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In India, buying a house is a milestone.

It signifies having arrived and one derives tremendous sense of security from the purchase of a house. Apart from the emotional benefits, there are tax benefits to be enjoyed as well on purchase of a house. And this applies not only to the first house but also to some additional property that you may purchase. The tax benefits may change with the new Direct Tax Code being proposed. Further with interest rates on loans going down and property prices also coming down, it would make good sense to invest in a house to live in. If you and your spouse are both working then there are double tax benefits to be availed by taking a home loan. When you take a home loan and start paying the EMIs (Equated Monthly Installments), there are two components to it One is the principal that you are repaying and the second the interest. On both of these, there are tax deductions available.

1. Principal: Under the Section 80C you can avail a deduction of upto Rs.1 lakh
from the taxable income on principal amount being paid every year. However, if there are other deductions you are claiming like EPF or PPF, insurance premia etc, deduction against the principal will be reduced by that amount.

1. Interest: Under Section 24(b), interest component of the EMI also is eligible
for deduction from taxable income. If this loan is on a house that you are presently occupying then this is limited to Rs.150,000 every year. If however this is on a property that you have let out or not residing in, then the entire interest payment is eligible for deduction. 1. This deduction is allowed from the year the property is purchased or from the year the construction of the property is completed. The interest payments incurred before the start of the financial year in which either the property is bought on completed construction is allowed as a deduction from that year onwards upto a total of 5 years. The amount allowed is 1/5 of the total each year. The ceiling of Rs.150,000 included this interest amount as well. 1. Further if you own the property, against which a home loan has been taken jointly with your parent, child, spouse or sibling then both of you can claim Rs.150,000 each as interest deduction . The ceiling of Rs.150,000 does not apply if the property is not self occupied, then you can claim the entire interest paid as a deduction. So when you are evaluating the pros and cons of either taking a loan or prepaying a loan, you need to consider the effectiveness of the loan post the taxation angle.

For example you have an option of a home loan of Rs.10 lakhs @10.5% for 15 years. This is on a property that is self occupied. If you are in the highest tax bracket and you get a deduction on the interest and the principal amounts, your rate of interest works out to approximately 7%. So remember to evaluate a home loan with the tax benefits and then take your decision whether to take the home loan or prepay it as may be the case.

The home loan market in India has seen a lot of change since the last 10 years or so. Apart from the offers and plans, even the numbers of financial institutions and the terms & conditions have seen a lot of transformation.

With so many options, a prospective customer is spoilt for choices. With homes being a necessity coupled with the peer pressure, there is a major chance that an individual makes mistakes. Some common mistakes which prospective home loan buyers tend to commit as discussed as follows:

Signing

Seeing

Upwards

The concept of signing something seeing upwards instead of seeing the papers is a financial phrase meaning signing the dotted line in haste, without understanding. Many people are so eager to get their hands on the keys of their new houses that at times they themselves press for expediting the process. It is advised to check the terms and conditions at least twice. There are many financial jargons during the process; cut-short and ask for an explanation from the home loans india agent.

Not

Checking

Penalties

and

Repayment

Terms

When someone applies for a home loan, they assume that every EMI will be paid on time, so they skip standby EMI aspects and repayment terms. It is recommended that you give prominence to these aspects and also make sure you have a backup plan.

Substituting

Home

Loan

Agent

with

Friend

or

Relative

Home loan agents not only work in this sector, but they are trained at this aspect. A friend who has successfully handled a home loan is a good adviser but giving the reigns to him/her is not advised.

Lastly, many people take different routes to organize the money or parts of it, like borrowing from friends and family or taking a personal loan to cover the paperwork charges. Instead, it is advised to apply for a homeLoans in india when you are ready.

Lastly, it is recommended to take time before you agree in black and white. Email This

Find low interest Home loans in India


Posted by loans bazaar Monday, 20 June 2011 at 03:38 0 commentsLabels: Car Loans, Credit Cards, Education Loans, Gold Loans, Home Loans, Personal Loans

You can easily grab the home loans in India at the low rate of interest with ease. Indian banks have come with the beneficial offer of less interest home finance for the loan seekers. Thus, it has become very convenient for the all finance seekers to apply for home loan in India by the finance providing firms in the country. Indian banks have offered the beneficial home loan plans such as fixed loan, floating loan and hybrid loan. All these three types of home finance can be easily grabbed by the Indian loan providing agencies at the less interest. Let us know about the types of home finance offered by the India banks as follows:

Fixed loan plan

Under this plan, you can grab the home finance at the fixed rate of interest. However, you may have privileges to pay back your home finance at the estimated rate of interest. The fixed rate of interest may be applicable for the monthly or yearly basis. It is recommended to grab this type of home finance in case of bad credit as well.

Floating loan Plan

This type of loan plan enables you to avail the home finance at the floating rate of interest. Here, the interest rate of home finance may fluctuate according to the marketings trend or present scenario. However it is up to you that if you are able to pay the market oriented interest or not? Under this plan home loan can be sanctioned after the less paper work formalities with ease.

Hybrid loan plan

It is also easy to grab the low interest home finance under this plan. In this finance plan, the rate of interest may remain same or fluctuate according to the markets present condition. So, you can pay back the loans interest as per your worth with ease. Documentation procedure followed under this plan is also very easy.

Thus, you can easily grab the low interest home loans India from any of the finance providing firm with ease.

The Home loan sector in India is the pi-votal role player in the growth of the real estate scenario in India. With tax incentives given to the housing finance sector in the annual budget of 2001, transactions related to buying and selling of residential properties increased considerably and was much higher as compared to previous years. Since the new class of buyers are relatively younger set of customers who are more aware about legal documentation and approvals, buyers are now more 'end-users' rather than investors; theproperty market in India undergoes transformation to align itself with global standards with an increased emphasis on quality & cost control and documentation methods. In the current economy of India, the real estate sector has the maximum propensity to generate income and demand for materials, equipment and services. It can be said that housing finance companies were formed for co-existing with buyer's requirements of housing loans for investing in properties. Home loans are made available by financial institutions to both Indian and NRI customers at floating and fixed rate of interest and also at attractive EMI options.

For construction or buying a new home

For home repairs and renovations

For purchase of plots

Against mortgage of property

No tax benefits are available for NRI customers unless you file returns and thereby become eligible to avail of the tax benefits. Besides home loans, Commercial property loans are also available and different financial institutions in India provide commercial loans at different rates and different upper limits. Real estate loans are available to builders, promoters and real estate developers. The experience and financial standing of the builders is taken into account before the loan is granted which is to be returned with the minimum installments. Today, the amount of money that a city dweller spends on rent is roughly the same, or only slightly less than the amount he pays as an EMI on a housing loan. Earlier the home loan sector in India was solely dependent on nationalized and public sector banks, but the entry of public sector banks into the housing

finance business marked the beginning of the first round of interest rate cuts. And this reduction in interest rates has enhanced the borrowing power of customers. Moreover, HFCs are offering incentives to attract investors like

Some companies sanction the housing loan without requiring you to identify property as a prerequisite for eligibility

Free accident insurance & property insurance

Waiving of pre-payment penalty

Waiving of processing fee

There are a few documents which the finance companies require for setting up criteria for eligibility of Home loans.

Salaried Employee

Self-employed

The latest salary slip showing statutory Computation of income for the deductions previous two years, certified by a Chartered Accountant Form 16 (showing tax deducted at source by employer) Proof of age (birth certificate/voter identity card/passport/school-leaving certificate/valid driving license Proof of residence (phone bill/electricity bill/ration card). Profit & Loss Account and Balance Sheet for the previous two years, certified by a Chartered Accountant Proof of age (birth certificate/voter identity card/passport/school-leaving certificate/valid driving license) Proof of residence (phone bill/electricity bill/ration card).

The realty boom in India has given a new dimension to the finance sector in India - both in Home Loans and Home Insurance segments. This has not only given a competitive edge to the finance companies to provide attractive options to customers but has also contributed to the increased investments in the real estate sector. This has resulted in 13 new institutions foraying into the housing finance business in the last three years.

Major Home Loan Providers Banks & Public State Bank of India, Corporation Bank, Punjab National

Sector Housing Finance Companies

Bank, Central Bank, Dena Bank, Allahabad Bank, Bank of Maharashtra, Bank of Baroda Housing Finance, Can Fin Homes, GIC Housing Finance, LIC Housing Finance, PNB Housing Finance, SBI Home Finance, Centbank Home Finance, HUDCO, LIC, etc. HDFC, ICICI Ltd, Citibank, HSBC, StandardCharteredGrindlays, IDBI Bank, etc

Financial Institutions

Loans to real estate cos up 20% in Jan The Financial Express Even as real estate sector is seeing a sharp drop in transactions and rising debt, banks lent over Rs 450 crore to the sector in January alone; a 20% rise year-on-year. The total outstanding has risen to Rs 1,05,884 lakh crore. Loans to the commercial real estate sector grew nearly 20% year-on-year in January, according to Reserve Bank of India data. In December 2010, loans had grown 20.4% year-on-year. Bank of India, executive director, BA Prabhakar said, Recent developments in the real estate sector has made banks cautious in disbursing fresh loans and it will not be easy for developers to get financing. However, our portfolio is performing well. Meanwhile, lending by commercial banks to individuals for buying homes, cars and consumer durables has seen a 15.8% rise in January 2011, according to RBI data. Banks had turned cautious in 2009-10 after being saddled with non-performing loans (NPAs) as the repayment capacity of customers was hit following the economic downturn. But they seem to be re-entering the market.

For the home loan market, volume seems to be the name of the game at present, with emphasis on expanding book rather than focussing on margins. The combination of lower property prices, attractive interest rates and aggressive promotions does seem to be working, and banks are seeing a progressive pickup in disbursals. Axis Bank has entered with its own discounted rate scheme for new home loans, PNB and SBI have extended the time period for which their low rate scheme will be applicable. Banks have been conservative with their lending. The target base remains the salaried customer with a regular source of income. Monthly installments are capped at 5055% of net monthly salary. Demand for housing remains high, and the majority of borrowers are owner-users rather than pure investors. Hence, they prefer to pay the monthly instalments even in times of financial stress. We do not see banks being in a hurry to raise home loan rates until they see definite signs of overall interest rates in the system hardening.

Axis Bank home loan Features of Power Home Loan Attractive interest rates Balance Transfer facility Doorstep service Nil Prepayment charges

Home Loan : Loan Purposes You can apply for Power Home for the following purposes

Purchase of a plot of land & construction of house thereon Construction of a house on plot of land already owned Purchase of a new house/flat Purchase of old house/flat. The residual age of the property as confirmed by our empanelled valuators at the maturity of the loan should not be less than 10 years Extend/Renovate/Repair of a house or flat already owned by self Take over of existing housing loan

Home Loan : Eligibility A) Salaried Individuals Any individual who is in permanent service in Government or reputed companies. The applicant in all the cases should be above 24 years of age at the time of loan commencement and up to the age of 60 Years or superannuation, whichever is earlier at the time of loan maturity. B) Professionals Professionals (ie, doctors, engineers, dentists, architects, chartered accountants, cost accountants, company secretary, management consultants only) can apply The applicant should be above 24 years of age at the time of loan commencement and up to 65 years or less at the time of loan maturity C) Self Employed Individuals Any individual filing Income Tax returns can apply The applicant in all the cases should be above 24 years of age at the time of loan commencement and up to 65 years or less at the time of loan maturity
Documents Required The following documents are required along with your loan application:

Purpose Salaried Others Proof of identityVoter's ID card or driving license or PAN card Voter's ID card or driving license or or photo credit card or employees ID card or PAN card or photo credit card defense or police or government department ID card Proof of income Latest salary slip showing all deductions or IT returns for the last 2 years and Form 16 along with recent salary certificate computation of income for the last 2 years certified by a CA Proof of Bank account statement or latest electricity bill Bank account statement or latest residence or latest mobile or telephone bill or latest credit electricity bill or latest mobile or card statement or latest LIC policy or insurance telephone bill or latest credit card premium receipt or employers letter certifying statement or latest LIC policy or the current mailing address or latest NSC or insurance premium receipt or latest other similar instruments indicating the address NSC or other similar instruments or existing house lease agreement indicating the address

Bank statement Last 6 months or Pass Book where salary or income is credited Guarantor form Optional Limits on home loan Minimum - Rs 1 lac Maximum - Rs 50 lacs Margin Sr. No Loan amount (Rs.) 1 For Housing Loan upto Rs.20 Lacs 2 For Housing Loan above Rs.20 Lacs 3 Improvement or renovaton loans 15% in case of Home loans 25% in case of improvement or renovation loans Quick and easy home loans Interest Rates: Sr. Type Loan amount (Rs.) No 1 Floating Less than Rs. 25 Lac Rate Loans greater than Rs.25 lac and upto Rs. 75 lac Loans greater than Rs. 75 lac Top Up - All loans Renovation 2 Fixed Rate All Loan Category Base Rate - 9.75%

Last 6 months

Optional

Margin 15% 20% 25%

Base Rate + Mark Effective Rate Of Up Interest Base Rate + 0.5% 10.25% p.a. Base Rate + 0.75% 10.50% p.a. Base Rate + 1% Base Rate + 2% Base Rate + 2% 10.75% p.a. 11.75% p.a. 11.75% p.a. 14% p.a.

Scheme Loan Prepayment No Due Solvency Charges for Charges for Processing Charges Certificate Certificate Late Payment changing Charges of EMI from fixed to floating rates of interest Power 1% + Nil NA NA Rs 500 + taxes Min. Rs. Home Service tax per cheque 5000 or 1% as bounce and a of the applicable penal interest outstanding @24% per amount annum i.e. @ whichever is 2% per month higher on the overdue

Charges for changing from floating to fixed rates of interest Min. Rs. 5000 or 1% of the outstanding amount whichever is higher

installment/s Other Charges: Sr. No Type Charges 1 Repayment Instruction/Instrument Return charges Rs.500/- per instance 2 Cheque/Instrument Swap charges Rs.500/- per instance 3 Duplicate Statement issuance charges Rs. 250/- per instance 4 Duplicate Amortization schedule issuance charges Rs. 250/- per instance 5 Duplicate Interest Certifcate (Provisional/Actual) issuance charges Rs. 250/- per instance 6 Issuance charges for Photocopy of title documents Rs.250/- per document set 7 Charges on customer initiated requests for copies of documents Rs. 250 per document set Switching Cost:Switching from the Floating rate scheme to the Fixed rate scheme and vice versa is permissible. If a fixed rate customer wants to reschedule the loan to a lower interest rate, the same is also permissible. Home Loan : Terms and Conditions Repayment Repayment period for home loans shall not exceed 25 years. Repayment period of pre-allotment bookings of housing loans shall not exceed 1 year Repayment period of improvement or renovation or extension of existing property shall not exceed 10 years. Security Equitable mortgage of the property to be financed by way of deposit of title deeds. Disbursement The loan will be disbursed in full or in suitable installments, taking into account the requirement of funds and progress of construction, as assessed by the Bank directly to seller or builder or local development authority or supplier of materials etc. Processing charges or admission fee Processing fee equivalent to 1% of the loan amount (applied for) will be collected along with the application form (taxes as applicable). Penalty for early closure Nil. Other Conditions Bank reserves the right to reject any application without assigning reasons thereof The applicant will undertake to inform the Bank as and when there is a change in address or employment The terms and conditions mentioned above and elsewhere under the scheme are subject to modification from time to time solely at Bank's discretion.

Home Loan : Fair Practice Code For Lenders As directed by the Reserve Bank of India, vide circular DBOD.No.Leg.No. BC.65/ 09.07.005/2006-07 dated March 6, 2007; the Bank has adopted modified Fair Practice Code for lenders as approved by the Board of Directors. The salient features of the same are: i) Applications for LoanIn the loan application form, the Bank shall provide comprehensive information including information about fees and charges if any payable for processing and amount of such fees refundable in case of non acceptance of application, prepayment options and other matter which affects the interest of the borrowers, of all categories of loans, irrespective of the amount of loan sought by them. ii) Processing a. The Bank shall provide acknowledgement for receipt of all loan applications indicating the time frame within which the application will be disposed of. b. The Bank shall verify the loan application and if additional details / documents are required, these will be sought from the applicant. c. For all categories of loans and irrespective of any threshold limits, the Bank will be expected to process the application without delay. In case the application is turned down, the Bank will convey in writing to the applicant the reasons for rejection within one month. iii) Loan Appraisal and Terms and Conditions a. The sanctioning authority will be expected to ensure proper assessment of the credit application as per the extant instructions and credit policy of the bank. The availability of adequate margin and security will not be a substitute for due diligence on the creditworthiness of the customer. b. All the terms and conditions and other caveats will be duly communicated by an authorized official of the Bank to the customer in writing. c. The acceptance of the customer will be obtained on the sanction letter with the customer's signature under the caption "I/WE ACCEPT ALL THE TERMS AND CONDITIONS WHICH HAVE BEEN READ AND UNDERSTOOD BY ME/US". d. A copy of the loan agreement along with all the enclosures quoted in the loan agreement will be furnished to the customer at the time of issue of the sanction letter. e. The sanction letter / loan agreement will clearly state that the credit facilities will be extended solely at the discretion of the Bank and that drawings under the following circumstances will be solely at the discretion of the Bank.

i. ii. iii. iv. v.

Drawings beyond the drawing power / sanctioned limits. Honouring of cheques issued for the purpose other than specifically stipulated in the sanction. Drawings in an account once it is classified as NPA. No drawings will be allowed in case of non-compliance of the terms and conditions by the borrower. Meeting further requirements of the borrower on account of growth in business will be subject to proper review of the credit limits.

iv) Disbursement of loans including changes in terms & conditions a. The disbursement will be done immediately on compliance of all the terms and conditions of the sanction by the borrower and the branches need not refer to the sanctioning authority for disbursement. b. Any changes in the terms and conditions of the sanction such as interest and charges will be notified to the borrower before effecting the changes. c. Any changes in interest rate and charges will be effected only prospectively after giving due notice to the borrower. v) Post disbursement supervision a. The post disbursement supervision, such as submission of periodical reports and periodic inspection, will be stipulated at the time of issue of the sanction letter. The sanction letter would also mention whether the Bank or the borrower will bear the cost of inspection. b. The Bank will issue notices to the borrowers in advance in case the Bank decides to recall the advance / accelerate the payment / accelerate the performance under the loan agreement. Or seek additional securities. c. The Bank shall release all securities on receiving payment of loan. However, the Bank may decide to exercise the right to set off any legitimate right or lien for any other claim against borrower. In case the Bank decides to retain the security, the borrower will be notified about the remaining claims and the documents under which the Bank is entitled to retain the security till the relevant claim is paid / settled. v) Others a. The Bank will not interference in the affairs of the borrowers except where provided for in the terms and conditions of the loan sanction documents, such as periodic inspection, scrutiny of books of accounts, verification of stocks and book debts, and scrutiny of QIS statements. b. In case any information not disclosed earlier by the borrower has come to

the notice of the Bank, the Bank will have the right to elicit the necessary information from the borrower and initiate action to protect its interest. c. While, the Bank may participate in credit-linked schemes framed for weaker sections of the society, the Bank shall not discriminate on grounds of sex, caste and religion in the matter of lending. d. In the matter of recovery of loans, the Bank shall not resort to undue harassment such as persistently bothering the borrowers at odd hours and use of muscle power. e. In the case of receipt of request for transfer of borrowal account, either from the borrower or from other banks / FIs which propose to take over the loan, the Banks' consent or objection, if any, shall be conveyed within 21 days from the date of receipt of request. vi) Grievance Redressal Though the sanction of the loans will be at the sole discretion of the Bank, borrowers will have an opportunity to appeal against the decision of the Bank's functionaries. Any such grievance received from the borrower will be heard and disposed of by the next higher authority. For this purpose the following review structure is available to the borrower, Grievance against decision of Branch Head VP / AVP Zonal Head Reviewing Authority Zonal Head Zonal Head President (Credit) for corporate advances President (Merchant Banking) for capital-market related advances and Senior Vice President (Retail Banking) for retail advances. Executive Director Chairman and CEO

Corporate Credit & Retail Loans (under Retail Banking) All others

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