Hello there,

Just thought to post something related to RE but not yet discussed on this forum. Hope you all find this info useful.


What are the types of home loans available?
There are a variety of home loans available. They are:


    HOME PURCHASE LOAN
    This is the common loan for purchasing a home.
    HOME IMPROVEMENT LOAN
    This loan is given for implementing repair works and renovations to your home.
    HOME CONSTRUCTION LOAN
    This loan is available for the construction of a new home.
    HOME EXTENSION LOAN
    Home extension loans are given for expanding or extending an existing home. For example, addition of an extra room, etc.
    HOME CONVERSION LOAN
    Available for those who have financed the present home with a Home Loan and wish to purchase and move to another home for which some additional funds are required. Through a Home Conversion Loan, the existing loan is transferred to the new home, including the additional amount required, eliminating the need for pre-payment of the previous loan.
    LAND PURCHASE LOAN
    This type of loan is sanctioned for purchase of land, for both home construction or investment purposes.
    BRIDGE LOAN
    The Bridge Loan is designed for people who wish to sell the existing home and purchase another. The bridge loan helps finance the new home, until a buyer is found for the old home.
    BALANCE TRANSFER LOAN
    Balance Transfer loans help you pay off an existing home loan with a higher interest rate, and avail of a loan with a lower rate of interest.
    REFINANCE LOAN
    This loan helps you pay off the debt you have incurred from private sources such as relatives and friends, for the purchase of your present home.
    STAMP DUTY LOAN
    This loan is sanctioned to pay the stamp duty amount that needs to be paid on the purchase of a property.
    LOANS TO NRIs
    This loan is tailored for the requirements of NRIs wishing to build or buy a home in India

    What is an EMI?
    EMI (Equated Monthly Installment) is the amount payable to the lending institution every month, till the loan is paid back in full. It consists of a portion of the interest as well as the principal.
    How is an EMI calculated?
    EMI Formula: l x r x 1/12
    l = loan amount
    r = rate of interest
    n = term of the loan
    What are the incentives offered by lending institutions?
    a) Some of the lending institutions sanction the loan without requiring you to identify property as a prerequisite for eligibility
    b) Free accident insurance
    c) Discounts
    d) Waiving of pre payment penalty
    e) Waiving of processing fee
    f) Free property insurance
    What are the eligibility conditions for a home loan?
    To qualify for a home loan, most of the lending institutions in India require you to be:
    a) An Indian resident or NRI
    b) Above 21 years of age at the commencement of the loan
    c) Below 65 when the loan matures
    d) Either salaried or self employed
    What are the interest rates offered for home loans? What are: Daily Reducing, Monthly Reducing and Yearly Reducing?
    Interest rates are different from institution to institution and generally range from about 9.25% to around 12 %. The interest on home loans in India is usually calculated either on monthly reducing or yearly reducing balance. In some cases, daily reducing basis is also adopted.
    Annual reducing:
    In this system, the principal, for which you pay interest, reduces at the end of the year. Thus you continue to pay interest on a certain portion of the principal which you have actually paid back to the lender. This means the EMI for the monthly reducing system is effectively less than the annual reducing system.
    Monthly reducing:
    In this system, the principal, for which you pay interest, reduces every month as you pay your EMI.
    Daily Reducing:
    In this system, the principal, for which you pay interest, reduces from the day you pay your EMI. EMI in the daily reducing system is less than the monthly reducing system.
    What is the best way to select the cheapest home loan?
    Keep the loan period constant and calculate the total amount paid for the home through the different loan options available.
    What is a fixed rate of interest?
    Some institutions have a fixed rate of interest, which means the rate of interest remains unchanged for the entire duration of the loan. This means you do not benefit, even if rates of interest drop in the market.
    What is a floating rate?
    This is the rate of interest that fluctuates according to the market lending rate. This means you stand the risk of paying more than you budgeted for in case the lending rate goes up.

    What are the other costs that usually accompany a home loan?
    Home loans are usually accompanied by the following extra costs:
    a) Processing Charge: It's a fee payable to the lender on applying for a loan. It is either a fixed amount not linked to the loan or may also be a percentage of the loan amount. The loan amount required by you cannot be less than the processing fee.
    b) Pre-payment Penalties: When a loan is paid back before the end of the agreed duration, a penalty is charged by some banks/companies, which is usually between 1% and 2% of the amount being pre-paid.
    c) Commitment Fees: Some institutions levy a commitment fee in case the loan is not availed of within a stipulated period of time after it is processed and sanctioned.
    d) Miscellaneous Costs: It is quite possible that some lenders may levy a documentation or consultant charges.
    e) Registration of mortgage deed.

    What are the repayment period options?
    Repayment period options range generally from 5 to 15 years.
    How do HFCs decide on the loan amount?
    Usually, most companies give up to a maximum of 85% of the cost of the house. The 15%, sometimes called 'seed money', will have to be provided by the loan applicant. The amount, for which the applicant is eligible, is determined by the age, income, no. of dependents, monthly outgoing and repayment capacity. This varies from case to case.

    Are securities required for home loans?
    In most cases, the property to be purchased itself becomes the security and is mortgaged to the lending institution till the entire loan is repaid. Some institutions may ask for additional security such as life insurance policies, FD receipts and share or savings certificates.
    Do I require a guarantor to get a home loan?
    Some institutions ask for 1 or 2 guarantors, others require no guarantor at all.
    What is the time required for loan application approval?
    About 10-15 days.
    What is the time required for loan disbursement?
    On an average, loans are disbursed within 3-15 days after satisfactory and complete documentation and completion of all relevant procedures, including proof that 15% of the cost has been paid upfront to the seller of the property.
    Can I make joint applications for home loans?
    Most institutions are willing to consider the joint incomes of the applicants for deciding the loan amount. Some institutions do not require the co-applicants to be co-owners of the property to be purchased.

    What are the tax benefits of home loans?
    Both principal as well as interest of home loans attract tax benefits. With effect from 1st April 2005 (i.e. assessment year 2005-07) under section 80C of the Income Tax Act 1965:
    Principal amount of repayment of loan along with other savings such as PF, PPF, Life Insurance premium etc up to a maximum of Rs 1,00,000/- will be eligible for deduction from gross income.
    Interest paid on loan after completion of construction will be deductible from income from property
    For self occupied - Income will be treated as nil and interest payment will be treated as minus income which will be adjusted against other income.
    For rental property - It will be adjusted against rental income.

    contd....
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  • I guess they still have their fixed interest scheme of 8% fixed for 1 year.
    And further 8.5% (or I guess 8.25%, don't remember) fixed for next 2 years.
    I'm not sure when that scheme is gonna get over.
    Check and get it confirmed with your local SBI branch.
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  • as far as my knowledge it ends by 31-March-2010.
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  • Private banks have already stopped this teaser rates scheme.
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  • Teaser rate schemes from PSU banks are ending on 31st March. HDFC has already stopped the sceme on Feb 27th.
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  • Deustche Bank has Home loan with 8.25% rate ...floating...is it advisable to prefer this versus our PSU banks ?
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  • Originally Posted by thatsnick001
    Deustche Bank has Home loan with 8.25% rate ...floating...is it advisable to prefer this versus our PSU banks ?

    When it comes to loans, especially long term loans, it is better to stick to Indian banks be it PSU or Private. Eg. We had taken car loan from Stan Chart bank. Later they closed their car loan dept & the loan was transfered to ICICI:o. Though the interest rates, duration remained the same, bank got changed (ICICI is useless bank). However, we didn't face much issues as we have a/c in Stan Chart. However, if at all there exists some discrepancies, you may be at the losing end in case of foreign banks. Hence, better stick to Indian banks as the loan is of long duration & that too individual one.

    Btw, Indiabulls too have intro 8.5% ROI for home loan, but Indiabulls is a bunch of thieves. First hand experience (I used to trade on market through them). So, better avoid these as well. These are baaps of ICICI when it comes to looting the customers.
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  • Private Banks are big crooks.....

    Go for PSU banks as far as possible...
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  • Why is it said that taking a home loan before 31st Martch is beneficial ???
    as it is ... for the floating rates... the new rates will apply...whenever you take loan ...

    am i missing something here?
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  • Originally Posted by thatsnick001
    Why is it said that taking a home loan before 31st Martch is beneficial ???
    as it is ... for the floating rates... the new rates will apply...whenever you take loan ...

    am i missing something here?


    You are correct. For floating rates, new rates will apply whenever they change.
    The special schemes having fixed rate of 8.25 or 8.5 for 2-3 years are ending on March 31st. Those who want to avail these schemes need to hurry.
    Anyways these schemes are gimmicks so no need to worry at all.
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  • Originally Posted by amjamirs2
    You are correct. For floating rates, new rates will apply whenever they change.
    The special schemes having fixed rate of 8.25 or 8.5 for 2-3 years are ending on March 31st. Those who want to avail these schemes need to hurry.
    Anyways these schemes are gimmicks so no need to worry at all.


    Thanks,.... But i suppose those have already been withdrawn ... no fixed rate scheme is available now ...
    I suppose currently ..the better ones are from BoB and HDFC ....
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  • Originally Posted by thatsnick001
    Thanks,.... But i suppose those have already been withdrawn ... no fixed rate scheme is available now ...
    I suppose currently ..the better ones are from BoB and HDFC ....


    SBI has last date of the scheme 31st march. But one of my firend said that they have stopped accepting new proposals for this scheme now. I am not sure if it is for any specific branch.

    BOB has good scheme going on. 8.75 for 15 yrs and 9.0 for more than 15 yrs. If you are employed in any of their preferred companies (many reputed companies are listed), you get a 0.25 percent lesser than current rate.
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  • Originally Posted by amjamirs2
    SBI has last date of the scheme 31st march. But one of my firend said that they have stopped accepting new proposals for this scheme now. I am not sure if it is for any specific branch.

    BOB has good scheme going on. 8.75 for 15 yrs and 9.0 for more than 15 yrs. If you are employed in any of their preferred companies (many reputed companies are listed), you get a 0.25 percent lesser than current rate.


    THATS NEWS? is this authentic info?
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  • Originally Posted by sanav3
    THATS NEWS? is this authentic info?


    Yes, check out their website
    http://www.bankofbaroda.com/int_adv.asp#retailloan

    This is floating interest rate.
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  • Originally Posted by amjamirs2
    Yes, check out their website
    http://www.bankofbaroda.com/int_adv.asp#retailloan

    This is floating interest rate.

    But man, it is a floating rate, hence how can that be constant for 15 yrs?
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  • Originally Posted by realacres
    But man, it is a floating rate, hence ho can that be constant for 15 yrs?


    THis is not fixed for 15 years. 15 years is the loan tenure. If you opt for a 15 years loan, interest rate is 8.75 and if you opt for a longer tenure, interest rate is 9.0
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