Académique Documents
Professionnel Documents
Culture Documents
For the purpose of the present study both primary and Secondary data were
used.
Primary data collected from bank visits, interviewing with staff etc.
secondary data collected from books, websites and newspaper.
Home
equityloansHome
loanfor
purchaseof
housingsiteHomeimprovementloanHomeextensionloanHome loansfor constructionof newhouse /
flat
SCHEMESOF HOMELOAN
Rate of Interest
:The lender decides the rate of interest chargeable on the homeloan, taking the following into
consideration:
1.Cost of funds:
The cost of funds is different for each lender, depending upon the mix of liabilities,
liability-raising costs (based on the image of t h e b a n k i n t h e m a r k e t ) a n d w i t h
d i f f e r e n t c o s t s i n d i f f e r e n t maturity buckets.
2.Tenor of the loan:
Generally, banks have borrowed funds with maturities up to 5 years, and some capital
fund surpluses, which may be availablefor allocation to home loan assets.
3.Capital allocation costs:
Banks are required to allocate capital based on the risk weight of each class of asset
taken on to the balance sheet.
4.Costs of administering the specific scheme.
5.
Swap costs, other funding costs
8
flow. There is an element of interest and of principal in themonthly payments. The interest
payable over the period of theloan is calculated and added to the loan amount to arrive at thetotal
payable amount .this amount, divide by the total number of monthly installments is called
equated monthly installment(EMI).
CHARGES IN HOME LOAN:
Acquiring a Home Loan doesnt only involve the cost of homeloan interest rates but it also
includes other charges & feeaccompanying at various stages of taking the Home loan. Youmust
consider all these charges while comparing the coststructure across banks. Following is the
detailed fee structureincurred by banks at different loan stages:
Processing Charge:
It is a fee payable at the time of submitting the loan applicationto the bank which is normally
non-refundable. The fee rangesbetween 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 loan sanction; thereare few banks who have removed
this fee so you must check itwith all the banks.
Prepayment Penalties:
When the borrower pre-pays the loan before the loan tenure,banks charge a penalty which
usually varies between 1 per centand 2 per cent of the pre-paid amount.
Legal Charges:
Banks also incur some charges from the customer for legal andtechnical verification of the
property.
Delayed payment Charges:
When there is a delay in the payment of your EMI, bankscharge a late payment fee from the
borrower which normallyranges from 2% to 3% of the EMI.
Cheque bounce charges:
Banks charge between Rs. 250 and Rs. 500 for every bouncedcheque towards the loan payment
because of lack of funds inyour account.
POINTS CONSIDERED BY BANK WHILE GRANTING HOMELOAN:
The borrowers eligibility of getting a home loan depend uponhis/her repayment capacity & the
banks establish this repayment capacity by considering various factors such income,spouse's
income, age, number of dependants qualifications ,assets, liabilities, stability and continuity of
occupation andsavings history.
CONCLUSION
The home loan market in India has grown at a rapid
a n d alarming rate of over 40% over the period of the last four years.A n d f r o m t h e r e p o r t s
from some of the industry experts, it isevident that there is very little
chance that there will be anysignificant decline in growth rates in the
future. Therefore itb e c o m e s i m p o r t a n t a t t h i s p o i n t i n t i m e t o
examine the keyfactors that have been instrumental in triggering
this highg r o w t h p e r i o d . T h e r e a r e s e v e r a l r e a s o n s
t h a t c a n b e considered as having attributed to the growth of the home
loanmarket. On the demand side, the first and the most important f a c t o r f o r
the growth has been faster rise in incomes as compared
t o p r o p e r t y p r i c e s , t h u s m a k i n g h o u s i n g m o r e affordable.Most of the
housing finance companies in India have introducedseveral new home loan products in order to