CHAPTER 1

INTRODUCTION
INTRODUCTION TO HOME LOANS

Home is a dream of an individual that shows the quantity of efforts,

sacrifices luxuries and above all gathering funds little by little to afford one’s
dream.
Home is one of the item that everyone want to own. Home is a shelter
to person where he rests and feel comfortable. several banks providing home
loans whether commercial banks or financial institutions to the people who need
to have a home.
Home Loan, India have been serving the people for around three decades
and providing numerous housing loan according to their varied needs at
attractive & reasonable interest rates. Owing to their wide network of funding,
Housing Loans provides services at your doorstep and helps you discover a
home as per your requirements.
Several banks are providing home loans at cheapest rate to attract
consumers towards them. The majority customer friendly attitude of these
banks, currently offer to consumers cheapest loan over homes.
In view of acute housing shortage within the country, and keeping in
mind the social – economic role of commercial banks in the present times, the
RBI advised banks to encourage the flow of credit for housing finance.
With the RBI reducing bank rate, the home loan market rates nose-diving
by fifty basis points. The Bangalore Bank and Standard chartered bank has
become the first player in this sector to announce a housing loan for a twenty
years period. No doubt it will enhance the end cost people to arrange their house
over longer duration now; it has been made easy for a person to buy that dream
house which he dreamt of long ago.
Home Improvement Loan for internal and external repairs and alternative
structural improvements like painting, waterproofing, plumbing and electrical
works, tiling and flooring, grills and aluminum windows. Bank finances up to
eighty five percentage of the cost of renovation (100% for existing customers).
Current status is reduced home loan rates by fifty basis points for all its
existing floating rate customers.

ADVANTAGES OF HOME LOANS: -

The various benefits of home loans arising to the customers are:-

(i) Attractive interest rates: -

The various banks provide engaging interest rates to boost and help their
customers. several banks provide loans on fixed or floating rates to facilitate
consumers as per their needs.

(ii) Help in owning a home: -

The home availed by a individual with the assistance of banks, because
they provide technical and financial assistance to customers for owning their
dream home.
(iii) No requirement of guarantor: -
The commercial banks currently on a daily basis, liberalize their laws
regarding home loans. Some of banks don’t even need the guarantor to grant
loan to their consumers. They also make consumers free by reliving him to find
a guarantor to finish the proceedings of availing loan.

(iv) Door-Step Services: -

These door to step services are provided from enquiry stage to the ultimate
disbursement takes place such services are helpful for customers in present busy
life. Banks like ICICI bank and standard chartered bank offers door to step
services to customers to borrow loan.

(v) Loan period: -

 There are several banks which offers maximum loan tenures up to 15-20
years based on the loan amount and the treatability of customers. This relieves
the customers to repay loan amount till a extended period.

(vi) For accidental death insurance:-

Some banks offers free accidental death insurance with housing loan
which is also helpful for the customers.
These benefits or advantages of home loans are responsible for making
than so popular among customer that a person who don’t have their home and
want to buy, they do it with home loan. Home loans help such kind of persons
in making their dream home.

DISADVANTAGES OF HOME LOANS: -

The main disadvantages of home loans are high lightened as below:

(i) Delays in processing: -

Many times, there are large delays in process of providing home loans
because various formulations to be fulfilled in this method. Due to these delays’
customers feel mentally as well as the financially weak.

(ii) Fluctuating interest rates: -

Some banks offers home loans at floating rates, that fluctuate at totally
Different intervals due to some reasons. These changes sometimes, may lead to
increase in interest rate which will increase the value of home loans to the
customers

(iii) High Cost: -

The public sector banks charge high process value for home loan’s
sanctioning. They are forced to pay serious charges at various stages to fulfill
the requirements. Some consumers are not able to pay such charges so such
people could not avail the advantages of home loan schemes.

(iii) Problems in disbursement: -

There are several issues in disbursement of home loan amount. There are
some delay in disbursement of loan amount to the customers due to legal
formalities. This causes issues to the customers.
These are limitations or disadvantages of home loans. however some
banks charges high installments to repay loan amount. Such additionally causes
drawback to customers. These limitations can be removed by providing good
and promote services to the customers.

DISBURSEMENT OF HOME LOANS :-

The each bank has its own procedure to pay the loan amount among
customers. After choosing your right home, the next step is disbursement of the
home loans. The loan amount is disbursed after identifying and choosing the
property or home that are purchased and submit the requisite legal documents.
In the disbursement of home loans a clear title and full verification to ensure
that a individual has full rights on his house.

(I) Eligibility criteria:-

However, if one could be a resident or non-resident individual who is

planning to buy a house in India, one will apply for a home loan. If a person has
decided to buy a property in the near future, he/she will apply for a loan before
even choosing the property. Once the reducing amount to put into the property
has been determined, the Housing Finance Institutions or Banks will let the
customer know that how much he/she is eligible for and this helps to plan out
the budget.

(ii) Conditions regarding co-applicants: -

All Housing Finance Institutions lay down the conditions on who can be
co-applicants. All the co-owners to the property. need to be co-applicants to
the loan necessarily. These institutions do not permit minors to join in as
either cower or as co-applicants because a minor is not eligible to enter into a
contact as per law. They do not permit even the friends or relatives who are
not blood relatives to take a property jointly.
Income Clubbing of Co-applicants:- It is as follows:-
Combination Income Clubbing: -

 Husband-Wife: - Income of husband-wife may be clubbed.

 Parent - son: - It may be clubbed if only son is there but not if any male
sibling exists.
 Brother-Brother: - If they are presently staying together and intend to stay
together in the new property, then only, their income-can be clubbed for
above purposes.

 Brother-Sister: - No clubbing-is possible.

 Sister-Sister : - No clubbing is possible.
 Parent-Minor- Child: - No clubbing is possible in this case also.

(iii) General Terms and Conditions: - The subsequent are the terms and
conditions applicable to the basic home loan product only. These are likely to
change on the basis of the variations of the home loan product. Typically, in
generally home loans, the following conditions are applicable: -

1) The loan to worth ratio (LTV) cannot exceed a particular percentage. This
differs from product to product and from one Housing Finance Institutional
Bank (HFI/B) to another. The components of the value of the Property
calculated here are covered under value of property.

2) The utmost tenure of the bank is nominally fixed by HFI/Bs. However,

Housing finance institution do provide for various tenures with different
terms and conditions.

3) The installment that one pay is generally restricted to about fifty percentage
of the monthly-gross income of the candidate.

4) The overall outflow towards all the loans that have been availed of,
including the current loan is normally restricted to fifty percent of the gross
monthly income.

5) One will be eligible for a loan amount which is the lowest as per one's
eligibility. This is calculated as per the LTV norms, the HR, and also the FOIR
norms as mentioned above.

6) Most Housing finance institution or bank consider the profile before they
decide the repayment capacity. The judgement is based on age, qualifications,
various of dependents, employment details, employer credentials, work
experience, previous track record of repayment of any loans that have been
availed of, occupation, the industry to which the candidate's business relates to,
if he/she is self-employed, then the turnover in the last three to four years .
(iv) Charges applicable to home loans: -

The various kinds of charges applicable to home loans are discussed below:

a) Processing fees: -

initial of all, comes the process fee. This is a charge that is levied by most
Housing finance institution or bank. This has to be paid at the time of
submission of the application form. It's normally charged as a percentage of the
loan amount sanctioned. Some Housing finance institution additional charge a
flat fee based on the loan amount instead of a percentage. When a lesser amount
is sanctioned the excess fees paid at the time of submission of the application is
adjusted with the charges, which one make to the HFI/B subsequently. Majority
Housing finance institution or banks refund the processing fee if the loan
application is rejected.

b) Administrative fees: -

This charge is again, ganarally, a percentage of the loan amount sanctioned.

It is collected by the HFI/B for the maintenance of customer's records, issuing
interest certificates, legal charges, technical charges, etc. though the tenure of
the loan. It is payable by the customer when he/she accepts the provided letter
given by the HFI/B. This payment has to be made before the ailment of the
disbursement. The mode of collection of these fees varies from one HFI/B to
another.

c) Rate of interest: -
 This is the rate of the interest applicable on the loan amount through the
tenure of the loan. It is charged on the principal of monthly reducing method.
Most HFIs/Bs give an option to select either a fixed rate of interest or a variable
rate of interest.

d) Legal Charges: -

Some HFIs/Bs in the main Public Sector Banks levy legal charges that they
incur on getting the property documents vetted by their panel of lawyers.

e) Technical Charges: -

These charges are also levied by certain Housing Finance

Institutions/Banks (HFIs/Bs) to meet their expenses on the technical website
visits to the customer's property. This ensures quality of construction and
construction within the norms as stipulated by the various approval authority.

f) Stamp duty and registration charges: -

HFIs that get in for a registered mortgage pass these charges on to the
customer. These are rather heavy in certain states depending on the laws
ordered down by the state where one buys a property.

g) Personal Guarantee from Charges: -

 The personal guarantee provided by the customer need to be stamped,
these charges are also recovered from the customer. They are charged by HFIs
who demand for Guarantees.

h) Cheque Bounce Charges: -

In case the cheques through which one build a payment to Hosing finance
institution get dishonored, some minimum charges are levied by the HFI. The
same are recovered from customer.

(i) Delayed payment charges: -

Housing finance institution or bank charge delayed payment charges from
the customer if he/she delays the payment of installments beyond the due date.

(j) Additional charges: -

These are levied as a percentage on the delayed payment charges by most

Housing finance institution or bank. They are levied if the one fail to pay the
dues within the stipulated time after a delay has taken place.

(k) Incidental charge: -

This is payable in case the HFI/B sends a representative from their

organization to collect their outstanding dues. It is generally charged at a flat
rate per visit. These charges are levied by most of the Housing finance
institution or banks.
l) Prepayment Charges: -

This is a penalty charged by the Housing finance institution or banks from

when one makes either a part prepayment or a full repayment of the loan. This
charge is levied only on the lump sum payment and not on the EMI that one
pays. This charge is levied on the amount prepaid by one and not on the entire
outstanding principal. Now, the decision on the repayment capacity shall be
talked about as follows.

SCHEMES OF HOME LOANS:

1) Home loans for construction of new house / flat, purchase of old

house/ flat, etc.:
Initially, lenders approved a home loan for family/own residence only. After
gaining experience and more importantly to be competitive, lenders
currently approve loans even when the applicant has more than one house or
flat/apartment. Now a days there is no general restriction on the number of
houses owned by an individual. The only stipulation is that the home loan
funds should not be used for the commercial purposes.

2) Home extension loan:

These loans are given for increasing or extending an existing home. These
are some of the instances for which you could take an Extension Loan.

• To construct an extra space or floor by getting additional FSI granted.

• Using grills or sliding windows to enclose the balcony.
• Construction of a garden or garage in the building vicinity.
3) Home improvement loan:
Home improvement loans for repairs /renovation including waterproof,
plumbing, compound wall, digging of well/tube-well, flooring/tiling,
additions like built-in cupboards /shelves, internal repairs including
replacing doors/windows, etc.

4) Home loan for purchase of housing site:

Here again, initially many banks did not approve such loans. However,
market forces have now made this a universal feature of the home loan
market. However, care has been taken in structuring the schemes for
avoiding funding for purchase of land for speculative lotion purposes.

5) Home equity loans:

A home equity loan (sometimes abbreviated HEL) is a type of loan in which

the borrower uses the equity in their home as to collateral. These loans are
sometimes useful to finance major home repairs, medical bills or college
education. A home equity loan creates a lien against the borrower's house,
and reduces actual home equity.
 Home loans
for
construction
of new
house / flat

Home
Home equity
extension
loans
loan
SCHEMES
OF HOME
LOAN

Home loan
Home
for purchase
improvement
of housing
loan
site
STEPS INVOLVED IN GETTING HOME LOAN:

STEP 1:
Submit the Application form along with relevant documents:
The finance company will process customer’s application will check the loan
eligibility based on the persons income and

personal profile. generally an up front (non –refundable fee) of about 0.5-1%

of the loan amount must be paid before processing begins.

STEP 2:
Verification of the property and supporting documents:
(Usually takes 5-7 working days after Step1)

A company representative might visit the property as well be the residence

to vary information submitted in the persons application form. Further, a
property valuation maybe carried out by the company to determine the
maximum amount they are willing to lend you. Any of references submitted
by the person in the Application Form may also be contacted.

STEP 3:
Sanction of the loan:
(Usually on the 7th working days after Step 1)

A sanction letter is issued which the customer will have to signed. This letter
will contain the amount and the terms for the loan. Some companies specify
the period for which the loan sanction is valid. The person will have to pay a
Commitment fee if you do not draw on the entire sanctioned amount before
that period.
STEP 4:
Submission of the original Property documents and signing the loan
Agreement copy
(Usually on the 8-10th working days after Step 1)

The customer will be required to leave the title deed of the property with the
company as a security for the loans. He will be required to go to the
company’s office to execute the legal loans papers.

STEP 5:
Disbursal of the Loan Cheque
(Usually on the 10 –15 working days after Step 1)

The person will draw the loan in parts depending on the stage of construction
of the building. Until such time that the entire sanctioned amount is NOT
drawn, you will pay a simple interest on the Actual Amount drawn (without
any principal repayments). The EMI payments can be commence only after
the entire Sanctioned Loan Amount is drawn.

EQUATED MONTHLY INSTALLMENTS (EMI):

The monthly repayment by the applicant is related to his cash flow. There is
an element of interest and of principal within the monthly payments. The
interest payable over the period of the loan is calculated and added to the
loan amount to arrive at the total payable of the amount. This amount, divide
by the total number of monthly installments is termed equated monthly
installment (EMI).
CHARGES IN HOME LOAN:

Acquiring a Home Loan doesn’t only involve the cost of the home loans
interest rates but it also rise other charges & fee accompanying at various
stages of taking the Home loan. You must nr consider all these charges while
comparing the cost structure across banks. Following is the detailed fee
structure incurred by banks at different loan stages:

• Processing Charge:

It is a fee collectable at the time of submitting the loan application to the

bank which is normally non-refundable. The fee ranges between 0.5 per cent
and 1 per cent of the loan amount.

• Administrative Fee:

It is a fee incurred by banks at the time of the loans sanction; there are few
banks who have removed this fee so you must check it with all the banks.

• Prepayment Penalties:

When the receivers pre-pays the loan before the loan tenure, banks charge a
penalty which usually varies between 1 per cent

and 2 per cent of the pre-paid amount.

• Legal Charges:
Banks has additional incur some charges from the customer for legal and
technical verification of the property.

• Delayed payment Charges:

When there is a delay in the payment of your EMI, banks charge a late
payment fee from the borrower which normally ranges from of the EMI.

• Cheque bounce charges:

Banks charge between Rs. Two fifty and Rs. Five hundred for every
bounced cheque towards the loan payment because of lack of funds in your
account.

POINTS CONSIDERED BY BANK WHILE GRANTING HOME

LOAN:

The borrower’s eligibility of obtaining a home loan depend upon his/her

repayment capacity & the banks establish this repayment capacity by
considering various factors of such income, spouse's income, age, number of
dependents qualifications, assets, liabilities, stability and continuity of
occupation and savings history.

IMPORTANT POINTERS IN HOME LOAN:

• Increase your Loan eligibility

• Credit History:
Your probability of obtaining a home loan are increased if you have a good
credit history which is known by banks by checking the borrower’s Cybil
score. Now it is very hard to get a loan from other bank when you already
have a bad debt with one bank.

• Clubbing of income:

Your eligibility to required a home loan will augment when you club your
income with your spouse’s income, bank in this case will calculate your
eligibility on the basis of the clubbed income of both the applicants. You can
club incomes of the spouse, children & parents staying with you and having
regular income.

• Enhance your loan tenure:

Longer is that loan tenure, lower will be the EMIs which further rising up the
repayment capacity of the borrower & in turn enhances the loan eligibility.

• Step-up Loan:

In this type of loan EMI's remain low in the beginning & increase gradually
as and when the borrower’s spending power rises. Therefore lower EMI's in
the initial years enhances the borrower’s ability to pay & further increases
the loan eligibility.

• Increase the down payment:

 You must know that in a home loan bank finances only eighty five to ninety
percentage for the property & the rest amount has to be funded by the
borrower. You should increase the down payment if you have more than
required amount which will mitigate your debt considerably.

INTRODUCTION TO THE INDUSTRY

THE HISTORY OF HOME LOANS: -

Home loans in India have made people Buy Property in India in spite of
the skyrocketing cost. Today, we find the considerable Real Estate Investment
in India, either in the field of Residential Property in India or Commercial
Properties in India. Home Loans in India are disbursed by several Banks as
Loan Banking is on for most important function of the Financial Services in
India. Property Dealers and Real Estate Consultants in India usually
recommend that we undertake appropriation Home Loan or Mortgage Loan
counseling so that we can Buy Apartment in India at an affordable Mortgage
Rate. buying the home of your dreams is not an simple task. particularly when
they decide to get a home on loan. Home loan means that you purchase of a
house on installments. In simpler terms when they want to own a home and
can’t afford to payment of lump sum, amount they you can pay it in monthly
installments with the interest rate.
The interest rates of home loans are expected to go down even further
according to analysts who foresee a cut down within the rates by the RBI in the
wake of the decision taken by US Federal Reserve to cut its rates by a
significant margin.
There are various of banks provide cheap home loans at a low interest rate.
They can avail loan against existing house for renovation or expansion etc.
There are several nationalized banks that provide finance for affordable
housing. Bengaluru Housing has put together a comprehensive data to provide
they with the cheapest Home Loans available within the market. We have listed
all the important housing finance institutes and few of the top home finance
banks providing lowest interest rates.

Lot many banks are offering home loans and this is available at low EMIs
(Equated monthly Installments). High EMIs are now a thing of past. Today
lending rate is in the range of 7.5 to 15 %.

However, before taking a loan, one should that the relationship with the
bank will be for a longer period usually 15 to 20 years so one must ensure faith
and integrity in bank.
Taking home loans these days has become easier. With the RBI regularly
bring down interest rates; taking home loans have become extremely easy.
Housing loans which were 16.5% to 18% a few years ago fell by 11.5% to 13%.
With interest rates going down, people increasingly variety apply to take these
loans. number of the leading banks offering home loans in India, including
ICICI Bank, IDBI Bank, HDFC Bank , Bank of Baroda, SBI, Standard
Chartered Bank and Axis Bank .

PROBLEMS FACED BY CUSTOMERS IN AVAILING HOME LOANS

There are everything within the world has good or bad points. No doubt
banking industry/ company has made many efforts to enhance the customer
satisfaction however customer still faced some problems. These are high
lightened as below:

1) The customer does not have correct information about different home
loan products so they face problem in making a good deal.

2) There are procedural delays, that harass the customers lot. This will
crush the curtsy of customers to take the home loan.

3) The attitude of bank staff sometimes non-cooperative and it creates a

hurdle in building trust and Confidence among customers about the banks.

4) The banks do not take under consideration the paying capacity of

customers. Therefore some customers are not able to get amount of loan needed
by them.

So above discussed are the issues which faced by customers while availing
home loans.

Types of home loans: -

Home loans provided by banks are of different types:-

 Home Purchase Loans

  Home Construction Loans
  Home Improvement Loans
   Home Extension Loans
  Home Conversion Loans
  Land Purchase Loans
  Stamp Duty Loans
  Bridge Loans
  Balance Transfer Loans
  Refinance Loans

Home purchase loans:-

This is the basic home loan for the buying of a new home. If the want to
buy a flat in some society or some already built house, banks and HFCs
sanction you home purchase loans for this process.

Home construction loans:-

This loan is provided for the construction of a new home on a said
property. The documents that are needed in such a case are slightly different
from the ones you submit for a normal Housing Loan. If they have purchased
this plot within a period of one year before they started construction of your
house, most HFCs will include the land cost as a component, to value the total
cost of the property. In cases where the period from the date of buying of land
to the date of application has exceeded a year, the land cost will not be the
included in the total cost of property while calculating eligibility.

Home improvement loans:-

These loans are provided for implementing repair works and renovations
in a home that has already been purchased, for external works like structural
repairs, waterproofing or internal work like tiling and flooring, plumbing,
electrical work, painting, etc. One can avail of such a loan facility of a home
improvement loan, after obtaining the requisite approvals from the relevant
building authority.

Home extension loans: -

An extension loan is one that helps they to meet the expenses of any
alteration to the existing building like extension/ modification of an existing
home; for example, addition of an extra room etc. One can be avail of such a
loan facility of a home extension loan, after obtaining the requisite approvals
from the relevant municipal corporation.

Home conversion loans: -

This is available for those who have financed the present home with a
home loan and wish to purchase and move to another home for which some
extra funds are required. Through a home conversion loan, the existing loan is
transferred to the new home including the extra amount required, eliminating
the need for pre-payment of the previous loan.

Land purchase loans: -

This loan is obtainable for purchase of land for both home construction
or investment purposes.

Stamp duty loans: -

This loan is sanctioned to pay the stamp duty amount that must to be paid
on the purchase of property.

Bridge loans: -
Bridge Loans are designed for people who wish to sell the existing home
and buying another. The bridge loan helps the finance the new home, until a
buyer is found for the old home.
Balance- transfer loans: -
Balance Transfer is that transfer of the balance of an existing home loan
that you availed at a higher rate of interest (ROI) to either the same HFC or
another HFC at the current ROI a lower rate of interest.

Refinance loans: -
Refinance loans are taken in case when a loan for your house from a HFI
at a specific ROI you have taken drops over the years and you stand to lose. In
such cases you may opt to swap your loan. This might be done from either the
same HFI or another HFI at the current rates of interest, which is lower.

NRI home loans: -

This is tailored for the requirements of Non-Resident Indians who wish to
build or purchase a home or property in India. The HFCs offer attractive
housing finance plans for NRI investors with suitable repayment options.
On would be entitled for home loans in the range of Rs five lakh to a maximum
of Rs one crore, based on the repayment capacity, previous credit history and
the cost of the property. The repayment capacity is calculated taking into
account factors such as:
 Age
 Income/Salary
 Qualifications
 Dependent/(s)
 Assets/Liabilities
 Credit History
  Stability / continuity of your employment/business
 Income of co-applicant/(s)
Taking home loans these days has become easier. With the RBI regularly
bring down interest rates; taking home loans have become extremely easy.
Housing loans which were 16.5 to 18 percentage a few years ago fell by 11.5 to
13 percentage. With interest rates is also going down, people increasingly
number apply to take these loans. few of the leading banks offering home loans
in India, including ICICI Bank, IDBI Bank, HDFC Bank State Bank, Bank of
Baroda, Kotak Bank, SBI, Standard Chartered Bank and Axis Bank.

The Credit Appraisal is an important step in sanctioning loan applications.

Hence the Credit Appraiser needs to has certain important documents to
compute the credit worthiness of the applicant .In the case of salaried person
these include the following :-

1) SALARY SLIPS (3 MONTHS CURRENT) :- The salary slip is sometime

a printed sheet of paper that contains 2 components

Income/Earnings column: - It contains an exhaustive list of the various

elements that are added to the persons salary. They contain various components
like Basic pay, HRA etc.

Deductions: - It contains an exhaustive list of the various components that are

deducted from the persons Earnings. They has contain various components like
Income tax, Provident fund, Employee Loans etc.
2) BANK STATEMENTS (6 MONTHS CURRENT) ;- The bank statement
contains the various transactions the applicant performs in his bank account. It
has 3 components
 Date
 Descriptions; - It has contained the brief and standardized description of
the activity or the account related to the transaction.
 Deposits: - It will contains the amounts that were credited to the account
 Withdrawal; - It contains the amounts that were debited to the account.
This is carefully studied to search out about any regular withdrawals or a
series of checks therefore any existing loans may be revealed and there
can be a correct estimate of the repayment capacity.
 Balance: - It will shows effect of transaction on the pre existing account
balance
 FORM 16 :- It is the form given by the Employer which states the
income earned from that company during the full financial year ,and
gives the details of Tax deducted at source.
 COPY OF INCOME TAX RETURN(SARAL) :- The SARAL tax
return form the reveals the structure of incomes and/or the various
earnings of the tax returnee .It is also shows the various deductions that
will not be included and it also contains the Rebates on which he earns
tax benefit.
 RESIDENCE PROOF: - The residence proof includes Electricity bill,
Telephone bill, Ration Card, Passport.
 PHOTO ID PROOF :- The photo proof includes the Pan card ,Voter ID
card, Employee ID card, Passport some more.
 AGE PROOF: - The age proof includes the Pan card, Passport, Photo
ID.
NON-RESIDENT INDIAN
SALARIED/EMPLOYED; - An NRI is a person with the Indian citizenship
but residing in another country. An NRI should take a housing loan . He is
however not eligible for a Top Up to loans, Home Equity Loans, Non
Residential Premises Loans .they is however eligible for Home Improvement
and Home Extension Loans .
An NRI Loan are appraised on the Net Salary. This is the take home pay
package obtained after reducing the deductions from the earnings .As this salary
is low it reduces their loan eligibility .However the earning is converted into
Indian Currency for computing credit worthiness.
SELF EMPLOYED PROFESSIONALS :- in the NRI applicant can also be a
Doctor, Engineer etc. In these cases will put them in the special category of Self
Employed Professionals.
Their credit appraisal is carried out are as follows:-
Their latest available of Profit and Loss A/c is reviewed by the credit appraiser.
This account has a two sides a Profit side which reveals all earnings and
gains .There is also a Loss side which shows all taxes, liabilities and losses.
We refer to the Profit side a the Gross Receipts.

Importance of a home loan

1. Tax benefits: –

To encourage lot of people buy their own house, government of

India provides tax deduction on the principal as well as interest paid on
home loan.

2. Tax benefits on second house:-

 In case of second house, you are eligible to assert deduction for the
entire amount of housing loan interest paid under Section  24B of Income
Tax Act.

3. No prepayment charges: –

Unlike alternative loans where lenders charge prepayment penalties

on payment made towards home loan , there are no prepayment penalties
on floating rate home loans

4. Balance Transfer Facility: –

In the case of home loan you have the facility to transfer your
home loan to different lender if they is giving you loan at a lower interest
rate. Check out our the Balance Transfer Calculator to know how
beneficial it will be for you to transfer your loan amount.

5. Makes it easy to buy dream home :-

For majority people buying house with own money is not possible,
home loan as it can be repaid in easy monthly installments makes it easier
to purchase a house.

6. High repayment Tenure:-

Among all kinds of loan, home loan has the longest repayment
tenure which goes up to 30 years, so one can reduce the burden of
equated monthly installments by extending the tenure. Use our home loan
as EMI calculator to know how EMI change as you change your home
loan tenure
 7. Enjoy capital appreciation: –

You will also benefit from the increase in prices of the property
over time.

8. Saves you from paying rent: –

As rent in metro cities is quite high they put strain on they monthly
budget. It is better to pay off EMIs and own a house.

Need for the study:

Home is a basic wants for every human being. The necessity for home loans
arises not because property prices are heading upwards all the time but because
home loans makes great sense from a loan term saving perspective not only are
home loans a handy tool for the common man to own a roof over his head but
they also helpful to save money in long run.
People are progressively choosing for housing loans to acquire their dream
home. Interest rate are coming down all the time and the bank and the housing
finance companies are literally falling over each other to lure the prospective
home-seekers.
Statement of the Problem:
 Due to the issues of illiteracy some of the home loan applicants and
loan takers could not responds to questionnaire properly. However
care was taken to elicit their opinion as for as possible.
 Rejection of the home loan application at the first stage
 Excess burden the down payment.
 Sanctioning of lesser amount.
 CHAPTER-2

RESEARCH METHODOLOGY OF THE STUDY

RESEARCH METHODOLOGY: -

Research methodology is a way to consistently show the analysis issues.

It should be understood as a science of studying however research is finished
scientifically. It is necessary for the researcher worker to grasp not only the
analysis ways however additionally the methodology.
This Section includes the methodology which includes. The research design,
objectives of study, scope of study together with research methodology and
limitations of study
To know the Customers perceptions about home loans, study the satisfaction
level of customers ,faced by customer in obtaining the home loan.

RESEARCH DESIGN:-

This project is relies on explorative study likewise descriptive study. It

was an exploratory study once the customer satisfaction level was studied to
recommend new way to boost up the services in presuming home loans and it
was descriptive study when elaborated study was made for comparison of
disbursement of home loans by commercial banks.

SCOPE OF THE STUDY

The Indian housing finance industry has adult by leaps and certain in few years.
total home loans disbursements by banks has up that witness fantastic growth
from last five years. There are large range of borrowers of home loans.
Therefore by this study we will verify satisfaction level of customers and issues
faced by them in obtaining home.
OBJECTIVES OF THE STUDY

There is no strongest foundation for your dream home, then an inexpensive

loan. Home loans become that stronger foundations for people that wish to own
a home. The main objectives of the study are as follows:-

 To examine the home loan schemes and lending procedure adopted by the
banks.
 To understand disbursement process of home loans by commercial bank
 To evaluate the recovery procedure of the bank.
 To study the issues faced by customers in obtaining the home loans.

PURPOSE OF THE STUDY

The main purpose of this study is to realize the data of the process system of
home loans. the main purpose of the study are as follows :-

 To know the ideas of customers concerning home loan procedure and

services.

 To check the satisfaction level of customers concerning home loans.

 To study the issues faced by customers in obtaining the home loans.

SOURCES OF DATA :-

To fulfill the information need of the study. The data is collected from the
secondary sources.

 SECONDARY DATA: -

It was collected from internal sources. The secondary data was collected on
the basis of organizational file, official records, news papers, magazines,
management books, preserved information in the company’s database and
website of the banks.

 Website
 Newspapers
 Related books
3. LIMITATIONS OF THE STUDY:-
This study also includes some limitations which have been discussed as
follows:

 To gather the information from numerous banks was quite difficult due
to non- cooperation of some banks. This proved to be major limitation of
the study.

 To access such an oversized range of customers was difficult because of

non-cooperative attitude of respondents.

 Lack of information was additionally the other limitation of the study as

some of banks do not have proper data on topic.

 There was limitation of time to conduct such aBusiness

giant survey in limited
es
available time.

 Ignorance and reluctant attitude of customers was also a serious

limitation during this study.
 Thus specially were the limitations in this research study. The maximum
efforts were created to beat these limitations within the study.

CHAPTER 3
SWOT ANALYSIS
SWOT Analysis

When we use SWOT analysis, Its often for strategic planning. It prepares for
decisions and gives an overall look at the strengths, weaknesses, opportunities,
and threats of business. But SWOT analysis can also be used to increase and
build upon customer satisfaction.
To give a well-rounded overview of  how to use SWOT analysis for a boost in
customer satisfaction, we’ll start with the Strengths and Weaknesses first.

SWOT analysis, for any who may be unfamiliar, is a planning method

typically used in the business strategy to identify
the Strengths, Weaknesses, Opportunities and Threats that may face a business
or project.

A number of us have likely had the opportunity to either observe or participate
in this exercise for the broader business in which we work.  A quick overview
of the core concepts:

Strengths and weaknesses

 Strengths and weaknesses internal to the organization.  Strengths represent
positive attributes or characteristics, factors that provide an advantage. 
Weaknesses are attributes or characteristics that place the business at a
disadvantage relative to others.

Opportunities and threats

Opportunities and threats are external to the organization.  Opportunities

represent external trends and chances to improve performance - something
happening in the outside environment that presents positive potential.  Threats
are elements or trends in the outside environment that could cause trouble for
the business, place it at risk.

 STRENGTH
 Good returns on capital expenditure-home loan limited is relatively
successful at attainment of new project and generated good returns on
capital expenditure by building new revenue streams.

 High level of customer satisfaction – the company with its dedicated

customer relationship management department able to achieve a
outstanding level of customer satisfaction among present customers and
good brand quality among the potential customers.

 Strong free cash flow – home loan has strong free cash floes that provide
resources in the hand of the company to expand into new projects.
  Strong brand portfolio – over the year home loan has invested in
building a strong brand portfolio. The SWOT analysis of home loan just
underlines this fact. This brand portfolio can especially useful if the
organization wants to extend into new product categories.

 WEAKNESS

 Limited success outside core business – even through home

loans limited in one of the leading organization in its
industry it has faced challenges in move on to other product
segments with its present culture.
 Not highly successful at integration firms with different
work culture. As mentioned earlier even though home loan is
successful at integrating small companies it has its share of
failure to amalgamate firms that have different work culture.
 Slow implementation of new technologies, latest trends and
development in current banking business.
 Organization structure is only compatible with processing
business model thus limiting expansion in adjacent product
segments.
 The profitability ratio and net contribution percentage of
home loan are below the industry average.

 OPPORTUNITIES

New trends in the consumer behavior cab open up new market for the
home loan. It provides a great opportunity for the organization to built new
revenue streams and diversify into new product categories too.
 The new taxation policy can be significantly impact the way
of making business and can open new opportunity for
established players such as home loan limited to increases its
profitability.
 The market development will lead to dilution of competitor’s
advantage and enable home loan to increase its
competitiveness compare to the other competitors.
 New environmental policies - the new opportunities will
create a level playing field all the players in the industry. It
represent a great opportunity for home loan to drive home its
advantage in new technology and rise market share in the
new product category.
 Extent for new banking services like online banking, SMS
banking core banking solution and mobile banking.
 Successful services industries like insurance.

 THREATS
 High initial cost in innovative technology up gradation
in banking resolution.
 Other commercial banks and financial institutions.
 Competitors with dissimilar strategies in co-operative
banking business.
 CHAPTER 4
OUTCOME OF THE STUDY
OUTCOME OF STUDY
 Majority of the people got loans between the age of eighteen to twenty
five years only
 Most of the customers of home loan taken are seventy percentage married
and thirty percentage are unmarried

 Most of the customers that who take home loans are graduated
 Some of the customer’s felt that the interest rates are somewhat high
 Some of the customer not having honesty on private banks like Standard
chartered bank, HSBC bank etc.
 Most of the home loan customers about 50 percentage are working
professionally
 The annual financial gain between two lakhs are more preferring for the
home loans
 The bulk of peoples are known about the home loans
 The reason for obtaining the home loan is for due to non-availability of
the funds
 The more range of the customers who got home loan from HDFC
 The majority information source of home loan is obtained from the
newspapers
 The many people are satisfied from Home loans
 The greater number of respondents of home loan is obtained from HDFC

 A few percentages of respondents have given invalid records to get the

home loans.
 Some few percentages of respondents are new employed or trainees are
getting home.

 The longer payment amount is available for the home loan.

 Greater credit eligibility obtainable for home loan

 Private sector banks are providing equal important for the both purchase
as well as construction of house

 The maximum age limit of housing loan borrowers was found fifty five
years

 The maximum repayment period of housing loan is twenty years (except

SBI and ICICI 25years)

 The majority of the home loan interest is provided under floating rate
interest

 The majority of the home loan sanctioned by commercial bank.

 The number of home loan sanctioned by commercial bank for purchase of

house and repairs.

 The most to propose house loan is 12 weeks

 The minimum of 0.5 percentage loan amount was charged as the
processing fee by all the banks

 It is seen from the analysis that a majority of respondents majority in

public sector and few of private sector make repayments in loan.

 It was found from the study that a good majority of respondents few
in public and majority in private sector save tax with the help of
housing loan up to five thousand annually.

 From the study it was found that a majority of respondents majority

public and few in the private are of the opinion of approaching the
same bank for the other loan requirements.

 Regarding the add on benefits, it was observed that a majority in

public sector and few in the private sector enjoy personal accidental
insurance facility with their housing loans.

 It absolutely was found from the analysis that a good majority of

respondents in public sector, few in private sector admit that they
would recommend their respective banks to friends and relatives.
 CHAPTER 5
LEARNING EXPERIENCE SUGGESTIONS AND CONCLUSION
Learning and experience:

This is the project gave a great chance to know about aspect of HOME
LOAN PRACTISE IN BENGALURU. It helped to know current situation of
loan parties.
By this topic it gave a lot of knowledge and experience, about loan procedure,
schemas, steps including in the home loan it is very interesting and challenging
to study this topic. I gain a many new skill management and also got chance to
learn the overall organization.
This concept make me to learnt about all type of people can also built a home
because it is the dream for each and every human being but some one has more
income some are less but this home loan make boost up the people confidence
by giving this home loan by less interest amount this concept was felt me very
interesting to me. This project gave me lot of knowledge about loaning steps
and this research made me to improve the communication skill.
The overall study of organization

 Upgrade skill:
This is one of the major things obtain from collecting
information from known persons it gives a new knowledge and
network and helps to improve many latest skills and knowledge.

 Professional communication:
 This is the special way to learn how to negative the working
through real life hands on experience this is one of the most
valuable skill will obtain from this ability to speak with the people.

 Making connections:
The people who will be reference within the time it will setup
many new connections and built the strong relationship.
 Independence:
Collecting information will reach that to require a own
decision and do things on your own being able to work
independently with little guidance is very important in operating
world.

At last I come to know what exactly needs of quality of work or

quality of work to be done or both. And also some extent I would
understand the BANKS working culture. Uniformity which is a
very essential element that management should maintain it will
also create an good impression on the minds of others regarding
their, preference, value. I had a lot of great time working on this
project , as it given insight into the working environment of the
organization. The environment experience was good. I learnt a lot
of information.
This project provide me a lot of experience and at a same time it
gave me enough scope to implement the educational ability. The
information advices presented during this project is based on
secondary information.

These suggestions have been discussed as follows:-

 To extend their customers, the Home loan should provide
specialized services in this sector. These services can be the such
as proper guidance to the customer regarding the processing of
loans, especially for the customers who are illiterate.

 To satisfy their customers and permanetly dealings in future,

should make prompt disbursement of loan amount to the
customers so that they can buy or construct their dream home as
early as possible.

 It should use easy procedure, or say, less lengthy procedure for the
sanctioning of loan to the customer. There should be less range of
legal formalities, in case this exists, then, these should be
completed in less time. This will be helpful in attracting more
customers.

 Although the interest rates on the specific norms, yet customers

seek less interest rate which can lower their cost of house.
Therefore banks should try to lower their interest rates. Needless
to say, that the bank which is having lower interest rates, have the
maximum clients for loans.

 provide Home loan according to the repaying capability of the

customer and his/her eligibility. Due to which, some customers are
not able to get amount of loan needed by them.
 produce awareness: The Company has to take care of awareness
creation about the products and services among the customers.

 Charges: The Company has to reduced the mortality and

administration charges.

 The company has to reduce their interest rates on home loan

products and services.

 The company has to identify the potential customers.

 Company should consider the present competition and should act
according to the customer needs.

 The Home loan should try to provide proper knowledge regarding

their home loan schemes, even to people who don't know about
such schemes and their advantages especially in rural areas.
therefore they should provide the knowledge to the ignorant
customers, especially in rural areas and backward urban area So,
above are the main suggestions provided to the loan. By
considering these suggestions, the Home loan can strengthen their
customer base in home loans sector. They should rise their
services and reduce legal proceedings and should be friendly to
their customers. All this will be useful to satisfy their customers.
 CONCLUSION

 In my study the tend to come to understand that a lot of peoples are

interested to take a home loan to construct their homes.
 Home loans have long period when compare to alternative personal loans
and other loans. therefore peoples are confused to take a home loan.
 Even though the interest rates are high peoples are willing to require a
loan due to some reasons.
 The interest rates is also somewhat high
 The home loan sanction process is low

Finally the complete analysis was carried out in a systematic way to reach
at exact results. The complete research and findings were based on the
objectives. However, the study had some limitations also such as lack of time,
lack of data, non-response, reluctant attitude and illiteracy of respondents,
which posed problems in carrying out the analysis. But proper attention was
made to Carry out research in proper way and to make accurate conclusion for
the Home loan which may beneficial for the banks to enhance their customer
base.