Real Estate News on Home Loans

The formation of a new central government brought back a positive momentum in the real estate segment. With plans to increase the LTV ratio as high as 90% by the National Housing Board and discounted interest rates being offered by top lenders ICICI Bank and State Bank of India, the home loan market has witnessed a good month. The Reserve Bank of India kept the repo rates unchanged helping in continuation of home loan interest rates devoid of any hike. Now with the annual budget just a few weeks away, the real estate industry and home loan seekers are bracing for positive announcement in the budget that can bring back the buzz in the home loan segment and the real estate sector as a whole.

RBI keeps repo rates untouched:

In a positive development announced in the beginning of the month of June, the Reserve Bank of India kept key rates unchanged. The repo rate was unchanged at 8% while the reserve repo rate was fixed at 7%. The SLR however was cut by 50 basis points. The announcements were largely as per market expectations and meant little or no change in home loan interest rates for new or existing borrowers.

High expectations from Union Budget 2014-15:

With the new central government likely to present its annual budget on the 10th of July, there are high expectation from both real estate developers and potential buyers. A vast majority of people expect the Narendra Modi government to announce a real estate regulatory or watchdog much on the lines of TRAI for the telecom sector. While developers expect change in laws for easier clearances, home loan borrowers are expecting deduction on home loan interest rates making buying a home more affordable to the common man.

NHB to allow up to 90% LTV:

Earlier the national housing bank NHB announced its plans to increase the LTV ratio for home loans above Rs. 20 Lakhs to 90% of the property value. If approved the NHB plan would allow more users to avail home loans as it would reduce the margin money required by individuals seeking home loans. With the sluggish gains in the real estate sector in the past year, NHB plans to increase LTV ratio is likely to trigger a positive impetus in the domestic housing real estate market. 

ICICI Bank cuts home loan rates:

ICICI Bank, India’s largest private bank and also the biggest home loan provider in the private sector announced a 0.10 percent cut in home loan interest rates. The limited period offer ending on June 30th brings ICICI Bank home loan interest rates at par with the discounted home loan rates of State Bank of India, the country's largest home loan lender. ICICI Bank offers home loans up to Rs. 75 Lakhs 10 10.15% while women borrowers would be given a further 0.05% discount with loans available at 10,10%.

SBI extends discount scheme for women borrowers:

The State Bank of India extended its home loan interest scheme especially designed for women borrowers. The scheme which was originally to expire on March 31, 2014 has been extended for an indefinite period allowing women borrowers a discounted interest rate of 10.10% for home loans above Rs. 75 Lakhs. For home loans above Rs. 75 Lakhs, women borrowers are eligible for home loans at 10.25% compared to 10.30% for other borrowers.

Developers want Home Loan Interest Exemption to be upped

The real estate market in India exhibits a practical example of demand and supply – basic law of economics. The soaring prices of property depict its excess demand which is making investment more expensive with each passing day. The high appreciation in property prices, ranging up to 50%, has not only caught the common man’s attention, but has even tempted NRIs to invest their funds. At this point, the government has to play a crucial role in the revival of residential real estate prices with new policies, increased tax exemption, and reduced interest rates, etc.

Home Loans in India

The boom in the real estate sector has given home loan business a new dimension by attracting various investors to build their dream house. Though home loans have always been the best choice for the end customers, but in the recent times, constant home loan tax exemption of Rs 1.5 Lakhs has failed to match the inflation. The middle income groups, especially the salaried individuals’ feel prohibitive prices and a few incentives make their dream beyond reach. Furthermore, the current tax benefits are too less to fuel the demand and propel growth in infrastructure.

Need for Increase in Tax Exemption on Home Loan

With the entry of a stable government, everyone is expecting the upcoming budget to provide the required policy incentives, stability and tax concessions for promoting the investments and economic growth of the country. The new government should primarily focus on continuing stimulus measures, seeing the delicate situation of economic recovery.

Specifically, in the context of real estate, developers feel a strong need for tax exemption in order to make home loan finance sector affordable. Few of the key recommendations for the upcoming budget are listed below:

·          Infrastructure status to be given for affordable housing: In this scenario, once the infrastructure will fall under priority sector lending of banks, it will provide funds at less rates.

·         Increase in exemption limit for home loan interest: The tax benefit for home loan interest has been the same at Rs 1.5 Lakhs since 2001. Since, the real estate prices have increased manifolds; the amount of loan required by an investor has also been directly affected. Developers are of the opinion that if this limit is increased to Rs 3 Lakhs, it might help in bringing back the boom in the real estate industry. This would surely be quite lucrative for the investors as it would imply additional tax savings as well.

·         Revision of home loan limit for PSL: The housing loan limit should be revised from Rs 25 Lakhs to Rs 35 Lakhs under PSL as this move would help buyers who are struggling to buy property due to soaring prices.

·         Income tax rebate should be extended to the private sector for the development of affordable housing

To sum up, the raised expectations of developers should be considered in order to review the benefits that housing loans provide under the various sections of income tax act. This move will definitely help people at all levels to borrow in order to fulfil their dream of owning a property.

How to Choose the Best Home Loan in India?

There are a number of financial institutions and banks in India that provide varied banking solutions, loans, investment options and many more services according to an individual’s requirement. All banks are competitive in terms of offers, discounts and the interest rates; hence, it becomes worrisome to select the best amongst the hundreds of alternatives.

There are more than a hundred banks in India which provide home loans to all classes of people on the basis of affordability. The main and foremost feature to look in the home loan is the “home loan interest rates” along with the repayment methods. It should be competitive enough with no hidden charges, quick processing time and the transparency throughout the procedure.

Understanding the types of home loan interest rates helps to select the ideal one.

Ø  Secured Home loan: These are loans provided against some kind of security or guarantee, such as a loan against property, any valuable asset, or jewellery or some legal documents. If any default situation arises, then the pledged thing becomes the lending institution’s property. In this case, the interest rates are comparatively less.

Ø  Unsecured Home loan: Loans are issued without any security, but the interest rates are higher as the loan is disbursed under the lender’s risk.

Ø  Variable Interest Rates: The interest rate may increase or decrease depending on the market fluidity.

Ø  Fixed Interest Rate: Here, the rate of interest is fixed throughout the loan tenure.

Ø  Split Loan: Some lending institutions or banks also provide split loans in which half of the loan amount is of variable type and the rest would be of fixed type.

Along with home loan interest rates, there are a few other features to be looked into while going for a home loan.

1. The EMI concept - The Equated Monthly Installments (EMI) are calculated using the home loan EMI calculator, depending on the down payment amount, and the loan amount. The loan amount includes the principal rate and the rate of interest. The more the down payment, the lesser the EMI would be. Calculate and think about the size of EMI you can afford every month till the loan tenure.

2. Loan Tenure - Loan tenure can be adjusted according to the affordability of the EMI. The increased loan tenure contains the increased rate of interest as well.

3. The Processing and other hidden charges -  There are banks, which believe in serving the people in any way, thus such banks waive off the process fee with an affordable interest rate. Compare the banks for the transparency in the procedure.

4. Ensure the Eligibility criteria and the documentation process - Compare the eligibility criteria, some banks are not stern about the eligibility and also provide a relaxation in the age and income factors. Ensure the facts and ensure a hassle free documentation check process.

5. Prepayment / Foreclosure options - The home loans can be closed anytime after six months of loan disbursal with a small percentage of foreclosure charges of the outstanding principal amount.

Thus, narrow down your search after considering and understanding the features to choose the best home loan, which can be applied either online or at the nearest branches with the required documents. Then the essential verification are done to disburse the home loan in 3-4 days.

About DHFL Home Loan and its current interest rates

Dewan Housing Finance Corporation Ltd(DHFL), established by Rajesh Kumar Wadhawan in 1984, is known for making available affordable housing finance to the lower and middle income groups in semi-urban and rural parts of India. It is one of India’s largest housing finance companies (and the second largest in the private sector).

The company provides home loan products tailor made to suit the needs of customers. It has tie-ups with leading public and private sector banks namely Punjab & Sind Bank, United Bank of India, Central Bank of India and YES bank to provide home loans to customers through a home loan syndication agreement. It has set up representative offices in London and Dubai to serve the ever increasing NRI population in these regions, and tied up with UAE Exchange to offer its home loan products through the various UAE Exchange centres in the GEC countries.

DHFL believes in reaching out to a vast majority of the low and middle income group customers. As a value-added product option to housing finance, it provides double protection to insure the life and property of customers, subject to terms and conditions. In association with leading financial Insurers in India, the company offers unique home loan linked insurance plans which could be customised to suit customer requirements. The basic intent is provide security to the family in the unfortunate event of the death of home loan borrower.

If you vail loan from DHFL, you can be assured of fair terms, total transparency and flexibility.  You can avail DHFL home loan for ready built-up or under construction house/flat purchase. The loan does not exceed 85 per cent of the cost of property (including stamp duty and registration fees) or 80 of the market value, whichever is lower. If you want further enhance the loan amount, you should have a co-applicant, whose income can be clubbed together with yours to enhance your home loan eligibility.

Your home loan amount will be determined taking into various account factors such as your repayment capacity, age, educational qualifications, stability and continuity of income, number of dependents, co-applicant’s income, assets, liabilities and your saving habits.

The tenure of your DHFL home loan ranges from 1 to 30 years. The term, however, won’t go beyond the retirement age or 60 years whichever is earlier (65 years for self-employed individuals). If you opt for loan period of 30 years, you can reduce the EMI amount on your home loan, enabling you to spend more money on your lifestyle and other needs.

DHFL offers one of the most competitive rates in the market (see the table below). The Interest rate applicable is based on the DHFL’s Retail Prime Lending Rate (RPLR) which fluctuates from time to time based on the money market conditions.

Bank Name	Up to 30 Lacs	From 31 Lacs to 75 Lacs	Above 75 Lacs	Processing Fee	Prepayment charges
DHFL	10.50% (for salaried), 10.75% (For SEMP)	11% (for salaried), 11.50% (For SEMP)	11.50% (for salaried), 12% (For SEMP)	1% for Salaried & 1.5% for SENP	NIL

In case of salaried individuals (SAL), home loan processing fee is 1 per cent of the loan amount, whereas for self – employed professionals / non-professionals, it is charged at 1.5 per cent of the loan amount, plus service tax and cess as applicable.

Home Loan Delay Bugs Customers

Home loans can easily be termed as the best financial schemes that allow borrowers to build their own dream house. In India, all the major banking institutions are known to offer high quality home loan schemes to customers who are willing to buy a new home. Even though the process of applying for a home loan is simple and straightforward, you might face certain delays due to various reasons. If you feel that home loan bugs customers, then you’d be wrong as by avoiding certain mistakes, you could easily make the process run smoother.

Home loan delay bugs customers who are in search of a quick loan advance; and the best thing that you could do as a borrower is to go through the reasons why you might have to face a delay. This will surely help you in improving your situation and putting the best foot forward.

Applicant’s income

The borrower must have a certain amount of monthly or annual income for being able to apply for a home loan. So, if you don’t submit the right salary slips that show your monthly income, then you might have to face a lot of delay because the bank is going to delve further into the matter before granting you a loan.

Opening cash reserves

Even if you meet all the eligibility requirements, the bank might ask you to open a cash reserve in which you’ll be asked to maintain a certain amount of balance in one of the bank accounts. This amount is kept aside as a security for the bank in case you fail to make further payments.

Credit history

Most of the banking institutions spend a lot of time in conducting a background check. They carefully go through your credit history to determine the fact that you’re a capable borrower who can easily repay the loan. So, it’s advised that you keep your credit history and report clean prior to applying for the loan.

Employment details

It is best to put forward your employment details in front of the bank as and when you submit the application form. If you fail to submit your documents, the bank might spend a lot of time doing a comprehensive check on your employment history which in turn would delay the whole procedure.

Incomplete or missing documents

If you fail to produce any kind of documents or even your photographs on time, then you might face an unwanted delay during the application procedure. A home loan cannot be granted to a borrower unless he has submitted all the documents in the head branch.

Applying on the Closing Day

You could even face some delays if you’re visiting the bank on the closing day. Banks usually don’t deal in any kind of customer services on this day and so you might have to delay the procedure by a day or two. So, you got to plan out your visit beforehand so that you can secure the loan easily.

These are some of the reasons why a home loan delay could bug the customer. Try to create proper strategies for making the home loan acquisition process a smooth and simple one! 

How Profitable is it to Invest in Real Estate?

Since the beginning of time, real estate has been a high paid investment. Not only does it double the value of money, but also keeps it secure. The trend in India for different real estate investments have been on the rise, owing to its immense potential.

How is home loan connected to real estate?

When it comes to real estate, thae first thing that comes into our mind is the amount of money required. With the growing inflation rate, it is not possible for everybody to arrange and accumulate huge sums in a short time. The common man is bounded by different money constraints, which propel him not to think about real estate investment. This is where the concept of home loan comes into the picture.

A home loan gives you the facility of investing in property that will reap benefits in the future. There are many banks, which have initiated different home loan schemes for the common man. Some of them are:

• ICICI: Being one of the pioneers in the banking sector, ICICI bank helps you build your home or invest in a feasible real estate option. With longer tenures, lower EMIs and low home loan interest rates, this bank has been able to fulfill the investment needs of many customers. The simplified documentation and flexible repayment procedure has captured the attention of many people.

• SBI: State Bank of India has been voted “The most preferred home loan provider” in AWAAZ Consumer Awards along with “Most preferred bank award” in a survey conducted by TV 18 in 21 cities across India. With its low home loan interest rates that are calculated on a daily reducing balance, the bank is able to save a lot for the customer. Also, its huge network of branches in the country has enabled many people to opt for home loans from SBI.

Benefits of real estate investments

There are many benefits of investing in real estate. Some of them are:

Ø  Ability to enhance value: When it comes to real estate, an investor can build or rebuild his or her asset in order to raise its value in the market. Being a tangible asset, property investment gives you more control over your investment compared to other forms.

Ø  Yield: The main reason why you should invest in real estate is the high yield value. Your investment portfolio would have some investments, which do not have regular or healthy returns. Invest in property compensates for losses incurred in stocks or bonds.

Ø  Effect of inflation: The real estate business does not get influenced by the inflationary conditions in the economy. You will find many rent leases that get renewed with new rent rates. Being directly linked to the rents paid by the tenants, the returns keep on increasing during inflation.

Ø  Diversification: When making your investment portfolio, always look into diversification in order to ensure better asset allocation. Real estate returns are not at all co-related to any other investment in your portfolio. This not only diversifies your investments, but also take care of the risk involves in it.

You should have investments that will reap benefits and monetary gains in the future. To ensure the proper circulation of the hard earned money, real estate is the safest option for any investor.

SBI Home Loan New Scheme 2014

State Bank of India is one of the most trusted banks in India. Owing to its nationalized status, it has a loyal customer base. Along with this, it has been voted in AWAAZ Consumer Awards as “The most preferred home loan provider” and “Most preferred bank award” in a survey conducted by TV 18.

SBI home loans are considered a solid foundation of transparency and trust, which are some of the main aims of this bank.

Advantages of SBI home loan

Customers always prefer SBI compared to other banks for home loans, owing to its advantages. Some of them are:

• There are many benefits for a customer as SBI home loans are a package of different facilities.
• SBI home loan interest rates are very low, which initiates savings at the borrower’s end.
• The interest rate for SBI home loans is charged on daily reducing balance.
• There are no hidden costs or administrative charges for any SBI home loan.
• In case the customer wants to prepay the home loan before term expiry, there is no prepayment penalty charged.
• The customer can avail the loan from any of the 15,350 branches of SBI across India.

Different SBI schemes for home loan

In order to fulfill the diverse needs of a customer, many SBI schemes have been formulated for home loans. Some of the main SBI home loans available are:

SBI Yuva Home Loan

This home loan is tailor made especially for youths.

Eligibility	Repayment	Interest rate
Age: 21 years to 45 years Income: Minimum net income should be Rs. 30,000	The interest applied on the SBI home loan is payable during the first 36 months. The actual monthly EMI starts after 36 months.	Upto Rs. 75 Lakhs - 15 bps above the Base Rate (Spread over the Base Rate that is 10%) and 10.15 % p.a (Effective rate) Above Rs. 75 Lakhs - 30 bps above the Base Rate (Spread over the Base Rate that is 10%) and  10.30% p.a (Effective rate)

Her Ghar

This SBI home loan is especially meant for the women.

Eligibility	Loan amount	Interest rate
The woman should be the sole applicant or first co-applicant of Home Loan. The property proposed to be financed should be either in the sole name of the woman borrower or she should be the first owner in case of joint ownership.	Maximum 30 years or to the age of 70, whichever is early.	Upto Rs. 75 Lakhs - 10 bps above the Base Rate (Spread over the Base Rate that is 10%) and 10.10 % p.a. (Effective rate) Above Rs. 75 Lakhs - 25 bps above the Base Rate (Spread over the Base Rate that is 10%) and  10.25% p.a. (Effective rate)

SBI Realty

This SBI home loan is meant for the construction of a house or purchase of a plot.

Loan amount	Repayment	Interest rate
Rs. 10 Crores	Up to 15 years	Upto Rs. 75 Lakhs - 15 bps above the Base Rate (Spread over the Base Rate that is 10%) and 10.15% p.a (Effective rate) Above Rs. 75 Lakhs - 30 bps above the Base Rate (Spread over the Base Rate that is 10%) and  10.30% p.a (Effective rate)

The above mentioned SBI home loans are the primary ones; however, apart from these, you will also find SBI home loans for NRIs, tribal areas and many others.