Home Finance

Are you looking for home loan to finance your property deal In India? You can avail the home finance services of many nationalized and private banks and financial institutions which are offering finance and home loan services in India. These fast processing home loan and finance service can make your home desire a reality with minimal paperwork. The rate of interest on home finance will be fixed or floating as per your desire.

Buying a house in India is one of the largest investments a person makes; thus increasing the importance of a home finance. A home loan involves more to it than just finance aspect. Legal advice or loan counselling is required to ensure that the title of the property acquired is clear and the customer may require technical advice to make sure that the structural aspects of the property are in order.

The difference in the home finance services in India provided by different home finance institutions determines their calibre.

The requirement of home finance in India is to the upper or middle class, who is of an average age of 35-40 years, typically a first time home buyer and by and large a salaried employee.

There are some standard loan products- home improvement and extension, land loans, loans for non-residential premises simple home loan product and the home equity and top-up/personal loans. However the maximum demand is for the simple home loans. Against the backdrop of lower interest rates seen across the region, most home loans are floating rate home loan. Many people opt for floating rate home loan without understanding the risks involved. Many of the fixed rate home loans have been converted to floating home loan rates. In order to avoid the confusion of choosing between fixed and floating rate for home loans, blended options are available where the customer can hedge part of the interest rate risk by opting for a combination of fixed and floating rates for home loans.

Cross-selling of products is rather popular in the Indian market. Thus a person looking for a home loan is also offered life insurance, home protection insurance, and other privileges on banking facilities.

Most of the financial institutions offer home loans to both Indian and NRI customers at floating and fixed rate of interest on following conditions:

Loans for home extension Loans against mortgage of property Loans to construct / buy a new home

What is monthly reducing loan?
Under this monthly reducing home loan scheme, the principal on which you pay interest reduces every month as you pay your EMI..

What is annual reducing loan?
Under this annual reducing home loan scheme, the principal reduces only at the end of the year. Hence the consumer continues to pay interest on a portion of the principal which he/she has actually paid back to the lender.

In effect, the consumer has to pay more under the Annual Home Reducing Loan as compared to a Monthly Reducing Loan.

What is fixed rate of interest?
A fixed rate of interest means that the rate of interest on the home loan amount remains unchanged for the entire duration of the loan agreement, irrespective of the change in the interest rates in the economy. Hence if the consumer opts for a fixed rate of interest he will not be able to benefit if the interest rates are falling.

What is floating rate?
A floating rate of interest is one that fluctuates according to the market lending rate. Hence, in an environment were the interest rates are rising, your budgeted expenditure on the home loan also goes up.

What are the other incidental costs associated with a housing loan?
The following are some of the extra costs associated with a housing loan:
· Interest Tax: This is the tax payable on the interest paid on a home loan and not on the principal. This tax is sometimes included in the interest   rate of the loan, or may be charged separately as interest tax.
· Processing Charge: This is a fee payable to the lender on applying for a loan. It is either a fixed amount or a percentage of the loan amount. The   loan amount received by you could be net of this fee.
· Pre-payment Penalties: When a consumer opts to pre-pay his loan, housing finance companies charge a pre-payment fee of between 1% and   2%. The reason for this is that the lender has to adjust his cash flows and match his asset-liability structure.
· Commitment Fees: To prevent their resources from being wasted, housing finance companies charge a commitment fee from each of their   clients. This is done in order to cover the expenses incurred in the process of sanctioning the loan.
· Registration of mortgage deed.

What Is The Security Most Housing Finance Companies Require?
In most cases, the property itself, bought or intended to be bought, becomes the security and is mortgaged to the lending institution till the entire loan is repaid. Some companies require additional security such as life insurance policies, FD receipts, share or savings certificates.

What is time taken for loan approval?
Between two and three weeks.

What is the time taken for home loan disbursement?
After a complete check of all the relevant documents and other formalities, including the payment of margin money on the loan, is done, the home loans are disbursed in maximum one or two weeks. What Are General Documents Required?
· Proof of Identity
· Proof of Residence
· Proof of Income

What Are The Tax Benefits That The Person Who Takes A Home Loan Gets?
The exemption limit on annual interest of a housing loan has been increased from the previous Rs30,000 to Rs75,000 which means an effective reduction in income tax of around Rs25,000 for somebody in the highest tax bracket. The exemption is only valid for those who take new housing loans after 1 April, 1999 and construct their house; the construction should be completed by 1 April, 2001.

In view of the increased cost of housing, the ceiling of Rs10,000 on repayment of housing loans has been raised to Rs20,000 under Section 88 of the Income-Tax Act.

If you want more information on Home Finance Services in India, Contact Property Affaire Now!