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hey anon !I take it that you know about MCLR or Marginal Cost of Funds based Lending, which has been made applicable w.e.f 1st April 2016 as a counter to the base rate system.Now, about how does MCLR benefits the ultimate consumer is a debatable topic and has to deal upon the type of loan you are indulged in (as mclr is not applicable on auto loans and personal loans) and is completely dependent upon the ongoing interest rate fixed by the RBII,though will try to form a clear pictureDr Raghuram Rajan, our beloved RBI governor (writing this answer on 5th sept ,so he is still our Rbi gov) cut the Repo Rates in the previous fiscal year so that to make loans cheaper for borrowers but banks haven't had started following the same while lending,so interst rates were still based upon the previous rates !Thanks to MCLR, the calculation of interest rates (though a bit complicated) will be based uponMarginal cost of fundsOperation expense of bankCost of carry in the CRRAnd, Tenor premiumexplaining the above,Marginal cost of funds depends uponBank rate interest (charged by banks from consumers)Repo Rate (charged by RBI from banks)Rate of Return on the capitalNow weights are assigned to it with a 92% weight to the sum of (1) and (2) and 8% to (3). Operting expense of bank is nothing but the daily cash requirement for running the bankCost of carry in the CRR means that banks have to take into account the amount of CRR blocked with them which they can't use, because CRR !Tenor Premium is about the time period a.k.a longer the duration of loan period,higher the premium.banks are allowed to charge a premium to the borrower for the risk (uncertainty) associated with lending for longer period.Now the RBI has issued guidelines for the banks so that they can pass on the benfit of a rate cut,down the lane . The main benefit coming out of the base of calculation of bothBanks would now charge you based upon the marginal cost of funds,by taking in account the repo, and tenor premium, so giving you a ‘reset period’ after which your loan rate will be revised plus the ‘spread’ banks levyComing back to the main answer, MCLR will benefit the consumers as now a rate cut in the repo will directly be reflected in the form of marginal costs of funds and customTaking an exampleFor instance, for salaried individuals, ICICI Bank has set a floating rate home loan at one-year MCLR of 9.20% with a spread of 25 bps for loans of up to Rs.5 crore. So, the interest rate will be 9.45% (9.20% +0.25%). This interest rate is valid till 30th April, 2016 (as given in the bank’s website). ICICI Bank has decided to set one-year MCLR as the benchmark rate for their home loans.Though the MCLR is reviewed monthly, your home loan will be reset every year automatically, depending on the agreement with the bank.So, if you take a Rs.50-lakh home loan on 10th April,2016, your home loan interest rate would be 9.45% . You have to pay EMI installments at this rate of interest for the next 12 months.Let’s say one-year MCLR gets revised to 9.% in April, 2017 and the spread remains the same then your home loan interest rate will be reset at 9.25% (MCLR of 9% plus spread of 25 bps)But , the interest rates cannot be predicted to remain low forever, if they increase there will be a swift hike in the interest rate (MCLR) ! Anyway if you predict a rate cut in the near future, you can transfer your loan to a mclr from a base rate oneMany companies prefer being charged with a floating interest rate rather than a fixed one as they hint from guidelines about rate cuts and would be benefitted by oneIt is too early to say if the change in base rate will actually be completely passed on to consumers. Because, do remember that banks still have the option to set a ‘spread‘ on loans. Banks are free to determine the range of spread for a given category of borrower or type of loan. (For example, if the loan interest rate offered to you is 10.25% and the new base rate as per MCLR is say 10%, 0.25% is the spread)As far as banks are concerned, their margins might take a hit in the range of Rs 15,000 to Rs 22,000 crore assuming a 75 basis point decline (source – ICRA). Banks may lose when interest rates drop but will gain when rates increase. So, it all depends on how many instances of ‘rate cuts’ will happen in the future.MCLR is applicable for Banks only. Hence this is irrelevant to home loans offered by NBFCs (Non-Banking Financial Companies) like LIC Housing Finance, Dewan Housing (DHFL), HDFC, Indiabulls housing finance etcThanks for readingImages and example from : ReLakhs.com - Personal Finance Blog

Not thorough with legal titles - go through multiple lawyers to verify the titles.Purchasing new projects is extremely risky. Most well known builders are in a mess. Its rather safe to purchase a completed property than under-construction one. Very few projects finish on time, and the interest cost, rental cost you pay is significant for the low price you do initially.Assuming, builders will supply all those amenities promised as per plan. Power, water, drainage, swimming pool, that overcharged club, garden may end up a room.Underestimating the impact of loan on your life. Most Indians live and work to pay their loans for banks. The house and bank owns them, not the otherway aroundProperty prices need not always go up. When a crash happens, you would be left with an unnecessary loan you end up payingNot counting additional charges - brokerage, TDS, registration, it adds up a lot. Monthly maintenance charges of your flat is additional.Sometimes its best to go for a 3BHK rather than a 2BHK now and thinkiing to purchase a bigger one later. It might pinch a bit, to buy a bigger home, but salaries also increase. Some may never be able to buy that bigger house, as expenses may catch up with children or otherwise.With bank loan, paying unnecessary insurance, you can assign your life insurance or others to your loanNot counting fixed, floating, foreclosure charges while taking a loan. A floating, no foreclosure charges and other value add service charges is the best loan. Private banks often aren’t the best to take a loan.Finally not knowing why they are purchasing the home. People confuse home with investment, and for most, thats their only investments. Even after 20–30 years, all they will be left with is the home, EPF/PPF , LIC amount accrued. They think they should have made a lot of money, alas they don’t do other investments and left with a home, which they never sell for a better post retirement life making it miserable for them.

Postal life insurance is the best.Earlier PLI was available only for a very limited number of professional like Employee of Central government, State Government,PSU,Nationalized Banks etc.As insurance sector has become very competitive over the years, PLI has redefined itself by expanding its clientele.The following professionals are also now eligible for having their lives insured under PLIEmployees of all private educational institutions/schools/colleges recognized by central/state Governments. ( B.Ed , M.Ed)Doctors ( Both working in Private as well as Government )(MBBS,BDS,BPT,BHMS,BUMS,BSMS,BAMS )Engineers( BE,B tech,ME,M tech )Management Consultants(MBA), Chartered Accountants, Architects,Cost AccountantsSoftware professionals ( MCA, MSc (Computer science and IT ) )Lawyers ( Registered with bar council of India )( B.L)Bankers ( Any Nationalised banks, Foreign banks, Regional Rural banks, Scheduled commercial banks, private sector Banks )Bsc ( Nursing, Hotel Management, Viscom )WHAT IS THE PREMIUM AMOUNT ? For the same Sum assured, the premium you pay in PLI is very less compared to other insurance.LOW PREMIUM, HIGH BONUSPLI premium is less compared compared with other insurance agency premiumOn the other hand it gives you high bonus than any other agency in the market.I will explain this with an example.If your age is 25 years, you give Rs.10/- daily until you are 60, and your maturity amount at 60 is Rs.4,24,000/-(Approx).This Rs.10/day is equivalent to monthly premium of Rs.315/-If any mishappening occurs before you’re 60, the Sum assured of Rs.1,40,000/- Plus Bonus accrued thereof is given to the nominee on claim.This Rs.10/- day is frugal and not even costs one chai.Isn’t it a wise decision to spend this money towards your life insurance premium?WHERE TO PAY THE PREMIUM ? : PLI Premiums can be payable at any post office across India.We have 1,55,000 post offices across the nation. You can find a post office more proximal than any other insurance premium office. Further you can also pay your premium ONLINE.Mode of premium payment can be cash/cheque/pay recovery ( For Government employees alone )WHERE CAN YOU BUY PLI POLICY?: Other insurance agents are more available in market where they can serve you at your door step unlike PLI agents. There are very limited number of PLI agents available when compared with other insurance. Still you can contact your nearest post office for getting contact of a PLI agent for buying a PLI policy.FUND INVESTMENT IN MARKET : Unlike other insurance agency does, the PLI funds are not invested in risky market. It gets invested in Debentures and Government securities/bonds which is risk free.IT Rebate : Both PLI and LIC qualifies for IT rebate under Section 80C.RETURNS : PLI gives you more Bonus when compared with other insurance. Even a person working in other insurance companies can’t deny it.CONVERSION OF MATURITY AGE AND SUM ASSURED : The maturity age which you opt for while opening an PLI can be increased or decreased.Likewise there is also an option where the Value of your policy ( Sum Assured ) can also be decreased.Not many use/know this option.PLEDGE : You can assign (pledge ) your PLI policy and can get loan from Nationalized Banks.LOAN FACILITY : You can avail loan from your PLI policy Accrued amount anytime after completion of 36 Months. The loan interest is 10% half yearly which is very less in the market.