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INTRODUCTION
INTRODUCTION TO 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.
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.
(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.
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: -
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: -
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.
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.
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.
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
STEP 2:
Verification of the property and supporting documents:
(Usually takes 5-7 working days after Step1)
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.
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:
• 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
• Legal Charges:
Banks has additional incur some charges from the customer for legal and
technical verification of the property.
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.
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.
• 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.
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.
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 .
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.
So above discussed are the issues which faced by customers while availing
home 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.
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.
1. Tax benefits: –
3. No prepayment charges: –
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.
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.
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.
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.
RESEARCH DESIGN:-
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
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.
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.
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.
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:
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.
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
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
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 majority of the home loan interest is provided under floating rate
interest
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.
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.
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.
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.