TARGET SEGMENT

• EMPLOYED/ SALARIED

• SELF EMPLOYED

 PROFESSIONAL (SELF EMPLOYED PROFESSIONAL)

 BUSINESSMAN (SELF EMPLOYED NON PROFESSIONAL)

• NON RESIDENT INDIAN(NRI)

 TECHNICAL ANALYSIS

1. Area Location – Good location in terms of Roads, Infrastructure, water facilities

etc.

TARGET LOCATION

• Gajraula
• Pilibhit
• Rampur
• Bilsi
• Moradabad
• Badaun
• Sitargang

2. Plot Area – Minimum plot area should be 100 sq. meter

• Below 100 sq.m approved map is not required.
• 100-300 sq.m then map submission (either approved or not) should be submitted.
• 300 sq.m above approved map required.

3. Covered Area – Minimum covered area should be 60-80 sq.meter in 100 sq.meter plot.

4. Quality of Construction should be good in terms of material used.

5. Standard Rate of Construction – Rs.6500-7500 per sq. meter (as per HDFC Ltd norms).
LEGAL FORMALITIES

• Title Search Report / Non Encumbrance Certificate -The search report traces the
history of the property that is who the original owners of the property were and how it
has been transferred over time before reaching the present seller. It also traces out any
charges or encumbrances created on the property and the present status. This search on
the title of the property is for a period of the past 12 years.

• Previous Linked Chain Document (Khatauni) -Khatauni is the register of all persons
cultivating or otherwise occupying land in a village as prescribed according to Delhi
Land Revenue Rules. It is a document prepared as part of record-of-right in every estate.
It contains entries regarding ownership, cultivation and various rights in land. It is revised
every 4 years when it is prepared by Patwari and attested by Revenue officer.

• Agreement to Sale - Written agreement between seller and purchaser in which the
purchaser agrees to buy certain real estate and the seller agrees to sell upon terms of the
agreement.

• Field Credit Investigation (FCI) - Appraisal of a prospective borrower's ability and

willingness to repay a loan, carried out by a credit analyst . Before approving a loan, a
lender may ask for credit references and personal or corporate financial statements,
obtain a copy of the applicant's credit report , and also verify the applicant's salary with
his or her employer.

• Credit Investigation bureau India Ltd. (CIBIL)-Comprehensive credit information,

which provides details pertaining to credit facilities already, availed of by a borrower as
well as his payment track record.
SALARIED EMPLOYEES

DOCUMENTS

1. Application form with photograph

2. Salary slip (private employee’s min. last 3 months)/

Salary certificate (govt. employee’s last month).

Form-16(mandatory) / Income tax return

• For employees whose salary is Taxable?
• For govt. employee’s General Provident Fund /Form-16.

Bank Statement(6 months)

• Current 6 months salary reflected in salary a\c (after deductions) of expenses.
• Net salary slip match with his Bank salary a\c statement.
• Loan statement/Repayment track record of early loans (borrowings) if any.

5. Know your customer (KYC) is the due diligence and bank regulation that financial
institutions and other regulated companies must perform to identify their clients and
ascertain relevant information pertinent to doing financial business with them.

6. PAN CARD (mandatory) for ID and Age proof.

7. Address Proof (Ration card, Telephone bill, Voter Id card).

8. Processing fee cheque.

9. Detailed cost estimate from architect/engineer for the property to be constructed

/renovated.

10.Property documents (Allotment letter, NOC etc).

11.Track Record of other loans if running any loan.

SELF EMPLOYED PROFESSIONAL

DOCUMENTS
1. Application form with photograph.

2. Identity and Age proof- PAN CARD.

3. Residence Proof- Ration card, Voter Id card, Telephone bill.

4. Education Qualifications Certificate.

5. Proof of business existence.

6. Last 3 years Income Tax returns (self and business).

7. Last 3 years Profit/Loss and Balance Sheet (C.A audited).

.
8. Last 6 months bank statements.

9. Processing fee cheque.

10. Detailed cost estimate from architect/engineer for the property to be constructed /
renovated.

11.Property documents (Deed, Agreement to sale).

12.Track record of other loans if running any loan.

SELF EMPLOYED BUSSINESSMAN

DOCUMENTS

1. Application form with photograph.

2. Identity and Age Proof- PAN CARD.

3. Residence Proof- Ration card, Voter Id card, Telephone

bill.

4. Education Qualifications Certificate.

5. Proof of business existence.

6. Business profile.

7. Last 3 years Income Tax returns.

8. Last 3 years Profit/Loss and Balance Sheet (C.A audited).

9. Last 6 months bank statements (self and business).

10. Processing fee cheque.

11. Property documents (Allotment letter, NOC etc).

12. Track record of other loans if running any loan.

TYPES OF LOANS

1) PURCHASE/ RESALE PURCHASE LOANS.

2) HOME CONSTRUCTION LOANS.

3) BUILDER PURCHASE LOANS.

4) HOME IMPROVEMENT LOANS.

5) HOME EXTENSION LOANS.

6) HOME EQUITY LOANS.

7) TOP – UP LOANS
1) RESALE PURCHASE

DOCUMENTS

• Sale to Agreement (registered).

• Previous linked chain document (Khatauni).

• Tile cum Search Report (TSR).

Evaluation of Purchase Loans

• Paying capacity for EMI (calculated on the basis of fixed obligation income ratio).

• Valuation of property done by Valuer of HDFC. (80% of valuation cost is calculated

for availing loan amount).

• Agreement cost according to market value (85% of estimate are calculated for availing
loan amount).

COSTING MAXIMUM LOAN AMOUNT

• Agreement Cost 85% of Agreement Cost

• Valuation Cost 80% of Valuation Cost

 Maximum loan amount will be decided on the amount whichever is less among them.

MAXIMUM TERM

20 years subject to your retirement age

 HOME CONSTRUCTION LOANS

DOCUMENTS

Title cum Search Report.

Map estimate (mandatory).

 Below 100 sq.m Plot approved map is not required.

 100-300 sq.m Plot then map submission (either approved or not) should be submitted.
 300 sq.m above Plot approved map required.

MAXIMUM LOAN AMOUNT

 Maximum loan amount will be calculated on basis of 85% of estimated cost

(Agreement Cost).
BUILDER PURCHASE LOANS

DOCUMENTS

• Allotment letter from builder.

• NOC from builder.

• Demand letter from builder.

• Tripadide Agreement- It is an agreement between HDFC, Builder & Customer that the
original deed should be submitted at HDFC (head office) till the whole tenure of loan.

• Own Contribution Receipt- Receipt of customer own contribution in project mainly 15-20%
of cost.

• Bank NOC – A particular Flat/Home where the funding for builder is done by other
bank & loan to customer are given by other bank (HDFC) so NOC is required in that
case by HDFC from other bank who is providing funding to builder.

MAXIMUM LOAN AMOUNT

 Maximum loan amount will be calculated on basis of 85% of estimated cost (Market
value).

SECURITY

Security for the loan is a first mortgage of the property to be financed, normally by way
of deposit of title deeds and/or such other collateral security as may be necessary.
 HOME IMPROVEMENT LOAN

DOCUMENT

Title cum Search Report.

Map estimate of covered area.

Estimated cost of material used.

MAXIMUM LOAN AMOUNT

Existing Customer
85% of the cost of improvement

New Customer
85% of the cost of improvement Subject to market value of the property.

MAXIMUM TERMS

15 years subject to your retirement age.

SECURITY

Existing Customer
Extension of the mortgage already created on the property financed and/or other
security as may be required by HDFC.

New Customer
For others, security for the loan is a mortgage on the entire property being improved
and/or other security as may be required by HDFC
HOME EQUITY LOANS

TYPE OF PROPERTY

• Non Residential Property.

-Should be Fully Constructed
-Should be a Freehold property having a clear and marketable title.

• Residential Property.

MAXIMUM LOAN AMOUNT

Existing Customers
- Balance of 60% of the market value and present loan outstanding.

New Customers
- 50% of the market value of the property (including the cost of the land).
Subject to
- Minimum Market Value of the property being Rs.5,00,000 for Residential property
and Rs.7.50 Laces for Non Residential Property.

Repayment Capacity of the customer

MAXIMUM TERMS

Property Type Repayment Option No. of Years

Residential EMI Based 15

Non Residential EMI Based 10

Residential and Non Residential Simple Interest 2

SECURITY

Security for the loan is a first mortgage of property against which HDFC has advanced the
loan. In addition, HDFC may request for additional, interim, collateral security. Liquid
securities in the nature of shares, fixed deposits etc. may be accepted as additional
securities on a selective basis.
6) HOME EXTENSION LOANS

PURPOSE

HDFC Home Extension Loan makes it convenient for you to extend or add space to your
home. Be it an additional room, a larger bathroom, or even enclosing an open balcony.

DOCUMENTS

• Map Estimate of extendable area.

• Market Valuation.

MAXIMUM LOAN

85% of the cost of extension.

MAXIMUM TERM

20 years subject to your retirement age.

7) TOP – UP LOANS

PURPOSE

This product offers an existing residents Indian customer a loan against the mortgage of
the existing property. It helps in encashing the investment in a house without having to
dispose it off to fund various needs related to Higher Education, Purchase of Furniture,
Business Requirements, etc.

MAXIMUM LOAN AMOUNT

• 60% of the market value of the property less the outstanding loan and is subject to the
current loan eligibility.

MAXIMUM TERM

• The maximum term of the loan is 10 years.

• Top up loans can given after 1 to 2 years (based on our discretion), of the final
disbursement of the existing loan or upon possession/completion of the existing
financed property.

PROCESSING FEES

• 0.5% of loan amount + service Tax @ Rs.551.50 per lakh (10%)+ Education
cess(3%).
 For Existing Customer rebate of 0.25% of loan amount.
 HDFC SALES PROCESS
1. Follow up with customer (introduction).

2. Lead Generate- After follow up with customer lead no. generated and information
to be recorded about customer for future loan purpose & mailed to coordinator of
HDFC which further inform sales executive in near future about customer requirement.

3. After Follow up and lead generate customer may takes time to take loan.

4. When customer agree to take loan then Personal discussion with Resident Manager
done.

Mandatory document for personal discussion

• KYC
• Income documents

5. If customer disagrees to take loan then File returned to customer.

If customer agree to take loan.

Filling of documents.
KYC
Personal Discussion sheet
• Checklist
File Prepared
Generate Reference No.
File Submitted to HDFC
Receiving recorded

It will take maximum 7 days for loan sanction.

RATE OF INTEREST

Target Segment Floating Rates

Employed 8.75%
Self Employed Professional(SEP) 8.75%
Self Employed Non Professional(SENP) 9.25%

At Floating rate rebate of 5 %(+,-) adjustable according to PLR (Prime Lending Rate)
  PLR -The loan interest rate a financial institution
uses as a base to calculate interest rates, Currently PLR is 13.75%.

DISBURSEMENT SCHEDULE

Various Case to Case ( 3 part payments)

STAGES LOAN AMOUNT

• DPC level (Foundation level) 50%

Slab level 30%

After plaster(Inner/Outer) 20%

Resale Purchase – One time payment or disbursement through panel lawyer.

Refinance (Flat Purchases) – Cheque handed over to customer directly.

Extension/ Improvement – Part Payment.

Documentation before Disbursement

Construction
Deed of customer.
Original documents like PAN card, Bank Statements, Property doc. are checked.
Mortgage of registry.

Purchase
• A/c payee cheque in the name of seller.
• Property documents are checked.
• Mortgage of registry.
 Analysis of Home Loan of HDFC

LAF (Loan Appraisal Form)

Repayments terms agreed:

• IIR( Installment to Income Ratio)

• FOIR( Fixed Obligation Income Ratio)

• LCR( Loan to Cost Ratio)

• LTV( Loan to Value Ratio)

Formulae to be used:

1. IIR = E.M.I / Salary * 100

2. FOIR = E.M.I + Obligation / Salary * 100

3. LCR = Loan Amount / Agreement Cost * 100

4. LTV = Loan Amount / Valuation Cost * 100

5. Maximum Loan Amount = Min. 45% of income / E.M.I

6. Maximum Loan Amount = 85% of Agreement Cost( Estimate Cost )

7. Maximum Loan Amount = 80% of Valuation Cost

8. E.M.I = EMI on 1 Lakh as per current rate * Loan Amount

NOTE- Maximum loan amount will be given on the basis of amount which ever is less
among 85% of agreement or 80% of valuation.
 SALARIED CASES

1. A person X has gross salary of Rs.14,000 per month and he applied for
loan of Rs.500,000 for 17 years. He has no obligation of any type.

Purpose is Home Construction

Rate of Interest is 9 % on Floating Rates

Estimated Cost of Construction is Rs.5 lakh

Total Plot Area is 177.75 sq m

Repayment Terms Agreed:

Maximum Loan Amount = 85% of Estimated Cost

Maximum Loan Amount = 85% of Rs.5 lakh = 4.25 lakh

Alternate Method

Maximum Loan Amount = Min 40% of Income / EMI on 1 lakh for term agreed

Maximum Loan Amount = 40% of 14,000 / 959 = Rs.5.84 lakh

Conclusion
Finance Corporation will consider 85% of Estimate Cost in giving loan in place of 40%
of Income as his repaying capacity because they will not give loan above the cost of
construction as well as he should also make his own contribution i.e. 15% of cost of
construction. He applied for Rs.500000 but he can’t be given loan above Rs.425,000.

Now Loan Amount = Rs.425,000

EMI = Rs.959*4.25 = Rs.4,075

NOTE – Rs.959 is EMI on Rs.1 lakh at 9% rate of interest for 17 years as per EMI
Chart.

IIR (%) = EMI / Salary * 100

IIR (%) = 4,075 / 14,000 * 100 = 30%

Conclusion
 Since Installment to Income Ratio is less than 45% so customer can easily pay EMI
so Finance Corporation easily credits such customer as they are in safer side.

FOIR (%) = (EMI + Obligation) / Salary * 100

FOIR (%) = (4,075 + NA) / 14,000 * 100 = 30%

Conclusion
Since there is no obligation of any type on X, so FOIR will be same as IIR which is
less than 45% so Finance Corporation can easily give credit to such customer.

3. LCR (%) = Loan Amount / Agreement Cost * 100

LCR (%) = 425,000 / 500,000 * 100 = 85%

Conclusion
Since Loan to Cost Ratio is 85% so Finance Corporation will easily give credit
because they consider 85% of the agreement cost of construction for maximum loan
amount. They will not give credit above 85% of agreement cost otherwise they will
be in Risk from such customer.

Note – In Construction cases we don’t calculate LTV because Bank isn’t

considering the valuation of property for giving loan.

Fees charged – 0.5% of 425,000 = Rs.2125 + 10.3% (S.T + Edu. cess) = Rs.2344
2. A person Y has gross salary Rs.58,835 per month he applied for loan
amount of Rs.2,800,000 for flat purchase for the period of 20 years.
He has obligations:
Obligation EMI Balance Terms

HDFC Loan Rs.7,300 till 2011

HSBC Loan Rs.3,400 till 2011

Purpose is Flat Purchase

Terms agreed for 20 years

Rate of Interest is 9% on Floating Rates

Flat Purchase Cost/Valuation is Rs.3400,000

Repayment Terms Agreed:

Maximum Loan Amount = (Min. 50% of Income - Obligation) / EMI on 1 lakh for term
agreed

Maximum Loan Amount = (55% of 58,835 – 10,700) / 900 = 21,660 / 900 = 24 lakh
(max.)

Alternate Method

Maximum Loan Amount = 85% of Valuation Cost

Maximum Loan Amount = 85% of 3400,000 = Rs.2,890,000

Conclusion

For the evaluation of loan amount Finance corporation consider that amount which is
minimum among them so he will be given only Rs.24 lakh but he applied for 28 lakh so
he has to stop his HDFC(loan) obligation of Rs.3,400/p.m to get loan of Rs.28 lakh.

Then, Maximum Loan Amount = (32360 – 7300) / 900 = 28 lakh

EMI = EMI on Rs.1 lakh for terms agreed * Loan Amount

EMI = 900 * 28 = Rs.25,200

1. IIR(%) = EMI / Salary * 100

IIR (%) = 25,200 / 58,835 * 100 = 43%

Conclusion