for their own records.

Remember that depending on the state and city your property is located in, this process and the types of paperwork needed may differ. For example, if you, the property owner, initially bought the property on the basis of an irrevocable Power of Attorney (POA) from the initial seller rather than a registered lease deed, this POA will be necessary during the selling process. As a result, it would be wise to get advice from a local real estate broker and a lawyer experienced in real estate transactions before moving through with the sale of a leasehold property.

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What are the Property rights of daughters and daughters-in-law in India

In a recent decision, the Supreme Court (SC) upheld the daughter’s property rights to demand an equal share, regardless of the year of their parent’s passing. The Prime Minister, Shri Narendra Modi, praised the efforts and emphasized the daughter’s property rights. Read more to know about his perspective on the subject and the property rights of daughters and daughters-in-law.

Latest News: In a speech recently, Prime Minister (PM) Shri Narendra Modi praised the decision to give daughters an equal share of their parents’ property. Despite an amendment to the Hindu Succession Act in 2005, the PM stated that mothers, daughters, sisters, and other females of a household must be able to claim property. Prior to September 9, 2005, daughters could only be entitled to an equal share of an ancestral property if their parents passed away after that date. Daughters now have the right to inherit property without regard to the decedent’s year of death, according to a new Supreme Court (SC) ruling.

There have been numerous reports of daughters and daughters-in-law being denied property rights in India. According to the Hindu Succession (Amendment) Act of 2005, women of the household are entitled to an equal share of the property just like men. This Act has been amended as a result of a recent Supreme Court of India decision. Regardless of when the parents passed away, the daughters can now enjoy equal rights to the ancestral property of their parents. However, it is crucial to remember that the daughter and the daughter-in-law may receive substantially different shares of the transferred property.

What is the recent Supreme Court decision on property rights?

Daughters could only claim their share under the Hindu Succession (Amendment) Act, 2005 if the father passed away after September 9, 2005. However, the recent Supreme Court (SC) ruling has made it abundantly clear that the daughters have equal rights to their father’s ancestral property, regardless of the year of their father’s passing.

According to the SC, if the daughter passes away while her father is still alive, her children may inherit their mother’s portion of the grandfather’s ancestral property. The father decides to give the property to whoever he wants out of his free will in case of his self acquired property. However, if the father passes away without making a will, his property will be distributed equally among his legal heirs, including his daughters.

Amendments made to the Hindu Succession Act, 1956

Daughters were given equal rights as co-heirs to inherit property under the 2005 revisions to the Hindu Succession Act. The amendment was implemented the day it was announced, but cases from before 2005 were not taken into account, so there was some ambiguity in the situation. To set the record straight on this, the Supreme Court (SC) ruled in a similar landmark decision on August 11, 2020, that daughters have the same rights as co-heirs under the Hindu Succession Act, regardless of when the amendment took effect. According to the Apex Court, a daughter acquires her coparcenary rights at birth. As a result, even if the father was not alive when the 2005 amendments were made, the Act’s regulations still hold true. Additionally, the daughter’s rights to coparcenary property are unaffected by her marriage.

What does the Hindu Succession Act, 1956 state about the ancestral property?

A daughter in a Hindu Undivided Family (HUF) is given the status of a “coparcener” under Section 6 (1) of the Hindu Succession Act, 1956, in accordance with its 2005 amendment. The term “coparcener” is defined by the Black Law Dictionary as a person who jointly descends an estate and holds it as an entire estate, or a person who has acquired concurrent ownership as a result of descent. As a result, a daughter who is a coparcener from birth has equal property rights in a HUF property. Regardless of her marital status, the daughter is still a co-owner of the HUF property and has the right to request its division. According to Advocate Sudhir Reddy, the founding lawyer of Reddy and Reddy Law Firm, “The daughter will also be held accountable for the same debts as a son, regardless of her marital status (married, single, or widow)”.

The deceased daughter’s children will be entitled to the share that she would have received if she had been alive on the date of the partition. If none of her children are still alive when the property is divided, her grandchildren will be eligible to inherit her share.

Property rights of a daughter as a co-owner 

A person who shares an inheritance with others is known as a coparcener. Daughters are coparceners, so they have the following property rights in an inherited property: 

  • Birthright ownership of HUF property
  • Partitioning on demand in a HUF property
  • Become a Karta if she is the oldest couple.
  • Right to intestate succession to her legal heirs of her share of the HUF property

Property rights of a daughter-in-law

A daughter-in-law is given the status of a HUF member but is not made a coparcener by the HUF. The daughter-in-law acquires rights to HUF property through her husband’s share in the HUF property (either willfully transferred by the husband or received after the demise of the husband). 

The daughter-in-law has no rights to the property that belongs solely to her in-laws, and such property is not considered shared property. The deceased mother-in-law’s share will be divided equally among her children in this case, and the daughter-in-law will only be given rights to her husband’s share. 

Property rights of the daughter regarding self-acquired property

“A son or daughter has no birthright to a property that a father or mother has self-acquired. According to the Rules of Hindu Succession Act, 1956, the daughter is covered as a Class I heir and has an equal right with the son(s) and other legal heirs if the father or mother dies intestate.

Property rights of the daughter-in-law regarding self-acquired property?

Daughters-in-law do not have right over the self-acquired property of her in-laws. She acquires right over her in-laws’ property only through the share of her husband in the same.

Daughters has now equal rights and shares in the property because the inheritence and succession law in India have been modified over the time. As a result. As a result, the daughter’s claim to both coparcenary and independently acquired property is legitimate and unchallengeable in any Indian court. The daughters-in-law only receive a share of the property through their husbands; they have no legal claim to the property that their in-laws have acquired on their own.

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Right of Redemption: Empowering the Mortgagor

The ability of a mortgagee to reclaim a mortgaged asset following debt repayment is known as redemption. The mortgaged property is kept secure to return to the mortgagor after the obligation is settled.

The Mortgagor’s right 

The Transfer of Property Act of 1882 grants the mortgagor a number of privileges. These protections are there to protect borrowers from being taken advantage of. The following rights belong to the mortgagor:

  • After debts are paid, you have the right to redeem the property (Section 60)
  • The mortgagor may request the mortgagee to transfer the property to a third party rather than to him again (Section 60A)
  • The mortgagor may request the mortgagee to provide documents pertaining to the mortgaged property, and may then examine such records (Section 60B)
  • The mortgagor shall be entitled to benefit from any accession made to the property while it was in the hands of the mortgagee upon redemption of the property (Section 63)
  • Any modifications made to the mortgaged property while it was in the mortgagee’s ownership are likewise entitled to the benefit of the mortgagor (Section 63A)
  • When a mortgagor mortgages a lease property and the lease is renewed while the mortgaged property is still in the mortgagee’s possession, the mortgagor is entitled to profit from the renewed lease. 
  • The mortgagee may lease the property while it is in legal possession (Section 64). (Article 65A)

Transfer of Property Act, Section 60

The mortgagor has the option to redeem under Section 60 of the Transfer of Property Act of 1882. According to this section, the mortgagor has the right to demand that the mortgagee return ownership of the mortgaged property to him or to any other third party that he chooses, as well as transfer the mortgage deed and any other pertinent documents to him, once the debt has been paid in full and on time. Hence, the mortgagor has the option to redeem his property upon debt repayment, and this power is referred to as the property redemption option.

The following fundamentals of the right of redemption can be formulated from a cursory reading of the section:

  • The mortgage must be legally enforceable and valid.
  • The mortgagor has the option to redeem the property by paying the loan, but a court may prevent him from doing so.
  • The mortgage funds must be disbursed to the mortgagee or his representative at the appropriate location and time.
  • The right to mortgage redemption may be enforced through legal action brought by the mortgagor.

In the English case of Stanley v. Wilde, a mortgage was defined as the act of giving a third party the right to an immovable property interest as security for a debt.

The Transfer of Property Act of 1882’s Section 60 envisions two critical concepts.

  • Once a mortgage, always a mortgage
  • Clog on redemption

Once a mortgage, always a mortgage 

The right to redeem a mortgage cannot be limited or terminated because a mortgage is always a mortgage. This right of redemption is generally applicable to all mortgages. According to the court’s ruling in Noakes & Co Vs. Rice, the mortgagee cannot impose any reservations that would prevent the mortgagor from exercising his right to redemption after paying the loan and any applicable interest. In the case of Knocks v. Roulds, the court ruled that a mortgage is always going to be a mortgage.

Clog on Redemption 

Any clause in the contract that limits the mortgagor’s ability to redeem the property after making the required principal and interest payments is invalid under the notion of clog on redemption. This doctrine is comparable to the idea of “once a mortgage, always a mortgage.”

The notion of the clog was established in Stanley when the court ruled that any obstruction to the right of redemption in a deed would render it void from the beginning. The Indian courts have also upheld this principle.

The doctrine of clog on redemption is founded on the idea that because of the mortgagee’s dominating position, any clause that limits the mortgagor’s right to redeem would be an abuse of that position by the mortgagee and would be in violation of the principles of justice, equity, and good conscience.

The Apex Court ruled in the landmark case of Vadilal Chhaganlal v. Gokaldas Mansukh that any restrictions or terminations of the mortgagor’s right to redemption imposed upon him would be null and void.

When the right to redemption is lost

According to Section 61(a) of the Limitation Act of 1963, the right of redemption expires 30 years after the right was first accrued.

The proviso to Section 60 states that if a lawsuit is filed with a court and a judgment is rendered by the court against the mortgagor, this right is no longer available when the deadline for principle repayment has passed.

Also, the right of redemption would expire if the state obtained the mortgaged property.

In the case of Moro v. Balaji, it was ruled that the mortgagee would be able to keep the share of the mortgaged property that he personally acquired, and the mortgagor could redeem his share.

Different Mortgages 

The Transfer of Property Act, 1882’s Section 61 envisions a scenario in which a mortgagor mortgages several properties to the same mortgagee. When the principal balance is due, the mortgagor can redeem the properties separately or jointly. A contract must not, however, conflict with the mortgagor’s preferences. By mutual agreement, the mortgagee and the mortgagor may opt to combine the redemption rights for all mortgaged properties.

Landmark Judgements

In the illustrious case of Prabhakaran and Ors v. M. Azhagiri Pillai (Dead) by Lrs. and Ors., the Supreme Court ruled that where a usufructuary mortgage stipulates that the mortgagee can possess the mortgaged property until the debt is repaid, the mortgagor may exercise his right of redemption in such a case by bringing a lawsuit within 30 years of the mortgage date. The court also ruled that the interpretation that there is no time restriction for the institution of the suit in cases of usufructuary mortgages is incorrect in law and that the mortgagor can file a suit to exercise his right only within thirty years of the institution of the usufructuary mortgage.

The Supreme Court of India held that while the mortgage deed may provide for a long term for payment, such terms must be justifiable, and a significantly long period would be considered a clog. This decision was made in the famous case of Pomal Kanji Govindji vs. Vrajlal Karsandas Purohit & Ors. 1988 SCR Supl. (3) 826. The Court ruled that when determining the validity of the period of payment, variables like inflation, real estate prices, interest rates (if any), the mortgagor’s financial and economic situation, etc., should be taken into account. The burden of proof lies with the mortgagee to demonstrate the validity of the period.

In the case of Seth Ganga Dhar v. Shankar Lal [AIR 1958 SC 770], the court held that although it had the authority to exempt the mortgagor from any clause of the contract that restricted the exercise of his right of redemption, it was also required to consider the pertinent facts and circumstances of the case in order to determine whether the mortgagor was forced into the agreement by taking advantage of his disadvantaged negotiating position. In this instance, the mortgage on the property was for 85 years.

On evaluating whether or not this time period was lawful, the Court noted that it did “not believe that everything in the mortgagee’s favor or that everything in the instrument was for his benefit and suggested that the mortgagee had pushed the mortgagor into a difficult bargain. We previously discussed how the agreement seems to have been fair and between parties who are interacting with each other on an equal footing”.

So, the clause would be regarded as legitimate if the court determined that the mortgagor and mortgagee were on equal footing. The Court determined, however, that a clause stating that the mortgagor must redeem the property within six months of the 85-year period’s expiration was illegal. The court will intervene and release the mortgagor from such an unfair arrangement only if the court is certain that the mortgagor has been unfairly ensnared by the mortgagee.

In the famous case of Bakhatawar Begum v. Hussaini Khanam, the court ruled that the deed might be redeemed because of a court order prior to the end of the time period specified in the contract.

The Transfer of Property Act is a supportive legal document with the purpose of “providing safeguard measures against tremendous financial hardship of the loanee in certain cases,” according to the Calcutta High Court in the case of Pranil Kumar Sett vs. Kishorilal Bysack and Anr. However, this benefit cannot be extended to recalcitrant and dozing borrowers.

Right to foreclosure 

Foreclosure refers to the mortgagee’s ability to seek a court order prohibiting the mortgagor from exercising his right of redemption. The mortgagee is granted the power to foreclose in order to recoup the amount. Section 67 of the Transfer of Property Act of 1882 provides for this power.

When the obligation has become due, the mortgagor has not made payment, and the agreement does not set a specific deadline for repayment, the mortgagee has the authority to foreclose. Also, the mortgagor must not have used his redemption option.

When the debt owed by the mortgagor becomes due and the mortgagor has not obtained a decree for exercising his right of redemption, Section 67, which deals with the “Right to fore-closure or sale,” states that the mortgagee has a right to obtain a decree for preventing the mortgagor from exercising the redemption right or to obtain a decree for the sale of the mortgaged property. The statute of limitations for filing a lawsuit to exercise the right to foreclose is twelve years.

Bottom line 

The right of the mortgagor to redeem the mortgage is therefore evident from the explanation above, and the mortgagee is unable to restrict or terminate this right. Any provision that renders the mortgaged property unredeemable after a predetermined amount of time would be in violation of Section 60 of the TPA. The mortgagor’s right of redemption is unalienable and coextensive with the mortgage.

By obtaining a court order to this effect, the mortgagee may take possession of the mortgaged property in their capacity as the original owner. If there are many mortgages on the same property, the mortgagee may redeem each mortgage individually or jointly, depending on whether a conflicting agreement is in place.

We can see that the mortgagee has also been granted the right to recoup the money that is really his. By virtue of Section 67, he may exercise his right of foreclosure. As a result, it is clear that the Transfer of Property Act is a useful legal regulation that aims to strike a balance between the rights of the mortgagor and the mortgagee while also taking into account the reality that, in most cases, the mortgagee is in a stronger negotiating position.

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Reasons to consolidate your unsecured debt

Servicing numerous loan accounts is a difficult task for anyone. Managing finances and keeping track of the balance of outstanding loan amounts can become very challenging, in addition to the risk of missed EMI payments. Additionally, if something goes wrong, it affects your creditworthiness and your capacity to borrow money at a time when you most need it. 

If you find yourself in this situation, you should think about debt consolidation, where you can combine all of your existing loans to pay off all of your existing unsecured debt with one new loan. It is a well-liked method of managing debt and has lots of advantages for the borrower.

Why opt for an unsecured debt consolidation loan:

Reduces the cost of interest:

Even if your loans are mostly low-interest ones, consolidating unsecured debt can help you save money overall on interest payments. By choosing a new loan with a shorter term, you can save money on interest and pay off your existing loan sooner. 

For instance, you will save on interest costs if you combine all of your credit card debt and unsecured loans into a single personal loan. This will enable you to repay the loan more quickly. 

Maintaining Your Credit Score: 

Maintaining multiple loans lowers your credit utilization ratio, which has an effect on your credit score. Additionally, missed and late payments have a signizicant negative effect on your credit score. 

You can simplify the loan repayment process by consolidating all of your debt into a single loan account. You can improve your credit score over time by making consistent and timely repayments and ultimately paying off the loan. It will considerably simplify the process of getting your next loan approved. 

Reduce your monthly payments: 

Your overall monthly repayments are now more evenly spaced out over a new and longer time period, in addition to savings on interest costs due to the reduced interest rate burden. Your monthly repayments are decreased as a result, and from the perspective of your monthly budget, you have more flexibility to manage your money more effectively.

In addition, it streamlines your finances and saves you money by preventing penalties, removing repayment hassles, and making repayment simpler.

Consolidating Debt with a Personal Loan

A personal loan is the best choice for you and works well with your debt consolidation plan. Being an unsecured loan type, you have more planning freedom when it comes to paying off all of your credit card and other loan obligations as well as consolidating your debt.

There are two different ways that debt consolidation with personal loans works. Either you pay your creditors directly, or the new lender will do so in return for pre-scheduled payments in the form of monthly EMIs, for all of the debt you currently owe.

Reasons to obtain a personal loan for debt consolidation:

Loan terms and repayment options are flexible.

You can choose the personal loan EMI in accordance with your ability to repay the loan over the course of up to 60 months.

Competitive Interest Rates 

Borrowers with good credit have a better chance of obtaining a debt consolidation plan from lenders at a lower interest rate because personal loan interest rates are competitive. 

Quick loan approval and disbursement

Personal loans are instantly approved and disbursed by lenders in comparison to other loan types, provided the requirements for personal loans are met. It aids in the swift and easy execution of the debt consolidation plan. 

Collateral Free and Unsecured

The fact that personal loans are unsecured and borrowers are not required to put up any collateral for the loan is one of their biggest advantages. The amount of the loan is determined by the borrower’s income status, ability to repay, and credit rating.

Easy Documentation Process

Both salaried and self-employed professionals can apply for personal loans, and the paperwork is very simple. You only need to provide three sets of documents to apply for a personal loan: proof of identity, proof of residence, and documents affirming your financial status. 

Online Account

You can easily keep track of your loan information and repayment schedule using the online tools provided by personal loan lenders, reducing the possibility of skipped EMI payments and penalties. 

Final Words

It is very efficient to consolidate debt through a personal loan in order to reduce the number of high-interest debts you are servicing and simplify your payments. Nevertheless, you should consider the following things before deciding on a debt consolidation strategy involving a personal loan:

  • Your monthly debt payments shouldn’t exceed 50% of your total income.
  • To negotiate a low-interest personal loan, you should have good credit score.
  • The personal loan should be repaid in five years. 
  • To make debt payments, you should have a consistent source of income.

Most importantly, once you have obtained a personal loan for debt consolidation, the following steps should be taken to ensure that you do not find yourself in a similar situation again:

  • Always make your EMI payments in full.
  • Pay your EMI before or on the due date every time.
  • Never skip an EMI payment.
  • Don’t take out any new loans until the current ones are fully paid off.
  • Manage your monthly spending while placing the EMI payment at the top of the list.

Finally, you should be aware that debt consolidation only makes the journey toward loan repayment easier, it does not actually end it.

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Microfinance Loans: Types, Benefits, and Documents Required

Microfinance loans are a popular lending option for people who are unable to access traditional banking services, particularly low-income individuals and small businesses. These loans are specifically designed to meet the unique financial needs of borrowers and help them build a better future for themselves and their communities. In this article, we will explore the various types of microfinance loans available in India, the benefits they offer, and the documents required to apply for a microfinance loan.

Types of Microfinance Loans in India

In India, microfinance loans are disbursed through two models: Self-Help Groups (SHGs) and Joint Liability Groups (JLGs). These loans are typically provided by microfinance institutions (MFIs), non-banking financial institutions offering financial services to underserved communities. The following are some of the most common types of microfinance loans available in India:

Income Generation Loans

These loans are intended to support the growth or establishment of small businesses or microenterprises. The loan amount varies depending on the borrower’s repayment ability and need.

Mid-Term Loans

After borrowers have repaid their income generation loans for 25 weeks, they may be eligible for mid-term loans. The amount available for these loans is generally the remainder of the income generation loan, and the borrower and the MFI agree upon the terms of repayment.

Emergency Loans

These interest-free loans are available to borrowers year-round to cover unexpected expenses, such as medical emergencies, funerals, or other unforeseen circumstances.

Individual Loans

These loans are offered outside of the group lending process to borrowers who require collateral and a guarantor. Before disbursement, a thorough evaluation of the individual’s business and cash flow is typically conducted.

Education Loans

Education loans are provided to help borrowers ensure that their children’s educational needs are met.

Consumer Product Loans

These loans allow borrowers to purchase products like cookstoves, mobile phones, and solar lights, which can improve their quality of life.

Dairy Cattle Loans

These loans help individuals purchase new cattle or improve their existing dairy farming practices to increase their income levels.

Agriculture Loans

Agriculture loans are available to help farmers and other individuals purchase essential resources such as seeds, fertilizers, and livestock to improve crop quality and yield.

Benefits of Microfinance Loans

Small Loan Amounts

One key benefit of microfinance loans is that they offer small loan amounts to borrowers who may not have access to traditional banking services. These loans are designed to meet the specific financial needs of low-income individuals and families and can range from a minimum of ₹ 8,000 to a maximum of ₹ 60,000.

By providing small loan amounts, microfinance institutions can help individuals invest in their small businesses, purchase essential items, or cover unexpected expenses, all of which can improve their overall financial stability and quality of life. Repaying these small loans can also help borrowers establish a credit history, which may help them access larger loans or other financial services in the future.

Affordable Interest Rates

In traditional lending models, borrowers with low incomes or poor credit histories may be subject to high interest rates and fees, making it difficult to repay the loan and potentially trapping them in a cycle of debt. Microfinance institutions, on the other hand, often operate as non-profit organizations or with a social mission and may offer lower interest rates than those of traditional lenders.

This makes it easier for borrowers to repay the loan, helping promote financial inclusion and reduce poverty in underserved communities. Moreover, some microfinance institutions also provide financial education and training to help borrowers better manage their finances and make informed decisions about borrowing and investing.

Empowerment and Social Impact

Microfinance loans can significantly impact the lives of borrowers and their communities. By providing access to financial services and resources, microfinance institutions can empower individuals to build their businesses, increase their income, and achieve financial stability. This can, in turn, have a ripple effect on their families and communities, creating a positive economic growth and development cycle.

Furthermore, microfinance institutions often prioritize lending to women, who may face additional barriers to accessing traditional banking services. By providing women access to credit and financial resources, microfinance institutions can help promote gender equality and empower women to take charge of their financial futures.

Documents Required for Microfinance Loans

The documents required for microfinance loans may vary depending on the lender and loan type. However, the following are some common documents that borrowers may need to provide:

  • Aadhaar card or other valid government-issued ID proof
  • Proof of residence, such as a utility bill or rental agreement
  • Bank statements for the previous six months
  • Proof of income, such as a salary slip or income tax returns
  • Business documents, such as registration or licensing papers, for income generation loans or business-related loans
  • Educational documents, such as mark sheets and certificates, for education-related loans

Bottom line 

Microfinance loans are a valuable resource for underserved communities and individuals who may not have access to traditional banking services. By providing small loan amounts, affordable interest rates, and a range of loan options, microfinance institutions can help to promote financial inclusion, reduce poverty, and empower individuals to build a better future for themselves and their communities.

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