home loans report
TRANSCRIPT
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INTRODUCTION
Home is a dream of a person that shows the quantity of efforts, sacrifices luxuries and
above all gathering funds little by little to afford ones dream. Home is one of the
things that everyone wants to own. Home is a shelter to person where he
rests and feels comfortable.
The roof over ones head and ground beneath onesfeet count as the bare necessities
of life. Theres nothing quite like owing a home, however humble to give that warm
and glowing feeling. But when one buys a home, one has much more than a feel good
purchase in mind! Its also a crucial investment decision, perhaps the biggest
spending decision of ones life. There are ample opportunities today for young
salaried investors to plan their moves early and buy a house at right time- and at right
price. In the process, not only do they fulfill that cherished dream of owning a house,
but also put themselves on the path to acquiring property that would meet the needs
and aspirations of their growing family, even as it leads to wealth creation. Every
individual aspires to own a home. But many either spend a lifetime saving to purchase
a house or exhaust money on monthly house rents.
Take a house loan and let the monthly rent (easily converted into affordable
EMIs) build dream home.
NEED FOR THE STUDY
Retail banking has been popular segment to enter into for many banks. In the retail
banking, housing sector has been most promising segment which is promising a
Comprehensive growth rate of about 30% for the next five years. With the
government keen on infrastructure development and announcing various tax Sops
housing loan segment has been a tempted area for many banks to enter into housing
sector can be bifurcated into organized and unorganized segments with the
unorganized segments accounting for over 75% of the housing units constructed.
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During the past 45 years the housing sector helped by the growing housing finance
industry has witnessed significant developments.
Housing Finance Evaluation:
Housing Development Finance Corporation (HDFC) was the first housing finance
Company to setup operations in India in 1977. After the National Housing Bank Act,
1987, was passed NHB came into existence as a Subsidiary of the Reserve Bank of
India (RBI) to regulate housing finance companies and provide them with refinancing
to supplement their fund requirements.
Public sector banks were allowed to provide housing loans directly to retail clients
only in 1988.
OBJECTIVE OF THE STUDY OF HOME LOANS
The study was mainly conducted to understand the concept of home loan
scheme and the eligibility criteria of the customers.
The study is done to understand the documents involved in the home loan
scheme and the repayment methodology adopted by SBH.
A depth study on interest rates provided by the different commercial banks to
the customers.
The innovative home loan schemes and the risk capturing mechanism adoptedby the HFIs and the future of the home loan segment has been undertaken as a
part of this study
PROFILE OF SBH BANK
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In 1953, the Bank took over the assets and liabilities of the Hyderabad Mercantile
Bank Ltd. In the same year, the Bank started conducting Government and Treasury
business as agent of Reserve Bank of India. In 1956, the Bank was taken over by
Reserve Bank of India as its first subsidiary and its name was changed from
Hyderabad State Bank to State Bank of Hyderabad. The Bank became a subsidiary of
State Bank of India on the 1st October 1959 and is now the largest Associate Bank of
State Bank of India.
All the branches of the Bank are totally networked under Core Banking Solutions,
offering a wide range of products to its customers. All the customers of the Bank have
access to the latest technologies like Internet Banking, ATMs etc. The Bank has pan
India presence and operates through more than 1000 Bank branches.
Management Team
O. P. BhattChairman
Amitabha Guha - Managing Director
Madhavi SharmaDirector
Jiban GoswamiDirector
S. A. ThimmiahDirector
Gajendra Singh RajukhediDirector
I. Ram ReddyDirector
M HarshavardhanDirector
Ramesh DatlaDirector
Dr. C. L. Laxmipathi GowdaDirector
S P S Sangwan - Director
HOME LOANS
A home loan scheme is generally offered to the person to accommodate finance for
purchasing the house or for renovation or extension of the existing house.
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OR
Home loans are loans you have access to, depending on whether you want to buy or
build a house and can also be used to repair or extend an existing house.
SCHEMES OF HOME LOANS
The various extensive schemes, which are included in the home loan portfolio, are:
Home Purchase Loan:
This is the basic home loan for the purchase of a new home.
Home Improvement Loans:
These loans are given for implementing repair works and renovations in a home that
has already been purchased by you.
Home Construction Loan:
This loan is available for the construction of a new home.
Home Extension Loan:
This is given for expanding or extending an existing home.
For eg: addition of an extra room etc.
Home Conversion Loan:
This is available for those who have financed the present home with a home loan and
wish to purchase and move to another home for with some extra funds are required.
Through home conversion loan, the existing loan is transferred to the new home
including the extra amount required, eliminating the need of pre-payment of the
previous loan.
Land purchasing loan:
This loan is available for the purchasing of land for both construction and investment
purpose.
Bridge loan:
These are designed for those people who wish to sell the existing home & purchase
another one. The bridge loan help finance the new home, until a buyer is found for the
home.
SBH OFFERS
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1. Attractive Interest Rates
2. Available as Term Loan and Overdraft also
3. Easy Documentation
4. Fast Processing
5. Daily Reducing Balance
6. Low Processing Fee
7. No Hidden Costs or other charges
OBJECTIVES OF HOME LOANS
Attractive Interest Rates
Available as Term Loan and Overdraft also
Easy Documentation
Fast Processing
Daily Reducing Balance
Low Processing Fee
No Hidden Costs or other charges.
REQUIREMENT OF HOUSE & HOME LOANS
Why should one option for a loan to buy a house?
Taking a loan seems like a good option when the money at hand is insufficient to buy
the house of your dreams. Consider couples in their twenties and thirties. They enjoy
a good income currently, buy their accumulated capital isnt enough to purchase a
house. Whereas a home loan can give them access to capital their current earnings.
Also, if you take a 10 years old loan when you are thirty, you could repay it by the
time youre forty. So you dont have to be burdened with the interest and are free to
plan your retirement savings.
The Quantum of loan that one can avail of:
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Loan sanctioned depend on your repayment capacitywhich is based on your
current income and your future repayment capacity. You would include your spouses
name to enhance the loan amount. The maximum loan can be sanctioned varies with
each bank/institutions and ranges from Rs.10 lakhs to Rs. 1 crore.
Benefits of taking a home loan:
A home loan is very different from a personal loan like a car loan for instance. You
can utilize a home loan for financing an asset that will hold its value and even
appreciate over the period of the loan. Though its price could fluctuate in the short
terms, Total Estate will show capital appreciation over the years. The value of your
house generally while the loan remains constant. If you had opted to wait, save up and
buy a house, it would, in the long run cost you much more; home loans also come
with many tax benefits.
Tax benefits of taking a home loan:
The income tax authorities look with favor 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.
Section 24 of the Income Tax:
Interest on loan till Rs.1.5 lakhs per annum is exempted form income tax (under
section 23/24(1) of the Income tax act).
Section 88 of Income Tax Act:
You get a 20% rebate on repayment of principle during a financial year. Once again,
over the years, the principle repayment eligible for rebate has been enhanced from
Rs.10,000 to the current limit of Rs.20,000 Stamp duty, registration fee or transfer of
such house property to the assesses is also considered under this amount.
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ELIGIBILITY CRITERIA FOR HOME LOANS
Eligibility:
Age: - Min: You should be at least 18 years of age.
Max: At the time of loan maturity, you should not exceed 65 years or your
retirement age, whichever is earlier.
Individuals:
You should have completed a minimum of 2 years of service (with a minimum of 1
year in the current job).
Businesspersons/Self-employed professionals:
You must have an established business or professional practice of not less than 3
years, with a positive net worth and must have posted a net profit for the last 2 years.
Note: Minimum net take home salary of Rs. 6000/- p.m. for salaried employees or
annual income of not less than Rs. 1.20lakh for businesspersons/ self-employed
professionals. (Spouse/co-applicants income can be included in the income
computation).
1. Individuals who are salaried or self-employed, professionals, businessmen are
eligible. Proprietary concerns, HUF, partnership firms or limited companies are not
eligible for this loan, where partners at their individual capacity are free to avail this
loan.
2. As a customer to enhance the loan eligibility, all HFIs lay down conditions to who
be co applicants, al co owners to the property should necessarily be co-applicant.
Income of the co-owners can be clubbed together to get higher loan eligibility. Minors
are not eligible to become co owners, as also friend and relatives only blood rela tives
are eligible to take a property jointly.
Some of the acceptable relationships where loan clubbing is possible:
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Income clubbing of coapplicants
Combinations Income clubbing
Husbandwife YES
parentSon YES (if only son)
ParentDaughter YES (If only child)
Brother- Brother YES (if currently staying together and
intend staying together in the new
property)
BrotherSister NO
SisterSister NO
ParentMinor child Not eligible for loan
3. The minimum age for the applicant and the co applicant to become eligible for
the commencement of eh loan is 23 years, and co applicant can be of 18 years of
age if their income is not clubbed to calculate the loan eligibility.
4. The maximum age at the time of loan maturity for applicant or co-applicant is
60 years or the retirement age whichever is earlier.
Amount of Finance
Maximum loan amount will be lowest of loan amount assessed on the basis of the
under noted 3 options (a.b.c) below:
a) Project cost which may include cost of land, house/ flat, cost of additional amenities
related with said house/ flat, registration charges, stamp duty, property insurance,
service tax and other statutory dues, if any, less applicable margin.
b) Permissible EMI/ NMI ratio.
c) Maximum Permissible Loan to Value (LTV) ratio.
Processing fee
Up to Rs. 25.00 lacs- 0.25% of loan amount subject to minimum of Rs.5,000/-
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Above Rs. 25.00 lacs to Rs. 75.00 lacs- Rs.6, 500/-
Above Rs. 75.00 lacs- Rs.10, 000/-
Other Charges
Lawyers, Valuers fee etc to be borne by the borrower on the basis of actual cost
EMI/ NMI Ratio
Based on income-wise graded ratio as under:
Up to `0.60 lacs: 20%
Above `0.60 lakhs to `1.20 lakhs : 25%
Above `1.20 lakhs to `2.00 lakhs : 30%
Above `2.00 lakhs to `5.00 lakhs : 50%
Above `5.00 lakhs to `10.00 lakhs: 55%
Above `10.00 lakhs : 65%
Margin
Loan
Amount
For House/ Flats
under construction
New House/ Flats for
ready possession
Old House/ Flats for
ready possession
Upto 20
Lakhs15% 15% 15%
Above 20
Lakhs20% 20% 20%
TYPES OF LOANS AVAILABLE TO THE CUSTOMERS OF SBH
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Broadly two types- fixed rate and variable rate loans; while the former deals with a
fixed rate of interest over the entire duration of the loan, the latter has the rate of
interest changing according to the fluctuations in the market.
% OF LOAN AMOUNT THAT ONE CAN AVAIL
Up to 85-90% of the total cost based primarily upon the individuals payback
capacity.
GENERAL CONDITIONS THAT GOVERN A HOME LOAN:
These are likely to vary with respect to the different types of housing loans:
The maximum period of the loan is normally fixed by HFIs. However, HFIs do
provide for different tenors with different terms and conditions.
The Installment that you pay is normally restricted to amount 45% of your
monthly gross income.
You will be eligible for a loan amount, which is the lowest as per your
eligibility. This is calculated on the basis of your gross income and payback
capabilities.
Some HFIs insist on guarantees from other individuals for due repayment of
your loan. In such cases you have to arrange for the personal guarantee before
the disbursement of your loan tasks place.
Most HFIs have a panel of lawyers who go through your property documents
to ensure that the documents are clear and are not misrepresented. This is an
added benefit that you get when you avail of a loan from an HFI.
You repay the loan either through Deduction against Salary, Postdated
cheques, and standing instructions or by Cash/DD.
WHOLESALE BANKING
Principal competitors in wholesale banking are public and new private sector banks as
well as foreign banks. The large public sector banks have traditionally been the
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market leaders in the commercial lending. Foreign banks have focused primarily on
serving the needs of multinational companies and the Indian corporations with cross-
border financing requirements including trade, transactional and foreign exchange
services, while the large public sector banks have extensive branch networks and large
local currency funding capabilities.
RETAIL BANKING
In retail banking, their principal competitors are the large public sector banks, which
have much larger deposit bases and branch networks,, other new private sector banks
and foreign banks in case of retail loan products. The retail deposit shares of the
foreign banks are quite small in comparison to the public sector banks, and have also
declined in the last five years, which we attribute principally to the competition from
new private sector banks. However, some of the foreign banks have a significant
presence among non-resident Indians and also compete for non-branch based products
such as auto loans and credit cards. They face significant competition primarily from
foreign banks. In provision of debit cards and also expect to face competition from
foreign banks when we begin offering credit cards. In mutual fund sales and other
investment related products, their principal competitors are brokers and foreign
private banks.
LOANS
SBH brings back you a wide range of loans to cater your financial needs.
The bank offers the following loans:
1) Personal loans.
2) Consumer loans.
3) Auto loans
4) Loans against shares
5) Loans against RBI bonds
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6) Loans against insurance policy
7) E- Instant loans give the facility of loans approval in the 60 second on the
internet.
8) SBH has offices spread all over the country. This extensive network helps SBH
in providing services to large and well spread out clients. This network of
interconnected offices (on data circuits) helps SBH to process application for
purchase of property anywhere in India.
9) SBH has vast experience and a very committed and skilled staff to handle
housing loan applications and solving customer problems.
LOAN AMOUNT
You can avail of maximum of up to 85% of the cost of the property, including the cost
of the land.
LOAN TENURE
You can repay the loan over a maximum period of 20 years under both FRHL and
ARHL. Repayment will not ordinarily extend beyond your age of retirement (if you
are employed) or on your reaching 65 years of age, whichever is earlier. However,
SBH will endeavor to determine the repayment period to suit your convenience.
RATE OF INTEREST
Period/ Amount Up to `30 lacs Above `30 lacs
Up to 30 Yrs 10.20% 10.20%
SBH Maxgain Housing
Loan
10.20% 10.20%
Processing Charges 50% off
SECURITY
Security for the loan normally is first mortgage of the property to be financed and/or
such other collateral security as may be necessary. Interim security may be required, if
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the property is under construction. Collateral or interim security could be assigned to
SBH of life insurance policies, the surrender value of which is at least equal to the
loan amount, guarantees from sound and solvent guarantors, pledge of shares and
such other investments that are acceptable to the SBH.
Loans from SBH are available even if you are availing a housing loan from your
employer. SBH has already entered into arrangements with several employers
enabling employees to avail of loans both from the employer as well as SBH for the
same property. Please do ensure that the title of the property is clear, marketable and
free from encumbrance. To elaborate there should not be any existing mortgage, loan
or litigation which is likely to affect the title to the property adversely.
DOCUMENTS/SUPPORTING DOCUMENTS TO BE ATTATCHED:
FOR ALL THE APPLICANTS:
1) Allotment letter of the co-operative society/association of the apartment
owners.
2) Copy of approved drawings of proposed construction/purchase/extension.
3) Agreement for sale/sale deed/detailed cost estimate from architect/engineer for
the property to be purchased/constructed/extended/renovated.
4) If you have been in your present employment/business or profession for less
than a year, mention an a separate sheet details of the of the occupations for
previous five years, giving position held, reason for change and period of same.
5) Applicable processing fees.
6) Proof of residence: attested copy of any one of the following:
a) Ration card
b) Passport
c) Driving license
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d) Voters identity card
e) Current telephone bill/electricity bill/gas bill
7) Proof of identity: attested copy of ay one of the following:
a) Passport
b) Driving license
c) Voters identity car5d identity card issued by the employer (if employed
in state/central government)
d) PAN card
8) Certificate of loan outstanding issued by the lender (for refinance cases only)
9) Any other information regarding your repayment capacity that is necessary and
will assist SBH in appraising the loan proposal.
ADDITIONALLY
IF YOU ARE EMPLOYED:
1) Verification of the employment form with only part I filled in.
2) Latest original salary slip/salary certificate showing all deductions.
3) If your job is transferable, permanent address where correspondence relating to
the application can be mailed.
4) A letter from your employer agreeing to deduct the EMI towards the
repayment of the loan from your salary. This will expedite the processing of
your loan application.
5) Your updated original bankpass book/s or original bank statement/s showing
salary and saving entries for the last six months.
6) A photo-copy of your Form-16 (issued by your employer) for the last
assessment year.
Proof of Employment:
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The proof of employment is verified by the
Identity card issued by the employer
Visiting card.
IF YOU ARE SELF EMPLOYED:
1) Balance Sheets and Profit & Loss Accounts of the business/profession along
with copies of individual income tax returns for the last three years certified by
the Chartered Accountant.
2) A note giving information on the nature of your business/profession, form of
organization, clients, suppliers, etc.
3)
Copies of individual tax chalans for the last three years4) Copy of advance tax chalan (if any)
5) Your updated original Bank Pass Book/s or Original Bank Statement/s
showing saving s entries for the last twelve months.
The documents required to be submitted by the businessmen as follows:
a. Last three years Profit & Loss Account Statement duly attested by a
Charted Accountant
b. Last three years Balance Sheets duly attested by a Chartered Accountant
c. Last three years Income Tax Returns duly filed and certified by Income Tax
authorities
Proof of Investments:
1. Bank statements for the last six months of all current accounts.
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2. Any other photocopies of investments held, as required by the HFI.
The above are the various documents required by the businessman in addition to the
documents, which are common to the entire category.
The businessman is also judged on the basis of the business conducted by him, if his
Business profile is in the negative list, he will be thoroughly considered for his
credibility before dispersing loan, the organization and property location should not be
in the negative list.
These are the additional documents which are required to be looked at before going on
for completing the pre sanction formalities with respect to dispersing of the home
loans to the business class.
THE PARAMETERS INVOLVED IN HOUSING LOAN EVALUATION
There are a number of parameters on which the housing loans are built:
They are:
1. TENURE
The tenure of the home loan refers to the time limit for a customer to repay the loan
Generally, the maximum tenure of home loans is 20 years, with a few lenders offering
tenure of 20 years or more (SBH has recently launched a 30 years loan). The longer
the tenure, more a customer pays in total interest, but monthly payments will be less.
So depending on the earning potential and bank balance of the customer, an
appropriate can be chose. An important requirement of most banks/ HFIs is that they
pay up the entire loan before you retire. The customer can always prepay the entire
loan amount before it is due.
As long as the tenure goes up a customer pays more interest which is up to 0.25
0.5%, generally above the home loan rates.
2. AMOUNT PAID BY THE FINANCER/ MARGIN REQUIREMENTS
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The financer does not pay the entire amount of the loan, they request the customer to
maintain margin, most banks go in for a 85% funding of the property value including
the stamp duty and charges, it however varies among various banks.
This is also treated as the margin money or own contribution required to be put by the
prospective loan seeker as the contribution towards the purchase of the house. Most
HFIs believe the amount paid is upfront before they release any disbursement.
As a rule of thumb, depending upon the HFC, the prospective loan seeker has to
cough up 15% - 20% of the loan amount as a down payment. For smaller amounts,
this may not be much. But for figures running into lacks, this could make loads of
difference.
For example: An apartment costing Rs. 10lacss may get 85 per cent financing. So,
customer has to arrange for the remaining Rs 1.5lacs.
Some banks however make way for the payment for 90% of financing and about
100% financing for some new projects, however they are subjected to a large number
of factors and constrains.
3. INTEREST RATES
Without doubt the most important parameter to factor into home loan calculations.
The interest rates may vary from institutions to institutions and generally range from
about 10.20% - 10.25% to around 9% Repayment is in the form of EMIs (Equated
Monthly installments). The longer the tenure, the more you pay in interest, but your
monthly payment will be less.
The two kinds of interest rates available to a customer are:
Fixed interest rates
Floating interest rates
Fixed interest rates remain fixed over the tenure of the loan.
Floating interest rates are affected by the rates in the market, they fluctuate according
to the rates issued or changed by the RBI from time to time.
The finance ministers diktat on home loans does not hold for private banks. Indias
largest home loan provider and second largest bankSBH Bankon Tuesday
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hiked its home loan by 1%. The bank has also increased its deposit rates.
As per the new rate structure, customer will have to pay 10.2% on the home loans
with a floating rate, while the fixed home loan will now invite an interest of 10.5%.
With this increase, the monthly installment on an Rs.1lakh loan for 20 years goes up
by Rs70.
Some public sector banks do so only once in 12 months while some private sector
lenders do it as frequently as a quarter. Though the current interest rate quote maybe
lower, over the life of the loan, a customer will be able saved more in the case of a
lender who resets your floating rate more frequently.
The investors are also given the option of changing their option from fixed rate loan to
a floating rate loan, of course by paying a penalty.
4. AMORTISATION
It means the method or the calculation by was of which the entire Principal
amount/loan amount is paid through the tenure of the loan.
This helps the customer to know what his outstanding principal is at any point of time.
There are two methods generally followed:
Annual rests
Monthly rests
Annual rests:
This is more commonly known as annual reducing balance of the principal/loan
amount lent to you. In an annual rest the EMIs (fixed monthly payment for the
dispersal of the loan amount) are calculated on a annual basis.
The component of interest is higher in the initial years and later on the component of
principal increases and the interest keeps reducing year after years. In other words, the
interests in the EMI will keep reducing year after year and the principal component
keeps increasing.
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Monthly rests:
This is called monthly reducing balance or principal. The calculation in the
above method remains the same as of the above except that the balance is calculated
on a monthly basis and the EMI is broken up every month to arrive at the opening
balance of the principal for the next month. It is always better for a customer to seek
an HFI, which generally has monthly rests, based system; this will reduce the amount
of interest paid by the customer. Many banks have adopted to the monthly rests
system.
5. REPAYMENT FACILITY
The bank has given three options for repayment of the loan to suit the
convenience of Borrower.
Equated Monthly Installments (EMI) uniform monthly installment, inclusive of
interest, for the entire repayment of only interest for the first five years, and thereafter
in EMI for the next 10 years.
Repayment of only interest in the first five years, 30% principal plus interest in the
next five years, and balance 70% plus interest in the remaining period.
Repayment to start on completion of construction, but not later than 18 months from
first disbursement and in case built up houses after one month from disbursement.
Interest during gestation shall be paid as & when due. The repayment not to extend
beyond the age of retirement of the borrower or 70 years whichever is earlier,
however where co-borrower is taken, a maximum repayment period of 20 years may
be considered provided the loan is liquidated within the age of 70 years of the
borrower/ co-borrower having capacity to service the loan.
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THE LOAN PROCEDURE FOLLOWED AT SBH BANK
The procedures involve in the disbursement of home loan by any bank entails the
following steps:
Home loan application form is first submitted by the customer covering
all details.
Checklist of requirements is requested for from the customer, and all
documents are required to be submitted (copies), they are then verified
whether the details are failed in correctly and whether all the documents
are submitted.
Additional loans, if any are applicable. Many banks provide for
supplementary loan as a part of their comprehensive home loan scheme.
The following diagram indicates the loan procedure at the
bank
RISK CAPTURING MECHANISM
Customer
Branch manager
Loan Department
Branch manager
Regional Officer
For large borrows
Legal opinion, valuationAnd Technical
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One of the important aspects in the home loan financing is to ensure that the loan
seeker is worthy and credible. SBH follows the credit score model to male home loan
disbursements.
Credit score model is a risk capturing mechanism, which is used to assess the risk
perspective of the loan seekers.
The prospective loan seeker is assessed on a number of parameters which helps in the
evaluation of his profile and each parameter is assigned a score based on which the
decision is taken.
A score of 100 is fixed, and a score of 75 is considered to be good, score of 55 is
considered above average and score of 25 to be average. The prospective loan seeker
on a scale of 100 is expected to get 55 avail the home loan.
The parameters on which risk is assessed are:
1. DEMOGRAPHIC PROFILE
The demographic profile includes a number of sub-parameters they are basically:
Age
Educational Qualifications
Number of Dependents
Marital status
The demographic profile of the loan seeker is allotted a maximum score of 15.
2. RELATIONSHIP WITH SBH BANK
The relationship with the bank is also considered for the benefit of its customers.
The sub-parameters considered here are:
Value of relationship (in terms of deposits)
Number of years
The relationship with the bank is given a weight of 10 on the total score of 100.
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3. INCOME MODEL
The income module of the bank includes parameters such as:
Gross Eligible Monthly Income
IRR ( Income to Installment Ratio)
FOIR (Fixed obligations to income ratio)
Net take home
The income model is given the highest score of 50 points.
4. STABILITY AND CONTINUITY
The stability and continuity factors are based on
Organization Profile : Govt. / public sector companies / public limited or
private limited companies or partnership or others
Length of service in Present job / organization.
This module is provided with maximum score of about 15 points.
5. ASSET MODULE
The asset module include factors like
Margin
Net-Worth ( Total assetsTotal Liabilities)
The asset module is given a weight of 10 on a scale of 100.
The various parameters of the credit score model and their respective weights
are depicted in the following chart.
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The abbreviations of the above term are:
DM Demographic profile
RSBHRelationship with the SBH
IM Income Module
SC Stability and Continuity
6. SCRUTINY OF THE DOCUMENTS
The retail processing is a procedure, which involves careful scrutiny of accounts. SBHBank uses a specialized system to go through the accounts, before dispersing the loan
to the customer. The basic groups set up in the process of loan application are:
7. RETAIL MANAGER ENTERER GROUP:
This group does the data entry. Upon completion of the data entry the group forwards
the same to the RM Verifier group to verify and resends it to the former in case of tiny
discrepancies for editing.
The Loan officer enterer group and the RM Verifier group should ensure, confirm and
verify the following:
The organization is in the appropriate list.
The organization is not in the negative list
SC
15%
DM
15%
Ricici
10%
IM
50%
AM
10%
Parameters in the model
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The property location is not in the negative list.
Applicant Details:
Name and the personal details
Identity details Address
Employment detailssalaried
Financial details: Income asset ownership, Existing bank account details and
credit card details
Employment details: Business
Financial details: Existing bank accounts and credit card details.
8. EXITING LOAN DETAILS:
The name of the financial institution (in case of takeover) type of loan, purpose of
loan amount etc., as per the home loan application form.
Loan request:
Including the disbursement details.
Acquisition details:
Gee details, loan amount recommended, name of the customer preferred branch.
Reference details:
Entry of at least one reference is mandatory.
Property details:
The RM enterer group and the RM Verifier group shall affix their initials on
the home loan process note.
Upon completion of the above activities, the field investigation, legal opinion and the
technical appraisal process shall be initiated by the RM.
The basic scrutiny checks followed by the bank:
A.Field investigation study.
B. Technical FeasibilityC. Legal Feasibility
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A. FIELD INVESTIGATION STUDY:
The manager RM shall go through the documents and inform the same to the
field investigation agency the details:
a) Field Investigation Report:
Residence and Reference (TeleCheck)
Name, Address, Office or Business telephone number of the
applicant and
Co-applicant.
Income Tax return.
The reports are too given on the letterhead of the respective approved agency by their
authorized employee with agencys rubber stamp. The RM should ensure from the
field investigation agency in case of Residence and reference (Tele-check)
The details in the report should match with the information given in the home loan
application form.
IT-Return:
It should be tallied as per the office records.
The manager RM shall make a tele-check to cross verify the investigation made by the
agency in case, for the salaried applicants where the disbursement is greater than 10
lacks and in case of the businessman where the disbursement is greater than 10 lacks.
B. LEGAL FEASIBILITY
The bank should arrange for the legal opinion.
The manager RM should forward it to thebanks empanelled lawyer various
documents for scrutiny.
Some of the documents required for the scrutiny by the lawyer are:
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Sale agreement duly registered
Own contribution receipts
Allotment letter
Land documents indicating ownership, if applicable registration receipt
Possession letter
Lease agreement, if applicable (Property bought from a development authority)
No objection certificate from the developer, society or development authority.
In case of the construction of the house the agreement of construction of the
house between the land owner and the contractor.
The above are the list of documents to be referred to by a lawyer. The manger has to
provide the copies of the documents should be provided by duly specifying the name
of the applicant, particulars of property and list of documents attached.
All correspondence with regard to the legal opinion must be carried forward between
the lawyer and the RM only.
C. FINANCIAL SCRUTINY
Prior to disbursement, the HFI also conducts a site visit to the customers property to
ensure the following:
In case of under construction property:
Stage of construction is the same as that mentioned in the payment notice given
to the builder. Quality of construction
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Satisfactory progress of work.
Lay out of the flats and area of property is within the permission granted by the
governing authority
Requisite certificate have been received by the builder to start the construction
at the site.
In case of ready / Resale construction:
External maintenance of the property. Internal maintenance of the property. Age of the building
Whether the building will last the tenure of the loan Quality of construction There is no existing lien or mortgage on the property
The list of valuation engineers empanelled by the bank need to take up these various
documents and ensure that the report is furnished in the prescribed format and that
loan amount requested by the applicant is sufficient to complete the project. The
details in the property report given by the technical term and compare it with the legal
opinion and application and ensure that there are no discrepancies. After completion
of the above checks and scrutiny the manager RM must forward the home loan
process not along with the home loan application and other enclosures Legal opinion,
technical appraisal report, for further processing to the Loan Manager term, after
retaining in the customers file, copy of the following papers:
Home loan application Legal opinion with all enclosures Technical appraisal report
Loan Department has to send the documents and papers to the RM for further scrutiny
and processing of the proposals. This would increase the turnaround time, of
processing and also additional charge towards the courier charges and also losing the
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documents in transit, In order to avoid the above discrepancies the documents are
verified by the document imaging system.
Newgen document imaging system is introduced to facilitate electronic transmission
of documents for processing of proposals by RM.
It facilitates scanning and maintenance of scanned images.
It also provides the provision of linking the documents if the same document is
required for multiple loans
Provisions to make remarks, on the document without disturbing the original.
Scanned images can be attached to any mail
This facilitates easy transmission of data and other documents and also provides the
flexibility in loan processing and helps in fast transmission of data, these all
advantages helps in easy disbursement of loans.
HDFC Home Loans
Home Loans
It is important to choose a good housing finance company which can
handhold the customer right through his home buying process. Since a
home loan is a long term commitment of 15-20 years, several factors like
expertise, quality of service, in-depth domain knowledge and the
companys level of commitment and transparency right through, the loan
procedures, the fine print, quality of services offered and safe retrieval o
the title deed are critical.
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HDFC Home Loan Advantages
Counselling and advisory services for acquiring a property.
Instant Home Loan Approval.
Widest range of home loan products & services like Home Loans, Home
Improvement Loans, Home Extension Loans, Loans to professionals for office
or clinic, Home Equity Loans (Loan against Property), Short Term Bridging
Loan etc.
Loan from any office for purchase of home anywhere in India
Loan approval even before a property is selected
Flexible loan repayment options.
Vast network of over 331 in India, offices in Singapore, London & Dubai and
franchises in the Gulf Cooperation Council (GCC) region.
Most experienced and empowered personnel to ensure smooth & easy
processing
Free & safe document storage.
Online loan application facility.
Features:
Maximum loan
80% of the cost of the property (including the cost of the land) and based on the
repayment capacity of the customer.
Maximum Term
The maximum period of repayment of a loan shall be upto 30 years (Telescopic
Repayment option) under the Adjustable Rate Home Loan product, depending upon
the specific repayment scheme as may be opted (*).
The maximum period of a loan shall be upto 20 years under the Fixed Rate Home
Loan product.
Repayment will not ordinarily extend beyond your age of retirement if you are
employed or on reaching 70 years of age, whichever is earlier. However, HDFC will
https://www.hdfcinstanthomeloans.com/home-loan/compare-interest-rates.htmlhttp://www.hdfc.com/loans/hm-loan-features.asphttp://www.hdfc.com/loans/hm-imp-loan-features.asphttp://www.hdfc.com/loans/hm-imp-loan-features.asphttp://www.hdfc.com/loans/hm-ext-loan-features.asphttp://www.hdfc.com/loans/loans-professional-features.asphttp://www.hdfc.com/loans/loans-professional-features.asphttp://www.hdfc.com/services/loan_against_property.asphttp://www.hdfc.com/loans/short-term-loan-features.asphttp://www.hdfc.com/loans/short-term-loan-features.asphttp://www.hdfc.com/nri/hdfc-singapore-nri-home-loan.asphttp://www.hdfc.com/nri/hdfc-london-nri-home-loan.asphttp://www.hdfc.com/nri/hdfc-middle-east-nri-home-loan.asphttp://www.hdfc.com/loans/hm-telescopic-repay.asphttp://www.hdfc.com/loans/hm-telescopic-repay.asphttp://www.hdfc.com/loans/hm-telescopic-repay.asphttp://www.hdfc.com/loans/hm-telescopic-repay.asphttp://www.hdfc.com/nri/hdfc-middle-east-nri-home-loan.asphttp://www.hdfc.com/nri/hdfc-london-nri-home-loan.asphttp://www.hdfc.com/nri/hdfc-singapore-nri-home-loan.asphttp://www.hdfc.com/loans/short-term-loan-features.asphttp://www.hdfc.com/loans/short-term-loan-features.asphttp://www.hdfc.com/services/loan_against_property.asphttp://www.hdfc.com/loans/loans-professional-features.asphttp://www.hdfc.com/loans/loans-professional-features.asphttp://www.hdfc.com/loans/hm-ext-loan-features.asphttp://www.hdfc.com/loans/hm-imp-loan-features.asphttp://www.hdfc.com/loans/hm-imp-loan-features.asphttp://www.hdfc.com/loans/hm-loan-features.asphttps://www.hdfcinstanthomeloans.com/home-loan/compare-interest-rates.html -
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endeavour to determine the repayment period to suit your convenience.
Applicant and Co- Applicant to the loan
Home Loans can be applied for either individually or jointly. Proposed owners of the
property will have to be co-applicants. However, the co-applicants need not be co-
owners.
Adjustable Rate Home Loan
Loan under Adjustable Rate is linked to HDFC's Retail Prime Lending Rate (RPLR).
The rate on your loan will be revised every three months from the date of first
disbursement, if there is a change in RPLR, the interest rate on your loan may
change. However, the EMI on the home loan disbursed will not change. If the
interest rate increases, the interest component in an EMI will increase and the
principal component will reduce resulting in an extension of term of the loan, and
vice versa when the interest rate decreases.
Interest Rate
W.e.f : 6th Feb 2013 RPLR: 16.40%
Loan Slabs
Applicable Variable rates
%
( Monthly Rest Basis )
Basis : RPLR minus
Spread
Upto and including Rs 30
lacs10.15% to 10.65% RPLR - 6.25 to - 5.75
Over Rs. 30 lacs 10.40% to 10.90% RPLR - 6.00 to - 5.50
The above rates are subject to change without notice.
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TruFixed Plus Home Loan
Under this product the customer has the option to choose a Fixed Interest Rate
Period (FIRP) between 3 to 15 years . Post the fixed rate period the loan will
automatically convert to a variable rate product. The customer also has the option,
subject to our eligibility norms to take a complete fixed rate term product for a fixed
term of 3 to 15 years. Or, he can avail a long term loan of 15 to 20 years with a part
fixed and part floating for the entire tenor of the loan. The full disbursement of the
loan, irrespective of the fixed period chosen, shall have been availed within the first
3 years from the date of first disbursement of the loan. Post the fixed rate period the
interest rates applicable on the loan shall be the then applicable HDFC RPLR minus
the spread as applicable currently on the loan amount being availed under this
product.
The applicable interest rates in the Fixed Interest Rate Period (FIRP) are linked to
sanctioned loan amount and as per details given below:
Loan Slabs Interest Rates during the
Fixed Interest Rate Period (
% )
Upto and including Rs 30 lacs 10.50
Rs.30.01 lacs onwards 10.75
Eligibility
The product is available to salaried and self-employed customers for loan
applications subject to first disbursement on or before July 31st, 2013.
PurposePurchase of
a. Flat, row house, bungalow from developers
b. Existing freehold properties
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c. Properties in an existing or proposed co-operative housing society
or apartment owner's association
d. First Power of Attorney purchases in Delhi for DDA flats allotted
before 1992.
e. Refinance (balance transfer) of an existing home loan from another
financial institution.
Fees
0.5% of the loan amount applied plus applicable service taxes and cess.
No Charges for
a. Replacement of cheques
b. Income Tax Certificates
c. Accelerated Repayment Option
Other Charges
a. Cheque dishonor charges : Rs. 100**
b.Prepayment charges :
For Home Loans, Home Improvement Loans,
Home Extension Loans, Short Term Bridging
Loans, Plot Loans & Rural Housing Finance
For Loan Against Property, Non Residential
Premises Loans, Top-Up Loans
C. Conversion fees :
For Home Loans, Home Improvement Loans,
Home Extension Loans & Rural Housing
Finance
For Plot Loans
For Loan Against Property & Non Residential
Premises Loans
d.Fees on account of external opinion :-For advocates/technical experts, as the
case may be
as per actuals applicable to a case
e. Insurance charges : as per actuals applicable to a case
f. Charges on account of delayed payments/defaults:
http://www.hdfc.com/others/prepayment_charges_housing_product.asphttp://www.hdfc.com/others/prepayment_charges_housing_product.asphttp://www.hdfc.com/others/prepayment_charges_housing_product.asphttp://www.hdfc.com/others/prepayment_charges_housing_product.asphttp://www.hdfc.com/others/prepayment_charges_non_housing_product.asphttp://www.hdfc.com/others/prepayment_charges_non_housing_product.asphttp://www.hdfc.com/others/prepayment_charges_non_housing_product.asphttp://www.hdfc.com/others/conversion_charges_housing_hl.asphttp://www.hdfc.com/others/conversion_charges_housing_hl.asphttp://www.hdfc.com/others/conversion_charges_housing_hl.asphttp://www.hdfc.com/others/conversion_charges_housing_hl.asphttp://www.hdfc.com/others/conversion_charges_housing.asphttp://www.hdfc.com/others/conversion_charges_non_housing.asphttp://www.hdfc.com/others/conversion_charges_non_housing.asphttp://www.hdfc.com/others/prepayment_charges_non_housing_product.asphttp://www.hdfc.com/others/prepayment_charges_non_housing_product.asphttp://www.hdfc.com/others/conversion_charges_non_housing.asphttp://www.hdfc.com/others/conversion_charges_non_housing.asphttp://www.hdfc.com/others/conversion_charges_housing.asphttp://www.hdfc.com/others/conversion_charges_housing_hl.asphttp://www.hdfc.com/others/conversion_charges_housing_hl.asphttp://www.hdfc.com/others/conversion_charges_housing_hl.asphttp://www.hdfc.com/others/prepayment_charges_non_housing_product.asphttp://www.hdfc.com/others/prepayment_charges_non_housing_product.asphttp://www.hdfc.com/others/prepayment_charges_housing_product.asphttp://www.hdfc.com/others/prepayment_charges_housing_product.asphttp://www.hdfc.com/others/prepayment_charges_housing_product.asp -
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iAdditionalinterest
: 18 % p.a.
iiIncidentalcharges
: ***
iii Expenses : as per actuals applicable to a case
g.
CERSAI charges(Central Registry ofSecuritisation Asset Reconstruction and
Security Interest of India)
Statutory /regulatory charges: All applicable
charges on account of Stamp duty / Central
Registry of Securitisation Asset
Reconstruction and Security Interest of India
(CERSAI) or such other statutory /
regulatory bodies and applicable taxes shall
be borne and paid (or refunded as the case
may be) solely by the Borrower.You may visit the website of CERSAI for all
such charges at www. Cersai.org.in
AXIS BANK
Features of Axis Bank Home Loans
Axis Bank housing loans are designed for todays home-hunter. Our easy home loans
are rich in features and offer a number of benefits.
Attractive housing finance rates: We offer attractive interest rates that make
your housing loans affordable and easier on your pocket every month.
Flexible rates: Choose between fixed and floating rate options depending on
which way you think interest rates are moving.
Balance transfer facility: Not satisfied with your existing Home Loan
provider? You can transfer your Home Loan to us without any hassles.
Doorstep service: You don't have to go the bank for Home Loans; the bank
will come to your doorstep. Perfect for those leading busy lives.
Nil prepayment charges: Come into some money and want to pay off your
housing loan early? You can do that at Axis Bank without worrying about
prepayment charges.
Quick and transparent processing: Special Benefits available forPremium
Banking customers. To know more, contact your Relationship Manager today!
http://www.cersai.org.in/http://www.axisbank.com/personal/experience-privilege.aspxhttp://www.axisbank.com/personal/experience-privilege.aspxhttp://www.axisbank.com/personal/experience-privilege.aspxhttp://www.axisbank.com/personal/experience-privilege.aspxhttp://www.cersai.org.in/ -
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Home Loan Eligibility Criteria
A) - Salaried Individuals
Individuals in permanent service in the Government or reputed companies meet
ourHome Loan eligibility criteria
Applicants should be above 24 years of age at the time of loan commencement
and up to the age of 60 or superannuation, whichever is earlier at the time of
loan maturity.
B) - Professionals
Professionals (ie, doctors, engineers, dentists, architects, chartered accountants,
cost accountants, company secretary, management consultants only) can apply.
Applicants above 24 years of age at the time of loan commencement and up to
65 years or less at the time of loan maturity meet our housing loan criteria.
C) - Self Employed Individuals
Any individual filing income tax returns can apply
Applicants should be above 24 years of age at the time of loan commencement
and up to 65 years or less at the time of loan maturity.
Limits on Home Loan
Minimum - Rs 3 lac
Margin
Sr. No Loan amount (Rs.) Margin
1 For Housing Loan upto Rs.20 Lacs 15%
2 For Housing Loan above Rs.20 Lacs 20%
3 Improvement or renovation loans 25%
Our Home Loan Rates
Sr.
No
Type Loan amount (Rs.) Base Rate +
Mark Up
Effective Rate
Of Interest
1 Floating Less than Rs. 25 Lac Base Rate + 10.75% p.a.
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Rate 0.75%
Loans greater than Rs.25
lac - Rs. 75 lac
Base Rate +
1.00%
11.00% p.a.
Loans greater than Rs. 75
lac
Base Rate +
1.25%
11.25% p.a.
Top Up - All loans,
Renovations
Base Rate +
2%
12.00% p.a.
Base Rate - 10.00%
NISHCHINT - Home Loan with Fixed Rate of Interest
Type Effective Rate Of Interest
Fixed Rate 11.75% p.a.
Other Charges:
Sr.
No
Type Charges
1 Repayment Instruction/Instrument Return charges Rs.500/- per
instance
2 Cheque/Instrument Swap charges Rs.500/- per
instance
3 CERSAI Charges Rs.500/-
4 Duplicate Statement issuance charges Rs. 250/- per
instance
5 Duplicate Amortization schedule issuance charges Rs. 250/- per
instance
6 Duplicate Interest Certifcate (Provisional/Actual)
issuance charges
Rs. 250/- per
instance
7 Issuance charges for Photocopy of title documents Rs.250/- per
document set
8 Charges on customer initiated requests for copies
of documents
Rs. 250 per
document set
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9 Equitable mortgage creation charges As applicable in the
state
10 Credit Bureau report issuance charges Rs.50/- Per Instance
Switching Cost:
Switching from the floating rate scheme to the fixed rate scheme and vice versa is
permissible. If a fixed rate customer wants to reschedule loan to the present fixed
interest rate applicable to the new customers, the same is also permissible. The
existing customers can also switch over to the new rate of interest applicable for the
new customer. For all of the above changes, a nominal switching fee is applicable.
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ICICI BANK
ICICI Bank Home Loans
Building your own home is special. As one of the leading home loan providers, ICICI
Bank Home Loans is here to help you lay the foundation for your dream home.
With the experience of sharing the dream of millions of our customers, we offer you
the most convenient housing loan plans to suit your needs.
Advantages
Wide range of product to choose from
Flexible repayment options
Guidance throughout the process making home buying hassle free
With a network of 2500 branches we are always close to you
Doorstep service at your comfort
Simplified documentation
Over 246 Bank Branches pan India for servicing of your loans
Free Personal Accident Insurance
Sanction approval without having selected a property.
Insurance options for your home loan at attractive premium
Home Loan - Interest Rates
Home Loan Interest Rates
ICICI Bank floating rate:
Category Effective Rate of Interest Rate
HL Rs. 3.0 million 10.40% to 11.00% I-Base + 0.65% to
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LIC HOUSING FINANCE LTD
LIC housing finance ltd has LIC Griha Prakash LIC home loans plan where individuals can
get LIC housing loan amounting to 85% of the total property cost provided the total value
of the property doesnt exceed the value of 1 Crore Rupees. This LIC home loan scheme is valid on
both purchase and construction of property and covers the money that the buyer spends while signin
agreement, making registration charges and payment of stamp duty fees.
Loan Category : Griha Prakash
Loan Amount : Min. Rs.5,00,000.
Loan to Property Cost :85% of total Cost of the property including Stamp Duty and
Registration Charges.
Loan Term : Maximum 20 years
Repayment Mode : Equated Monthly Instalments(EMI) - Monthly Rest Basis
Security : 1. Equitable Mortgage of Residential House / Flat / Plot
2. Demand Promissory Note.
Upfront Fees : 1.00% of Loan Amount Sanctioned + Service Tax as applicable.
LIC housing finance ltd is also committed to help non-professional loan seekers to take advantage o
Griha Shobha LIC home loan project where they can get a minimum LIC home loan of 5,00,000 RS
for a maximum time of 10 years. Professionals get an extended advantage of repayin
back this LIC housing loan in 15 years.
1.25%
Notes:1% Cashback benefit is available on above product
1% Cashback benefit is available if EMI payment is through Auto Debit from ICICI
Bank Account
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STATE BANK OF INDIA (SBI)
The origin of the State Bank of India goes back to the first decade of the nineteenth
century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806.
Three years later the bank received its charter and was re-designed as the Bank of
Bengal (2 January 1809). A unique institution, it was the first joint-stock bank of
British India sponsored by the Government of Bengal. The Bank of Bombay (15 April
1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These three
banks remained at the apex of modern banking in India till their amalgamation as the
Imperial Bank of India on 27 January 1921.
Primarily Anglo-Indian creations, the three presidency banks came into existence
either as a result of the compulsions of imperial finance or by the felt needs of local
European commerce and were not imposed from outside in an arbitrary manner to
modernise India's economy. Their evolution was, however, shaped by ideas culled
from similar developments in Europe and England, and was influenced by changes
occurring in the structure of both the local trading environment and those in the
relations of the Indian economy to the economy of Europe and the global economic
framework.
With a tradition of trust and transparency, through 13, 700 branches across the
country,
SBI brings you exclusive benefits:
Interest on a daily reducing balance
No prepayment penalties
Open loan account closest to your present or proposed residence
So what are you waiting for? You can reduce your interest burden and optimally
utilize your surplus funds, only with SBI.
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EMI in `/lac/month
Period of
Loan(Years)
Upto ` 30 lacs @ 9.95%
p.a
Above ` 30 lacs @ 10.10%
p.a
30 874 885
25 905 916
20 962 972
15 1,072 1,081
The chart shows the survey results which was conducted last year. It is very evident
that majority of the Indians choose SBI for acquiring home loans compared to any
other commercialized or nationalized banks.
IDBI BANK
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Home Loan in India - IDBI Bank Home Loan Interest Saver
Home Loan Interest Saver provides customer the facility of linking Home Loan
account with the operative Account. The interest liability of the borrower on home
loan comes down to the extent of surplus funds parked in the operative account.
Customer will be allowed to deposit and withdraw from the operative account as and
when required. Interest on Home loan will be calculated based on the balance
maintained in the operative account.
The IDBI Bank Home Loan Interest Saver Advantage
Maximum Tenor
Attractive Rate of Interest
Maximum Funding
Interest Rate on Daily Reducing Balance
Simple Documentations
Personalized Doorstep Services
Savings on Interest Payable
The IDBI Bank Home Loan Interest Saver Features
Loan Range from min of Rs. 5 lacs up to Rs. 500 lacs Rs. 250 Lacs in case of
NRIs (salaried)
Loan to value ratio:
Upto Rs. 20 lacs90% of cost of property Above Rs. 20 lacs80% of cost of property
Repayment period -
20 years for Salaried and Self-employed professional and
15 years in case of NRIs (salaried) & self-employed non - professionals
No prepayment charges
Interest Rates
As per RBI mandate, Savings Bank interest will be calculated on the daily balances
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maintained in your account, at a rate of interest as specified by RBI from time to time
(existing rate is 4.00% p.a.).
vings Bank Rate (w.e.f. May 03,
2011)4.00 % p.a.
Base Rate (w.e.f February 01,
2013)
10.25 %
All the loans are linked to Base Rate of the Bank
Current BPLR(w.e.f February 01,
2013)14.75 %
COMPARATION OF INTEREST RATES AMONG VARIOUS BANKS
Bank NameFloating
Interest ratePer lac EMI Processing Fee
Prepayment
Charges
State Bank Of 9.95% Rs.962 Up to 25 lacs : 0.125%of loan amount
Nil
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India minimum Rs.1000/-25-75 lacs : Rs.3,250/-75 & above : 5,000/-
ICICI Bank Scheme I :10.25%(Fixed 1 yr)
Scheme II :10.25% (Fixed
2yrs)
Scheme III :10.50% (Fixed
3yrs)
then 10.25%
Scheme I : Rs.982(Fixed 1 yr)
Scheme II :Rs.982 (Fixed
2yrs)
Scheme III :Rs.998 (Fixed
3yrs)
then Rs.982
0.50% of loan amountupto 1 crore
N.A
HDFC Ltd 10.15% Rs.975 0.5% or maximum10,000+service tax
(12.36%)
Noprepaymentcharges shall
be payable forpartial or fullprepaymentsirrespective of
the source
HSBC Bank 10% to 13% Rs.965 to Rs.1172 1% of the loan amountapplied for, subject to aminimum of Rs 10000plus service tax. This
fee is payable onapplication and is not
refundable
Nil
LIC Housing Scheme I : 10.25%(Fixed for 2 yrs)
Scheme II :10.95%(Fixed for
10 yrs)
Scheme I : Rs.982
(Fixed for 2 yrs)Scheme II :
Rs.1029 (Fixed for10 yrs)
Up to 50 lacs : 10,000
+(Service tax)50 lacs & above :
15,000 +(service tax)
Nil
AXIS Bank 10.25% (Upto 25Lacs), then
10.50%
Rs.982 (Upto 25Lacs), then Rs.998
1% of the Loan Amount Nil
IDBI 10.25% Rs.982 Up to .50%of loanamount
(Rs 2500 to be collectedat login and balance at
the time of sanction )
If BalanceTransfer then2% Otherwise
Nil
PNB Housing
Finance
10.50%-11.25%(For
Salaried/SEP),
11%-11.50%(SENP)
Rs.998 - Rs.1049(For
Salaried/SEP),
Rs.1032 - Rs.1066(SENP)
0.5% NIL
ING Vysya 10.75% Rs.1015 0.5% of the loanamount
NIL
Standard
Chartered
9.99% (Upto25Lacs), then
10.15%-10.25%
Rs.964 (Upto25Lacs), then
Rs.975 - Rs.982
Rs.7500/- + Service tax NIL
Citibank 10.50% (Upto Rs.998 (Upto 0.25% (for salaried ), NIL
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25Lacs), then10.75%
25Lacs), thenRs.1015
0.50% ( for SelfEmployed)
Deutsche Bank 10.50% Rs.998 12000 + Service Tax Nil
DHFL 11% Rs.1032 1% for Salaried & 1.5%
for SENP
NIL
India Bulls 10.15% (Upto25Lacs), then
10.75%
Rs.975 (Upto25Lacs), then
Rs.1015
Up to 30 lacs5,000+12.36%(Service
tax)30 lacs & above :
15,000+12.36%(Servicetax)
NIL
Federal Bank 10.25% Rs.982 10,000 + Service Tax N.A
Allahabad
Bank
10.20% (Upto25Lacs), then
10.45%
Rs.978 (Upto25Lacs), then
Rs.995
0.50% of loan amount,Maximum Rs. 10,000/-
NIL
Bank of
Maharastra
10.55% (Upto
25lacs), then10.75%
Rs.1002 (Upto
25lacs), thenRs.1015
0.50% (Max. Rs.
50,000/-)Nil
Central Bank
of India
10.25% Rs.982 0.50% of the loanamount subject to
maximum ofRs.20,000/-
Nil
Corporation
Bank
10.25% Rs.982 0.50% of Loan amount(Max.Rs.50,000/-)
NIL
Bank of India 10.25% Rs.982 0.25% of loan amount.
Min.Rs.1,000 and Max.Rs.20,000
Nil
Union Bank of
India
10.25% Rs,982 Processing charges are0.50% of the loan
amount subject tomaximum of Rs. 15,000
NIL
United Bank
of India
10.75% (upto 25lacs) then 10.55%
Rs.1015 (upto 25lacs) then Rs.1002
0.50% of the loanamount
N.A
UCO Bank 10.20% Rs.978 0.5% of the loanamount, minimum
Rs.1500/- & maximumRs. 15000/-
NIL
Bank of
Baroda
10.25% Rs.982 Loan upto Rs.30 Lacs -0.50% (Minimum
Rs.5,000/-)Above 30 Lacs - 0.40%
(Min. Rs.15,000/- &
Max. Rs.50,000/-)
N.A.
Canara Bank 10.75% Rs.1015
Oriental Bank
of Commerce
10.25% Rs.982 0.50% of the loanamount, subject to
maximum of Rs.20000/- plus service tax
NIL
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Kotak Bank 10.75% Rs.1015 0.25% - 0.5% 2% on Balancetransfer else
NIL
Dena Bank 10.30% Rs.985 N.A N.A
PunjabNational Bank
10.25% Rs.982
First Blue
Home Finance
10.25% (forSalaried / SEP),
10.75% (For SelfEmployed) (Upto
25Lacs), Then10.75% (for
Salaried / SEP),11.25% (For Self
Employed)
Rs.982 (forSalaried / SEP),
Rs.1015 (For SelfEmployed)
Salaried: Up to 30 lacs:7300
30 - 75 lacs : 1180075 lacs & above :15,000 + service
tax(12.36%)
Nil
Vijaya Bank 10.50% Rs.998 0.25% of loan amount.Maximum Rs.10000.Exclusive of Service
Tax
N.A
Syndicate
Bank
10.25% ( upto 25lacs ), then
10.50%
Rs.982 (Upto 25Lacs), then Rs.998
upto Rs.25 lacs -0.25% (Min Rs 1000 -
Max Rs 5000)26 lacs to 75 lacs -
0.55% (Max.Rs.500/-)above Rs.75 lacs -
0.55% (Max Rs.10000/-)
N.A
Indian
Overseas Bank
10.25% Rs.982 A flat rate of 0.58% ofthe loan amount-maximum of Rs.
10,190/- There is nohidden charge. This is
subject to change fromtime to time without
prior intimation.
N.A
Reliance 11.50% - 11.75% Rs.1066 - Rs.1084 0.75% of loan amount NIL
Development
Credit Bank
11.50% Rs.1066 1% Nil
State Bank of
Travancore
10.25%-10.50% Rs.982 - Rs.998 Processing fees standsreduced by50% of
normal charges duringthe campaign period
NIL
Tata capital
Housing
Finance ltd
10.75% Rs.1015 0.5 to 1% off the loanamount.
N.A
Dhanalakshmi
Bank
Scheme I: 11.50%(Fixed for 1 yr),
Then 12%Scheme II: 12%
Scheme I: Rs.1066(Fixed for 1 yr),
Then Rs.1101Scheme II:
1% + service tax N.A
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Rs.1101
Indian Bank 10.20% Rs.978 Nil Nil
COMPARISON OF MAJOR PLAYERS
The markets for home loans have been sizzling in India. The spurt in growth in recent
years and the prospect of continued buoyancy in demand have attracted many players
to the industry which till a couple of years back had two major players- HDFC and
LIC Housing Finance. The result is cut-throat competition, which has benefited the
loan seekers. The home loan market has grown at a compounded rate of over 40%
over the last four years. And from what industry experts believe that there is a little
chance that there will be any significant decline in the growth rates going forward. So
what have been the key factors in triggering of this high growth period?
There are several reasons for the same on the demand side:-
Faster raise income as compared to property prices, thus making housing more
affordable.
Decline interest rates, which have greatly reduced the cost of borrowing (both
o0n interest and capital).
Then there are factors on the supply side too which have supported this growth:-
More competition in the housing finance sector resulted in companies charging
lower interest rates, sometimes even at the cost of spread (i.e. profit margin)
The fee for getting the home loan has reduced dramatically over the last couple
of years. From over 2% of the loan amount to as long as 0.25% (some
companies are known to wave of the fee entirely). Housing Finance Companies
have introduced several new products to meet the needs of wide variety of
customers. One such scheme, the Step up Loan, where EMIs increases as the
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income of the individual increases has been a big hit with the individuals just
starting off with their careers.
One other factor is increasing collaboration between Housing Finance
Companies and builders. Such partnership minimizes the service and funding
related issues significantly thus making it easier to buy property.
One innovation in the housing finance sector has been the introduction of floating rate
home loan simply put the cost of such home loan or the interest rate not fixed during
the tenure of the loan. Instead interest rate is benchmarked against some index/
indicator. So as the benchmark rate moves up or down, the cost of your loan too
changes, at some predetermined frequency (usually once a quarter).
Ideally loan seekers should opt for a floating rate home loan when it is expected that
the interest rate will decline going forward. Fixed rate loans should be preferred when
the interest rates are expected to rise.
But is the choice that simple? In todays environment when there is a lot of talk about
rising interest rate, should investor shun floating rate home loan. Altogether is there
still some merit in this instrument? In the last one year, there was a trend of floating
rate home loans being more popular as compared to the fixed rate loan. As of now,
this trend is continuing says Mr. Suresh Menon , GM (Mumbai region), HDFC
Limited.
There are three important issues which one needs to consider before opting for one
type of a loan over the other:-
First, an important determinant of what you go in for should be the long term
expectation of interest rate. For example if you (or the experts) expects the
rates to rise for the next one year, but then decline gradually over the next
several years a floating rate product may be preferable. The other option for
going in for a fixed rate product and then switching at the end of the year will
entail costs (there could be penalty of 1%-2% of the outstanding loan amount)
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and may not make financial sense. Moreover floating rate home loans do not
change the rate of interest every quarter (even though they review the rate
every quarter). Mr. Menon points out The attraction of a floating rate home
loan is that it does not attract a part prepayment charge. This could appeal to
individuals who get lump sum bonuses which they can use to reduce their loan
exposure.
Second, the issue whether fixed rate home loan are actually fixed rate. When
considering a fixed rate home loan over floating rate of home loan a strong
selling point is that if interest rate were to rise dramatically you will be
protected. Apparently the reality is some what different. It seems that
companies that have given out fixed rate home loans can revise their rates
upwards in exceptional circumstances (significant rise in interest rate for one)
so if you think interest rate will remain rage bound over the near term and
decline over the long term, you are still better off with the floating rate product.
Third, a fixed rate loan is generally priced higher as compared to the floating
rate product. This holds true in the current environment where the fixed rate
loan is at a higher interest rate as compared to the floating rate loan. The
difference is currently about 0.25% to 21%. So if you expect that interest rate
are likely to move up, but only to the extent of this differential, then you should
ideally be in different between the two types of loan. The deciding factors then
should be when you think the rates will increase and also the long term
expectations of interest rates.
As always there is no one answer to whether you should go in for floating or a fixed
rate home loan. If you are a person with very little appetite for risk or negative
surprises, opt for fixed rate home loan. But in case you can take on some risk a
floating rate home loan is worth a look.
Five steps to take a right loan:-
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1) Gather data on interest rate. Get interest rate information from morethan one
source and get the same information from each so you can compare the offers.
2) Get information on fees. Find out about processing fees, administration
charges and other costs that may be involved in taking the home loan. A
written statement of all the fees from the housing finance companies will
ensure that there will be no surprises later on. Use the lowest amount of fees to
negotiate with the other lenders.
3) Get pre-approval letter. This gives you substantial leverage as you are then
seen as serious buyer by the seller of the property. Also, having the letter in
your hand will set a limit to the amount of money you can commit to the
property. This will help in identifying the right property.
4) Bargain for a lower rate of interest. Housing finance will reduce their rack
rates for customers with the good credit record. A bargain deal will easily fix a
home loan at significantly lower rates (at time