Housing Loan in SBI, Bellary.

HOME LOAN IN SBI
Introduction
Owing a piece of land or property is a lifetime dream for every individual. There are many Home Loans provider in the market to make your dream come true. But before opt for any home loan provider, need to consider certain factors related to property that interested in buying and also about the salient and also study some home loans in applying a home loan in India. Purchasing and moving into a dream home would generally rank among the top three things on the wish list of most people. A few decades ago finding a bank for financing Home Loan was not so easy. But now taking Home Loan has become very simpler. The RBI has been regularly stashing interest rates, with the result that Home finance loans that came at an interest rate of 16.5% to 18% four years ago are now available at 11.5% to 13% or lower. Each year the finance minister’s generosity during the budget seems to be slowly concentrated for the Home sector and construction sector. In their quest for attracting more and more customer for Home Loans most of the banks have sanctioned loans without taking applicant’s capacity to repay loan into consideration. The result: banks have to initiate legal process under securitization act. To avoiding legal complication a few private banks have embarked on to create awareness among the prospective application for Housing Loans.

Sree Guru Thipperudra College, Bellary.

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Housing Loan in SBI, Bellary.

Title of the study:
I have undertaken this project entitled “A study on Home Loans in State Bank of India, Main Branch, Bellary”.

Scope of stud
The fact that finance is the life blood of the every home finance company’s and it lies in the effective management to finance in organization. It is the largest source of mobilization of the resources makes it crucial that the funds are used effectively. This study helps to assess the effectiveness of the home loan system and the process of loan. And also assessing safeguarding of the interest of the both parties.

Objectives of the study
 To study the home loan practices in state bank of India  To study the home finance with reference to evaluating the process of loan in state bank of India.  To know the various schemes and types of home loans  To know the benefits of state bank of India home loans

Methodology of study
The value of any systematic and scientific research lies in its methodology giving a clear idea of the forms of the study and procedure adopted in conducting it and stating the purpose becomes essentials part of every study. Both primary and secondary sources of data are employed in this project report.

Sree Guru Thipperudra College, Bellary.

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Housing Loan in SBI, Bellary.

• Primary data
• Primary data is collected through interaction with the official at state bank of India • Primary data were collected by will prepared questionnaire by the respondents

• Secondary data • Bank profile were made use
• Through newspapers and magazines • Through internet

Limitation of the study
• The study was based on interaction with the officials at state bank of India main branch, Bellary. • The study was based on available information and documents. • Due to time limitation in depth study has not been carried in relating to few areas. • The study not based on the questionnaire.

Sree Guru Thipperudra College, Bellary.

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Housing Loan in SBI, Bellary.

POFILE OF THE REGION

Bellary district takes its name from the word Balari which refers to goddess Durugamma as this goddess had marijested herself in the town. Some of the events in the great epic Ramayana are related to this historical place. It is said that Rama while searching for Sita met Sugreeva and Hanuman at a place which is very near to Hampi, the celebrated capital of Vijayanagara kingdom. The history speaks volumes about significant role it acquired during Satavahanas, Kadambas, Chalukyas of Kalyana, Kalachuryas, Sevunas and Hoysalas period. There upon the Vijayanagara rulers built the “City of Victory “on the bank of Tungabhadra River at Hampi in Hospet Taluk. This area which had witnessed the prosperity to its peak fell into political turmoil after the fall of Vijayanagara in 1565. This district was transferred to the erstwhile Mysore State on 1st October 1953 from Madras State. With the re-organization of the districts during 1997, the number of taluks is reduced to 7. The Harapanahalli taluk has been transferred to Davanagere district. Bellary district is spread from South-West to north – East and is situated on the eastern side of Karnataka State. The district is situated between 14o 30’ and
Sree Guru Thipperudra College, Bellary. 4

It comes under the administrative control of Gulbarga division and development jurisdiction of H. This district is bounded by Raichur district on the north by Dharwad district on the west. The density of population is 196 per sq. Kurnool districts of Andhra Pradesh on east. Bellary. The rural populations constitute 70%.No 1. 436 Thandas/habitations. total labour forces are dependent on agriculture for its livelihood. The important crops grown are Cotton.7 Sree Guru Thipperudra College. Bellary SubDivision and Hospet Sub-Division which have in all seven taluks. The Bellary SubDivision has 3 taluks while there are five taluks in Hospet Sub-Division. As per 1991 census the population of the district stood at 16. 5 . Jowar..017 1. Chitradurga and Davangere districts on the south and Anantapur. There are 27 hoblies.Housing Loan in SBI. The major occupation of this district is agriculture and 75 p.97.D. 15o50’ north latitude and 75o 40’ and 77o 11’ east longitude.9 15. 4. Sunflower and Cereals.875 62. The geographical area is 8447 sq.2 Percentage total area 11.2 7. The net irrigated area is 37 p. It has 2 revenue sub divisions viz. 2. Gulbarga.972 33.53 lakhs.B. Land classification Forest Land not available for cultivation Other un-cultivated land Fallow Land Area sown (net) Area (in hectares) 97.21. to the net area sown. two CMCs one Town Municipality.c. Groundnut.km. The pattern of land utilization in the district is as under (1997-98): Sl. Paddy.c. seven Town Panchayat 542 Revenue villages.982 4. 5.K.0 4.346 61. 3.km which is much lower than the State average of 235 per sq.km. Bellary.

The inflow of investment into these industries would be around Rs. Dolomite. The important rivers are Tungabhadra. It has both metallic and nonmetallic minerals. Sandur. Bellary. Moulding sand.00 The main source of irrigation is Tungabhadra Dam.30. Corundum. The metallic minerals are abundant is only three taluks viz.192 100. There are 23 units of large and medium scale industries in this district with an investment of Rs.13. Total 8. HUMAN DEVELOPMENT Sree Guru Thipperudra College. The non-metallic minerals include Andalusite. At present it occupies ninth place in the state. and Limekankan. soap stone.447. The metallic minerals include Iron ore.Housing Loan in SBI. Bellary. Manganese Ore. Asbestos. Hospet and Bellary in the order of mining activity intensity. Red oxide. The Canal network accounts for 64 % of irrigated area. granite and red ochre. Copper and Lead. The western taluks of the district are dogged with scarcity conditions with the failure of rains during successive years.. quartz. 6 . It is understood that Mukund Steels and Kalyani Steels have plans to start industries in this area. However during the current year and preceding year heavy rains have created havoc in the district leaving many in lurch.76 crores employing around 9. 000 Crores. Chay. Gold. Hagari and Chikkahagari.222 persons. Limestone. However with the commissioning of Jindal Vijayanagar Steel Limited at Sandur the industry scenario of this district will be undergoing sea changes. Bellary district is rich in natural resources which need to be tapped to a great extent for overall development of the district.

It is the key to building human capital and human capital is the vital ingredient in building a nation.Housing Loan in SBI. The working group on road for 9th five Sree Guru Thipperudra College. 7 . Rural roads may be defined as those roads which connects villages. progress and well being of any country. They are means to prosperity.470. INFRASTRUCTURE: Roads indicate civilization of a nation. Bellary. Its HDI is 0. expenditure is also incurred towards building up of infrastructure facilities in educational institutions PER CAPITA INCOME: Per capita income in the district is much lower than the per capita income in the state as evinced from the following figures: Reference Current Prices (1995-96) Constant Prices (1980-81) Bellary Rs 8544 Rs 2143 Karnataka Rs 9384 Rs 2551 Bellary district stands at 7th place in Income Index among 20 erstwhile districts in the State but stands at 17th place in HDI which clearly indicate that whatever income generated is not converted into welfare of the people.429 as compared to State HDI of 0. The GOK spends 32% of SDP on education. Apart from this. Bellary is one of the most backward districts of the State. In terms of the Human Development Index it is at 17th place among the earlier configuration of 20 districts. LITERACY: Education is the passport to accelerated economic growth. In Bellary District 42% of Plan and non-plan expenditure is incurred towards salary component alone. During 5th five year plan constructions of road was made a component of minimum needs programme. Bellary.

Shelter is an indication of an individual’s existence. There is a substantial increase in the outlay for these programmes in eighth and ninth five year plans. Besides 125 lakh rural houses need up gradation to make them livable. The Government of Karnataka has approved setting-up of a Thermal Power Plant of 500 MW capacities near Sree Guru Thipperudra College.14040/. It is estimated that housing shortage is more than 410 lakh units out of which shortage in rural areas is more than 265 lakh units. However Rs.Housing Loan in SBI. HOUSING The Govt. As per survey conducted during 1994-95. The Jindal Vijayanagara Steel Limited Power Generating Plant is expected to be commissioned shortly with an installed capacity of 260 MW out of which 130 MW is likely to be available for other users.  The Hampi Power House  The Tungabhadra Right Band Power House  The Munirabad Power House The installed capacity of the above power stations is 99 Megawatts. year plan has estimated that an amount of Rs. 8 . houseless households in the district. The National Housing Policy of 1994 clearly envisages the difference between rural and urban housing. Bellary. Bellary.10540 Crores has been proposed for the 9th plan.crores would be required for the construction of rural roads to cover 85% of village population. of Karnataka has been implementing various rural development programmes in order to improve the living conditions of rural folk. there were 59607 sites less households and 45776 POWER: At present there are three power generating stations in this region viz. “Shelter for all" appears to be a distant dream because of its colossal dimensions with a huge backlog over the period and rapidly growing population. dignity and security.

In this way. Both Fannie Mae and Freddie Mac were at one time considered "government" auspices. Sree Guru Thipperudra College. even during a time when most people were out of work and had little.2. the Federal Home Loan Mortgage Corporation. Bellary. 000 crores." was created to lessen the "monopolization" of home lending that it was felt that Fannie Mae enjoyed. Kuduthini by the KPCL at an estimated cost of Rs. INDUSTRY PROFILE Home loans are usually the largest loans that consumers will ever make. This type of loan was obtained through a bank. 9 . For many years. the different types of home loans and the similarities and differences between them. It made it possible. credit union or other private. In 1970. consumers can make the best decision on which loan is the best for their purposes. History of Home Loans In 1938. the Federal National Mortgage Association. better known as "Fannie Mae. but now are considered private establishments. non-government-affiliated financial institution." was created and established as a federal agency by then-President Franklin Roosevelt as part of his New Deal. known as "Freddie Mac. Bellary. This project construction is likely to be started during 2000-2001. the only way in which to obtain money to purchase a home was to apply for a conventional home loan. if any. Because of this. it is important to know how home loans started. income to still be able to afford a home.Housing Loan in SBI.

Public Law 78-346. Vietnam and. the property market in India undergoes transformation to align itself with global standards with an increased emphasis on quality & cost control and documentation methods. equipment and services. the real estate sector has the maximum propensity to generate income and demand for materials. they returned home to pick up their lives where they had left off. transactions related to buying and selling of residential properties increased considerably and was much higher as compared to previous years. Help for Veterans World War II came along and hundreds of citizens went to war. With tax incentives given to the housing finance sector in the annual budget of 2001. or to start a life. In the current economy of India. Since the new class of buyers are relatively younger set of customers who are more aware about legal documentation and approvals. most recently. so the Serviceman's Readjustment Act of 1944. Bellary. Home loans are made available by financial institutions to both Indian and NRI customers at floating and fixed rate of interest and also at attractive EMI options. the Gulf wars.Housing Loan in SBI. This made it possible for veterans borrow money for the purchase or building of a home. It can be said that housing finance companies were formed for co-existing with buyer's requirements of housing loans for investing in properties. When it ended. Bellary. buyers are now more 'end-users' rather than investors. such as Korea. was enacted. to have the same advantages in obtaining home loans. Several major changes in the Act have been made in the years since 1944. Sree Guru Thipperudra College. Home Loans scenario in India The Home loan sector in India is the pi-vital role player in the growth of the real estate scenario in India. allowing veterans of subsequent wars. These people needed places to live. 10 .

 Waiving of pre-payment penalty.Housing Loan in SBI. HFCs are offering incentives to attract investors like some companies sanction the housing loan without requiring you to identify property as a pre-requisite for eligibility.  For construction or buying a new home  For home repairs and renovations  For purchase of plots  Against mortgage of property No tax benefits are available for NRI customers unless you file returns and thereby become eligible to avail of the tax benefits. Bellary. Moreover. Self-employed years. bill/ration card). And this reduction in interest rates has enhanced the borrowing power of customers. Bellary. but the entry of public sector banks into the housing finance business marked the beginning of the first round of interest rate cuts. Earlier the home loan sector in India was solely dependent on nationalized and public sector banks.  Free accident insurance & property insurance. certified by a Chartered Accountant Proof of age (birth certificate/voter identity card/passport/school-leaving certificate/valid driving license) 11 Proof of residence (phone bill/electricity The latest salary slip showing statutory Computation of income for the previous two bill/electricity bill/ration card). certified by a Chartered Accountant Profit & Loss Account and Balance Sheet for the previous two years. . Salaried Employee deductions Form 16 (showing tax deducted at source by employer) Proof of age (birth certificate/voter identity card/passport/school-leaving certificate/valid driving license Sree of residence (phone Proof Guru Thipperudra College.  Waiving of processing fee There are a few documents which the finance companies require for setting up criteria for eligibility of Home loans.  Waiving of processing fee.

The realty boom in India has given a new dimension to the finance sector in India -both in Home Loans and Home Insurance segments. Cent bank Home Finance. This has resulted in 13 new institutions foraying into the housing finance business in the last three years. Standard Chartered. This has not only given a competitive edge to the finance companies to provide attractive options to customers but has also contributed to the increased investments in the real estate sector. Bank of Maharashtra. LIC. 12 . LIC Housing Finance. Financial Institutions HDFC. Allahabad Bank. GIC Housing Finance. Central Bank. SBI Home Finance. Bellary.Grind lays. Citibank.Housing Loan in SBI. etc. ICICI Ltd. etc COMPANY PROFILE Sree Guru Thipperudra College. Major Home Loan Providers Banks & Public Sector Housing Finance Companies State Bank of India. Can Fin Homes. Corporation Bank. Bellary. HSBC. HUDCO. Bank of Baroda Housing Finance. Punjab National Bank. Dena Bank. PNB Housing Finance. IDBI Bank.

Establishment: The establishment of the Bank of Bengal marked the advent of limited liability.Housing Loan in SBI. Bellary. These three banks remained at the apex of modern banking in India till their amalgamation as the Imperial Bank of India on 27 January 1921. Bellary. the three presidency banks came into existence either as a result of the compulsions of imperial finance or by the felt needs of local European commerce and were not imposed from outside in an arbitrary manner to modernize India's economy. EVOLUTION OF SBI The origin of the State Bank of India goes back to the first decade of the nineteenth century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Their evolution was. A unique institution. The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. however. Three years later the bank received its charter and was re-designed as the Bank of Bengal (2 January 1809). Primarily Anglo-Indian creations. Sree Guru Thipperudra College.O. 13 . Bank of Bengal H. and was influenced by changes occurring in the structure of both the local trading environment and those in the relations of the Indian economy to the economy of Europe and the global economic framework. shaped by ideas culled from similar developments in Europe and England. it was the first joint-stock bank of British India sponsored by the Government of Bengal.

14 . Each charter provided for a share capital. Sree Guru Thipperudra College. viz. and especially up to the time that the three presidency banks had a right of note issue. The members of the board of directors. which managed the affairs of each bank. Bellary.Housing Loan in SBI. commonly called Company's Paper. joint-stock banking in India. Loans were restricted to Rs. Bellary. The concept of deposit banking was also an innovation because the practice of accepting money for safekeeping (and in some cases. This right of note issue was very valuable not only for the Bank of Bengal but also its two siblings. even investment on behalf of the clients) by the indigenous bankers had not spread as a general habit in most parts of India. jewels. the decision to allow the Bank of Bengal to issue notes. or goods 'not of a perishable nature' and no interest could be charged beyond a rate of twelve per cent. treasure. one of whom was elected as the president of the board. four-fifth of which were privately subscribed and the rest owned by the provincial government. which were revised from time to time. But. bank notes and government balances made up the bulk of the invisible resources of the banks. The rest were government nominees. So was the associated innovation in banking.one lakh and the period of accommodation confined to three months only. were mostly proprietary directors representing the large European managing agency houses in India. The three banks were governed by royal charters. It meant an accretion to the capital of the banks. which would be accepted for payment of public revenues within a restricted geographical area. plate. a capital on which the proprietors did not have to pay any interest. Business The business of the banks was initially confined to discounting of bills of exchange or other negotiable private securities. the Banks of Bombay and Madras. for a long time. keeping cash accounts and receiving deposits and issuing and circulating cash notes. invariably civil servants. Loans against goods like opium. The security for such loans was public securities. indigo. bullion.

15 . they embarked on branch expansion at a rapid pace. as far as the government was concerned. While the Bank of Bengal had eighteen branches including its head office. The main function of the banks. the Banks of Bombay and Madras had fifteen each Sree Guru Thipperudra College. seasonal branches and sub agencies. But as soon as the three presidency bands were assured of the free use of government Treasury balances at places where they would open branches. With the passing of the Paper Currency Act of 1861. Major change in the conditions A major change in the conditions of operation of the Banks of Bengal. The task of management and circulation of the new currency notes was conferred on the presidency banks and the Government undertook to transfer the Treasury balances to the banks at places where the banks would open branches. Bellary. None of the three banks had till then any branches (except the sole attempt and that too a short-lived one by the Bank of Bengal at Mirzapore in 1839) although the charters had given them such authority. agencies and sub agencies of the three presidency banks covered most of the major parts and many of the inland trade centers in India. the branches. salt woolens. the right of note issue of the presidency banks was abolished and the Government of India assumed from 1 March 1862 the sole power of issuing paper currency within British India. Bombay and Madras occurred after 1860. cotton. cotton piece goods. was to help the latter raise loans from time to time and also provide a degree of stability to the prices of government securities. Bellary.Housing Loan in SBI. mule twist and silk goods were also granted but such finance by way of cash credits gained momentum only from the third decade of the nineteenth century. By 1876.

But it continued to maintain currency chests and small coin depots and operate the remittance facilities scheme for other banks and the public on terms stipulated by the Reserve Bank. The new bank took on the triple role of a commercial bank. The triad had been transformed into a monolith and a giant among Indian commercial banks had emerged. The establishment of the Reserve Bank of India as the central bank of the country in 1935 ended the quasi-central banking role of the Imperial Bank. Bellary.Housing Loan in SBI. Bank of Madras Note Dated 1861 for Rs. a banker's bank and a banker to the government. Bellary. 16 . Sree Guru Thipperudra College. Bombay and Madras with their 70 branches was merged in 1921 to form the Imperial Bank of India.10 Presidency Banks of Bengal The presidency Banks of Bengal. The latter ceased to be bankers to the Government of India and instead became agent of the Reserve Bank for the transaction of government business at centers at which the central bank was not established. The establishment of the Reserve Bank simultaneously saw important amendments being made to the constitution of the Imperial Bank converting it into a purely commercial bank. The earlier restrictions on its business were removed and the bank was permitted to undertake foreign exchange business and executor and trustee business for the first time.

94 crores respectively and a network of 172 branches and more than 200 sub offices extending all over the country. Stamp of Imperial Bank of India When India attained freedom. The financial status and security inherited from its forerunners no doubt provided a firm and durable platform. deposits. Bellary. investments and advances. reserves. Imperial Bank The Imperial Bank during the three and a half decades of its existence recorded an impressive growth in terms of offices.275.11.72. Bellary.14 crores and Rs. the increases in some cases amounting to more than six-fold. the Imperial Bank had a capital base (including reserves) of Rs. Sree Guru Thipperudra College.85 crores. All these enabled the Imperial Bank to acquire a pre-eminent position in the Indian banking industry and also secure a vital place in the country's economic life. 17 . But the lofty traditions of banking which the Imperial Bank consistently maintained and the high standard of integrity it observed in its operations inspired confidence in its depositors that no other bank in India could perhaps then equal.Housing Loan in SBI. deposits and advances of Rs.

It is recorded that SBI has about 10000 branches. Through the establishments. factoring services. there are several other establishments in and outside Mumbai.Housing Loan in SBI. The bank boasts of having as many as 14 local head offices and 57 Zonal Offices. The eight banking subsidiaries are:  State Bank of Bikaner and Jaipur (SBBJ)  State Bank of Hyderabad (SBH)  State Bank of India (SBI)  State Bank of Indore (SBIR)  State Bank of Mysore (SBM)  State Bank of Patiala (SBP)  State Bank of Saurashtra (SBS)  State Bank of Travancore (SBT) Sree Guru Thipperudra College. Bellary. Branches The corporate center of SBI is located in Mumbai. located at major cities throughout India. primary dealership in government securities. credit cards and insurance. Subsidiaries The State Bank Group includes a network of eight banking subsidiaries and several non-banking subsidiaries. 18 . apart from the corporate center. it offers various services including merchant banking services. well networked to cater to its customers throughout India. In order to cater to different functions. fund management. Bellary.

BOARD OF DIRECTORS List of Directors on the Central Board of State Bank of India Sr. No. Sundaram Director Director 7 8 9 10 11 Shri.Housing Loan in SBI. D. Sridharan Designation Chairman Managing Director 3 Dr. P. Bhatt Shri R. (Mrs. Ashok Jhunjhunwala Director 4 Shri Dileep C. G. Venkatachalam Shri D. Rajiv Kumar Shri Ashok Chawla Smt. Bellary.) Vasantha Bharucha Dr. Bellary. Choksi Director 5 6 Shri S. 19 . 1 2 Name of Director Shri O. Shyamala Gopinath Officer Employee Director Director Director Director Director Sree Guru Thipperudra College. Nadaf Dr.

Bellary. 20 . Products and Services Personal Banking  SBI Term Deposits SBI Loan For Pensioners  SBI Recurring Deposits Loan Against Mortgage Of Property  SBI Housing Loan Loan Against Shares & Debentures  SBI Car Loan Rent Plus Scheme  SBI Educational Loan Medi-Plus Scheme Other Services  Agriculture/Rural Banking  NRI Services  ATM Services  Demat Services  Corporate Banking  Internet Banking  Mobile Banking  International Banking  Safe Deposit Locker  RBIEFT  E-Pay  E-Rail  SBI Vishwa Yatra Foreign Travel Card  Broking Services  Gift Chequ Sree Guru Thipperudra College. Bellary.Housing Loan in SBI.

Branch profile Name of the branch Category of the branch No. Bellary. OLTAS. A (825 marks) Technology up gradation DBD. In the same campus our two branches are situated viz commercial branch and Bellary ADB. Mobile banking and SBI connect. Present location: station road. CMP. Brief history of the branch Branch was opened on 22-8-1865 as second inland branch of the bank of Madras. Bellary branch was reopened on 18-3-1918 as an Imperial Bank. A (801 marks) PBD. the branch primarily discounted nuisance bills is connection with movement of AGL produce. Bellary. A (810 marks) E-realization. 21 . The branch is housed in spacious own building. During the initial years. The directors decided to close Bellary branch on 15-7-1901 as the branch was no longer remunerative. The business of the branch declined during last quarter of the 19th century and profits were difficult to come by. Interest banking. NEFTRTGFs. Sree Guru Thipperudra College.Housing Loan in SBI. ATM. of divisions Bellary SCALE IV Two personal banking division Date of opening the branch Migration of CBS Date of last inspection Inspection ratings development banking division 18-3-1918 24-05-2006 17-12-2009 Branch. bellary583101.

Housing Loan in SBI. Bellary. and generally the lender has to bear the risk that the borrower may not repay a loan (though modern capital markets have developed many ways of managing this risk). Mortgage loans Sree Guru Thipperudra College. there is a predetermined time for repaying a loan. Bellary. Home purchase loans 2. Home improvement loans 3. Because a home is the largest purchase many individuals will ever make most borrowers utilize home loan to assist with their home purchase. Home construction loans 4. Meaning of Home Loan Home loans allow borrowers to purchase a new home. Usually. is a secured loan that borrowers obtain in order to purchase a home. or mortgage. Home equity loans 6. Types of Home Loans There are different kinds of home loans are available in the market with different schemes to meet customers needs. at some future point(s) in time. Land purchase loans 7. A home loan. and the borrower agrees to return the property or repay the money. They are: 1. usually along with interest. CONCEPTUAL FRAME WORK OF HOME LOANS Meaning of loan An arrangement in which a lender gives money or property to a borrower. Home extension loans 5. 22 .

energy-related items (permanent in nature). but one will have to discuss the terms in detail with his/her mortgage lender. Luxury items and fireplaces are generally not eligible. the loan is extended for the remaining period of the original mortgage. 2. Home improvement loans are usually paid out in Sree Guru Thipperudra College. at the same time though. Home improvement loans are used to maintain or enhance the value of your house. seem confusing if you're a first time buyer or even an experienced homeowner. However. a new bathroom. 23 . 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. But at the same time. Bellary. you may be flummoxed to look so many attractive rates and offers in the market. Home purchase loans These are the basic forms of home loans used for purchasing f a new home. though. recently purchased property or rented accommodation. terrace. In the most common cases. In general it includes: repairs. Many improvements in landscape and even swimming pools are nowadays considered to be a part of home improvement. repairs. remodeling. o First Mortgage/Loans: Generally the current lender provides you with home improvement loans against your first mortgage. when the sites are coming up with all the latest gizmos and tools and relevant information for you. an extension or general property improvements. Bellary.Housing Loan in SBI. and with all such conveniences. a new kitchen. obtaining a home purchase loan or mortgage has become really pretty simple. But sorting out the best rate can at times. 1. With about a million home lenders and mortgage brokers it's becoming a tough challenge as the days are progressing.

o 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. i. But. defer your payments. delay your payments. o Personal. or may even help in releasing some cash for your home improvement. with so many home construction loans available in the Indian market. nor does it binds you to borrow money against your home. Home construction loans Home construction loans are used to finance for the construction of yours newly acquired home or if you are planning to build a home. Generally the personal loan is disbursed by either a finance company. but at the same time. Sree Guru Thipperudra College. or a bank for home improvement project. 3. payments in proportion to the work that is being carried out and the contractor may be paid directly from the lender.e. o Home Loans Refinancing: Refinancing of your mortgage or loans may help you to lower your payments. One may have a decent equity in his/her home.Housing Loan in SBI. o Second Loans: It may also include: Home Equity Loans and Home equity line of credit. Bellary. Bellary. Unsecured Loan: The best part of personal loan is that it doesn't require you to have equity in your home. 24 . 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.

Factors to be consider for home building  Design of the house  Construction cost  Financing Cost  Buildable site All the above mentioned costs will help you determine the amount you may need to borrow. Each site is unique requiring different expenditures so this specific rupee amount will vary from site location to site location. you may also be required to consider the total expenditures to develop the site in order to build. by adding more rooms. 25 . You may also be considering adding a conservatory so that there is somewhere for you to relax away from the rest of the family when everyone is at home. 5.Housing Loan in SBI. Bellary. For example. Perhaps you're thinking of extra entertaining space for parties with friends or bigger family get together. Home equity loans Home equity loans helps customer to encash the market value of the commodity by taking a loan by mortgaging the property. Home extension loans Home extension loans are used by customers to get loans from the banks to extend their houses. Home equity loans are availed by customers. Bellary. wash rooms. So. then you might also be looking to expand your lounge or add an extra bathroom. or any other rooms for your growing family. terraces. It may also be used to enclose open balcony/terrace space. If it is not extra bedrooms or balcony or a bigger kitchen. 4. who wish to mortgage his/her property to the bank for taking some Sree Guru Thipperudra College. besides calculating the construction costs. or constructing a Puja ghar. kitchens. Home extension loan thus falls under the category of Home loans.

if a lender (such as a Sree Guru Thipperudra College. provided the mortgager is a licensed title holder and the land is free form any kind of dispute. Bank of India. Both the residential as well as non residential property can be considered for the approval of the loan. Land purchase loans Land Purchase loans are used by customers who wish to purchase a plot of land for commercial or residential purpose. it's up to the bank's discretion to consider the market value of the property and accordingly decide how much to pay to the customer. While many lending firms around the nation compete to provide mortgages for the purchase of a house on a lot. For example. Bellary. Everyone has his/her dream perfectly sketched in his souls and so is his ambition to get his house erected on the exact location Loans that are strictly for land purchase can be as scarce as good residential plots. 7.Housing Loan in SBI. Then. It is calculated by dividing the amount of interest by the amount of principal. Bellary. loan for some other purpose.. Meaning of interest A rate which is charged or paid for the use of money. The mortgage loan allows the borrower to apply for loan against a fixed asset of his/her. Mortgage loans Balance transfer loans are used by customers who wish to mortgage their property on an attractive rate of interest from the banks like Dena Bank. An interest rate is often expressed as an annual percentage of the principal. Citibank etc. 6. only local institutions typically will be interested in lending for an empty lot. 26 . Interest rates often change as a result of inflation and Federal Reserve policies.

Fluctuated interest rate Any interest rate that changes on a periodic basis. For example. then the interest rate would be 90/1000 *100% = 9%. if interest rates were historically high at the time of the loan. bank) charges a customer $90 in a year on a loan of $1000. he or she would benefit from a floating rate loan. Sree Guru Thipperudra College. he or she would benefit from a floating rate loan. a fixed rate loan would allow him or her to "lock in" the low rates and not be concerned with fluctuations.Housing Loan in SBI. you might see a rate set at "prime plus 2%". which changes regularly to take into account changes in the inflation rate. Movement above or below certain levels is often prevented by a predetermined floor and ceiling for a given rate. the rate on the loan would decrease. Fixed interest rate and 2. Bellary. Fixed interest rate A loan in which the interest rate does not change during the entire term of the loan. Fluctuated interest rate 1. such as the prime interest rate. Bellary. For an individual taking out a loan when rates are low. Types of interest There are two types of interest rates are there namely 1. because as the prime rate fell to historically normal levels. if interest rates were historically high at the time of the loan. For an individual taking out a loan when rates are low. 27 . 2. On the other hand. the fixed rate loan would allow him or her to "lock in" the low rates and not be concerned with fluctuations. This means that the rate on the loan will always be 2% higher than the prime rate. On the other hand. the rate on the loan would decrease also called adjustable rate. Opposite of adjustable rate. because as the prime rate fell to historically normal levels. The change is usually tied to movement of an outside indicator.

0220391. Bellary. For example. 1.220391 equals 0. so that over a specified number of years.Housing Loan in SBI.00833 to the power of 24 months. Meaning of margin The loan amount granted by the banking institution. 10 percent divided by 12 equals 0. Subtract one from the number calculated in Step 3. Instructions 1. For example. 3. Raise the number calculated in Step 2 by the power of the number of months of repayments. In the example. 28 . expressed as a percentage of the value of property pledged to secure the loan. The number of months of repayments is an exponent. the amount of equity contributed by a customer as a percentage of the current market value of the securities held in a margin account. For example. 1 plus 0. In other words. 4. The benefit of an EMI borrower is that they know precisely how much money they will need to pay toward their loan each month. Equated monthly installments are used to pay off both interest and principal each month. 1 1. Bellary. Add 1 to the interest per month. 2. Divide the interest rate by 12 to calculate the interest per month.00833 equals 1.220391.00833. the loan is paid off in full. minus Sree Guru Thipperudra College. making the personal budgeting process easier. this equals 1. Equated monthly installment (EMI) A fixed payment amount made by a borrower to a lender at a specified date each calendar month.00833.

00833 divide by 0. Even though. Multiply the principal by the number calculated in Step 6 to determine the monthly payment. the eligibility criteria may vary according to the HFCs regulations. Bellary. which equals 0. The maximum loan that can be sanctioned varies with the banks and other housing finance companies (HFC) and generally.037812. Divide the interest per month by the number calculated in Step 4. 5. 6. Bellary. assets. Home loan Eligibility Criteria Age (Minimum) Age (Maximum) 21 Years 58(salaried) 60(Public limited/Government Employees) 65 (self employed) Qualification Income Dependents Graduation Stable source of income and saving history Number of dependents.00833 plus 0.Housing Loan in SBI.000 times 0. Home loan eligibility corresponding to repayment option is based on the following factors. 0. 0. . 7. For example.046145.0220391. liabilities 29 Sree Guru Thipperudra College. Add the interest rate per month to the number calculated in Step 5.45 Eligibility Home loan eligibility for Resident Indians depends upon the repayment capacity of the loan applicant. the maximum loan amount granted is 80 to 85% of the cost of your home. $10. For example.037812 equals 0.046145 equals monthly payments of $461. For example.

For increasing loan eligibility.  Clubbing of income Sree Guru Thipperudra College. his assets and liabilities. some home loan borrowers might have to re-evaluate their options (in terms of loan amount) on account of the new eligibility criteria. Other income sources Spouse's income Quantum of Finance: As home loan rates increase. his 'ability to pay' and therefore his loan eligibility automatically increase. which an individual has to pay.Housing Loan in SBI. Bellary. his age and property (flat/house) value. is the net interest outgo. 30 . In such a scenario. Bellary.  Repaying the outstanding loans There might be adverse effect on home loan eligibility for individuals with outstanding loans like car loans or personal loans. What changes though. which rises with a rise in tenure. This will ensure that their eligibility for the home loan purpose is unaffected. The amount of loan will be decided after taking into account factors like earnings and repayment ability of the loan applicant. you are allowed to club:  Increasing the home loan tenure One of the basic process of enhancing the home loan eligibility is by opting for a higher tenure. Industry standards suggest that existing loans with over 12 unpaid installments are taken into account while computing the home loan borrower's eligibility. In such a scenario. the loan eligibility for a borrower becomes stiffer. starts to decline as the tenure increases while the interest rate as well as the principal amount remains the same. And since the individual is paying a lower EMI now. individuals have the option of prepaying in part/full their existing loans. This is so because the EMI.

The eligibility in such cases will be calculated on the clubbed income of both the applicants enhancing the individual's eligibility to the extent of the co-applicant's income.B. Home loan eligibility can also be enhanced by clubbing incomes of spouse. HFCs usually consider the lower EMI of the initial years to calculate his loan eligibility while the initial lower EMI helps increase the individual's 'capacity to borrow'.C based on company profiles and run different schemes like special interest rates.Housing Loan in SBI.  Employer-Bank relationship A lesser interest rate will naturally increase your eligibility. children (son or daughter) staying with the applicant and having regular income and even earning parents (father or mother) living with the applicant. Bellary. People working in MNCs are benefited out of this usually. processing fee waiver etc. Bellary. Repayment Sree Guru Thipperudra College.  Perks Salaried individuals must ensure that variable sources of income like performance-linked pay among others are taken into consideration while computing their income. A step-up loan is a loan wherein an individual pays a lower EMI during the initial years and the same is enhanced during the rest of the loan tenure. Banks usually categorize companies into A. 31 . Check with the banks if there are any schemes running with your employer. This in turn will imply that the loan amounts they are eligible for stand enhanced as well.  Set up loan Individuals can also enhance their loan eligibility by opting for step-up loans.

Housing Loan in SBI. It not only helps a customer get a larger amount of loan as compared to the loan under the normal housing loan. 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. need to pay interest (on the loan amount drawn based on level of construction) till the property is ready. Customers can fix the installments they wish to pay till Sree Guru Thipperudra College.  Tranche Based EMI Customers purchasing an under construction property. 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. 32 . which is subsequently accelerated proportionately with the assumed increase in his income. Bellary. They have thereby come up with more flexible and Multiple Repayment Option. but the customer can avail of a higher amount of loan and pay lower EMIs in the initial years. 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. Every housing finance companies or banks have customized repayment options to suit every individual's requirement and also repaying capacity with some tax benefits. Bellary. Tranche Based EMI is a special facility offered by some banks to help customer save this interest.  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 loan.

33 . Anything over and above the interest paid by the customer goes towards principal repayment. Home Loan Tenure Home loan tenures fixed by RBI are available up to a term of 15 years. the EMI is calculated on the net loan amount (i. The return from the investments also gives you the comfort of paying the increased EMI. However. increase in your disposable income or have lump sum funds for loan prepayment. The customer benefits by starting EMI and hence repays the loan faster. Under this facility. total loan less the present value of the maturity value of the securities). Some financial institutions have home loan tenures in the range extending up to 20. Bellary.Housing Loan in SBI. you can benefit by • Increase in EMI means faster loan repayment • Saving of interest because of faster loan repayment Or invest lump sum funds rather than use it for loan prepayment. you cannot opt for a Sree Guru Thipperudra College. The present value of the maturity amount of assigned securities is combined with the loan amount to arrive at the enhanced loan eligibility. 25 and 30 years if the applicant fulfils certain criteria. Whenever you get an increment.  Accelerated Repayment Scheme Accelerated Repayment Scheme offers you a great opportunity to repay the loan faster by increasing the EMI.  Balloon Payment Balloon Payment is an augmentation tool offered by the financial institutions.e. The minimum amount payable is the interest on the loan amount drawn. LIC policies etc. Bellary. the property is ready. which helps in increasing the loan eligibility of the customer without increasing the EMI by assigning securities like National Savings Certificate (NSC).

However. Education Qualifications Certificate and Proof of business existence. The Applicant's Profile refers to the bio-data of the applicant. age. mentioning his address.Housing Loan in SBI. • Latest Salary-slip. • Form 16 • Last 3 years Income Tax returns (self and business) Business profile. term that extends beyond your attaining retirement age or 60 years of age (whichever is earlier). 34 . Bellary. there are some standard documents made mandatory for a loan applicant to produce such as the loan applicant's profile. These documents are very much necessary for the financial institutions to avoid any dispute and uncertainty. Sree Guru Thipperudra College. List of Documents Salaried Customers Self Employed Professionals Self Employed Businessman • Application form with photograph. Bellary. family background and detail information. Type of Property Residential Plot of Land Against Existing Plot of Land Salaried 15 years 10 years 15 years Self-Employed 10 years 10 years 10 years Documentation Documentation refers to the specific documents to be submitted by applicants as they apply for home loan. earning life of the applicant and present financial status proof etc. • Identity and Residence Proof.

35 . • Bank statements (last 6 months).  Proof of Individual's Identity (any one of the following) • Passport • Photo PAN Card • Defence Identity Card • Voter's Identity Card • Driving License • Photo Ration Card • Government Identity Card  Proof of Residence (any one of the following) • Passport • Ration Card • Telephone (Land/Mobile) Bill • Electricity Bill • Driving License • Voter's Identity Card • Life Insurance Policy  Proof of Age (any one of the following) • Passport • Valid Driving License • Voter's Identity Card • Birth Certificate • LIC Policy or Premium Receipt clearly indicating the applicant's age • Letter from the employer stating the age of the employee Sree Guru Thipperudra College. • Processing fee cheque. for business/self-employed last 3 years Profit /Loss A/c and Balance Sheet.Housing Loan in SBI. Bellary. Bellary.

• Photo Ration Card RBI NORMS TOWARDS HOME LOANS INTRODUCTION In pursuance of National Housing Policy of Central Government. Bellary. Other Guidelines 1. During last three years. 2.Bank finance extended for purchase of a house by a borrower who proposes to let it out on rental basis on account of his posting outside the headquarters or because he has been provided accommodation by his employer. 36 .Housing Loan in SBI. age of dwelling units. margin. the housing sector has emerged as one of the sectors attracting a large quantum of bank finance. for buying/ constructing a second house in the same or other town/ village for the purpose of self occupation. repayment schedule.  Banks are free to evolve their own guidelines with the approval of their Boards on aspects such as security. 3. Bank finance extended to a person who already owns a house in town/village where he resides. etc. Sree Guru Thipperudra College. Bellary. The current focus of RBI's regulation is to ensure orderly growth of housing loan portfolio of banks. Bank finance extended to a person who proposes to buy an old house where he is presently residing as a tenant. DIRECT HOUSING FINANCE  Direct Housing Finance refers to the finance provided to individuals or groups of individuals including co-operative societies. Reserve Bank of India has been facilitating the flow of credit to housing sector.

banks may extend such finance after obtaining pari passu or second mortgage charge over the property mortgaged in favour of other lenders and/or against such other security. as they may deem appropriate.. etc. housing boards. Bellary. 5. It should also be ensured that the supply of plots/houses is time bound and public agencies do not utilise the bank loans merely for acquisition of land. primarily for augmenting the supply of serviced land and constructed units.Housing Loan in SBI. with the help of bank finance or otherwise. INDIRECT HOUSING FINANCE General Banks should ensure that their indirect housing finance is channeled by way of term loans to housing finance institutions. Similarly. Bellary. 4. Sree Guru Thipperudra College. Supplementary finance  Banks may consider requests for additional finance within the overall ceiling for carrying out alterations/ additions/repairs to the house/flat already financed by them. professional developers and individuals with a stipulation that the houses should be constructed thereon within a reasonable time. other public housing agencies. Bank finance granted only for purchase of a plot. 37 . within such period as may be laid down by the banks themselves.  In the case of individuals who might have raised funds for construction/ acquisition of accommodation from other sources and need supplementary finance. provided a declaration is obtained from the borrower that he intends to construct a house on the said plot. not exceeding three years. serviced plots should be sold by these agencies to co-operative societies.

the banks may take advantage of various guidelines issued by NHB for augmenting the supply of serviced land and constructed units.e. deferred revenue expenditure and intangible assets). housing finance companies’ total borrowings. whether by way of deposits. (ii) In terms of NHB guidelines. while doing so. track record. Lending to Housing Boards and Other Agencies Banks may extend term loans to state level housing boards and other public agencies. loans and advances from banks or from financial institutions including any loans obtained from NHB. issue of debentures/ bonds. Lending to Housing Intermediary Agencies Lending to Housing Finance Institutions (i) Banks may grant term loans to housing finance institutions taking in to account (long-term) debt-equity ratio. (iii) All housing finance companies registered with NHB are eligible to apply for refinance from NHB and will be eligible subject to the refinance policy. 38 . should not exceed 16 times of their net owned funds (i. For this purpose. the banks must not only keep in view the past performance of these agencies in the matter of recovery from the beneficiaries but they should also Sree Guru Thipperudra College. However. Bellary.Housing Loan in SBI. Bellary. The quantum of term loan to be sanctioned to them will not be linked to net owned fund as NHB has already prescribed the above referred ceiling on total borrowing of housing finance companies. in order to develop a healthy housing finance system. paid-up capital and free reserves less accumulated balance of loss. recovery performance and other relevant factors.

including development of infrastructure such as water systems. banks may extend finance to public agencies for acquisition and development of land. banks should ensure that housing finance intermediary agencies being financed by them are authorized by RBI to grant housing loans to NRIs as all housing finance intermediaries are not authorized by RBI to provide housing finance to NRIs. Bellary. in any case. term loans may be granted by banks to housing intermediary agencies against the direct loans sanctioned/ proposed to be sanctioned by the latter. Further. However. provided it is a part of the complete project. within three years. The project should be completed as early as possible and. so as to ensure quick re-cycling of bank funds for optimum results. provision of electricity. drainage. Terms and Conditions for Lending to Housing Intermediary Agencies (i) In order to enhance the flow of resources to housing sector. roads.Housing Loan in SBI. such finance granted by banks to housing finance Sree Guru Thipperudra College. stipulate that the Boards will ensure prompt and regular recovery of loan installments from the beneficiaries. credit extended therefor in respect of individual beneficiaries should be on the same terms and conditions as stipulated for direct finance. (ii) Banks can grant term loans to housing intermediary agencies against the direct loans sanctioned/proposed to be sanctioned by them to Non-Resident Indians also. Such credit may be extended by way of term loans. etc. Bellary. irrespective of the per borrower size of the loan extended by these agencies and such term loans would be reckoned for the purpose of achievement of their housing finance allocation . Financing of Land Acquisition In view of the need to increase the availability of land and house sites for increasing the housing stock in the country. 39 . If the project covers construction of houses.

Bellary. Bellary. (iii) Banks have freedom to charge interest rates to housing intermediary agencies without reference to Benchmark Prime Lending Rates (BPLR) Term Loans to Private Builders In view of the important role played by professional builders as providers of construction services in the housing field.Housing Loan in SBI. commercial banks may extend credit to private builders on commercial terms by way of loans linked to each specific project. especially where land is acquired and developed by State Housing Boards and other public agencies. 40 . Banks’ may consider this aspect for incorporation in their loan policies. It is advised that banks adhere to the National Building Code (NBC) formulated by the Bureau of Indian Standards(BIS) in view of the importance of safety of buildings especially against natural disasters. through close monitoring. The period of credit for loans extended by banks to private builders may be decided by banks themselves based on their commercial judgment subject to usual safeguards and after obtaining such security as banks may deem appropriate. HOME LOANS UNDER PRIORITY SECTOR The following housing finance limits will be considered as Priority Sector Advances: Sree Guru Thipperudra College. that no part of such funds is used for any speculation in land. employing professionally qualified personnel. It should be ensured. Such credit may be extended to builders of repute. intermediary agencies against the letters’ on-lending to NRIs will not be treated as housing finance for the purpose of scheme of yearly allocation of housing finance applicable to banks.

 Loans granted by banks in rural areas under the Special Rural Housing Scheme of NHB will also be considered as part of priority sector advances subject to the limits specified under (i) and (ii) above i.e. Sree Guru Thipperudra College. semi-urban. 5lakh of loan amount per housing unit.5lakh of loan amount per housing unit. upto Rs. with the approval of their Boards.Housing Loan in SBI. Bellary. subject to a ceiling of Rs. urban and metropolitan areas for construction of houses by individuals.1 lakh in rural and semi urban areas and Rs. 41 . 15 lakhsfor acquiring/ construction of a new house and upto Rs.  Assistance given to a non-governmental agency approved by the National Housing Bank for the purpose of refinance for reconstruction of houses orfor slum clearance and rehabilitation of slum dwellers. Indirect Finance  Assistance given to any governmental agency for construction of houses. 1 lakh for repairs/ up gradation of an existing house. Bellary. 2 lakhs in urban areas for repairs to damaged houses by individuals. Direct Finance  Loans up to Rs. 15 lakh in rural.  Loans up to Rs. subject to a ceiling of Rs. or for slum clearance and rehabilitation of slum dwellers.

CONSTRUCTION ACTIVITIES NOT ELIGIBLE FOR BANK CREDIT Banks should not grant finance for construction of buildings meant purely for Government/Semi-Government offices. REPORTING Sree Guru Thipperudra College. Even in respect of projects undertaken by corporate bodies. the bank finance should be restricted to an amount arrived at after reducing from the total project cost the amount of subsidy/capital contribution receivable from the Government and any other resources proposed to be made available by the Government.e. banks may grant loans for activities. which will be refinanced by institutions like NABARD. Projects undertaken by public sector entities which are not corporate bodies (i. where the project is run on commercial lines. as defined above. and the Government is interested in promoting the project either for the benefit of the weaker sections of the society or otherwise. in the case of a housing project. 42 . However. public sector undertakings which are not registered under Companies Act or which are not Corporations established under the relevant statute) may not be financed by banks. Bellary. Thus. and a part of the project cost is met by the Government through subsidies made available and/or contributions to the capital of the institutions taking up the project. Bellary. banks should satisfy themselves that the project is run on commercial lines and that bank finance is not in lieu of or to substitute budgetary resources envisaged for the project.Housing Loan in SBI. including Municipal and Panchayat offices.

Sree Guru Thipperudra College. Central Office. it will be 100%. In the case of MBS of Housing Finance Companies to be eligible for 75% risk weight. Cuffe Parade.  For the purpose of monitoring the macro-level performance of the commercial banks in disbursement of housing finance banks should submit.  Housing loans taken over from other banks should not be included in the quarterly statement as disbursements. World Trade Centre. 43 . as per the format given in Annexure 2 within 20 days from the close of the respective quarter. Bellary.Housing Loan in SBI. 2006. However the risk weight for commercial real estate exposure has been raised to 125% on July 26. In all other cases. 2005 and further to 150% on May 25. Mumbai 400 005. securities issued by the SPV should be backed only by assets qualifying for 75% risk weight. on a quarterly basis.  Banks should compile the data relating to Housing Finance at half-yearly intervals on the lines of format given in Annexure 1 and keep it ready for being made available to the bank’s internal inspectors/RBI’s inspectors. Bellary. RBI. details of disbursements made by them towards housing finance to Department of Banking Supervision. RISK WEIGHT ON HOUSING FINANCE Banks extending housing loans to individuals against the mortgage of residential housing properties are required to assign risk weight of 75% on such loans which are fully secured by mortgage of residential properties and investments in Mortgage Backed Securities (MBS) of Housing Finance Companies (HFCs) recognized and supervised by NHB.

For Sree Guru Thipperudra College. Bellary. Is sanctioned can be calculated as below: The main factor banks will consider is “proof” that shows that the borrower is capable of repaying the loan on time. there is every reason to be vigilant and foresee the repaying capacity of the prospective applicant and take appropriate measures at the time of initial appraisal itself to ensure safety of the advance. Bellary. meticulous understanding of various aspects like:  Need for the Home  Sources of income  Applicants previous credit dealing  Repaying capacity  Enforcement of securities etc. Credit appraisal is an impartial and crucial exercise than disbursement or abstention of security as already stated. recovery of loan depends much on the quality of appraisal. Since the Home Loans are long term in nature spread over a period extending 15-20 years. Credit Appraisal is the process followed by banks to determine the borrower’s ability to repay his loan as well as his trust worthiness. Credit Appraisal Credit appraisal is an important exercise for building up of a quality credit portfolio and avoiding bad loans at the beginning itself.Housing Loan in SBI. A prospective borrower has to go thorough the stages of credit appraisal as practiced by different banks. 44 It is nothing but .

Bellary. Banks look into your credit history like existing loan repayments. Balance Sheets. This can be checked through a database of past loans and repayments available with the Credit Bureau of India Ltd (CIBIL). education. LTV is also a factor in eligibility calculation. Bellary. considering that one needs around 45.50% of his income for his personal expenses. Sree Guru Thipperudra College. mishandled accounts or delinquent credit cards. experience etc. 45 . The loan eligibility is usually calculated by applying Fixed Obligations to Income Ratio (FOIR). A common pattern they follow is the sanctioning of a loan amount which will be a fixed multiple of the annual income. The loan amount.Housing Loan in SBI. banks will analyze the financial statements to see how the business has been faring for the past 2-3 years considering the ITRs. Old generation banks and cooperative banks to certain extent rely upon existing relationship or the previous experience with a client. should be restricted to a maximum 45-50% of his gross monthly income. For those who have not yet decided on the property. Cross checking of the income with documents like bank statements or initiating credit verifications is also part of the process. all fixed obligations including the home loan applied for. there is an option to sanction an in-principle amount. Most banks restrict FOIR to a maximum 45-50% of monthly income. which helps to know the amount a bank would be able to give out. this. However. For the business class. P & L Accounts (audited and certified). personal credit history. current assets and liabilities. they will look into your income documents. Loan Eligibility = Gross monthly income * 45-50% – all other obligations / per lakh EMI (EMI calculated on the basis of applied tenure and rate of interest). Banks finance up to 70-80% of the property value as evaluated by the bank’s evaluator. the new generation banks strictly follow their parameters. That means.

46 . The housing loan offers many facilities to the customers that help them materialize their dream home plans better. Bellary. HOME LOAN PRACTICES IN SBI The most preferred Home Loan provider voted in “Awaaz Consumer Award” along with the “Most Preferred Bank Award” in a survey conducted by TV 18 in association with AC Nielsen-ORG Marg in 21 cities across India. The SBI housing loan comes with attractive packages and exclusive benefits. SBI housing loan is one of the most simple and customer friendly home loans across the India. Bellary. State bank of India housing loans are available with attractive interest rates and repayment terms that are suitable for the borrowers. SBI Home Loans now offers Interest Rates concessions on Green Homes in accordance with SBI's commitment to Environment protection. SBI Home Loans come to you on the solid foundation of trust and transparency built in the tradition of State Bank of India. These loans are offered by the personal banking division of SBI. Types of Home Loans offering by SBI SBI offering various types of home loans to fulfill the customers needs. Best Practices followed in SBI mentioned below will tell you why it makes sense to do business with State Bank of India. Sree Guru Thipperudra College.Housing Loan in SBI.

Housing Loan in SBI, Bellary.

1. SBI easy housing loan 2. SBI advantage housing loan 3. SBI premium housing loan 4. Housing loan product variants  SBI maxgain  SBI realty  SBI home plus  NRI home loan  SBI tribal plus  Sahyog niwas  SBI green home loan 5. Related home loan products  Earnest money deposits(EMD) scheme  SBI reverse mortgage loan 6. New products  SBI surakshit home loan  SBI yuva home loan  SBI home loan PAL 7. Gram nivas scheme

1. SBI Easy home loan:
Getting your dream home has become easier with SBI Easy Home Loan. With low interest rates for home loan under Rs. 30 lakhs category, SBI Easy ensures that you are not burdened with high interest for your home loan. Plus with over 13700
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Housing Loan in SBI, Bellary.

SBI branches nationwide you can get your Home Loan account parked at a Name Facility Type Loan amount Interest Rate SBI Easy Home Loan Term Loan or OD as in SBI MaxGain. (OD facility will be available for loans above Rs.5 Lacs.) Upto (and including) Rs.30 Lacs Card Rate applicable for the tenor of the loan – 1.50% above Base Rate, Present effective rate being 9.75% p.a.

Ist Year 1% discount over Card Rate, present effective rate being 8.75% p.a. 2nd and 3rd year 0.25% discount over Card Rate, present effective rate being 9.50% p.a.

4th year Card Rate onwards No Fixed Interest Rate option. branch nearest to your present or proposed residence.

Processing Fee
The revised processing fee structure (including service tax) is as under: Loan Amount Upto Rs.5 Lac Processing Fee Rs.1000/-

Above Rs.5 Lac and upto Rs.10 Lac Rs.2000/Above Rs.10 Lac and upto Rs.20 Lac Rs.5000/Above Rs.20 Lac and upto Rs.30 Lac Rs.7,000/-

Sree Guru Thipperudra College, Bellary.

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Housing Loan in SBI, Bellary.

2. SBI Advantage home loan
Name SBI Advantage Home Loan (Above Rs.30 Lacs and upto Rs.75 Lacs) Term Loan or OD as in SBI MaxGain.

Facility Type Loan For Home Loans above Rs 30 lacs and upto Rs. 75.00 Lacs amount Interest Rate Card Rate applicable for the tenor of the loan – 1.75% above Base Rate, Present effective rate being 10.00% p.a. Ist Year 1.25% discount over Card Rate, present effective rate being 8.75% p.a. nd rd 2 and 3 0.50% discount over Card Rate, present effective rate being at 9.50% year p.a. th 4 year Card Rate onwards No Fixed Interest Rate option.

Processing Fee:
Loan Amount Above Rs.30 Lac and upto Rs.50 Lacs Processing Fee Rs.7,000/-

Above Rs. 50 Lacs and upto Rs. 75 Lacs Rs. 8,000/-

3. SBI Premium home loan
Name SBI Premium Home Loan – Above Rs.75 Lacs

Sree Guru Thipperudra College, Bellary.

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Housing Loan in SBI, Bellary.

Facility Type Loan amount Interest rate

Term Loan or OD as in SBI MaxGain up to Rs.1 Crore. For Home Loans above Rs 75.00 lacs Card Rate applicable over the tenor of the loan is 1.75% over the Base Rate, present effective rate being 10.00% p.a. Concessions including discretionary concessions will be available over the tenor of the loan No Fixed Interest Rate option.

Processing Fee
The revised processing fee structure (including service tax) is as under: Loan Amount Above Rs.75 Lacs and upto Rs.1 Crore Above Rs. 5 Crores Processing Fee Rs. 8,000/Rs. 20,000/-

Above Rs. 1 Crore and upto Rs. 5 Crores Rs. 10,000/-

4. Home loan product variants
The various home loan product variants are:

 SBI Maxgain
An innovative and customer-friendly product to enable you to earn optimal yield on your savings and minimize interest burden on Home Loans, with no extra cost. The loan is granted as an Overdraft facility with the added flexibility for you to operate your Home Loan Account like your SB or Current Account. The product serves to minimize your interest cost by enabling you to park your surplus funds in ‘SBI-Maxgain’ (with the benefit to withdraw the surplus funds whenever you require), specially in the wake of low yields from other deposit/ investment avenues. Minimum Loan Amount: Rs.5 lacs Maximum Loan Amount: Rs.1 Crore
Sree Guru Thipperudra College, Bellary. 50

House construction should commence within 2 years from the date of availment of ‘SBI-Realty’ Housing Loan.1 crore and with a comfortable repayment period of up to 15 years. (Other terms and conditions – as applicable to regular Home Loans). Bellary. 50% above 1 crore. 30% up to Rs.2 lakh and up to Rs. 1 crore. The loan is available for a maximum amount of Rs. Features NAI  SBI Home Plus Sree Guru Thipperudra College. Customers are also eligible to avail another Housing Loan for construction of house on the plot financed above with the benefit of running both the loans concurrently.2 lakh 40% NAI above Rs. 51 . And Two title search reports to be obtained one before loan sanction another before disbursement.  SBI Realty A unique product if you are on the lookout for a loan to purchase a plot of land for house construction. Name Max amount Margin SBI Realty 10 cror 20% up to 75 lakhs. 25% above 75 lakhs and up to Rs.5 lakh and up to Rs. Properties to be valued by two independent empanelled valuations to be consider.Housing Loan in SBI.10 lakh (may be relaxed by 10% sanctioning authority if customer Undertakes to complete construction of house by own source). Bellary.5 lakh 450% NAI above 10 lakh 5% NAI above Rs.

purchase of car/ consumer durables.  NRI Home Loans State bank of India provides SBI NRI home loan for building a new house/flat. SBI lays down certain pre-conditions for NRI to avail home loan. Bellary. etc. lower of remaining HL tenure or 120 months including moratorium. Name Min amount Max amount Margin EMI Repayment SBI home plus Rs. Bellary. • The loan seeker should be at least 21 years old/ • The loan seeker should have valid Indian passport.25. education / medical expenses of family members. All home loans customers with a satisfactory repayment record of at least one year and who maintain a Savings bank or current account with us. If EMI not extended. There will be no need to obtain documentary evidence for the enduse of funds. viz.10 lakh 15% 60% If EMI extended to cover the loan max 120 months including moratorium. personal expenses. Sree Guru Thipperudra College.000 Rs. The conditions are: • The loan seeker should have stayed in India for at least 182 days or more. buying an old house/flat or repair and reconstruction of house. The loan can be used for any purpose.Housing Loan in SBI. SBI Home plus is scheme is launched for granting personal loans to the banks home loans customers against the security of their house property. 52 . However a certificate from the customer in the application to the effect that the loan will not be used for speculative purposes would be obtained. However. extension/repair of house.

Housing Loan in SBI. • Should have been working abroad for at least 2 years with valid job contract. Loans given against Third Party Guarantee Features/conditions Sree Guru Thipperudra College. Loan Amount The loan amount is to be determined on the basis of repayment capacity taking into account income. • The loan seeker should have a steady flow of monthly income with stable employment/business to ascertain the repayment capacity.  SBI Tribal Plus 'SBI-Tribal plus’ Home Loans. d. 65% for above Rs. Repair /Renovation/extension of an existing house or flat. The loan amount is subject to the following: Minimum: Rs.5 Lac. c. b. qualifications.2 Lac and up to Rs.5 Lacs and up to Rs. age. stability of occupation. assets and liabilities.10 Lacs. and employment prospects on return. which is 30% for Net Annual Income (NAI) up to Rs. 53 .10 Lacs. 3 lacs Maximum: Maximum permissible loan amount would be determined by EMI/NMI ratio criteria as applicable to regular Home Loans scheme for Resident Indian customers. • Non Resident Indians (NRIs) should have a valid Indian passport. Bellary. Bellary. a Special Scheme designed for Hill/Tribal areas for extending financial assistance to individuals in such areas to: a.2 Lac. Purchase or construction of a new house / flat (without mortgage of land) Purchase of an existing house / flat which is not more than 10 years old. 50% for NAI above Rs. 55% for NAI above Rs.

Housing Loan in SBI. businessman.500/. loan to be fully repaid by the age of 65 years. for on lending to members for housing in rural areas. • Maintaining deposit account with average balance of Rs.for last 2 years or • Maintaining loan account for a minimum period of 2 years (without any instance of overdue and bouncing of cheques etc). • Margin: If construction/purchase: 15%.2 crore. • Classified as standard assets.15 years. and agriculturists: • Min 5 years of experience. if repairs: 20%  Sahyog Niwas The Sahyog Niwas scheme has been instituted to finance the self help groups with a good track of payment record for 2 years.30% of loan amount (AGM region/branch may reduce it to 15% of the loan amount in respect of tie-up with government departments reputed corporate with availability of bulk business potential of less than Rs. 54 . self-employed. Sree Guru Thipperudra College. • Max repayment. • Min liquid security 50% of loan amount. For professionals. Bellary. For employees: • Age min 21 years. covering the following purposes. • Min 5 years of service4 • 36 times NMI’s • Min liquid security. • Loan: 2 times of average NAI for the last 3 years. Bellary.

“Green Housing” or “Green Home” is one of the types of projects identified for this purpose.  SBI Green Home Loan State Bank of India has adopted a Green Banking Policy with an objective of contributing towards the fight against the adverse climate change. Bellary. those projects which reduce Carbon Emissions and promote Renewable Energy. i.Housing Loan in SBI.25% concession in interest rate. One of the initiatives approved by the Board for this purpose is incentivizing customers who go in for Green Projects. 5. • Other terms and conditions – as applicable to regular Home Loans. • For the extension of existing house / work space to existing house /shed. tailoring shed/shop. Loan amount: Loan amount 10 times the savings the corpus of SHG including limits already sanctioned. • Waiver of processing fee. Related Home Loan products:  Earnest Money Deposit (EMD) Scheme Sree Guru Thipperudra College.) • For the renovation or repair of an existing house / shed • For the purchase of a plot of land for the purpose of house construction. grocery stores etc. Special concessions: • 5% waiver in margin. • For the purchase or construction of a house exclusively or including the housing needs of activities carried by them. (Dairy shed. Bellary. 55 . • 0.e.

Repayment: • By refund in case of non-allotment • By regular HL in case of allotment but not more than 12 months from the date of disbursement of the loan. Bellary. Individuals above 21 years of age and with a steady source of income are eligible to avail loans under this scheme. Many Government agencies. Sree Guru Thipperudra College. • PDCs one for the principle amount of EMD and another towards interest for the next 6 months should be taken to meet the eventuality of refund getting delayed. wherein applicants have to submit 10-20% of the cost of plot/house as Earnest Money Deposit (EMD) and allotments are made by draw of lots. like Urban Development Authorities and Housing Boards. Salient Features of the Scheme: • No minimum income criteria. Bellary. • Margin waived in al cases. • Waiver of security in all cases irrespective of the loan amount.Housing Loan in SBI. periodically come out with schemes for sale of plots/houses. subject to maximum loan amount of Rs.10 Lacs. The above mentioned features of the scheme are applicable subject to the following conditions: • Allotment letters/refund orders should be routed through SBI. • Eligible for 100% of application money. • Lump sum amount equal to 6 month’s interest to be taken upfront. 56 . The SBI EMD scheme is designed for financing against earnest money for allotment of a house/plot.

The new products are: Sree Guru Thipperudra College. the borrower will have the option to prepay the loan at any time during the loan tenure and there will be no pre-payment penalty. NEW PRODUCTS These home loans are lunched recently in order to provide better service and modern services to consumers. Bellary.3 lakh and max amount is Rs. Also.  SBI Reverse Mortgage loan SBI Reverse Mortgage Loan enables house-owning Senior Citizens having inadequate income to meet their financial needs for renovation/repairs to house. The borrower continues to retain ownership of the house. age above 58 years should not have more than one securing spouse undertaking to not re-marry during loan term. when loan jointly with spouse. 57 . Bellary. Loan availed in single name: 15 years if age of borrower up to 68 years and Loan tenure 10 years if age of borrower above 68 years. medical & other personal purposes.Housing Loan in SBI. Loan amount: 90% of value of property (it includes interest still maturity).1 crore. Loan availed jointly with spouse: Loan tenure: 15 years if age of younger borrower up to 68 yeas and 10 years if age of younger borrower above 65 years. 6. Features/conditions Age: above 60 years(first borrower). The min amount is Rs. Loan may be disbursed in monthly/quarterly installments or 50% in lump sum and remaining 50% though periodic payments. There is no compulsion for the borrower to repay a RML during his or her lifetime or till such time he or she continues to stay in the house.

 SBI Surakshit Home Loan: A separate product for customers who opt for home loan with life insurance cover.e. : Min contribution of 25% to combined EMI by each of husband and wife then upper age limit stands YUVA family Min NMI Loan term Repayment relaxed to 40 years : Contribution of 75% to combined EMI by Yuva or Yuva couple. Bellary. Sree Guru Thipperudra College. MNC’s. Other features like tenure. : Maximum 300 months : Fixed loan term of 240 months First 36 months only interest applied during the month will be recovered. then parents may join as co-borrowers : Rs. Bellary. 37th month onwards 204 EMI’s Loan amount : 20% extra i.50. PSU’s Government Age YUVA couple employees. 58 . eligibility as per the standard schemes.Housing Loan in SBI. Government undertakings. : Between 21 years to 35 years.2 times the loan as per regular HL based on EMI/NMI ratio Benefit under corporate salary package if Employee Company covered under CSP if not under CSP..000/.expected rental income from proposed property not o be added.  SBI yuva home loan Features/conditions Type of loan Eligibility :Term loan only : Salaried employee of companies form the private sector. loan to value. 1. then festival loan (DL) equivalent to 3 months NMI repayable within 36 months permitted.

Features Minimum age: 18 years as on the date of sanction Maximum age: 70 years. subject to availability of sufficient. Customer can confidently negotiate with the builder/seller after getting a sanction. cost of the proposed house/flat etc. 2. Under this. your Eligible Loan Amount is assessed before finalization of property deal and a Pre-Approved Loan Arrangement Letter (PLAL) is issued to you.  SBI Home Loan PAL ( Pre-Approved Limit ) Benefits of this product: 1. Features/conditions. the age by which the loan should be fully repaid. To enhance loan eligibility you have option to add: 1) Income of your spouse/ your son/ daughter living with you. provided they have a steady income and his/ her salary account is maintained with SBI. regular and continuous source of income for servicing the loan repayment. Sree Guru Thipperudra College. Loan Amount: Actual loan amount will be determined taking into consideration such factors as applicant’s income and repaying capacity. assets and liabilities. other then those mentioned above will be the same as those applicable to SBI home loan scheme.Housing Loan in SBI. i. Bellary. age.e. 59 . Bellary.

etc. 20 Lacs.) if the house/ flat were being purchased is proposed to be rented out. subject to some conditions. the population of which does not exceed 50000 as per 1991 census. 'Rural Area' for the purpose of the Scheme is the area comprised in any village including the area comprised in any town. Margin/ LTV Ratio: Loan Amount Upto Rs. 60 . Bellary. Security: Equitable mortgage of the property. 20 Lacs Above Rs. GRAM NIVAS SCHEME This customized offering is an extension of the social responsibility that we have shouldered since the very inception of the Bank.) 10% 20% Maximum LTV Ratio (Max.) 90% 80% 7. The objective of this scheme is to comprehensively cater to the needs of the village community with special focus on poorest of the poor for Housing Loans keeping in view the peculiarity of the ownership title in rural areas.Housing Loan in SBI. type of construction and other related needs. cess. Eligibility • The applicant should be between 21 years and 50 years of age Sree Guru Thipperudra College. Depreciation. Bellary. Regular income from all sources. Margin (Min. Features Operational Area The Scheme will cover all rural and semi-urban centres. 2) 3) 4) Expected rent accrual (less taxes. social habits.

30 lac Margin 10% of the project cost Sree Guru Thipperudra College. or • 5 times the Net Annual Income in case of employees.1.00 lacs • For repairs/renovation: Rs.2. or • Individuals whose existing loan account is satisfactorily conducted and is Standard Asset. or • 5 times the Average Annual Income from the business/ profession • To enhance the loan eligibility you have the option to add: o Income of your spouse o Regular income from all sources • The loan amount is. Bellary.00 lac • For purchase of land: Rs.0. Bellary. • Individuals having satisfactorily conducted deposit accounts for two years.Housing Loan in SBI. subject to the following limits • For construction/purchase of house: Rs. or • A member of a Self Help Group having savings/ loan accounts with us Applicants above 50 years may be considered for sanction of loan with all the legal heirs joining as guarantors or after obtaining a suitable no objection agreement/ power of attorney from the legal heirs Loan Amount • The loan amount will be: • 5 times the Average Annual Income from agriculture including income from ancillary agricultural activity. 61 . however.

0. decided upon the merits of each case Processing Charges Nil.50 lacs – on the basis of unit costs for different types of houses as fixed by the Bank Security • For loans upto Rs.0. not exceeding Rs.50 lacs – on the basis of simple estimates • For loans above Rs. or • Any other tangible security including agricultural land to cover 100% of loan amount Repayment Maximum repayment period of upto 15 years with option to repay in equated monthly/ quarterly/ half yearly/ yearly installments. 62 . Bellary.50 lacs: • Equitable/ Registered mortgage of the House/ Flat.50 lacs – only third party guarantee is required • For Loans above Rs.0. (Lawyer’s fee. to be paid by the borrower) (Other terms and conditions – as applicable to regular housing loans) MOST IMPORTANT TERMS AND CONDITIONS These terms and conditions are applicable to all Home Loan customers: Purpose for which home loan can be availed: 1. The loan will be sanctioned for the purpose of purchase / construction / extension / repairs/renovation of new/second-hand residential house/flat/plot of Sree Guru Thipperudra College. Bellary.0. Assessment of Eligibility • For loans upto Rs.Housing Loan in SBI.500.

63 . Bellary. Bellary. land/purchase of consumer durables/furnishings (hereinafter referred to as the ‘project’) 2. maximum permissible LTV ratio is 80%. constant and steady source of earnings for paying off the loan. The rate of interest is subject to revision from time to time due to (i) changes in Base Rate or (ii) revision even without change in Base Rate the Bank has the option to reduce or increase the EMI or extend the repayment period or both consequent upon revision in interest rate. Loan to Value Ratio (LTV): For loan amount less than Rs. Rate of Interest: Floating Rate of Interest: Interest on the loan will be charged at prevailing floating rate of interest on a daily reducing balance at monthly rests. The maximum age limit for a loan applicant is 70 years by which the loan has to be paid in full. Eligibility You should be at least 18 years of age to qualify for a state banke of India home loan. Premium of Home Loan Insurance cover (Optional) : The premium for the optional Home Loan Life Insurance cover (if availed) will be added to the loan amount. Fixed Rate of Interest: Sree Guru Thipperudra College. For loan amount less than Rs.Housing Loan in SBI. this is dependint on availability of adequate.20 Lacs.20 Lacs. maximum permissible LTV ratio is 90% of the assessed value of the property. However.

the Borrower can request SBI. to terminate the loan and the Borrower shall repay the Loan and any other amount due to SBI in full and final settlement in accordance with the provisions of the Agreement relating to preclosure. Interest on the loan will be charged at the prevailing fixed rate of interest on daily reducing balance at monthly rests. Intimation of change in Interest Rate: The borrower shall be deemed to have notice of changes in the rate of interest whenever there are changes in Base Rate or increase in interest rates where there is no change in Base Rate are either displayed on the Notice Board of the Branch or published in news papers or made through entries of the interest rate charged in the passbook/statement of account furnished to the borrower and the borrower is liable to pay such revised rate of interest. State Bank of India (SBI) may at its discretion stipulate the periodicity of computation of interest. Calculation of interest: Interest on the amount of the loan will be applied at the prevailing rate per annum on daily reducing balance with monthly rests. Bellary. SBI may at its sole discretion alter the rate of interest suitably and prospectively in the event of major volatility in interest rates during the period of the agreement. If the Borrower is not agreeable to the revised interest rate so fixed. Further. 64 . within 15 days of receipt of the notice intimating change in interest rates from SBI. subject to interest rate reset at the end of every two years on the basis of fixed interest rates prevailing then. Thenceforth the rate of interest varied as aforesaid shall be applicable to the Loan.Housing Loan in SBI. Bellary. Penal interest: Sree Guru Thipperudra College. SBI shall be the sole judge to determine whether such condition exists or not.

over and above the applicable rate will be charged if the Equated Monthly Installment (EMI) remains unpaid for a period of 30 days from the due date. on payment of residual amount.a on the irregular amount for the period of irregularity. Bellary. where loan is released in installments. whichever is early. Bounced cheque/ECS or SI dishonors:A penalty of Rs 250/. The rate may vary from time to time.Housing Loan in SBI. if any. whichever is earlier or (b) From the next month after the date of full disbursement in respect of outright purchase of land/house/flat/extension. Loan Tenor: Maximum 25 years (or) up to the age of 70 years (the age by which the loan should be fully repaid) of the borrower. including a bounced cheque.will be charged for every bounced cheque/ECS or SI dishonors. the Bank reserves the right to levy a higher rate of interest as it deems fit. Repayment: The loan is to be repaid in Equated Monthly Installments over the tenure of the loan. In the event of a default in payment or any irregularity in the account. The repayment installment commences (a) 2 months after completion of construction of house/flat or after eighteen months from disbursement of first installment. for any reason. repairs or renovation of an existing house/flat. Bellary. Enhanced rate of interest @2% p. The liability to the bank will be extinguished only when the outstanding in the loan account becomes Nil. 65 . Pre-closure Charges: Sree Guru Thipperudra College.

Collateral: If mortgage of the property being financed is not possible. If the loan is pre-closed from own resources other than borrowings. Government Promissory Notes. 66 . Bank may accept. gold ornaments or such other tangible security as may be deemed appropriate. at it discretion. Bellary. Loans on Fixed and Floating rate of interest: Pre-closure charge of 2% of the amount pre-paid in excess of normal EMI dues will be levied in case of pre-closure of loan within 3 years from the stipulated date of commencement of repayment. for which proof is submitted to the satisfaction of the Bank. pre-closure charges shall not be levied irrespective of the period for which the loan account has run. Bellary.Housing Loan in SBI. as considered necessary. Interim Security Pending Mortgage:Wherever creation of mortgage is likely to be delayed for any valid reason. may be taken for the interim period. security of adequate value in the form of Life Insurance policies. shares/ debentures. The construction of the house/flat or the modification/extension proposed by the borrower in the Sree Guru Thipperudra College. suitable security including third party guarantee. Security Primary:The loan will be secured by Equitable / Registered mortgage/extension of mortgage of the land and building/flat for which the loan is to be sanctioned. Utilization of the loan: The amount of the loan shall be utilized strictly for the purpose detailed in the borrower’s application form and in the manner prescribed.

50 Lac and up to Rs.1 Cr Above Rs.7. Earthquake etc.5 Lac Above Rs. 67 .000/Rs. Bellary. existing house/flat should be strictly according to the plan approved by the Local Authorities/Town Planning and Development authorities.20.000/Rs. If loan application is rejected after site inspection and/or abstention of legal/valuation report.8. 75% of the processing fee will be reimbursed.5 Cr Processing Fee Rs. No refund of processing fee is permissible in case of sanction/rejection by sanctioning authority.000/Rs. Entire processing fee would be refunded if application is rejected after initial scrutiny.000/- Sree Guru Thipperudra College.10.5000/Rs. Fees and charges: Processing fee: Is to be paid upfront at rates laid down by the Bank from time to time.5 Cr Above Rs. Loan Amount Up to Rs. in the joint names of the Bank and the borrower.20 Lac Above Rs.10 Lac Above Rs.1000/Rs.50 Lac Above Rs. Inspection: The Bank will have the right to inspect. Bellary. Insurance: The house/flat shall be insured comprehensively for the market value covering fire. Any modification desired in the plan as originally approved.10 Lac and up to Rs. Cost of the same shall be borne by the borrower.2000/Rs. the borrower’s property by an officer of the Bank or a qualified auditor or a technical expert as decided by the Bank and the cost thereof shall be borne by the customer.Housing Loan in SBI. flood.20 Lac and up to Rs.5 Lac and up to Rs. can be undertaken only after express sanction for it has been obtained from the appropriate authority. at all reasonable times.1 Cr and up to Rs.

State Bank of India home loan interest rates are one of the best rates that are available to you in India. 68 . Sree Guru Thipperudra College.Housing Loan in SBI. Bellary. The seeker can also examine the monthly installments for diverse periods and select and choose the more suitable option using this tool. you should give State Bank of India a thought. SBI Home loan interest rates When you’re searching for the most affordable home loan interest rates from the market. About State Bank of India Home Loan Interest Rates State Bank of India home loan interest rates are one of the most competitive rates that you will get in the market. SBI EMI calculator State Bank of India comes up with a unique SBI home loan calculator to enable its customers an easy and simple way to calculate their monthly installments and get an estimate of the amount for successive payments in settlement of their debt. For this the person must be aware of following details:• The amount he/she requires • The applicable interest rate • The duration for which you want to acquire. The SBI home loan EMI calculator is a convenient way for the individual applying for the home loan to determine the amount to be paid as an installment. The SBI home loan calculator is applicative to Indian residents. Bellary. The rates are subject to change as per the sole discretion of SBI.

more is the premium) Sree Guru Thipperudra College. 69 . The premium amount broadly relies on few conditions:• Age of the person availing the loan (the younger the person. Bellary. SBI on its website offers its clients a free of cost online SBI Home loan EMI calculator which helps them to make a calculation of their respective EMI amount and capacity to avail and repay the amount thereafter. This also gives an option to the client to get a rough idea about his monthly payments vis-a-vis the amount of home loan he/she has availed from the bank. In absence of such an insurance cover paying the EMIs would become a Herculean task for the family members of the loan taker. This minimizes the task of the customer and makes the whole banking procedure simple and easy to understand. the lower the premium) • Period of the loan (the more the loan repayment period.Housing Loan in SBI. SBI Home loan insurance The State Bank of India comes up with the SBI Home loan insurance product providing a shield to the customer's home loan in wake of any unexpected occurrence. Bellary. the lower the premium amount) • Loan amount (the lesser the loan amount. In such circumstances the deceased's family members will have the backing of the insurance cover to pay for the remaining amount of the home loan without any stress of monthly loan installments in order to repay the loan amount. their main concern is that should something happen to them their folks would have to encounter the problem of facing the impact of repaying the loan debt. People seeking home loan often encounter such worries like what if anything happens to them in that case what would happen to the home loan? Naturally.

Housing Loan in SBI. • Health of the loan taker (the premium amount would be low in case of good health of the individual) DOCUMENTS List of papers/ documents applicable to all applicants:  Completed loan application  3 Passport size photographs  Proof of identify (photo copies of Voters ID card/ Passport/ Driving  license/ IT PAN card)  Proof of residence (photo copies of recent Telephone Bills/ Electricity Bill  Property tax receipt/ Passport/ Voters ID card)  Proof of business address for non-salaried individuals  Statement of Bank Account/ Pass Book for last six months  Signature identification from present bankers  Personal Assets and Liabilities statement For guarantor (wherever applicable):  Personal Assets and Liabilities Statement  2 passport size photographs  Proof of identification as above  Proof of residence as above  Signature identification from his/her present bankers  Proof of business address as above Additional documents required for salaried persons: Sree Guru Thipperudra College. 70 . Bellary. Bellary.

In addition to this.a. Additional documents required for Professionals/self. is paid. 00. However.660 p.  Original Salary Certificate from employer  TDS certificate on Form 16 or copy of IT Returns for last two financial years.employed/ other IT assesses:  Photocopies of challans evidencing payment of Advance Income Tax.490 p. It may help one get tax benefit up to Rs. 1961. 50. that further reduces the tax liability by Rs.000 if the following conditions are fulfilled:  Capital is borrowed for acquiring or constructing a property on or after April 1.000 p.a. one also is eligible for getting tax benefits under section 80C on repayment of Rs. 1999.a.Housing Loan in SBI. (approx). These deductions are available to assesses.a. returns/ Assessment Orders.T. 1.000 p. Bellary. duly acknowledged by IT Deptt.50.  Acknowledged copies of three years I. interest on borrowed capital is deductible up to Rs 150. if interest repayment of Rs. Sree Guru Thipperudra College. Tax benefits There are certain tax benefits for the resident Indians based on the principal and interest component of a loan under the Income Tax Act.33.  The acquisition and construction should be completed within 3 years from the end of the financial year in which capital was borrowed. under Section 24(b). 71 . 1. Bellary. who have taken a loan to either buy or build a house.

he can claim further benefits from the additional loan taken.  According to the Income Tax Act.  An additional loan for extension/improvement to the same house and the individual's deductions on the existing loan are less than Rs 150. Bellary.000 for a financial year. tax rebates can only be claimed by the loan applicant.  The person.000 under Section 80C from assessment year 2006-07. subject to an upper limit of Rs 150. subject to the upper limit of Rs 150.Housing Loan in SBI. In addition to the above.000. Bellary. certifies that such interest is payable in respect of the amount advanced for acquisition or construction of the house  A loan for refinance of the principle amount outstanding under an earlier loan taken for such acquisition or construction. he cannot claim tax benefits for the same.000 for a financial year. Sree Guru Thipperudra College. Terms and conditions for availing Tax benefits on Home Loans  Tax deductions can be claimed on housing loan interest payments. If an individual fails to make EMI payments.  Tax benefits under Section 24 and deduction under section 80C of the Income Tax Act can be claimed only when the payment is made. principal repayment of the loan/capital borrowed is eligible for a deduction of up to Rs 100. extending the loan. 72 .

renewals or reconstruction. and if any profit is made. get tax deduction benefits. tax benefits can also be availed for a second loan taken to repay the first loan but not for subsequent loans.000. 73 . then a long-term capital gains tax liability would have arisen.  A husband and wife. But in case.  Tax benefits on interest on housing loans are allowable only for the original loan and according to Section 24 (1). to the extent of the amount of loan taken in their own respective name.Housing Loan in SBI. then a capital gains tax liability arises on the same for which the individual is liable to pay short-term capital gains tax since the sale took place in the same year. previously claimed. Sree Guru Thipperudra College. then tax benefits will not be allowed and benefits. if the sale had taken place after 3 years. both of whom are tax-payers with independent income sources. will be clubbed to the income and taxed accordingly.  The interest on home loans taken for repairs. also qualifies for the deduction of Rs 150. Bellary.  If an individual buys a house and sells it within the same year or after 3 years. Bellary.  On being proved that the home loan is simply an arrangement between the loan-seeker and the builder or with a third party for the purpose of claiming tax benefits. with respect to the same housing loan.

2009-10 and 2010-11 was 36%. Bellary.47 551.99 627.Housing Loan in SBI. Sree Guru Thipperudra College. The total disbursement ratio for three years 2008-09. ANALYSIS AND INTERPRETATION OF DATA Graph showing total Housing Loans disbursement Years 2008-09 2009-10 2010-11 Amount in Lakhs 667. 74 . 34% and 30% respectively. Bellary.10 Amount in Lakhs 2010-11 30% 2008-09 36% 2009-10 34% Inference: The above chart shows the ratio of total disbursement of three years.

Classification based on loan amount 1.73 Lakh 2008-09 to Rs.68.70. of loans given Amount in lakhs Inference: According to the above chart the amount of Housing Loan is fluctuating every year from in Rs.19 in 2009-10 and Rs.5 lakh Loans Below Rs.Housing Loan in SBI. Bellow Rs. Sree Guru Thipperudra College.80 in the year 2010-11. Bellary.20. Bellary.5 Lakhs 80 70 60 50 40 30 20 10 0 2008-09 2009-10 2010-11 No. 75 .

115.70 in 2009-10 and Rs. of loans given 30 34 15 Amount in Lahks 227. Bellary. of loans given Amount in Lahks Inference: According to the above chart the amount of Housing Loan is fluctuating every year from in Rs.5 to Rs. Rs. Bellary. 2.Housing Loan in SBI. Sree Guru Thipperudra College.10 lakh Years 2008-09 2009-10 2010-11 No.70 115. 5 lakh and up to Rs.10 Lakhs 300 250 200 150 100 50 0 2008-09 2009-10 2010-11 No.227.60 in the year 2010-11.96 258.96 Lakh 2008-09 to Rs.258. 76 .60 Loans from Rs.

30 in the year 2010-11.15 lakh Years 2008-09 2009-10 2010-11 No.10 Lakh and upto Rs.72. 77 . of loans given 18 19 5 Amount in lakh 241.15 Lakh 300 250 200 150 100 50 0 2008-09 2009-10 2010-11 No.50 Lakh 2008-09 to Rs.50 254. Above Rs.256.36 72.10 lakh and up to Rs.Housing Loan in SBI. of loans given Amount in lakh Inference: According to the above chart the amount of Housing Loan is fluctuating every year from in Rs.36 in 2009-10 and Rs. Bellary. Bellary. 3.241.30 Loans Above Rs. Sree Guru Thipperudra College.

4.00 in the Sree Guru Thipperudra College.73. 78 . Bellary.20 Lakhs 80 70 60 50 40 30 20 10 0 2008-09 2009-10 2010-11 No.Housing Loan in SBI. Bellary. Above Rs.15 Lakhs and upto Rs.00 Loans above Rs.43 Lakh 2008-09 to Rs.15 lakh and up to Rs. of loans given Amount in Lakhs Inference: According to the above chart the amount of Housing Loan is fluctuating year 2010-11.20 lakh Years 2008-09 2009-10 2010-11 No. of loans given 3 1 4 Amount in Lakhs 52.43 18.18.52.50 in 2009-10 and Rs.50 75. every year from in Rs.

Bellary.Housing Loan in SBI. Loans above Rs.20 Lakhs 300 250 200 150 100 50 0 2008-09 2009-10 2010-11 No. 79 . of loans given 3 1 10 Amount in lakhs 77.37 Lakh 2008-09 to Rs. 5.20 Lakhs Years 2008-09 2009-10 2010-11 No.267.77.00 267. Bellary. Sree Guru Thipperudra College.40 in the year 2010-11.25.37 25. of loans given Amount in lakhs Inference: According to the above chart the amount of Housing Loan is fluctuating every year from in Rs.40 Loans above Rs.00 in 2009-10 and Rs.

especially after banks renewed their trust on this business because of its high yields and low NAPs. The SBI interest rate for first year is 8. Standards.5%. 200910 and 2010-11 is constant. Findings  Housing loans disbursed for the last three financial years i.  Competition in the housing finance industry has intensified.  For home loans the interest with all banks are nearly the same. The percentages of loans disbursed from last three years are 36%.  There is no default housing loans from last three years. Bellary. It will change for second year according to the terms and conditions.  Most public and private sector banks are aggressive in this segment because of the low default rates and longer tenure of the loan which helps keep profitability impact of longer time. Bellary. which in turn has led to expansion of the market. But SBI Housing Loans interest rates are very low compared to other banks and HFC’s.  SBI Home Loans now offers Interest Rates concessions on Green Homes in accordance with SBI's commitment to Environment protection.e.  Interest rates are very low compared to other private banks and Housing finance institutions. Competition has contributed to a sharp decline in housing finance rates and improvement in service. 80 .Housing Loan in SBI. Sree Guru Thipperudra College. 2008-09.. 34% and 30% respectively.

they are reaching out to individual consumers directly.  To effectively market their specialized finance products. Sree Guru Thipperudra College. Bellary.  Banks are fast restructuring their business activities. Bellary.Housing Loan in SBI. housing finance companies are resorting to various segment like employee’s class. professional class and business. 81 .  The most of the borrowers prefer the mixed rate of interest. No longer confined to traditional corporate clientele.  The most of the borrowers consider the rate of interest and service offering by the institutional to select the institution.

HFCs. which appeals to the borrows. Bellary is Rs. they are posing a problem of banks.  The regulatory bodies need to streamline their policies and norms so as to come with bold procedure to recover to loans in case of defaults.30 lakh. would be a positive factor in increasing the market share. Bellary. between receive of application and disbursement of loan amount. 82 . Sree Guru Thipperudra College.  The bank needed to concentrate on middle income group people and also economically weaker sections. Bellary.. they are not generating adequate return for their shareholders.Housing Loan in SBI. Suggestions  Though the interest rates are attractive to the customers. So bank can provide maximum loan amount up to Rs.e. it should continue with this to improve the awareness regarding its new products and schemes launched.50 lakh.  Changes in advertisement.  Bank need to reduce the time taken for sanction of loans i.  As the organization undertakes many fairs. In recent years the earning capacity and standard of living of Bellary people is rapidly increased.  The maximum disbursement of SBI main branch.

Bellary. 83 . The SBI Home Loan offers you the facility to club your income with the income of your spouse and children to get th maximum loan amount. Sree Guru Thipperudra College. The bank is a public sector banking behemoth with the biggest branch network in India. When you’re searching for the most affordable home loan interest rates from the market. Conclusion SBI offers a variety of banking products with its huge network and overseas branches which includes products targeted at Non-resident Indians. you should give State Bank of India a thought. You can also club the expected accountable rent from the mortgaged property to get the correct loan amount. State Bank of India home loan interest rates are one of the best rates that are available to you in India The bank offers some unique SBI Home Loan facilities like free personal accidental insurance cover and optional group insurance form SBI Life. Bellary.Housing Loan in SBI.

statebankofindia.Gordon & Natarajan 21st Revised Edition Annual Report SBI Annual Report 2010-11 Internet www.com Sree Guru Thipperudra College. Bellary.com www.com www. Bellary. law and practice . 84 .guide2homeloan.bankbazer. BIBLIOGRAPHY: Books Banking theory.Housing Loan in SBI.

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