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Home Loan FAQs Made Easy.

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Home Loan FAQs Made Easy.

Last updated: August 14 2016
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  • #21

    #21

    Re : Home Loan FAQs Made Easy.

    I came to know about an insurance where if the home loan borrowers dies, the remaining EMIs are paid by the insurance company till the end of tenure. Does anyone has more info on this?
    If you are happy, you are successful.

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    • #22

      #22

      Re : Home Loan FAQs Made Easy.

      BoB Baroda offer the same with their home loan "FREE oF COST"...

      BoB Provide both insurance to property as well as to borrower life Free of cost, like if anybody has taken loan of 30 lacs & at the time of any unfortunate events either with property or to Borrower rest of the money will be paid by the insurance company to BANK....By doing this actually bank is insuring its own loan Smart enough isnt it

      I think they have tied up with NIC for this insurance...so one can also take this insurance by his own from NIC or there might be other insurance companies also offering the same insurance...

      Originally posted by realacres View Post
      I came to know about an insurance where if the home loan borrowers dies, the remaining EMIs are paid by the insurance company till the end of tenure. Does anyone has more info on this?
      Cheers,
      -Ashish

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      • #23

        #23

        Re : Home Loan FAQs Made Easy.

        Originally posted by realacres View Post
        I came to know about an insurance where if the home loan borrowers dies, the remaining EMIs are paid by the insurance company till the end of tenure. Does anyone has more info on this?
        Hi Real

        Why would insurance company pay EMIs (which means additional interest)? I think the model should be simple... insurance company will pay the remaining principal and will close the loan account.

        I think the banks which are offering free insurance, are using term insurance only. In the fortunate case where the borrower is able to clear all the loan, he/she wont get any returns from the insurance company. but that is fine.

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        • #24

          #24

          Re : Home Loan FAQs Made Easy.

          What is Moratorium period in home loan?

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          • #25

            #25

            Re : Home Loan FAQs Made Easy.

            SBi provides property insurance or some other insurance free....any idea about that?

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            • #26

              #26

              Re : Home Loan FAQs Made Easy.

              This is a period starts after first disburesement till the possesion date, in which you pay interest on the disburese amount. EMi starts after this period.

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              • #27

                #27

                Re : Home Loan FAQs Made Easy.

                Mystified by the jargon when you are taking a home loan?

                Does the terminology used by housing finance professionals leave you feeling confused? That's not a problem you can afford when you are taking one of the most important decisions of your life! So here's a quick rundown of some of the terms you may come across while doing a property deal.

                EMI: This is the abbreviation you will most commonly hear while talking to finance professionals. EMI is an Equated Monthly Instalment and is a fixed amount payable every month. The EMI is broken up into principal and interest. This break up of the EMI is never constant and keeps changing from month to month, year to year. However, the EMI remains constant over the tenure of the loan.

                PEMI: This refers to the Pre EMI that you pay when your loan is partly disbursed. In home loans, the disbursement is made as per the stage of construction of the property. When your loan is partly disbursed, you cannot start paying your EMI. Instead, you pay simple interest on the part amount drawn by you at the rate that is applicable to you. This is called PEMI.

                DMA/DSA: Direct Marketing Associate / Direct Sales Associate. This is an agency of a financier, which takes care of customer sales and service. He or she is the person who is often the first point of contact and ought to be able to answer any queries you may have, in addition to smoothening the home loan process.

                AC: Additional Charges (AC), are levied by HFIs that are over and above the delayed payment charges (DPC). In other words, charges on the DPC, in case of a further delay on your part to pay the instalment due, are termed as Additional Charges.

                AF: Administrative Fees (AF) are charged by a HFI on the loan amount sanctioned to you. This fee is normally payable at the time of accepting the offer letter. It is charged mainly to meet the operating expenses of the loan amount for the entire tenure. The expenses for technical site visits made to the property are also covered under this fee.

                IIR: The Installment to Income Ratio (IIR) is a term very commonly used by HFIs to calculate your loan eligibility. It is generally expressed as a percentage. This percentage denotes the portion of your monthly installment on your home loan. This figure can vary on the basis of actual salary details, qualifications, employer / business, years of experience, growth prospects and sources of other income.

                IC: Incidental Charges (IC) are levied by some HFIs for visits made by the collections team to the customers' houses who have delayed the payment of instalment.

                NOC: This is a document required by all HFIs from the concerned authority in cases where you are not the owner of the land in which your property is being built. The authority depends on the type of property i.e. society if the society has been formed and conveyance deed executed. Builder if it is purchased from a builder directly or if the society has not been formed. Development authority if the property has been directly allotted by a development authority, etc. However, if the customer is building a property on a plot of land that he owns, a NOC is not be required.

                PF: Processing fees (PF) is charged at the time of submission of the application form and covers expenses incurred for processing the application form. The customer has to pay this upfront.

                PPC: Pre Payment Charges or PPC as it is known stands for the charges that you incur when you pay back the loan before the completion of the tenure. PPC varies from one HFI to another. It is either a percentage of the loan amount being prepaid or a flat value based on the amount of prepayment.
                If you are happy, you are successful.

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                • #28

                  #28

                  Re : Home Loan FAQs Made Easy.

                  Originally posted by realacres View Post
                  What you are talking about is Monthly reducing. Please don't get confused between Monthly reducing & Daily Reducing.
                  The interest component in EMIs in initial years is high compared to principal amount. So, a person might have paid EMIs worth INR 5L, but the principal amount maybe just about INR 30,000/-.

                  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.

                  Total amount (EMI) is made up of Principal amount (P) + Interest amount (I)

                  Here you save some component of interest as principal amount is paid from day one, the amount is adjusted on pro-rata basis which makes EMIs less compared to other system & hence total EMIs value is less in daily reducing system.

                  However, I don't think all banks follow this system. Get it checked from your bank. If yes, opt for the same.
                  I have read somewhere that as per historical data, difference between daily reducing EMIs and Yearly Reducing EMIs can be to the tune of 0.7% on total loan amount....

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                  • #29

                    #29

                    Re : Home Loan FAQs Made Easy.

                    Regarding Insurance, SBI has 2 options.
                    1> Property Insurance (Mandatory)
                    2> Life Insurance.

                    1> Property Insurance (Mandatory)
                    Atleast it was mandatory a few months ago, when I took the loan.
                    They have waived off the processing fee, but smartly added PI. Money still goes under SBI hood.
                    This Insurance will be helpful in case of any disaster. Say borrower loses his flat due to earthquake/fire. SBI Life Insurance will pay money to SBI Home Loan deparment. Borrower is from his loan.
                    This is 1 time amount charged to you.
                    I took a loan in August and they charged the amount in December.

                    2> Life Insurance.
                    This is optional. This like our routine LIC. Borrower, even here, doesn't get back anything.
                    Unfortunately, in case of any bad news regarding the borrower, SBI Life Insurance will pay money to SBI Home Loan department.
                    This amount is higher as compared to Property Insurance.
                    But on the contrary, this is added to borrower's EMI. Thus the EMI increases by around Rs 300-400 per month depending on the cost of the flat and Insurance.
                    This is a good option. It is worth paying 40K for a flat of 30L.
                    At least the family has a place to live.

                    Regarding SBI Home Loans:
                    As far as my knowledge is concerned, all home loans are processed at the RACPC office of SBI at Shankar Sheth Road.
                    No matter in which branch borrower applies for Loan in Pune. Borrower will have to go to Shankar Sheth Road at-least once.

                    PS: I'm not aware of any new processes.

                    Loan processing takes time. And yes, it takes a good amount of time.
                    I don’t want to comment here on their way of working or speed or anything else. But yes it takes time.
                    The scheme is good. They scrutinize the papers (borrowers as well as builders) in a very detailed manner.

                    If the builder has sanctioned the entire site from SBI then life will be a bit easier. But still it will take time.

                    It entirely depends on the Marketing Executive who is handling the case. If he knows what documents are required at first place, then things work faster.

                    The list of documents is also pretty big.
                    2 important documents are the plan (blue print) and Commencement Certificate.
                    Usually Marketing Executives are unaware of these documents. And later on these are added to the list.
                    Such small things actually delay the process. If they can provide the entire list at first place, the loan can be sanctioned much faster.

                    I don’t want to provide more information here as SBI might file a case on me for leaking their process.

                    In case if anyone is looking for a home Loan from SBI he has to have patience.

                    Regards,
                    Abhijeet.

                    Comment

                    • #30

                      #30

                      Re : Home Loan FAQs Made Easy.

                      The entire process in SBI is different from other private banks e.g. HDFC, ICICI. SBI touch your file only after the aggrement done this is a major disadvantage for buyers. They don't give you senction letter as pvt banks give after submitting your documents. These days SBI is giving in principal approval letter in a single day which is use less.Once your aggremet done
                      SBI starts its process as follows.
                      - CIBIL check
                      -Evaluation report
                      -Search report
                      {It takes 15 days and complete at branch label where did u apply for loan}.
                      Once its okey then file send to RACPC branch
                      - Secrutiny check
                      -house\employemnt verfication
                      - Then they senction the amount for your loan...
                      {Senction process takes 21 days after the aggrement,}
                      Once your sentioning done, 5-7 days for disbrussment..
                      One month is ideal time, if you take loan from SBI.
                      It can vary if..
                      - If project has complication and not approved by SBI
                      -CIBIL is not ok
                      - Service gap in last 3 years
                      - There are long weekends in month
                      Then it takes 2-3 months

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