home loan project final (arun)

ANALYZING THE HOME LOAN MARKET AND DIFFERENT PLAYERS IN THE MARKET VIS-A-VIS THEIR MARKET SHARE.

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An Introduction to Home loans

1. What is a Home loan? Home loan is the sum of money a bank or financial institution lends you to help you buy your dream home.

By taking a home loan from a bank or a housing finance company you pledge

your home as the lender’s security for repayment of your loan. The bank or

financial institution will hold the title or deed to the property till the loan has

been paid back with the interest due for it.

Home loans are generally taken for long tenures as the loan amount is usually a

huge sum. A home loan can be taken anywhere between 5 and 30 years. The

amount of loan one is eligible for is dependent on the individual’s credit profile.


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2. What is a down payment? What are the ways in which one can source his / her down payment?

Generally as a thumb rule, banks or financial institutions lend 85% of the cost of

the property. 15% of the money is expected to be paid as a down payment for

the loan.

Opting for a personal loan if you can afford that cost as well, pledging your

investments, getting loan against your insurance policy etc. are some ways to

liquidate your assets and pay your down payment.

3. Are there any specific loans available for NRIs?

Yes, there are specific loans that are tailored for the requirements of NRIs who

wish to build or buy a home in India.

4. What is reverse mortgage?

This loan facility allows a senior citizen (above 60 years of age) eligible to

apply for a reverse mortgage loan and avail 60% of the value of the residential

property he resides in and retain the right to continue to reside there. The

maximum tenure for this loan scheme is 15 years.


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Loan Eligibility & Cost

1. Who is eligible for a home loan?

Indians with a regular source of income, which includes salaried individuals,

self-employed professionals, self-employed business people, NRI individuals

and existing property owners who can pledge it as security for the loan, are all

eligible for a home loan. The individual applying for the loan should be above

21 years of age, when the loan period begins and should be less than 65 years

when the loan period closes.

2. What are the other factors, which are relevant for home loan eligibility?

- Purpose of the loan - (purchase of property, improvement, purchase of land)

- Age

- Income (savings history)

- Experience & Qualification (stability and continuity of occupation)

- Employer

- Existing loans


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- Number of dependents

- Credit History (Past repayment history)

- Resident status (The maximum loan that can be sanctioned to a resident Indian

is Rs.5, 000,000)

3. What are the factors included in the total loan cost?

Registration charges, transfer charges and stamp duty costs apart from the actual

loan amount are included in the total cost calculation of the home loan.

4. How much loan can one avail?

The amount of loan you can avail depends on factors like salary details,

qualifications, employer/business, years of experience, growth prospects,

alternate employment prospects and sources of other income, if any. Generally,

about 40% of your monthly gross income can be availed as your loan amount.

For self-employed applicants, profit is the benchmark that determines loan

value. The longer the time frame for repaying the loan the lower the EMI and

this also means you can opt for a larger loan amount. The loan amount you are

eligible for is also dependent on other factors like the company you are

employed with, the location of your residence and your credit history.


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To know how much money you are eligible for, to compare banks and figure

who offers you the best loan bargain.

5. What are the other costs that usually accompany a home loan?

Home loans are usually accompanied by the following extra costs:

a) Processing Charge: It is a fee paid to the lender when you apply for a loan. It

could either be a fixed amount not linked to the loan or could also be a

percentage of the loan amount.

b) Pre-payment Penalty: When a loan is paid back before the end of the agreed

duration, a penalty is charged by some banks/financial institutions, which could

be up to 5% of the amount pre-paid.

c) Commitment Fees: Some institutions levy a commitment fee in case the loan

is not availed within a stipulated period of time after it is processed and

sanctioned.

d) Miscellaneous Costs: Some lenders may levy a documentation or consultant

charge.

e) Registration charges of the mortgage deed.


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6. What are the details of some of the incentives offered by housing finance institutions?

Some lending institutions sanction the loan without requiring you to identify a

property as a prerequisite for eligibility

a) Free accident insurance

b) Discounts

c) Waiving of pre-payment penalty

d) Waiving of processing fee

e) Free Property Insurance

7. When can one take a home loan?

You can take a home loan before or after identifying the property you want to

purchase or when the property is under construction or for purchasing a plot of

land for investment or to renovate an existing home.

8. Can one have a co-applicant for a home loan?

Yes, it is good to have a co-applicant. This can help you increase the loan

amount you are eligible for as the income of the co-applicant is also taken into

consideration. Providing additional security like bonds, fixed deposits and LIC

policies will also help in enhancing eligibility.


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9. Who is eligible to be a co-applicant?

The co-owner of the property you are going to purchase should also be a co-

borrower/co-applicant. The reverse however is not stressed by lending

institutions. Financial institutions accept a parent or spouse as an ideal choice

for a co-applicant. A fiancée can also become a co-applicant but the loan

disbursal will begin only after the submission of the marriage certificate.

10. What is EMI? How is it calculated?

An equated monthly Installment (EMI) is the amount of money that is paid back

to the lender on a monthly basis. It is essentially made up of two parts, the

principal amount and the interest on the principal amount equally divided across

each month in the loan tenure. The EMI is always paid up to the bank or lender

on a fixed date each month until the total amount due is paid up during the

tenure.

The EMI facility helps the borrower plan his budget. The EMI is calculated

taking into account the loan amount, the time frame for repaying the loan and

the interest rate on the borrowed sum.


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11. What is the difference between a fixed interest rate and floating interest rate?

A fixed interest rate remains constant throughout the loan tenure regardless of

the market conditions whereas a floating interest rate can decrease or increase

depending on market fluctuations. For instance, it increases when RBI hikes up

short term interest rates. Banks usually quote the floating rate loans as their

index rate (prime lending rate) plus or minus x%. Banks usually increase or

decrease their prime lending rate when the RBI increases or decreases short

term interest rates.

12. What are the different types of interest rates available?

Interest rates are quoted either as fixed flat rates or reducing balance rates. In

the flat rate method of interest calculation, the outstanding loan amount is never

reduced during the entire tenure of the loan even though you make payments

monthly.

In the case of reducing balance interest rates the EMI is calculated on the basis

of daily, monthly, quarterly or annual rests. A ‘rest’ indicates the time frame in

which the bank will recalculate the EMI based on the amount of loan paid back

and the frequency of any compounding interest rate. Suppose you have a loan

with an annual ‘rest’ then, though you pay a monthly installment, your benefit

kicks in only at year end, here the bank gets to benefit. A monthly ‘rest’ will

recognize the reduction in the loan amount on a monthly basis, a quarterly rest


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does it every quarter while a daily ‘rest’ will do it each day. The more closely

the rest matches the frequency of your payments, the lower the total interest

paid as the total outstanding loan amount is reduced by your monthly payments

more frequently.

13. What is an amortization schedule?

An amortization schedule is a table giving the reduction of your loan amount by

monthly installments. The amortization schedule gives the breakup of every

EMI towards repayment interest and outstanding principal of your loan.

14. What are the factors one need to keep in mind while comparing loans from different financial institutions?

A loan applicant needs to keep a few things in mind when comparing loans. The

applicant needs to determine the kind of loan and the amount he wants to apply

for. He needs to keep in mind the total cost of the loan, which will be paid up by

the end of his loan tenure.

The second step is to understand the terms and conditions under which financial

institutions are offering the loan. Finally he needs to evaluate, which loan offer

is the best bet for him. Search for your home loan at BankBazaar.com to gain

access to the most interactive tools in helping you compare and evaluate the best

deal you can get from any bank of your choice.


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Other factors that you should look out for are customer service levels and the

average time the bank takes to process a loan.

15. Can one avail a tax rebate on my home loan?

Section 80C and Section 24 grant income tax rebates to people who have taken

home loans.

These tax deductions are capped at 1 lakh for the principal repaid and 1.5 lakhs

for the interest repaid.

16. What are the loan tenure options?

You have the option of selecting a loan tenure you are comfortable with,

ranging up to 25 years, provided the term does not extend beyond your reaching

65 years of age or retirement age, whichever is earlier.


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Credit History

1. What is credit history? How does a financial institution check on my credit history?

A credit history is basically a record of your past repayments of loans and credit

card bills. Also, there is a central bank of data available with the Credit Bureau

of India Limited (CIBIL), where data from all the banks on existing loans and

their repayment patterns of their customers are accumulated. Before approving

your loan a financial institution always checks with CIBIL on your loan

repayment track record.

2. Is the repayment track record of my previous loans considered in calculating my eligibility for a new loan?

It definitely has its benefits! A good repayment track record could fetch you a

higher loan amount at a lower interest rate as it is standing proof for your money

management capabilities. In case of a bad repayment record you will be charged

high interest rates and you will find it difficult to obtain a loan.


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3. If a loan application is rejected, does that reflect on my record?

Every time you apply for a loan to a financial institution, your credit report with

CIBIL is checked and the inquiry appears on the record. Many such inquiries

will adversely affect the interest rates you are charged and will make your

borrowing options limited as it suggests you are likely to be facing a financial

crunch.

Documentation

1. How can one apply for a loan?

When you are ready to apply for a home loan, you should evaluate your options

by presenting your requirements with different banks. What was earlier a

daunting task involving rushing from bank to bank for a series of discussions

and bargaining for the best deal, is now just a simple 15 minute process thanks

to BankBazaar.com. Search BankBazaar.com to find the best loan bargain that

is most suited to your needs. Then get your documents ready for the Bank to

collect it at your doorstep and begin processing your loan.


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2. A document checklist, so that one can be ready when the Bank comes to collect it from my residence.

Make sure you check with your Bank or NBFC to figure out which of the following documents you need to submit, as the requirements differ from bank to bank.

Here is a standard list of options for each document required.

A. Identity proof:

o Driving license

o Voters ID

o Passport

o PAN card

o Ration card

o Employee ID

o Bank passbook

o Letter from a recognized public authority or public servant verifying your

photograph

o Confirmation letter from your employer or another bank verifying your

photograph

B. Address Proof:

o Driving license

o Voters ID

o Passport


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o Ration card

o Bank passbook or Bank account statement

o LIC policy/ receipt

o Utility Bill - telephone, electricity, water, gas (less than 2 months old)

o Letter from any recognized public authority verifying residence address

of the customer

o Letter from your employer

C. Age Proof:

o Driving license

o Passport

o Bank passbook

o PAN Card

o Birth certificate

o 10th standard mark sheet

D. Income Proof:

The following set of documents that detail your credit profile varies according

to whether you are a salaried individual or a self-employed individual.

i. Self Employed/Entrepreneurs:

o A brief introduction of Business/Profession

o Balance Sheet, profit and loss account statement of income, proof of

income tax returns

o for the last 3 years certified by a CA

o Photographs

o Receipts of advance tax payments if any made


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o A photocopy of Registration Certificate of establishment under Shops and

Establishments Act/Factories Act

o Registration Certificate for deduction of Profession Tax

o Certificate of Practice

o Receipts of Bank loans

o Proof of investments (FD Certificates, Shares, any other fixed asset)

ii. Salaried Individuals:

1. Income Proof (you just need to provide one of the options listed for income proof):

o Latest Pay slip

o Form 16

o Increment/Promotion letters

o Appointment letter

o Pay slip (Last 2 months) with salary account bank statement

o Certified letter from Employer

o IT returns (for three years)

2. Investment proof (FD certificates, shares, any fixed asset etc.)

3. Documents supporting the financial background of the borrower (his liability

and assets if Any)

4. Photographs.


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Property Documents

A. If a flat is purchased from the builder, one needs the following supporting documents to submit to the bank.

1. Original copy of your agreement with the builder

2. 7/12 extract - This is issued by the concerned land authorities giving details

such as the survey numbers, area, date from which current owner is registered as

owner etc.

3. Property register card, which is obtained from the City Survey Department

4. N.A. permission for the land from the collector, if its agricultural - If the land

is agricultural and is being utilized for residential/ commercial/industrial use,

then such agricultural land has to be converted to non-agricultural land and a

Non-Agriculture Order has to be obtained from the Collector of the district

where the property is located.

5. Search Report and Title Certificate - A search report and title certificate can

be obtained from an advocate who will conduct a survey of the title of the

property by visiting the office of registrar. A legal opinion can avoid any legal

hassles later and is mandatory to be filed with the agreement for sale.

6. Development agreement between the owner of land and the builder

7. Copy of order under the Urban land Ceiling Act


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8. Copy of building plans sanctioned by the competent authority

9. Commencement certificate granted by the Corporation

10. Building completion certificate

11. Latest receipts for taxes paid towards the land or property or flat to be

purchased

12. Partnership deed or memorandum of association of the builders firm

B. In case one is buying from a Cooperative Society, then ensure he /she has the following documents in place.

1. Original share certificate of the Society

2. Allotment letter from the Society in your name

3. Copy of the lease deed, if executed

4. Certificate of the registration of the society

5. Copy of the byelaw’s of the Society

6. No objection certificate from the Society

7. 7/12 extract or property register card in the Society’s name

8. Copy of N.A permission for the land from the collector

9. Search Report and Title Certificate


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10. Copy of order under the Urban Land Ceiling Act

11. Copy of the building plans sanctioned by a competent authority

12. Commencement certificate granted by Corporation

13. The latest receipts of taxes paid for the property

14. Original Agreement to assign / Deed of assignment

C. If one is constructing on your own land then one will need the following documents.

1. Original sale deed of land and extract of Index II

2. 7/12 extract or property register card in your name

3. Copy of N.A. permission for land from the collector

4. Search and title report

5. Copy of tax paid under Urban Land Ceiling Act (obtained from

Commissioner ate of Urban Land Ceiling and Urban Land Tax)

6. Copy of the building plans sanctioned by a competent authority

7. Building permission granted by the Corporation

8. The latest receipts of taxes paid for your land

9. Estimate of the cost of construction certified by the architect


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3. What are the documents that need to submitted for disbursement of a home improvement loan?

Title deeds for the past of 13 years

Encumbrance certificate for the past 13 years ‘Khata’ certificate

Most recent tax receipts for the property

Approved plan

License for the extension

Cost estimate from a qualified engineer

Cost estimate from the architect

4. What are the things one needs to keep in mind before one selects a property?

You need to check if the property is approved by the government and if it is

registered. You need to evaluate if the location of the property is conducive to

your family’s needs. Schools, hospitals, shops, transportation facilities, the

reputation of the builder, availability and consistency in the supply of power and

water, security, parking facilities, location in a residential area etc. need to

checked out.


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5. Is it a must to apply for insurance cover for ones property?

Though it is not a must, considering the huge sum of money spent on

purchasing the property it is a sound practice to have it insured to protect

yourself against any danger that might befall on the property. Usually property

insurance comes as an incentive with your home loans after a certain period.

Insurance rates are usually very affordable.

6. What is a ‘No Objection Certificate’?

This certificate states that it allows the property to be mortgaged by the bank.

This comes into effect in instances like a co-operative society that owns the

property but whose members have a right to reside in the premises and also

transfer the rights to someone else. This is also true in the case of leased land on

which property is built. In this instance, the property is owned by the borrower

but the land on which the property is built legally belongs to a development

authority. This certificate safeguards the interests of the Bank.

7. When does a property become `pre-approved’?

When a bank has already verified the title documents of the property of a

particular builder, it files them in the bank records and labels them “pre-

approved”. This means that when a buyer approaches the bank for purchasing a


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house or apartment in that property, the bank need not do a title verification

process all over again.


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Processing the loan

1. What are the steps involved in taking a loan?

There are three steps to a home loan application -

1. Application - You submit a completed application form with all the

essential documents.

2. Sanction - You get an approval for a specific loan amount based on the

value of your property and repayment capabilities.

3. Disbursement - The loan amount is transferred to the applicant.

2. How long will it take for the financial institution to contact me after one submits my application?

Most financial institutions will contact you within one business day of your

application being submitted.

3. How long will it take for the financial institution to approve the loan?

Loan approvals are at the sole discretion of the financial institution. The time taken to approve a home loan is usually about a week, subject to the fact that all the required documentation has been submitted to the bank.


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4. How soon will one get my loan amount?

Once all necessary documents are submitted and the paperwork completed, including submission of the post dated cheques (PDC) or signed ECS (Electronic Clearing System) form, the financial institution will usually disburse your loan within seven working days of the loan approval.

5. Does the financial institution verify authenticity of the submitted documents and the details provided in my application?

Yes, the financial institution will verify all submitted documents and the details provided in your loan application. Your application could be declined in case of any discrepancies.


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Different Player in the Home Loan Market.

Banks Providing Home Loans ABN AMRO Andhra Bank Axis Bank Bank of Baroda BHW Birla Home Finance Canara Bank Citibank Corporation Bank Dewan Housing Finance GE Money GE Wizard HDFC HSBC ICICI IDBI


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India bulls Indian Bank LIC LIC Housing PNB SBI Standard Chartered


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ICICI Bank is the largest provider of Home Loans in India. ICICI Home Loans

offer unbeatable benefits to ensure that its clients get the best deal without any

hassles. ICICI Bank Home Loans provide loans not only at competitive interest

rates, but also are so designed that they cater to the specific needs of consumers.

New products / new features in existing products are introduced from time to

time based on customer feedback. ICICI Bank offers easy home loans for

purchase or construction of flat or house.

The benefits associated with ICICI Home Loans which give them an edge over

other players in the market are:

Attractive and customer friendly loan interest rates

Loans as low as INR 0.2 million is available

Term loans up to 20 years is available

Loans come with a Free Personal Accident Insurance Policy

Premium charged in case of insurance options for Home Loans is also

attractive.

Simplified Documentation

Doorstep Service

Home Loans can be sanctioned even before selecting a property


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(All the above facilities are situational and subject to changes according to the

company's discretion.)

With varied offering of house loans and home finance, ICICI Bank Home Loans

provide a variety of options to its customers from which they can choose the

one that suits them the best.

The Various policies or terms of ICICI Home Loans are:

Fixed Rate Home Loan

Adjustable Rate Home Loan or Floating Rate Home Loan

Partly Fixed and Partly Floating Rate Home Loan

Smart fix Home Loan

Money saver Home Loan

The other types of loans include Land Loans, Office Premises Loans, Home

Improvement Loan and Home Loan for NRI. One can also leverage his/her

existing property to get a Loan against Property, Property Overdraft or Lease

Rental Discounting. All of these are available at a fixed rate or an adjustable

rate of interest.

Another significant feature of ICICI Home Loans is that it allows the customer

transfer the balance of his/her existing home loan from other banks. Moreover,

the Home Loans are also liable to tax benefits.

Thus, for all good reasons mentioned above, ICICI Home Loans have been and

will be the most sought after in the distant future.


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ICICI Bank ensures you get the best deal on Home Loans in terms of interest

rates and other facilities. You can opt for a floating, fixed or a part fixed and

part floating rate Home Loan.

Charges Home Loans

Loan Processing Charges /

Renewal Charges

0.5% of loan amount as Administrative Fee or

Rs. 2,000, whichever is higher

Pre-payment Charges (Part) Nil

Pre-payment Charges (Full) 2% of Principal Outstanding including amount

prepaid in the last 12 months


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Home Loan Counseling - Sharing of over 30 years of home loan experience

We have been a part of a 30 year journey with our 33 Lakh customers. Our

home loan counsellors offer you the time tested advice.

Be it legal documentation, project or builder approvals, and technical advice, we

look forward to sharing with you and this service is absolutely free.

Our project approval facility provides our customers the comfort of purchasing

properties from builders who have complied with all basic documentation.

Door Step Service

We offer door step service. Please call HDFC Home Line call for our Sales

Executive to assist you or get in touch with the HDFC Office near you, please

click here.

We help you find your dream home

You can buy, sell, lease residential or commercial properties through HDFC

Realty.


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Wide Product Range

We provide loans to meet all your requirements for you to make that house a

home.

Home Loans, Home Improvement Loans, Home Extension Loans, Loans to

professionals for office or clinic, Home Equity Loans (Loan against Property),

Loan against Rent receivables, Short Term Bridging Loan.

Loans on Adjustable Rate, Fixed Rate.

Multiple Repayment Option

Step Up Repayment Facility

Helps young executives take a much bigger loan today based on an increase in

their future income, this helps executives buy a bigger home today!

Flexible Loan installments Plan

Often customers, parents and their children, wish to purchase properties

together. The parent is nearing retirement and their children have just started

working. This option helps such customers combine the incomes and take a long

term home loan where in the installment reduces upon retirement of the earning

parent.


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Tranche Based EMI

Customers purchasing an under construction property need to pay interest (on

the loan amount drawn based on level of construction) till the property is ready.

To help customer save this interest, we have introduced a special facility of

tranche Based EMI. Customers can fix the installments they wish to pay till the

property is ready. The minimum amount payable is the interest on the loan

amount drawn. Anything over and above the interest paid by the customer goes

towards Principal repayment. The customer benefits by starting EMI and hence

repays the loan faster.

Accelerated Repayment Scheme

Accelerated Repayment Scheme offers you a great opportunity to repay the loan

faster by increasing the EMI. Whenever you get an increment, increase in your

disposable income or have lump sum funds for loan prepayment, you can

benefit by:

Increase in EMI means faster loan repayment

Saving of interest because of faster loan repayment

You can invest lump sum funds rather than use it for loan prepayment. The

return from the investments also gives you the comfort of paying the increased

EMI.


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Wide network of financing

With over 200 offices, 90 outreach programs - HDFC is able to provide home

loans in over 2400 locations in India. You can apply at your local HDFC office

for properties in locations where we finance.

Post Disbursement Services

Income tax Certificate to enable you to claim the tax benefits are sent to you.

This service is absolutely free.

Loan Repayment

ECS facilities

Post dated cheques - No charges for replacement of cheques

Loan repayment at any HDFC Bank


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Home Loan Quick and easy home loans

Need help buying a home?

Axis Bank's Power Home puts an end to your Real Estate troubles. Augment

your reach and buy the house that you've set your heart on.

Features of PowerPlus scheme

Fixed interest of 8% p.a. for 12 months & floating thereafter

Balance Transfer facility

Doorstep service

Nil Prepayment charges

AXIS Bank Home Loan has recently seen slashing down in interest rates on its

floating rate housing loans by 25 basis points with effect from November 25,

2007. UTI Bank is now working under the name of Axis Bank. UTI bank offers

a home loan for:

o Purchasing a plot and constructing a house on it o Constructing a house on an already owned plot o Purchasing a house/flat but that shouldn't be more than 15 years old o For renovating/extending an old house/flat o Take-over of existing housing loan o Home Loan to NRI on the purchase of ready residential property


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Axis Bank Home Loan Details Loan can be taken against a property but that property should be within a radius

of 50 km from any UTI Bank branch. At the time of taking a loan the age of the

applicant should not be less than 24 years and at the end of the tenure he should

be less than 65 years. Applicant availing a Home Loan can be Salaried

Individual, Professional or Self-employed individual. Salary requirement:

o A salaried person working in a government or private firm and already

has an account with UTI/Axis can take loan if his salary is Rs. 7500 per

month.

o In case an applicant is not a holder of an account with UTI bank needs to

have salary Rs. 8000 per month.

o If the spouse is also working then the clubbing facility is provided by

AXIS/UTI Bank in which the salary of both is taken together to give

home loan and that salary should be Rs. 12,000 per month.

o The professionals like doctors, engineers, CAs, management Consultants

etc., should have minimum net annual income of Rs. 1.50 lakhs. If

clubbed with spouse's income it should be more than Rs.12, 000 per

month.

o For self-employed person the home loan is granted by UTI Bank if net

annual income is Rs. 1.50 lakhs

Axis Bank Home Loan Documents

The minimum amount that you can take as home loan is Rs. 1 Lakh and the


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maximum can be Rs. 50 lakhs depending on the need. The interest rate will vary

with the tenure of the Home Loans. Documents required taking home loan from

UTI/Axis Bank:

o Identity proof (Indian Passport/voter card/driving license and a

photograph)

o Salaried employee need to give income proof (the latest salary slip with all

deductions/form 16 with recent salary certificate)

o For self-employed income tax return of the last 2 years and income

computation certificate by a CA.

o Residence Proof (Ration card, latest electricity bill, telephone bill, credit

card bill)

o Guarantor form


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When can one apply for a Home Loan from an ABN

AMRO? You can get a home loan sanctioned from ABN AMRO if you have just decided

to acquire a Home in the near future, i.e. even before selecting a home.

What is the current FLOATING RATE OF

INTEREST?

Following are the present floating reference rates:

ABN AMRO has revised the reference rates downwards by 25 bps effective 1st

july-09.

The Revised benchmark rates are:

Mortgages Floating Reference Rate (MFRR)* = 11.00%

Home Prime Lending Rate (HPLR)** = 12.00%

ABN AMRO's Mortgages Floating Reference Rate (MFRR). The reset dates are

- 1st January, 1st April, 1st July and 1st Oct of each Calendar Year.

ABN AMRO's Home Prime Lending Rate (HPLR). The reset dates are - 1st

January and 1st July of each Calendar Year.


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What are the tax benefits which one can enjoy by home loan?

Tax benefits are available on the principal and interest components of a housing

loan as per the Income Tax Act, 1961. As the benefits could vary each year,

please check out the current benefits available.


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ELIGIBILITY CRITERIA

General Age 21 to 65 years. Repayment maximum 20 years. 75% of cost of construction OR 85% of estimated cost for outright

purchase as loan No guarantee / co obligation. Income tax benefit for payment of both Principle and Interest as per

I.T.Rules

Salaried Persons

Maximum 48 times monthly gross income

Latest salary certificate

Certificate from the employer regarding leftover service

Estimates and other related approved documents

30% take home pay.

Housing Loans for Agriculturists, Business & Self-employed persons For Agriculturists, four times of gross annual income as per certificate issued

by the competent Revenue Authority, supported by evidence of land

holdings


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4 times the gross annual income

Income Tax Returns

Auditor Certificate

Estimates and other related approved documents

Rate of Interest for Loans Sanctioned w.e.f., 25.07.2009


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Home Loan is available for: Purchase of new / old dwelling unit.

Construction of house.

Purchase of plot of land for construction of a house.

Repaying a loan already taken from other Housing Finance Company /

Bank.

Repayment period up to 25 years (floating rate option).

Bank offers following benefits with home loan availed by you:

Free Property and Personal Accident Insurance (available for

stipulated tenure of loan).

Free Credit Card - "Paras" card (Complimentary for first year) to all

new home loan borrowers with loan limit of Rs. 2/- Lakhs and above

Advance up to 90% of the principal amount of home loan repaid for any

requirement ('AAA').


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As per current IT provisions - Interest on loan up to Rs. 1.5 Lakhs per

annum is exempt from income tax (Under section 23/24(I) of the Income

Tax Act).

Terms & Conditions

Income Criteria:

Monthly Income Modified Criteria Up to Rs. 20,000/- 36 times of monthly

income More than Rs.20,000/- & up to Rs. 1 lac

48 times of monthly income

More than Rs. 1 lac 54 times of monthly income

Margin:

Monthly

income

Purpose Margin

Upto

Rs.20000/-

Purchase of plot 20%

House/flat already constructed from

own resources

25%

All other cases 20%

Above

Rs.20,000/-

Purchase of plot 20%

House/flat already constructed from

own resources

20%

All other cases 15%


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Special Home Loan Package: On home loans sanctioned on or after

16.12.2008 - and up to 31.12.2009 (shall not apply to swapping of loan,

loans sanctioned on Reimbursement basis and takeover from other banks

o Home Loan up to Rs 5.00 lac for a maximum period of 20 Years:

Margin - 10%

No processing charges and pre payment charges / penalty

Free Personal Accidental Death and Property Insurance

Cover

Free Life Insurance cover equivalent to the loan amount

o Home Loans above Rs 5.00 lac and upto Rs 20.00 lac for a

maximum period of 20 Years

Margin - 15%

There shall be no processing charges and pre payment

charges / penalty

Free Personal Accidental Death and Property Insurance

Cover.

Free Life Insurance cover equivalent to the loan amount

As security against the loan amount, the bank will take an equitable

mortgage of the housing property and/or other suitable securities.


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No Fees will be charged on part prepayment / full prepayment of the loan

amount from own sources.

The loan can be repaid in a maximum period of 15 / 25 years taken under

fixed / floating rate option subject to the period up to age of retirement in

case of salaried persons and 65 years in case of others.

In case of full prepayment or foreclosure (other than from own sources)

fees will be charged at 0.5% for each year of the residual period subject

to maximum of 2%.

RATE OF INTEREST:

Flexi rate option is available. This will facilitate to hedge interest rate

risk.

0.25 bps concession in rate of interest is available to employees of

preferred organizations and group borrowers (list of preferred

organizations is available at branch level).


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Canara Bank home loan products are designed to help you acquire the dream

home u wished to buy. Come to Canara bank and get housing loan at most

competitive interest rates and the most convenient loan procedure to make the

loan process less tiresome. Canara bank has a legacy of over a century in

specialized bank services and a branch network of more than 25000 branches

that ensures nothing but the very best services to all customers.

Canara Bank housing loans details:-

The housing loans by Canara bank are provided for various purposes including:

For repair or renovation in residential house or flat

For purchase of residential property or land

For construction on residential land

For repayment of home loan for any other housing finance institution.

The loan process involves an application form available in the Canara Bank

Branches and also online on the canara bank website. Then comes the security the bank demands for sanctioning any loan. This can be mortgage of a house or a flat owned.

Canara Bank home loan rates

The rates of interest offered on Canara Bank home loans are highly competitiveand easily affordable.


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Citibank Home Loans in India give Home Loans from Rs 2.1 Lakh to Rs 5

Crore, which can be returned in 25 years. Citibank is fully dedicated to make

your dream of getting a home come true. Eligibility criteria for salaried and

self-employed person are different. Salaried person is eligible to take loan if he

has gross annual income of Rs 1, 00,000 or above, with age between 23 and 58

years and at least 2 years of work experience. Whereas a self-employed person

can have home loan if his gross annual income is Rs. 85,000 or above, age

between 23 and 65 years along with 3 years of continues experience. The home

loan is given with the tenure of at the max 25 years and can be repaid by

anyone following way through EMI (Equated monthly Installments) as

o Post dated Cheque (PDC)

o Standing Instruction (SI) provided by Citibank banking account

o Electronic Clearing System (ECS)

There are different types of home loans available in market by different banks

and Housing Finance Companies:

o Bridge Loans

o Home Construction Loans

o Home Improvement Loans

o Home Purchase Loans

o Home Extension Loans

o Home Conversion Loans


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o Land Purchase Loans

Bridge Loans are taken if you are buying your home and purchasing the new

one. This loan taken fills the gap till you sell your home. Land purchase and

Home Purchase Loans respectively taken to purchase land and home. Home

Construction Loan as the name suggests is taken to construct a home and Home

Extension Loan helps to extend already constructed home.

Citibank Home Loans can be taken for:

o Property under construction

o Self-Construction

o Plot plus self construction

You can apply online for the loan from Citibank. The online provision will also

help you to view the status of post dated cheque, repayment details and can also

be used to get Interest Certificates online. To customers, bank also gives QPIN

that is used to check your Home Loan Account online. Citibank also offers

Students a loan that helps students in their studies. Citibank under property

power package offers loan against property from Rs. 2.10 Lakh to Rs 2 Crore for

up to 15 years. Citibank has worldwide service centers for NRI. In India it has

branches all over the nation with ATM facility. The new feature of Touch Screen

Banking is made at the ATM of this bank. The address of any branch is available

online in their website. Personal loan between Rs. 40,000 and Rs. 10 Lakh can

be availed. The amount will depend on your profile with competitive interest

rates. EMI calculator is also present for each type of loan with which you can

easily calculate your installment online.


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The world's local bank Save with Smart Home

At HSBC, we understand that buying a home is a long-term financial

commitment. Smart Home is a simple way to use your savings smartly, by

letting you decide how much interest to pay. Repay your loan sooner. Smart

Home offers competitive home loan interest rates and more.

Know more

Features & Benefits

Eligibility and Documents Required

Calculate your Savings

FAQs

Smart Home Features & Benefits

Save up to 50% on interest payments

With every Smart Home, you get a current account. All you need to do is put

your usual savings, from other accounts, into the Smart Home Account.

Depending on the savings you put into the Smart Home Account, you can

reduce the quantum of interest paid by up to 50%.

The example below shows how much interest is reduced, with a monthly saving

of just Rs. 6,000, over and above your EMI.


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Standard Home Loan

HSBC's Smart Home

Home Loan Amount (Rs.) 25 lakhs 25 lakhs

Interest Rate 8.50% p.a.* 9.00% p.a.*

Original Tenor 20 years 20 years

Actual EMI's 240 143 (40% less)

Total Interest (Rs.) 27,06,939 16,11,087

Saving in Interest (Rs.) 10,95,852 (40%)

Savings in Tenor (months) 97 (40%) * Interest rates are merely indicative which can change from time to time depending on market conditions.

The shortened loan tenor and savings require monthly payments and the

accumulation of monthly savings of Rs. 6,000 in the Smart Home account.

The interest rate on your Smart Home is linked to HSBC's Retail Lending Rate

(RLR) and any revision in the RLR would impact your interest rate. The RLR is

13.75% effective from July 03, 2009.

Tax benefits

Smart Home customers are eligible for certain tax benefits on principal and

interest components of a housing loan under the Income Tax Act, 1961*.


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LIC Housing Finance Limited was incorporated on June, 19, 1989 and

promoted by the Life Insurance Corporation of India. As one of the leading

players and an earlier entrant in the market for housing loans, LIC Housing

Finance Limited boasts of an extensive distribution network.

LIC offers home loans for construction/purchase of house/flat and also for

renovation of existing flat/house. While LIC Griha Prakash and are for

purchase, construction of properties and extension of residential units, LIC

Griha Sudhar Loan facilitates repairs/renovation of properties.

LIC Housing Finance provide loans for

Purchase / construction / repair and renovation of new / existing flats /

houses.

Finance for existing property for business / personal needs

Loans to professionals for purchase / construction of Clinics / Nursing

Homes / Diagnostic Centers / Office Space.

Loans to Corporate Bodies and Companies under different schemes for

purchase / construction of office premises for their own use, construction

of staff quarters and also for onward lending to meet the requirements of

employees

Loans to Property Builders and Developers for residential and

commercial projects.


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Eligibility criteria for resident Indians:

Minimum age 21 years as on the date of sanction.

You must be in permanent service or engaged in a profession or business.

A stable job and regular income.

Eligibility criteria for NRIs:

Minimum age 21 years and Graduate

Valid Indian Passport (for NRIs)/ valid foreign passport (for PIOs)

Steady source of income.

Valid job contract or works permit.

Rate of Interest:

The Interest Rate depends on the purpose for which the housing loan is taken

which could be for the purchase of a new house, existing house from second

owner, construction of house, renovation, etc.

Loan Amount:

Loan amount is determined on the basis of the repayment capacity of the

applicant/s. Repayment capacity takes into consideration factors such as age,

income, savings, assets, stability of occupation and continuity of income,

dependents, liabilities, etc.

In LIC Griha Prakash scheme, the maximum loan can go up to Rs 1 crore

starting from Rs. 25,000. The minimum is Rs.1, 00,000 and maximum is Rs.1,

00, 00,000 for Griha Laxmi. In both cases, the home loan finances go up to 85%


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of the cost of the property including agreement value, stamp duty and

registration charges.

For purchase of a site/ vacant plot, the minimum is Rs.50, 000 and maximum is

Rs. 20, 00,000.

LIC Griha Sudhar Loan offers a maximum loan amount of up to Rs.10 lacs and

the loan to property cost shall not exceed 85% of the cost of repairs or 25% of

market value of property, whichever is lower. The company finances up to 85%

of the total cost of the property including Stamp Duty and Registration Charges.

For security purposes, you will need to provide:

An equitable mortgage of house/flat

One guarantor

Repayment

Repayment Mode:

Equated Monthly Installments (EMI) - Monthly Rest Basis

Repayment of the loan for resident Indians is permitted for a maximum period

of:

20 years for ‘Griha Prakash’ or Retirement Age, or 70 years of age,

whichever is earliest?

15 years for ‘Griha Laxmi’ and ‘Griha Sudhar’ or Retirement Age, or 70

years of age, whichever is earliest.


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The maximum duration for repayment of loans for NRIs is

10 years under'Griha Shobha' and

15 years under 'Griha Laxmi'

However, the term for the loan will under no circumstances exceed the age of

retirement or completion of 65 years of age, whichever is earlier. For NRIs, the

maximum term is restricted to seven to 10 years.

Processing fees:

Processing fees (non-refundable) is 0.5 per cent of the amount applied for,

subject to a maximum of Rs 5,000.

Administrative fees (non-refundable) is charged at the rate of 1 per cent of the

loan sanctioned.


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SBI HOME LOANS

"THE MOST PREFERRED HOME LOAN PROVIDER" voted in AWAAZ

Consumer Awards along with the MOST PREFERRED BANK AWARD in

a survey conducted by TV 18 in association with AC Nielsen-ORG Marg in 21

cities across India.

SBI HOME LOANS now offers Interest Rates concessions on GREEN

HOMES in accordance with SBI's commitment to Environment protection.

SBI Home Loans come to you on the solid foundation of trust and transparency

built in the tradition of State Bank of India.

Best Practices followed in SBI mentioned below will tell you why it makes

sense to do business with State Bank of India.

SBI Home Loans Unique Advantage Package of exclusive benefits.

Lowest interest rates. Further, we charge interest on a daily reducing balance!!

Low processing charges.

No hidden costs or administrative charges.

No prepayment penalties. Reduce your interest burden and optimally utilize


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your surplus funds by prepaying the loan.

Over 12000 branches nationwide, you can get your Home Loan account parked

at a branch nearest to your present or proposed residence.

PRODUCTS

SBI HI-FIVE LOAN

SBI EASY HOME LOAN

SBI ADVANTAGE HOME LOAN

SBI HI-FIVE LOANS

SBI Hi-Five is available up to 31st March 2010

Amount Maximum Rs.5 Lacs

Term Maximum 120 months (i.e. 10 years) including

moratorium period.

Interest Rates 8% p.a. Fixed interest rate during first 60 months.

61st month Onwards - floating at 2.75% below SBAR

Or

Fixed interest at 1.25% below SBAR

PROCESSING FEE


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The revised processing fee structure (including service tax) from 9th November 2009 is as under:

Loan Amount Processing Fee(Revised)

Upto Rs.5 Lac Rs.1000/-

SBI EASY HOME LOAN – FOR LOAN AMOUNT UPTO Rs. 50 Lacs

SBI Easy is available up to 31st March 2010

Getting your dream home has become easier with SBI Easy Home Loan. With

low interest rates for home loan under Rs. 50 lakhs category, SBI Easy ensures

that you are not burdened with high interest for your home loan. Plus with over

12000 SBI branches nationwide you can get your Home Loan account parked at

a branch nearest to your present or proposed residence.

INTEREST RATE

Interest rate during the first year (i.e. till first anniversary date from

the date of first disbursement) is fixed at 8% p.a.

Interest rate during next two years is fixed at 8.5% p. a

Interest rate after three years may be Fixed or Floating as per the

borrower’s choice made at the time of sanction. If floating rate option is

chosen, then the rate will be 2.75% below SBAR. If fixed rate option is

chosen, then the rate will be 1.25% below SBAR prevailing on the third

anniversary date from the date of first disbursement, and shall have a


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reset frequency of 5 years from the third anniversary date of the loan.

Fixed interest rate shall be subject to force-majeure clause.

PROCESSING FEE

The revised processing fee structure (including service tax) from 9th November

2009 is as under:

Loan Amount Processing

Fee(Revised)

Upto Rs.5 Lac Rs.1000/-

Above Rs.5 Lac and upto Rs.10 Lac Rs.2000/-

Above Rs.10 Lac and upto Rs.20 Lac Rs.5000/-

Above Rs.20 Lac and upto Rs.50 Rs.7,000/-

SBI ADVANTAGE HOME LOAN – FOR LOAN AMOUNT ABOVE Rs. 50 Lacs SBI Advantage is available up to 31st March 2010

SBI Advantage Home Loan with competitive rates of interest is available for

home loans above Rs.50 lakhs. Plus with over 12000 SBI branches nationwide

you can get your Home Loan account parked at a branch nearest to your present

or proposed residence.


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INTEREST RATE

Interest rate during the first year (i.e. till first anniversary date from

the date of first disbursement) is fixed at 8% p.a.

Interest rate during next two years is fixed at 9% p. a

Interest rate after three years may be Fixed or Floating as per the

borrower’s choice made at the time of sanction. If floating rate option is

chosen, then the rate will be 1.75% below SBAR. If fixed rate option is

chosen, then the rate will be 0.75% below SBAR prevailing on the third

anniversary date from the date of first disbursement, and shall have a

reset frequency of 5 years from the third anniversary date of the loan.

Fixed interest rate shall be subject to force-majeure clause.

PROCESSING FEE

The revised processing fee structure (including service tax) from 9th November

2009 is as under:

Loan Amount Processing

Fee(Revised)

Above Rs.50 Lac and upto Rs.1 Cr Rs.8,000/-

Above Rs.1 Cr and upto Rs.5 Cr Rs.10,000/-

Above Rs.5 Cr Rs.20,000/-


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At India bulls Housing Finance Limited, we understand how special creating a

new home is for you, and India bulls Home Loans helps you lay the foundation for

your dream home.

Consider yourself at home with India bulls Home Loans. While owning a house of

one’s own is a cherished dream for most individuals, it is also a major decision

involving a large investment, a responsibility for which Indiabulls is ever ready to

provide the best financial help.

Indiabulls Home Loans helps you realize your ultimate dream of creating your

own haven by a simple, sure and safe home loan scheme. At Indiabulls, We

understand how it feels to have a place to cherish as your own home.

THE BENEFITS OF TAKING A HOME LOAN.

The income tax authorities look with favour upon those servicing a housing loan

from specified financial institutions. And, it is up to you to be wise enough to take

advantage of this.

LET'S START WITH SECTION 24 OF THE INCOME TAX ACT.

Interest paid on capital borrowed for the acquisition, construction, repair, renewal

or reconstruction of property is entitled to a deduction. Rs 1,50,000 is the


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maximum amount eligible for deduction in the case of self-occupied property and

for Rented out property there is no limit of amount of deduction.

THAT BRINGS US TO SECTION 80C OF THE INCOME TAX

ACT.

You get a maximum Rs.1,00,000 deductions from the Income, on repayment of

principal during a financial year. Stamp duty, registration fee or other such

expenses paid for the purpose of transfer of such house property to the assessee is

also considered under this amount.

KEY FEATURES OF HOME LOAN

Attractive Interest Rates.

Tenure can range upto 20 years for Housing Loan.

Easy Monthly repayment mode.

Loans to salaried and self employed.

Borrow home Loan upto Rs.50 Lacs and for commercial property upto

Rs.40 lacs.

Insurance Option available for your house loan.

Speedy Loan Approvals.


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Market share of the Players in Home Loan Market


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Vital Tips for Home Loans

To increase your loan eligibility, combine your income with that

of your spouse, children or parents

Always negotiate - the first home loan interest rate quoted is never

the final rate

Before paying the loan processing fee request lender for

preliminary check on the property

Buy Loan Protector Life Insurance - ensure your family can use

the house if you are not alive

Immediate disbursement get best rates – talk to home loan

providers when you are close to finalizing your property

How much loan to take?

Please consider the following factors before deciding upon the size of your loan:

A. Income

You need to consider the amount of money that you earn as well as the stability

of your income. Many people choose to take a more expensive home upfront as

they think that their income will increase as a result of their income growth and

career progress. This will make even large EMI payments an ever decreasing

percentage of their monthly expenses.


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Some of the questions that you need to answer before making this decision are:

How much increase do you expect on a yearly basis? How confident are

you in getting this raise?

Is there any risk of you losing your job such that you might not be able to

afford to pay the EMI?

What are your chances of getting a new job in case you lose your present

one?

Will large EMI payments interfere with your goals of retiring early,

taking a mid career break, or even paying for your children's education

and marriage?

Will your spouse continue to work and financially contribute to the

household during the tenure of the home loan?

Do you expect to get a lump sum bonus or variable pay at the end of the

year that can be used to fund your home purchase

Have a realistic view of what your income and career prospects can support –

don't be over optimistic about your future income.

B. Personality

No two people have the same personality or attitude towards debt. Some people

can sleep soundly at night knowing that they owe Rs.30,000 per month for the

next 25 years. Other people worry about taking a loan for such a long tenure.

Know your personality type – can you live with a big loan or would you feel

safer with a small loan?


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C. Expenses

The home loan lender calculates your loan eligibility based on your current debt

and monthly expenses. You must identify whether you might have other

expenses that you currently do not have, but expect to incur in the near future.

Do you have plans to buy a new car? Where will you fund the EMI for

the car from?

Have you planned for your children's college education and marriage?

Will you need money for these activities, and will you still have enough

to pay fund these after your home loan EMI?

D. Lifestyle

In life one has to prioritize one's goals and activities to achieve what is

important to us. Are you willing to change your lifestyle to get the house you

want? Maybe if you cut your spending a little, the bigger loan just might be

within your reach. Ask yourself whether you and your family can handle:

Fewer shopping trips to the mall

Less frequent expenditure on entertainment – movies, eating out, latest

cell phones

Fewer vacations, or take a domestic vacation instead of going abroad

Sometimes you do not realize how much of your money is going towards

useless expenditure. If you can cut down on this, then maybe you can afford a

bigger home loan. Discuss with your family the pros and cons of taking a bigger

loan and cutting down your family's lifestyle related spending. And do

remember that it always pays to compare home loans before taking any

decision.


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Bibliography

www.rbi.org.in

www.indiahousing.com

www.google.com

www.statebankofindia.com

www.icicibank.com

www.hdfcbank.com

www.apnaloan.com

www.axisbank.com

www.lichousing.com