What is Financial Literacy?

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In the money world,

The term “financially literate”— or a related derivative—gets tossed around quite a bit. Not a whole lot of experts actually take the time to define exactly what financially literate means, leaving many statistics related to money habits void of their importance. Kids especially need a definition as they learn how to handle funds, because without it, they don’t know if they’ve reached the goals you want them to hit.

On the most basic level,

Financial literacy is simply about being knowledgeable. It means that you understand fundamental facts about money, such as the value of cash coins or bills. You also grasp standards and routine practices, such as the fact modern people generally pay for things with plastic (debit or credit card). With this information, you are able to follow most everyday conversations about money.

Research studies across,

Countries on financial literacy have shown that most individuals (including entrepreneurs) don’t understand the concept of compound interest and some consumers don’t actively seek out financial information before making financial decisions. Most financial consumers lack the ability to choose and manage a credit card efficiently, and lack of financial literacy education is responsible for lack of money management skills and financial planning for business and retirement.

Most potential retirees lack information about saving and investing for retirement. Many people fail to plan ahead and they take on financial risks without realizing it. Problems of debt are severe for a large proportion of the population because of financial illiteracy. Youth on average are less financially capable than their elders.

Financial education,

Benefit consumers of all ages and income levels. For young adults just beginning their working lives, it can provide basic tools for budgeting and saving so that expenses and debt can be kept controlled. Financial education can help families acquire the discipline to save for their own home and/or for their children’s education. It can help older workers ensure that they have enough savings for a comfortable retirement by providing them with the information and skills to make wise investment choices with their individual pension and savings plans. Financial education can help low-income people make the most of what they are able to save and help them avoid the high cost charged for financial transactions by non-financial institutions.

Decades ago, 

when it was considered bad manners to discuss money matters with others and many people didn’t even finish elementary school, people didn’t seem to have trouble grasping the basics of money management. People understood very clearly the need to live within their means and save for the future; not just because they lived in a cash-based society where solvency was admired and debt was frowned upon, but also because they had no real alternatives. When you’re paid in cash and you have no credit options available to you, the choice is pretty simple: you either live within your means or you go without.

Fear is a powerful motivator and, while I’m sure that there were plenty of people living pay cheque to pay cheque, I’m willing to bet that there were plenty more living within their means and building solid financial foundations in order to make sure they didn’t run out of cash. Then, in the 1980’s and 90’s, with the introduction of credit cards, an alternative approach to money emerged. Credit gave people the option of an easier path that removed the need to save and live within their means and offered them the opportunity to purchase experiences and products that might otherwise have been out of reach. It’s a tempting offer, and one that proved hard to resist. Human beings are hard-wired for pleasure and it

takes a greater degree of willpower and motivation to take the fiscally responsible path rather than the fun and easy one. Not surprisingly, as credit became more readily available and more socially acceptable, there was a steep decline in the amount people were saving and a sharp increase in the amount of debt they were carrying.

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Important things to note when you close your own home loan

Purchasing a home and applying for a home loan are the two most vital decisions of one’s life. You can plan to buy your dream home with a secured home loan, where you have to keep your house as collateral. So, in this case, you are giving the authority to the lender to auction your home to get the money back, if you become a defaulter.

However in that excitement, a lot of people do not take all the required actions and later suffer because of small things they didn’t complete after closing their home loans. In this article, I want to share few things every home owner should complete, when they are closing their loan.

While I am focusing totally on home loan closure in this article, but whatever I am going to share also applies when one closes a car loan, education loan, personal loan or any other kind of loan

So why are you waiting? Avail a home loan and grab your dream home. Let’s find out. Finding difficulty in Finding Your Dream House? We at moneymindz.com will make it easy for you. Just give us a missed call on 022-62116588 to explore our best Free Advisory Service. We don’t sell of any financial products. We only provide FREE financial advice so that you are not mis-guided while buying any kind of financial products.

1) Get back all the original documents

Once you have made all your payments, the Bank or Housing Finance Company will give you all the original documents. You should make certain that all the documents you presented with the bank when taking the loan are returned. Typically it will be the Title Deeds and Mother Deed (if applicable).

Don’t just test out for document alone. Confirm that all the pages are there in good condition as well. I have seen cases where last page of sale deed went missing. In that instance you require to arrange for the misplaced page which is a tiresome process.

Ensure all the pages are intact in front of the bank official prior to signing on the acknowledgement of the bank.

Once you sign, you can’t undo it and banks typically won’t be receptive in this regard. It is typically a good process to get hold of the documents from bank by visiting them than request documents by courier.

2) Obtain No Objection Certificate

NOC or NC is a No Objection certificate which is a consent certificate from the bank or housing finance company. This affirms that the Bank does not have any more interest in the asset and it’s cleared by the bank after removing all hypothecation.

When you get this make certain the NOC unmistakably mentions the Property details (like address etc.,) , name of the borrower, home loan account number, date of loan starting and closure, amount borrowed and repaid (some banks don’t mention) .

Also a section should be plainly mentioned that the borrower has paid all the dues and the property is now debt-free. This will confirm that the home is completely yours now.

(Real Estate Regulatory Bill)

3. If Lien of Your Home Is with the Lender, Don’t Forget to Remove It from the Registrar Office

Lien here means “the right to hold possession of property which belongs to another person until he/she has cleared all the debt.”

When you buy a home with housing finance, the lender has the right to sell the property (home bought by you) if you’re unable to pay back the entire loan.

Nowadays, banks carefully check the background of the borrower in advance, so they don’t put a lien on the property. However, they keep the original documents (of property) in their custody.

But if the lenders find anything suspicious in any customer’s background, they might want to put a lien on his/ her property from registrar office.

So make sure you ask your lender about the lien on your property, and if it’s there, ask them about the process to remove it.

4. Is Your CIBIL Report Updated With “Closed” Entry?

A borrower’s creditworthiness is measured through his/ her CIBIL report and it records your every loan entry and payment actions. Lenders check your CIBIL report before giving any type of loan or credit card. So, if you have closed your home loan by making full payment, it’s crucial to check if your CIBIL report is updated with the “Closed” entry or not.

Although banks update it themselves, but many times they delay or even completely ignore it for several months and your CIBIL report isn’t updated on time which might decrease your credit score and mar your chances of getting any loan in future.

So, double check with the lender bank when you close your home loan account, that they update the CIBIL report at the earliest.

Whenever you’re closing your home loan (even if you’re opting for pre-closure), make sure you complete all the things mentioned above to be on the safer side.