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Housing Loans

Introduction
The most popular method of financing a home purchase is with a mortgage. This is a loan that is secured over the home. Our home is probably the single biggest purchase which we make in our lifetime, we must make sure to take care and attention that the transaction merits. Mortgage rates can vary greatly from lender to lender and the amount our rate is set and can make a huge difference to the amount for our repayments will amount to. Even a small difference in rates could save you thousands of rupees or allow you to have your home paid off years sooner. Here, I m going to show you the study of Housing loans. When it come to housing loan we need to keep certain things in our mind and those are about fixed and floating interest rates, admin and processing fees, tenure, down payment, prepayments and prepayment penalty, foreclosures, methods of payments etc. Housing loans are usually the largest loans that consumers will ever make. Because of this, it is important to know how home loans started, the different types of home loans and the similarities and differences between them. In this way, consumers can make the best decision on which loan is the best for their purposes.

HISTORY OF LOANS
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No one can say for certain where the history of loans began. It is likely that people have been practicing lending and borrowing for as long as there has been a concept of ownership. The history of loans can be documented at least several thousand years back; forms of lending were evident in ancient Greek and Roman times, and monetary loans were even mentioned in the Christian bible. The modern history of loans started much later than these ancient times, of course it is, however, important to realize that lending started much earlier than many people would imagine and has its origin in much older times. Earlier three types of Loans Existed I.e. Indentured loans, Banking Loans and Modern banking Loans. Indentured loans One of the early forms of lending that should be explored in the history of loans is the indentured loan (also known as indentured servitude.) Initially practiced in the Middle Ages and through the 19th century by land owners and the wealthy, indentured servitude allowed poor individuals to borrow the money needed for major expenses such as travel and real estate. Once the land owner or wealthy individual had secured a ship passage or piece of real estate for an individual, that individual would then have to work off their debt over the course of several years unfortunately, many times the land owner was very dishonest and would greatly inflate the debt or would continue to add provisions to the debt long after it had been repaid.
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Indentured servants often had very few rights, and were seen by some wealthy individuals as a way to maintain slave labor long after slavery had been abolished in both Europe and the United States. Banking loans Luckily, legitimate banks were developing even as indentured servitude was rampant. Individuals known as moneylenders played an important part in the history of loans in fact, it's from the Italian moneylenders of the middle Ages that we get both the English words bank and bankrupt that we use today. Italian moneylenders would set up benches in the local marketplace (with the word for bench being banca, from which we eventually derived the word bank). The moneylenders would charge interest on their loans at a rate that they set, and would sometimes be quite successful and become very wealthy. As an interesting side note to the history of loans, if the moneylenders were not successful, though, they would break up their benches and pursue other venues

Modern banking loans

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Of course, the history of loans has progressed quite a bit since the days of the Middle Ages moneylender. Interest rates are much more controlled, loan terms have a much higher degree of fairness to them, and the banks of our era aren't out to simply get as much money out of borrowers as they can. The modern banks, finance companies, and online lenders that provide loans to the public and private sectors provide a great service to the world economy, and are regulated by both local and governmental policy so as to make sure that nothing interferes with that service. However, if not for some of the oppression and misdealing that was present throughout the history of lending then the fairness and opportunity that exists in banking today might not be possible even the oppression that resulted from indentured servitude in the past helped to establish modern banking by showing what factors needed to be eliminated so as best to benefit both lender and borrower.

HOUSING LOANS
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Few decades back, buying a home was not a very easy task as there were hardly any lenders available to loan the ever increasing astronomical lump sum of money. However, with time, the rising property prices and the burgeoning housing finance market in the country, made the phenomenon of the home loans easy and the dream of buying a home possible. The HFCs (Housing Finance Companies) and banks have come up with so many home loan plans that they have become an answer to every customers necessity. Apart from this, the changing equation of market has also provided customers with several reasons to opt for a home loan. For many years, the only way in which to obtain money to purchase a home was to apply for a conventional home loan. This type of loan was obtained through a bank, credit union or other private, non-government-affiliated financial institution. Owning a piece of land or property is a lifetime dream for every individual. There are many home loans provider in the market to make our dream come true. But before we opt for any home loan provider, we need to consider certain factors related to property that we are interested in buying and also about the salient features offered by a home loan provider. You can take different types of housing loans like Home Purchase Loans, Bridge Loans, Home construction Loans, Home Equity Loans, Home Extension Loans, Home Improvement Loans, Land Purchase Loans etc for
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different schemes available in the market. There are different types of home loans tailored to meet your needs.

Types of Home Loans in India

Loans are the funds which a home buyer attains from any financial institution in order to pay for a home or residential property. Loans are agreed upon certain predefined/fixed or floating rate of interest. Nowadays there are multiple types of loans which an individual can choose from; these generally depend on the arrangement and predilection of the Loaned. Following are the types of Home Loans:

Home Purchase Loan: These loans are taken to purchase a new home in a certain complex.

Home Construction Loan: These are taken to construct a home on an owned land unlike complexes and apartments.

Home Improvement Loan: These are given to existing homes, the sum is used to renew, renovate, addition and modification to the existing owned home.

Balance Transfer Home Loan: Competition has it all; these are given as new loan to repay an old loan. These are usually taken with view that the new loan is lower on the interest rates.
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Land Purchase Loan: These are given to buy a land to construct a home, usually bungalows, duplexes, row houses etc.

Bridge Home Loan: These are given to individuals who are looking to buy a new home and want to sell the old home to buy the new one. With Bridge Loan you can buy a new home even before you find a buyer for your home.

NRI Home Loans: These are given to individuals who are NRIs and want to buy or invest in residential properties; this is getting popular these days with the IT professional abroad. Note: - Most of these loans come with an insurance cover.

1. Home Purchase Loans:

With about a million home lenders and mortgage brokers it's becoming a tough challenge as the days are progressing. But at the same time, when the sites are coming up with all the latest gizmos and tools and relevant information for you, and with all such conveniences, obtaining a home purchase loan or mortgage has become really pretty simple. However, at the same time though, you may be flummoxed to look so many attractive rates and offers in the market, not to forget the hidden costs associated with each of them. Companies offer home buyers a wide selection of home purchasing loan options (mentioned in details below) and home purchase loans tailored to
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match your specific needs and budgets, including fixed rate loans, adjustable rate loans, second liens, and home equity lines of credit. Fixed Rate: In the fixed rate, enjoy the predictability of a fixed interest rate for the life of your loan. Adjustable Rate Loans: Take advantage of low interest rate and low monthly home loan payments which are customizable as per the client's requirements. Home Purchase loans and the quotes associated with the mortgage include: 1. A choice between 10, 15, 20, 25 and 30 year terms 2. Customized pricing suiting needs. 3. Free Quotes without Pulling Your Credit Score 4. Customized quotes in less than 24 hours 5. Bad Credit or Past Bankruptcy 6. Rate Lock - if you choose 7. Complete documentation list at the time of closing or finalization 8. Immediate approval letter for home shopping 9. 100% Financing - No Down Payment Programs also Available

2. Home Construction Loan: Home construction loans are used to finance for the construction of youre newly acquired home or if you are planning to build a home. But, with so many home construction loans available in the Indian market, how do you
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decide which one would suit you most and which one would be most favorable to you? Are you eligible for converting the Home construction loans into permanent loans? How many rupees would you require for the construction business? And when you plan to pay back the loans? What are the other botherations and calculations usually made by banks and financial institutions if and when you qualify for the home construction loans? 3. Home Improvement loans Home improvement loans are used to finance improvements and add on to the existing set of credentials of beauty on your owned house, recently purchased property or rented accommodation. Home improvement loans are used to maintain or enhance the value of your house. In general it includes: repairs, remodeling, energy-related items (permanent in nature), repairs, a new kitchen, a new bathroom, terrace, an extension or general property improvements. Luxury items and fireplaces are generally not eligible, though. Many improvements in landscape and even swimming pools are nowadays considered to be a part of home improvement. So, to sum up the story, it can be concluded that all the actions that can be considered to increase the face value of the property in such a way that it increases the expected sales value of the home or the property are to be considered home improvements.

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What are the different types of Home Improvement Loans? a. First Mortgage/Loans: Generally the current lender provides you with home improvement loans against your first mortgage. In the most common cases, the loan is extended for the remaining period of the original mortgage, but one will have to discuss the terms in detail with his/her mortgage lender. Home improvement loans are usually paid out in payments in proportion to the work that is being carried out and the contractor may be paid directly from the lender. b. Second Loans: It may also include: Home Equity Loans and Home equity line of credit. One may have a decent equity in his/her home, but at the same time, he/she needs to be vigilant as well to evaluate and compare the different alternatives in detail to avoid any confusion or problems at the later stages. c. Home Loans Refinancing: Refinancing of your mortgage or loans may help you to lower your payments, delay your payments, defer your payments, or may even help in releasing some cash for your home improvement. d. Personal, i.e. Unsecured Loan: The best part of personal loan is that it doesn't require you to have equity in your home, nor does it binds you to borrow money against your home. Generally the personal loan is disbursed by either a finance company, or a bank for home improvement project. e. Grants from the Government Bodies: Few Government grants programs are available for you to offer financial help to low income families to repair current homes.

4. Balance Transfer Home Loan: Balance Transfer is the transfer of the balance of an existing home loan that you availed at a higher rate of interest (ROI) to either the same HFC or another HFC at the current ROI a lower rate of interest.
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5. Land Purchase Loan: Land Purchase loans are used by customers who wish to purchase a plot of land for commercial or residential purpose. Everyone has his/her dream perfectly sketched in his souls and so is his ambition to get his house erected on the exact location he dreamt that to be. Now, that you have decided to purchase a land as an investment or for your own dream home, you will realize that a land purchase loan is one you will cherish. Loans that are strictly for land purchase can be as scarce as good residential plots. While many lending firms around the nation compete to provide mortgages for the purchase of a house on a lot, only local institutions typically will be interested in lending for an empty lot. Eligibility: 21 Years and above having regular income is applicable. Maximum Loan: 85 % of the cost of the plot and is also based on the repayment capacity of the customer. Maximum Term: 15 years, this of course takes into consideration your retirement age. Advantage(s): Is generally a smaller loan than a home mortgage You can purchase your land, then take your time building your home

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Disadvantage(s): Land loans can carry higher interest rates and bigger down payments than conventional mortgage loans, to reflect the increased risk. Process of Home Extension Loans Application: Customers can fill online application forms or personally visit the bank for approval of loan. A nominal fee of 1-2% is charged as processing by the banks. 6. Bridge Home Loan: Bridge loans are used by customers as an effective vehicle to capitalize on a purchase opportunity. It can be considered as a short term financing scheme which is generally expected to be paid back, within the range of 6-36 months, till the time the borrower gets more permanent and lower cost financing. So, bridge loans, (or swing loans as they are otherwise said) is a short term loan provided by various banks like Bank of India, Citibank, ICICI etc. often used for commercial real estate purchases, retrieve real estate from foreclosure. Working: Bridge loan or swing loans pays off the old mortgage and goes toward the down payment on the new home. When the old home gets sold, you pay off the bridge loan and continue paying the traditional mortgage on the new home.

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Before considering a bridge loan, it is advisable to check with your local realtor to see how long homes in your area and their corresponding price range are sitting on the market. While it's always nice to have the option of a bridge loan, it's always better to wrap up the sale of your existing house or property before you commit to purchase a new There are a couple of types of bridge loans. The consumer borrows the money to pay off his/her existing mortgage and enough to make his/her desired down payment on the new home. Usually the consumer is not required to make monthly payments on bridge loan but has to make only the monthly mortgage payment on the new home, and when the old home sells the accrued interest and the outstanding balance on the bridge loan is paid back.

The consumer keeps his current mortgage, but borrows against the equity in the current home and uses that money as the down payment on the new home. Let us illustrate that with an example: Say your
new home costs Rs 5000000. You've built up Rs. 1750000 in equity in your current home, which today is worth Rs. 3000000 and has an outstanding mortgage balance of Rs1250000. You want to make a down payment of Rs1000000 on your new home and you've earmarked Rs500000 in savings to cover part of the cost. A bridge loan would let you borrow against that Rs1750000 in equity to help make up the difference.

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7. NRI Home Loans The Non-Resident Indians (NRIs) are recognized under the Foreign Exchange Regulatory Act, 1973. Every bank and housing finance companies follow the RBI guidelines to define NRI"An Indian citizen who holds a valid documents like Indian passport and who stays abroad for employment or for carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a NRI." Broadly categorized, Non-Resident Indians qualifying for NRI housing loans are: 1) Indian citizens who stay abroad for employment or for carrying on business or vocation outside India or for any other purpose in circumstances indicating an indefinite period of stay abroad; 2) Government servants who are posted abroad on duty with the Indian missions and similar other agencies set up abroad by the Government of India where the officials draw their salaries out of Government resources; 3) Government servants deputed abroad on assignments with foreign Governments or regional/international agencies like the World Bank, International Monetary Fund (IMF), World Health Organization (WHO), Economic and Social Commission for Asia and the Pacific (ESCAP);
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4) Officials of the State Government and Public Sector Undertakings deputed abroad on temporary assignments or posted to their branches or offices abroad.
5) Documents required for Resident Indians as well as for NRIs for

getting Home Loans are different in some respect. Home loans for NRIs are available for construction of new house / flats, purchase of old house / flat addition / alteration to an existing house and repairs / renovation etc. NRIs can avail of loans by mortgaging an existing residential property. However, for availing home loans, NRIs have to fulfill certain conditions according to provisions of the Income Tax Act. They should have stayed in India for a period of 182 days or more within an assessment year or they should have stayed in India for at least a total of one year or more.
6) The FDI Policy that permits FDI up to 100% from foreign/NRI

investor under the automatic route has boosted NRI confidence. Banks have attractive NRI housing schemes to accommodate the housing needs of NRIs. From the stables of HFCs, NRI housing finance plans with suitable repayment options are available.. 7) Last but not the least, NRIs should take due care while selecting their home loan provider companies or HFCs. Considering the geographical distances involved, it is significant that loan seekers associate with a proactive and responsive HFC.

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Home Loan Advantages

The need for home loans arises not because property prices are

heading upwards all the time but because home loans make great sense from a long-term savings perspective. Not only are home loans a handy tool for the common man to own a roof over his head but they also help save money in the long run. With skyrocketing real estate prices, people are increasingly opting

for housing loans to acquire their dream home. Interest rates are coming down all the time and the housing finance companies are literally falling over each other to lure the prospective home-seekers. Not with standing the tax breaks and generous lending rates, a lot of

people still can't arrange resources for the down-payment, which comes out to be at least 15 per cent of the property value. Taking cognizance of the situation, HFCs are coming up with home loan products called zero down payment loans, wherein 100 per cent funding is provided for select properties. These lucrative offers are other major reasons for why people are opting for home loans. Even if one can afford to buy a home with one's own money, home

loans should be availed because they act as good savings instrument. According to industry estimates, the long term average return in investing in a home is about 20% p.a. while the average cost of borrowing funds in the market today is about 10% p.a. (considering all tax breaks).
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For salaried employees, housing loans are the best way to avail tax

benefits. Many people simply go for the home loans in order to avail these benefits. Interest payments up to Rs 1.5 lakh on housing loans are deductible from the taxable income and there is a further tax deduction of Rs 4,000 against repayment of principal. In case a person stays in a rented house, the cost of the loan will be nearly zero per cent since he will be saving a decent amount on rent.

BENEFITS OF HOME LOAN

1. Deduction for house loan /installment available up to Rs.100000 /2. The limit of one lac as above is total limit u/s 80C for all type of savings, plus section 80CCC (pension policy) plus u/s 80CCD (Contributory Pension Plan).Means the aggregate amount of deduction under above referred sections can not exceed Rs. 1, 00,000. 3. The payment of loan should be made towards cost of purchase/construction of new residential house property. 4. The house property income should be assessable in the hand of assessee in simple term assessee should be the owner of the house property. 5. The payment should not be for addition or alteration to, or renovation or repair of house property done after completion of house. 6. Completion of house means 1. completion certificate in respect of the house property by the authority competent to issue such certificate or 2. house property or part has been occupied by the assessee or any other person on behalf of assessee or 17 Malini Kishor Sanghavi College of Commerce & Economics

T.Y.B.B.I 3. has been let out; 7. Housing loan for more than one house can also be claimed.

Housing Loans

8. All the benefit of tax u/s 80 c will reversed if house property is sold with 5 year from purchase of house property 9. The tax benefit under section 80C is available on residential house property only and not available on commercial house property. 10. Loan should be taken from Specified institutions/deptt only given below 1. Central or State Government 2. any Bank including co-operative bank 3. LIC or National Housing Bank 4. public company formed and registered in India or co-operative society with main object to provide long term finance for construction purchase of houses in India. 5. Assessee Employer if public company or public sector company or university established by law or a college affiliated to such university or local authority or co-operative society.

Rate of Interest
This is the single biggest factor while taking a home loan. The lower the interest rate, the better it is. This is because if the rate of interest is less, you
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would pay less every month towards interest, and pay more every month towards principle. A lower interest rate also obviously reduces the monthly payout or the EMI. A lower EMI is easier to repay. Lower interest rate also means that you would be eligible for a higher loan amount for a given income level.

Concept of Housing Loans

What are the different interest rate options offered by banks?

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Banks generally offer either of the following loan options: Floating Rate Home Loans and Fixed Rate Home Loans. For a Fixed Rate Loan, the rate of interest is fixed either for the entire tenure of the loan or a certain part of the tenure of the loan. In case of a pure fixed loan, the EMI due to the bank remains constant. If a bank offers a Loan which is fixed only for a certain period of the tenure of the loan, please try to elicit information from the bank whether the rates may be raised after the period (reset clause). Hence, the EMI of a fixed rate loan is known in advance. This is the cash outflow that can be planned for at the outset of the loan. If the inflation and the interest rate in the economy move up over the years, a fixed EMI is attractively stagnant and is easier to plan for. However, if we have fixed EMI, any reduction in interest rates in the market, will not benefit us

Determinants of floating rate: The EMI of a floating rate loan changes with changes in market interest rates. If market rates increase, our repayment increases. When rates fall, our dues also fall. The floating interest rate is made up of two parts: the index and the spread. The index is a measure of interest rates generally (based on say, government securities prices), and the spread is an extra amount that the banker adds to cover credit risk, profit mark-up etc. The amount of the spread may differ from one lender to another, but it is usually constant over the life of the loan. If the index rate moves up, so does our interest rate in most
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circumstances and we will have to pay a higher EMI. Conversely, if the interest rate moves down, your EMI amount should be lower. Also, sometimes banks make some adjustments so that your EMI remains constant. In such cases, when a lender increases the floating interest rate, the tenure of the loan is increased (and EMI kept constant). Some lenders also base their floating rates on their Benchmark Prime Lending Rates (BPLR). You should ask what index will be used for setting the floating rate, how it has generally fluctuated in the past, and where it is published/disclosed. However, the past fluctuation of any index is not a guarantee for its future behavior.

Flexibility in EMI: Some banks also offer their customers flexible repayment options. Here the EMIs are unequal. In step-up loans, the EMI is low initially and increases as years roll by (balloon repayment). In step-down loans, EMI is high initially and decreases as years roll by. Step-up option is convenient for borrowers who are in the beginning of their careers. Step-down loan option is useful for borrowers who are close to their retirement years and currently make good money.

What is an EMI?

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We repay the loan in Equated Monthly Installments (EMIs) comprising both principal and interest. Repayment by way of EMI starts from the month following the month in which you take full disbursement.

What documents are generally sought for a loan approval? In addition to all legal documents relating to the house being bought, banks will also ask us to submit Identity and Residence Proof, latest salary slip ( authenticated by the employer and self attested for employees ) and Form 16 ( for business persons/ selfemployed ) and last 6 months bank statements / Balance Sheet, as applicable . We also need to submit the completed application form along with our photograph. Loan applications form would give a checklist of documents to be attached with the application. Do not be in a hurry to seal the deal quickly.

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New RBI directive for home loans

The Reserve Bank of India (RBI) has in the latest directive asked the Indian banks to be more "fair and transparent" while signing their agreements with the consumers. This has come following complaints from various Repayment options Every housing finance companies or banks have customized repayment options to suit every individual's requirement and also repaying capacity with some tax benefits. They have thereby come up with more flexible and Multiple Repayment Option. A few among them are:

Step-up Repayment Facility

The objective of step-up repayment is to provide the borrower with a repayment schedule, which is linked to expected growth in income. It not only helps a customer get a larger amount of loan as compared to the loan under the normal housing loan; but the customer can avail of a higher amount of loan and pay lower EMIs in the initial years, which is subsequently accelerated proportionately with the assumed increase in his income.

Flexible Loan installments Plan

This repayment option offers a customized solution to suit the needs of customers whose repayment capacity is likely to alter during the term of the
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loan. In cases when a borrower is nearing retirement, the loan is structured in such a way that the EMI is higher during the initial years and subsequently decreases in the latter part proportionate to the reduced income of the customer. This option helps such customers combine the incomes and take a long term home loan where in the installment reduces upon retirement of the borrower.

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. Tranche Based EMI is a special facility offered by some banks to help customer save this interest. 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

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Or 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.

Balloon Payment

Balloon Payment is an augmentation tool offered by the financial institutions, which helps in increasing the loan eligibility of the customer without increasing the EMI by assigning securities like National Savings Certificate (NSC), LIC policies etc. The present value of the maturity amount of assigned securities is combined with the loan amount to arrive at the enhanced loan eligibility. Under this facility, the EMI is calculated on the net loan amount (i.e. total loan less the present value of the maturity value of the securities). HOME LOAN FOR RESIDENT INDIANS
A.

Eligibility

B.

RBI directive for home loans

C.

Repayment options

D.

Home loan tenure

E.

Tax benefits
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F.

Documentation

It has emphasized on the fact that while giving a home loan, the banks should not tie their loans with their own prime lending rates (PLR) which often results in pro-bank and against consumer interest. Households should get credit counseling before signing any loan agreement. In such case, banks should give credit counseling to customer before giving a loan. Any non-governmental organization can also give independent credit counseling to small borrowers. Consumers often complain of not receiving benefits of falling

interest rates as banks tie their floating rate loans with its PLR and even when rates fall, the banks kept the PLR unchanged. But when interest rates are hiked, the banks increase the benchmark rate, thus making customers pay a higher rate and consequently increase the number of EMIs too. The RBI has asked the banks to mend rules for the same. Individual borrowers should ask for the exact tenure and EMI

while taking a fixed rate loan. The RBI has also resolved to look into all consumer complaints if it is bought to the regulator's notice. The IRDA (insurance regulator) has powers to take action

against banks if a customer feels cheated while buying an insurance

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product. On its regulatory role, the RBI is trying to maintain a balance between the extent of freedom granted to the banks and the objectives of governance. RBI has made it mandatory for all banks - including private and

foreign banks - to offer a passbook to their customers with the address and telephone number of the nearest branch. Customers have often been harassed by banks' call centers

where there is no accountability of the query made. The "do not call" registry has also been flouted by banks as customers are bombarded with unnecessary product offerings. The RBI has directed the Indian Banks' Association to come out with a single "do not call" registry or when a customer adds his name to a single bank registry it should then stop unsolicited calls from all banks. On rising credit card frauds and wrong statements given by the

banks, the RBI has asked the customers to approach the ombudsman to redress their problems. This way the RBI feels would inculcate more consumer friendly practices among Indian banks.

Our bank will assess our repayment capacity while deciding the home loan eligibility. Repayment capacity is based on our monthly disposable / surplus income, (which in turn is based on factors such as total monthly income / surplus less monthly expenses) and other factors like spouse's income, assets, liabilities, stability of income etc. The main concern of the
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bank is to make sure that you comfortably repay the loan on time and ensure end use. The higher the monthly disposable income, higher will be the amount you will be eligible for loan. Typically a bank assumes that about 55-60 % of your monthly disposable / surplus income is available for repayment of loan. However, some banks calculate the income available for EMI payments based on an individuals gross income and not on his disposable income. The amount of the loan depends on the tenure of the loan and the rate of interest also as these variables determine your monthly outgo / outflow which in turn depends on our disposable income. Banks generally fix an upper age limit for home loan applicants.

Home Loan Tenure

Home loan tenures fixed by RBI are available up to a term of 15 years. Some financial institutions have home loan tenures in the range extending up to 20, 25 and 30 years if the applicant fulfils certain criteria. However, you cannot opt for a term that extends beyond your attaining retirement age or 60 years of age (whichever is earlier). Home loan Tenure:

Type of Property
Residential Plot of Land Against Existing Plot of Land

Tax benefits Salaried

15 years 10 years
28

Self-Employed
10 years 10 years 10 years
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There are certain tax benefits for the resident Indians based on the principal and interest component of a loan under the Income Tax Act, 1961. It may help one get tax benefit up to Rs. 50,490 p.a. (approx). if interest repayment of Rs. 1,50,000 p.a. is paid. In addition to this, one also is eligible for getting tax benefits under section 80C on repayment of Rs. 1, 00,000 p.a. that further reduces the tax liability by Rs.33.660 p.a. These deductions are available to assesses, who have taken a loan to either buy or build a house, under Section 24(b). However, interest on borrowed capital is deductible up to Rs 150,000 if the following conditions are fulfilled:

Home Loan Procedure in India

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Submission of Application Form

Validation of the Information

Issue of Sanction Letter

Submission of Documents

Validation of Property

Payment Procedure

1. Submission of Application Form: - After choosing a particular home

loan, the customer submits the application form to the housing finance company (HFC) along with other relevant documents as required by
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the HFC. They comprise documents to establish income, age, residence, employment, investments, etc. The customer also needs to hand over a cheque for payment of an up front (non -refundable) processing fee of about 0.5-1% of the loan amount to the HFC.

2. Validation of the Information: - In the next stage, HFCs validate the

information provided by the customer on the application form. They usually conduct checks on the residential address of the customer, the place of employment of the customer, and credentials of the employer. Some HFCs may insist on a personal interview with the customer and perform reference check on the references provided by the customer on the application form.
3. Issue of Sanction Letter :- After due appraisal of customer profile, a

sanction letter is issued which contains details such as loan amount, rate of interest, annual/ monthly reducing balance, and tenure of the loan, mode of e-payment and general terms and conditions of the loan. This is the actually the approval of the money lending procedure by the company. However, the money is sanctioned only after the documents and the property on behalf of which the loan is being granted is thoroughly verified

4. Submission of Documents: - Once the sanction letter is passed, the

customer is required to leave the entire set of original documents pertaining to the property being purchased with the HFC as security
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for the loan amount sanctioned. These documents remain in the custody of the HFC till the time the loan is fully repaid. Once the documents are handed over to the HFC, they send all the documents for a thorough legal scrutiny.

5. Validation of Property: - Prior to disbursement, the HFC also

conducts a site visit to the customer's property to ensure that all construction norms have been adhered to properly. Once the HFC is satisfied that the property is legally and technically clear, they disburse the loan amount. The disbursement from the HFI is on the basis of the stage of construction of the property.
6. Payment Procedure: - Once all the above mentioned process, the

borrower is entitled to take the money from the lender party. Until such time that the entire sanctioned amount is not drawn, the customer is supposed to pay a simple interest on the Actual Amount drawn (without any principal repayments). The EMI payments commences only after the entire sanctioned loan amount is drawn.

7 most common Home Loan problems faced by borrowers in India

Getting a home loan is a lengthy procedure. However simple it might look in the bank's advertisement, the fact remains that there are a lot of hiccups in
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the entire process. Here are the 7 most common problems faced by home loan borrowers in India. Each problem is discussed in detail and appropriate remedies are mentioned along with it. The objective of this article is to ensure that your home loan becomes a hassle-free experience. 1. Rejection at the first stage Strange but true, many of the home loan applications do not pass even the first test. They are out rightly rejected due to incompatibility between the borrower's qualifications and lenders requirements. It could be the age criteria, income criteria, proper documents not being submitted, the bank not being able to verify your details properly, not passing the field investigations conducted by the bank and many more. The best way to avoid being rejected in this way is to check the eligibility requirements of lending banks carefully and apply only to that bank which matches your profile. Keeping proper documents ready and providing accurate, verifiable details to the banks will ensure that you sail through the preliminary verification process. 2. Processing fee not refunded With every application form for home loans, banks require about 0.25% to 1% of the loan amount to be submitted as the processing fees. This processing fee is generally NOT REFUNDABLE. In simple words this means that for whatever reasons, if the bank finds that you don't deserve the home loan, these fees won't be returned. This is the cost of applying for home loans. If in any case, the bank you have applied to states that it will refund the processing fees in case the bank doesn't sanction you the home loan, it is better to get any such declaration in writing and make sure that the
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clause is enforceable. A verbal statement by bank authorities won't be of any use unless it is properly and legally documented. In all other cases there is little remedy for processing fees being not refunded?

3. Desired loan not sanctioned The loan amount sanctioned is based mostly on repayment capacity of the borrower. Many things come into picture, when the bank decides how much home loan a person can get. The monthly income, financial history, other unpaid loans with the borrower, past repayment record, credit card usage history if any, bounced checks, average balance with the banks, continuity in present employment, total years in employment, nature of employment etc. These factors all clubbed together help the bank to decide whether it will be able to recover its money satisfactorily or not. If you get rejected due to any such criteria, you can increase your eligibility by clubbing together your spouse's, fathers, sons, relative's income and make them a co-borrower. In addition to it, if you have sufficient funds in NSC's, provident funds, LIC policies etc. you can keep them as collateral and ask the bank to finance your home loan. 4. The interest rate dilemma Whether to go for a fixed rate or floating rate interest for home loans is a dilemma which almost every home loan borrower faces. Even after deciding on a particular loan regime, the home loan terms and condition fine prints
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can create havoc with your interest rates. For example even if a borrower has opted for fixed rate home loan and the bank has promised him a rate which he feels is good, the catch is in the fine prints which authorizes the bank to vary this fixed rate every 2 years, things can go worse for the fixed rate borrower. Similarly if the bank doesn't pass you the benefit of lowered interest rates in floating interest rate regime, it will be of a little value. Avoiding such a situation essentially means that you study the terms and conditions of home loan carefully and clearly ask the bank about such things. In case of floating interest rates the facts can be verified by checking how the interest rates on home loan dropped during low interest periods. Ask your bank for some historic floating rate changes. 5. Difference in property valuation The bank has its own experts for legal, technical and financial appraisal of the property in question. It evaluates the property on its own established parameters and assigns a value to it. This value can be significantly lower than the price you quoted for the property. Thus the bank will only lend you up to the amount it valued. This can cause a significant gap between what you need and what the bank is willing to lend. To avoid this situation the borrower can get the property valued before applying for home loan from a bank approved valuator. 6. The down payment Banks require the borrower to fund at least 10% to 20% (varying from bank to bank) of the entire loan amount as the down payment for the home loan. This amount has to be deposited before the disbursal of the home loan. In
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the absence of such down payment the bank will refuse home loan to the borrower. For a home loan of 10 lacs this could mean anything between 1 to 2 lacs. This amount must be readily available with the borrower. In a scenario where the valuation of the property by bank is considerably lower than the market price of the property, the balance will also have to be paid by the borrower. This effectively increases the down payment. The obvious remedy to this tricky situation is to get the property valued beforehand and have the down payment ready. Some banks also allow NSC's, provident funds, LIC policies etc for down payment. It is generally a good procedure to check the down payment requirement of various banks and choose the one which requires the lowest amount to be deposited initially or fits your budget well. 7. Title deeds and NOC Documentation Problems The title deeds and NOC documents have to be furnished in the bank's format. Borrowers, who don't provide such documents in proper format, will ruin the entire exercise and won't get any home loan. To avoid falling into such uncomfortable situation, enquire about all the documents required by banks beforehand and take necessary steps to get them ready within the stipulated time frame. Conclusion: The above mentioned problems are very common, but can be easily
avoided if the borrower follows proper procedure, prepares adequately before applying and takes care of correct documentation.

LIST OF BANKS IN INDIA PROVIDE HOME LOANS FACILITY

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There are several banks in India which are providing loans at attractive rates to its customers. Here we have listed the list of top 20 banks offering loans in India.

"Study of HDFC bank for home loans in India" COMPANY PROFILE OF HDFC HOSING DEVELOPMENT FINANCE CORPORATION LTD
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INTRODUCTION:Housing Development Finance Corporation Limited, founded 1977 by Ravi Maurya and Hasmukhbhai Parekh is an Indian NBFC, focusing on home mortgages. HDFC's distribution network spans 243 outlets that include 49 offices of HDFC's distribution company, HDFC Sales Private Limited. In addition, HDFC covers over 90 locations through its outreach programmers. HDFC's marketing efforts continue to be concentrated on developing a stronger distribution network. Home loans are also Sharcket through HDFC Sales, HDFC Bank Limited and other third party Direct Selling Agents (DSA). HDFC Incorporated in 1977 with a share capital of Rs.10 Crores, HDFC has since emerged as the largest residential mortgage finance institution in the country. The corporation has had a series of share issues raising its capital to Rs. 119 Crores. The gross premium income for the year ending March 31, 2007 stood at Rs. 2,856 Crores and new business premium income at Rs. 1,624 Crores. The company has covered over 8, 77,000 lives year ending March 31, 2007. HDFC operates through almost 450 locations throughout the country with its corporate head quarters in Mumbai, India. HDFC also has an International Office in Dubai, UAE with service associates in Kuwait, Oman and Qatar. HDFC is the largest housing company in India for the last 27years.

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'HDFC' - a household name that Indians proudly reckon

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Housing Development Finance Corporation Limited (HDFC Ltd.) was established in 1977 with the primary objective of meeting a social need of encouraging home ownership by providing long-term finance to households. Over the last three decades, HDFC has turned the concept of housing finance for the growing middle class in India into a world-class enterprise with excellent reputation for professionalism, integrity and impeccable service. A pioneer and leader in housing finance in India, since inception, HDFC has assisted more than 38 Lakhs customers to own a home of their own, through cumulative housing loan approvals of over Rs. 3.73 trillion and disbursements of over Rs. 3.02 trillion as at March 31, 2011. HDFC has a wide network of 294, catering to over 2,400 towns & cities spread across the country. It also has offices in Dubai, London and Singapore and service associates in the Middle East region, to provide housing loans and property advisory services to Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs). HDFC's focus on Corporate Governance, high standards of ethics and clarity of vision, percolate through the organization. Trust, Integrity, Transparency and Professional Service are the important pillars of the brand HDFC and most importantly, people - both employees and customers - are its brand ambassadors. Customer satisfaction is the hallmark of all HDFC offerings. The first touch of HDFC's personalized service begins as soon as a customer approaches HDFC. State-of-the-art information Malini Kishor Sanghavi systems supported by strong in-house training programmes
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conducted at its specialized training centre in Lonavla, have

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HDFC Home Loan:Eligibility; - HDFC home loans are available for: Purchase of flat, row house, bungalow from developers Purchase of existing freehold properties Purchase of properties in an existing or proposed co-operative housing society or apartment owner's association Purchase of first Power of Attorney purchases in Delhi for DDA flats allotted before 1992. Construction of own house

HDFC home loans can be applied for either individually or jointly. Propose downers of the property will have to be co-applicants. However, the coapplicants need not be co-owners. Maximum tenure is 20 years subject to retirement age. Loan Amount: - 85% of the cost of the property (including the cost of the land) and based on the repayment capacity of the customer. Rate of Interest: - The current applicable fixed rate of interest in respect of the total loan approved is as follows: For loans up to Rs.2, 00,000:-

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For loans greater than Rs.2, 00,000

All loans on annual rest basis. You repay the loan in Equated Monthly installments (EMIs) comprising principal and inertest.EMI per Rs 1, 00,000 (for loan up to Rs.2, 00,000)

EMI per Rs.1, 00,000 (for loan greater than Rs.2, 00,000)

Pending final disbursement, you pay interest on the portion of the loan disbursed. This interest is called pre-EMI interest. An early redemption charge of 2% of the amount being prepaid is payable on repayment of a loan ahead of schedule.

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Repayment Period: Repayment Options Step up Repayment Facility: - Helps younger borrowers to take a much bigger loan today based on an increase in their future income. 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. These option helpssuch customers combine the incomes and take a long term home loan wherein the instalment reduces upon retirement of the earning parent. 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, HDFC has introduced a special facility of Tranche Based EMI. Customers can fix the instalments they wish to pay till the time the property is ready for possession. 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 idea is customer benefits by starting EMI and hence repays the loan faster. Accelerated Repayment Scheme: - provides borrower the opportunity to repay the loan faster by increasing the EMI. Whenever the borrower gets an increment, increase in disposable income or have lump sum funds for loan prepayment, they can benefit by saving of interest because of faster loan repayment. Borrower can benefit by:

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Increase in EMI means faster loan repayment Saving of interest because of faster loan repayment 24 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...

Documents Required:-

The Credit Appraisal is an important step in sanctioning loan applications. Hence the Credit Appraiser needs to have certain important documents to compute the credit worthiness of the applicant .In the case of salaried person these include the following:-

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1) SALARY SLIPS (3 MONTHS CURRENT):- The salary slip is usually a printed sheet of paper that contains 2 components Income/Earnings column: - It contains an exhaustive list of the various components that are added to the person salary. They contain various components like Basic pay, HRA etc. Deductions: - It contains an exhaustive list of various components that are deducted from the persons Earnings. They contain various components like Income tax, Provident fund, Employee Loans etc. 2) BANK STATEMENTS (6 MONTHS CURRENT); - The bank statement contains the various transactions that the applicant performs in his bank account. It has 3 components Date Descriptions; - It contains the brief and standardized description of the activity or the account related to the transaction. Eg. Clearing cheque 166129, Transfer deposit. Deposits: -It contains the amounts that were credited to the account Withdrawal; - It contains the amounts that were debited to the account. This is carefully studied to find out about any regular withdrawals or a series of checks so that any existing loans may be revealed and there can be a correct estimate of the repayment capacity. Balance:-It shows effect of transaction on the pre existing account balance Special feature:-HDFC will not consider any loans with outstanding EMI of or below 6 months. 3) FORM 16:-It is form given by Employer which states the income earned from that company during the full financial year, and gives the details of Tax deducted at source.
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4) COPY OF INCOME TAX RETURN (SARAL):- The SARAL tax return form reveals the structure of incomes and/or the various earnings of the tax returnee. It also shows the various deductions that will not be included and it also contains the Rebates on which he earns tax benefit. 5) RESIDENCE PROOF: - The residence proof includes the Electricity bill, Telephone bill, Ration Card, Passport. 6) PHOTO ID PROOF: - The photo proof includes the Pan Card, Voter ID card, Employee ID card, Passport etc. 7) AGE PROOF: - The age proof includes the Pan card, Passport, Photo ID.
8) LOAN APPLICATION FORM DULY FILLED: - It can also be

downloaded from HDFCs user friendly web based portal.

9) CHARGES FOR PROCESSING FEES: - This is a standard and

nominal fee to be paid at the time of applying for loan Fees structure 0.5% of loan amount +Service tax of 12% (Less)Education Less of 3% OR 5618/HDFC takes from applicant whichever is less. This is applicable time to time.
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10)

PHOTOCOPIES OF PROPERTY PAPERS.

NON RESIDENT INDIAN

SALARIED/EMPLOYED; - An NRI is a person with Indian citizenship but residing in another country. An NRI can take a housing loan from HDFC. He is however not eligible for a Top Up loans, Home Equity Loans, Non Residential Premises Loans. He is however eligible for Home Improvement and Home Extension Loans from HDFC. An NRI Loan is appraised on the Net Salary. This is the take home pay package obtained after reducing the deductions from the earnings .As this salary is low it reduces their loan eligibility .However the salary is converted into Indian Currency for computing credit worthiness. The figure obtained is higher in Indian currency hence the loan eligibility raises. Eg 5,487$ American dollars will mean 2, 46,915 Rupees. SELF EMPLOYED PROFESSIONALS: - An NRI applicant can also be a Doctor, Engineer etc .In these cases HDFC will put them in the special category of Self Employed Professionals. Their credit appraisal is carried out as follows:Their latest available Profit and Loss A/c is reviewed by the credit appraiser. This account has two sides a Profit side which reveals all earnings and gains .There is also a Loss side which shows all taxes, liabilities and losses We refer to the Profit side as the Gross Receipts. These include components

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revealing the nature and amount of the Prime income and other earnings Eg Consultation fees in case of Doctor. From the Gross Receipts we calculate the Gross Profits and thereon move to calculate Loan eligibility .Which is the loan amount that can be conveniently sanctioned to the applicant. Loan Eligibility = Gross Profit * 2 Another important consideration is that the Annual outflow of EMIs should not exceed the NET PROFIT. The Net Profit is computed by deducting the various costs and losses from the Gross profit.

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STAGES OF HOME LOAN

The representation shown above is not a perfect copy of the actual process. This is because these stages are taking place simultaneously and one application is being taken care for by the experienced employees of both HDFC Ltd service centre and HDFC Ltd HUB (also called the back end office).Also the applicant may be asked to send information or may be asked questions regarding his requirement and/or his documents for his own
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convenience Hence the loan application may or may not shuttle through different stages

APPLICATION STAGE: - This is the stage where the Application Form first reaches the concerned Service Centre Here all the documents in the application are reviewed by the experienced staff present at the service centre The HDFC Ltd employee who reviews the file checks to see whether all documents are present and in their proper place .He checks if the documents are duly filled, not fake, attested by authority in question and present in order. In case any document is missing the applicant is contacted electronically or by mail. The applicant is contacted by telephone and requested for the document until he denies it being with him. This exercise is called FOLLOW UP. the credit appraisal of the loan application starts at this stage. The service centre employees compute the gross salary, IIR, FOIR, Loan Eligibility ratio etc. The credit worthiness of the applicant is calculated here. It is also at this stage that the QUICK DATA ENTRY of the loan application is done to create a serial no. of the application. after that another page appears and more data is entered .It is now that a special and unique LOAN A/C NO. is created under which all the loan processes will be carried out. The number that has been generated is communicated to the applicant by means of a letter and/or electronic communication the system of electronically recording the data helps to create ready reference, a proof ,helps in quick and easy processing of the data. It also helps to very easily and quickly share data with other employees of HDFC.
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The next and important processing performed at the service centre is that of filling up a document known as the INTERVIEW SHEET. for processing individual loans (salaried cases) .It contains various simple entries like :1. Name of borrower 2. Name of co-borrower 3. Income details:-Family background and permanent address etc. It also contains various important entries like. 4. Gross Salary 5. Rental 6. Other incomes 7. Obligations: - The various other loans that the applicant is entitled to pay, their amount, their remaining terms, source etc. 8. Remarks;- This column contains the various findings that the employee has found out after thorough review of the applicants documents such as bank statement, salary slip etc. Hence the interview sheet contains the important findings which the employee has collected after careful review of the various documents .The interview sheet helps to cut corners and helps save time by not having other employees to go through the documents again and again .It hence acts as a source of quick reference. After all this has been performed well enough the loan application will be arranged in a file and all it will be given its loan a/c no which also acts as its

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file no. the file is now ready to be sent to the HUB where further processing will take place.

SCANNING: In this stage the various important documents of the applicant are scanned. This helps to create their electronic copy which acts as a ready reference, a proof, and can also be shared and utilized by other employees of HDFC Ltd. DATA ENTRY: The file has been sent to the back end office or the HUB. At HUB there are many experts with their own specializations. These officials review the various parts of the file again and perform many specialized tasks Data entry is also one of these tasks .this entry is much more different and complex as compared to the earlier performed Quick Data Entry. An exhaustive amount and type of information has to be entered into the ILPS system ranging from Personal Details, Employment Details to Property Rate History and Customer Interactions. RECOMMENDATION OVER (ROVR):The Recommendation OVER is also referred to as the First Appraisal at this stage certain specially appointed persons have been given the responsibility of recommending a loan. These people have to take special care of reviewing every document, and all the small details that need to be considered before considering the loan application to be valid. After this the
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file is sent to another specially appointed person as explained below. At this stage if any correction or mistake is present it can be sent back to the Service Centre.

DOUBLE CHECKING OVER (DCOR): As the name suggests at this stage a specially appointed person will double check all the past proceedings .He will examine the Loan file for any discrepancies ,any missing and /or misplaced documents ,the Credit Appraisal results, etc. this is a very important stage and must be handled with exceptional care. This is because a mistake at this stage can cause a great loss to the company. The Double checker is responsible for the ultimate sanctioning of the loan .If any mistake is done at this stage there is no going back and hence no protection. HDFC takes great care while appointing double checkers .They should have completed a select number of years with the company and should have shown exemplary performance and must possess experience. SANCTIONING:An authorized sanctioning authority within HDFC itself will review the remarks of Double Checker and Sanctioning authority .If It considers the loan suitable to be Sanctioned it gives its approval .After it has given its approval stamp the ILPS system will automatically send a letter to the Applicant that his loan has been sanctioned. After this approval the

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Applicant can go to whichever Service Centre which he selects to get his loan disbursed. SPECIAL CASE: A special case can arise if the applicant has not mentioned the property for which he wants to take a loan .In that case the applicant can let the case be remain pending. This means that the Applicants loan request will be considered to be complete even though he has not decided the property. However the Applicant is expected to finalize the property in a short time. A Property Address is necessary to 1. Get the loan disbursed 2. Process the Legal and Technical Appraisal of the property and its Papers. DISBURSEMENT: - The last and final stage in the Home Loan process is that of disbursement. After the sanctioning has taken place the applicant becomes a registered customer of HDFC Ltd. He can now take the disbursement of the loan from any of the various service centre of HDFC .The loan shall be disbursed in one Lump sum or unsuitable installments to be decided by HDFC with reference to the need and/or progress of construction (which decision shall be final and binding on the borrower).The borrower hereby acknowledges the receipt of the loan disbursed as indicated in the receipt.

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Conclusion
The rising cost of residential accommodation has led to the popularity of Home Loans in India. Home loan is the finance borrowed from a bank or financial institution to buy or modify a residential real estate property. Any Resident or Non-resident individual who is planning to buy a house in India can apply for a Home loan. If you have decided to buy a property in the near future you can even apply for a loan before you select your property. It becomes easier if the property you are planning to buy is in a condominium or township that is pre-approved by a bank or financial institution. The steep rises in the real estate prices in India are mainly due to the disparity in supply and demand of quality residential accommodation. The largest group of the Indian demography, the middle-class Indian population avails the major bulk of home loans in India. Home loans are facilitated by all public and private sector banks operating in India. Financial institutions specializing in home financing are also cashing in on the latest boom in home loans.

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The recent downturn in the economy resulted in buyers constituting the 'endusers' segment rather than investors and speculators. Since the new class of buyers is a relatively younger set of customers, more aware of legal documentation, approvals and due diligence, we have seen the much-needed professionalism and accountability become more prevalent in the industry. Today, the amount of money that a city dweller spends on rent is roughly the same, or only slightly less than the amount he pays as the EMI (Equated Monthly Installments) on a housing loan. Home loans are made available by financial institutions to both Indian and NRI applicants at floating or fixed rate of interest and also at attractive EMI options: For construction or buying a new home For purchase of plots for construction of house For home repairs and renovations or extension of an existing house or flat Against mortgage of property Purchase of home consumer durables and furnishings as included in the project cost The buyers should try to take loan from established banks and financial institutions that screen the entire project before approving a loan for an apartment or plot in that project. In the course of approving a project, these institutions ensure that the developer has all the requisite approvals and sanctions. The government has recently announced interest rate subsidy of 1% for housing loans up to Rs. 10 lakhs and earmarked Rs. 1,000 crores for the scheme. The subsidy of 1% will be available for the first 12 EMIs on loans up to Rs. 10 lakhs for houses costing less than Rs. 20 lakhs.

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For those planning to take a loan to buy a house, there is good news. The prevailing home loan rates from nationalized banks and housing finance companies are fairly reasonable: State Bank of India (SBI): 8% 8.5% for Rs. 30-50 lakhs loan for 20 years (8% fixed for 1st year and 8.5% fixed for the next two years) Punjab National Bank (PNB): 8.5% for Rs. 30 lakhs and 9.25% for Rs. 3050 lakhs loan for 20 years (fixed for three years) Life Insurance Corporation (LIC): 8.75% for Rs. 30-50 lakhs loan for 20 years (floating home loan rates) HDFC: 9% for Rs. 30-50 lakhs loan for 20 years (floating home loan rates) ICICI: 9.25% for Rs. 30-50 lakhs loan for 20 years (floating home loan rates) Dewan Housing Finance Corporation Limited (DHFL): 9.25% for Rs. 3050 lakhs loan for 20 years (floating home loan rates) Further, various banks and finance companies are coming up with schemes ahead of Diwali. Deals include low, adjustable introductory rates for initial years, with some lenders giving the option to shift to either fixed or floating rates in subsequent years. Lenders like Canara Bank, Bank of Maharashtra and Dena Bank are offering fixed-rate loans for the first 5 years, and subsequently, linking the loans to their prime lending rates. While others like Bank of India are offering fixed-rate loans for the first 2 years. Indias largest bank SBI is offering fixed rates for the first 3 years. Development Bank of Credit introduced a fixed rate of 7.95% for the first year, the lowest, at least, for the first year. Moreover, in order to attract investors, Housing Finance Companies are offering incentives like:
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Free accident insurance & property insurance Waiving of pre-payment penalty & processing fee My advice to all prospective home buyers: Be diligent, be bold and fulfill your dream as it is a buyers market at present. Just one word of caution; check the credentials and track record of the Developer you are buying from.

Bibliography
www.rbi.org.in www.scribd.com www.edenblog.in www.home-loans-info-4u.com www.ravikarandeekarsblog.blogspot.com www.indiadaily.org www.metroplots.com www.ehow.com www.google.com

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