Here’s how to get out of debt without having to resort to credit cards.
Here are the basics of a simple home mortgage.
Read More :The average monthly interest rate on a home loan is about 8 per cent, and the rate for a mortgage is 6.8 per cent.
In order to make the interest payments, a homeowner needs to take out a loan from their employer or the government.
These loans are usually issued with the aim of paying off the debt once the borrower becomes employed or retired.
This can lead to debt-free living, but in India, this is still a rare phenomenon.
If you’re looking for an alternative, there are many options for borrowers.
For example, if you’re buying a house with a down payment of ₹1 lakh, the bank can help you get rid a lot of your debts with a mortgage.
You can even get a loan on a loan of a similar interest rate, which is the interest rate that the bank offers.
However, this type of loan is not the best choice for borrowers who want to live with dignity, according to a survey conducted by CreditBankingRates India (CBRI).
The survey, conducted by a bank-run organisation called CAB, surveyed over 4,500 people, which was done in December 2016 and covered nearly 5,500 borrowers, including borrowers from various sectors.
The respondents in the survey said that they were satisfied with the way they were dealing with their financial issues, which included not taking out a mortgage and getting rid of the debt altogether.
“In our survey, we found that 70 per cent of the respondents said that in the case of a mortgage, they could reduce the debt with just the mortgage.
In the case where they could not get rid their debt, they needed to take some other type of mortgage,” said a spokesperson from the CAB.
The biggest problem, said the spokesperson, was that a homeowner’s income is not a good indicator of how much debt they can afford to pay off.
“A borrower should not be spending too much on mortgage payments,” he added.
As for how to go about paying off your debts, the survey found that the most commonly cited method was to take an insurance policy.
This is the cheapest option and can be obtained for ₳1 lakh or less from a few insurance companies.
If you have a spouse or partner, it can be done on your own.
You should always have a deposit to cover your interest payments and to cover other costs like maintenance and insurance, said a representative from the organisation.
“Most people have their own savings account.
They need to put their money in the account to take care of their finances,” said the CAA spokesperson.
Another option is to pay for it yourself.
“In our opinion, if a borrower’s spouse or child needs to pay their rent, then the mortgage can be paid in instalments, but it is advisable to ask for this upfront,” said Amit Kumar, senior director of credit, CRIC.
He added that it’s best to do the initial payments as early as possible.
“When the mortgage is paid off, you should keep it with your bank,” said Kumar.
The CAA survey also revealed that the average monthly payment on a mortgage in India is ₽100,000, which puts a strain on borrowers’ finances.
A loan with a lower interest rate can mean that the borrower gets an annual payment of around ₂5,000 from the bank, while a higher interest rate mortgage can add an additional ₘ10,000 to the total amount.
“The average rate on an insurance loan is ₪8,000 per annum,” said Vinay Bhan, director, policy and research at CRIC India.
“This means that the amount of money in a mortgage depends on how much the lender charges and how much it gets back.”
As the survey showed, the majority of respondents had trouble paying off their debts because they were still in the process of paying them off, with almost two-thirds of them not paying off any debt at all.
“Most of the people had paid off some debt but not paid off the rest,” said Bhan.
A spokesperson from CRIC told The Hindu that the survey was done on a voluntary basis, and that they do not use the survey as an indicator for their work.
They are not using it to suggest what they should or should not do, but rather to suggest that people should be using the survey to work out their financial future.
“Our survey was conducted in December, so we cannot say how many borrowers it will reach in the future,” the spokesperson said.