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Home Loans in India by CBRE

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Title: Home Loans in India by CBRE


1
HOME LOANS IN INDIA
A comprehensive report by
2
Title
CONTENTS
  • ELIGIBILITY

    02
  • TYPES

    03
  • FLOATING VS FIXED INTEREST RATES
    04
  • PRE-EMI

    05
  • LOAN TO VALUE INTRO
    07
  • LTV CALCULATION SLAB
    08
  • FOIR INTRO
    10
  • FOIR CALCULATION SLAB
    11
  • TAX BENEFITS
    12
  • BEST BANKS
    13
  • INTEREST RATES 2020
    14
  • SOURCES CREDITS
    15

3
ELIGIBILITY
Age of the Applicant 18 to 70 years
Eligible Salary Rs. 25,000 per month and above
Work Experience for Salaried 3 years and above
Business Stability for Self Employed 5 years and above
Minimum CIBIL Score 650
Maximum Loan on Property Value Up to 90
Maximum EMI as percent of income 65
Eligibility with Co-applicant Up to 3 earning family members may be added to get higher loan eligibility
4
Types of home loans
  • Purchase of Residential Property
  • Construction of a House
  • Purchase of Land
  • House Expansion
  • Home Improvement Loans
  • Home Conversion Loans
  • Balance Transfer Home Loans
  • NRI Home Loans
  • Bridged Loans
  • Stamp Duty Loans

5
Title
FLOATING INTEREST RATES
  • FIXED INTEREST RATES
  • A fixed interest rate is one where the interest
    amount is fixed and does not vary depending upon
    market fluctuations.
  • PROS
  • Greater predictability
  • Suitable for short-term loans
  • CONS
  • Higher rate of interest
  • Limited repayment tenure
  • Prepayment penalty
  • Also known as adjustable rate home loans, is a
    home loan where the interest rate keeps changing
    over the course of the fixed loan, due to
    differences in the market rate.
  • PROS
  • Lower interest rates
  • Can reduce the total interest payable
  • No prepayment penalty
  • CONS
  • Difficult to budget
  • Highly subjective to market factors

6
PRE-EMI on Home Loan
Pre-EMI is the applicable interest payment to the
amount that is disbursed over the entire tenure
of a home loan. It begins when the house is under
construction. Once the structure is complete
pre-EMI payments end, and generous EMI payments
start. Equated Monthly Instalment (EMI) is a
repayment option on a home loan where both
interest and principal amount are paid to the
lender through a fixed monthly payment. Nowadays,
lenders are offering innovative methods for the
repayment of the home loan. One of the options is
the pre-EMI plan wherein, the homebuyers only
pay the interest amount on the partly disbursed
home loan amount as per the stage of construction
of the property. This plan is only applicable for
under-construction properties.
7
LTV
  • Loan to Value Ratio

8
LTV - INTRO
  • The loan-to-value (LTV) ratio is based on the
    size of home loan sought and determines the
    maximum amount that can be sanctioned to a
    property buyer..
  • The LTV can range from 75 per cent to even 90 per
    cent of the property value and also depends on
    the borrowers relationship with the lender and
    the scheme availed.
  • A higher LTV implies a greater loan amount and
    therefore, lesser down-payment that you need to
    arrange out of your pocket. However, it also
    means a higher EMI. A lower LTV means that you
    have to arrange for a larger sum to be paid as
    down-payment.

9
LTV CALCULATION SlaBS
Outstanding Loan LTV Ratio() Risk Weight()
Upto 30 Lakhs lt 80 35
Upto 30 Lakhs gt 80 lt 90 50
30 75 Lakhs lt 80 35
Above 75 Lakhs lt 75 50
10
FOIR
  • Fixed Obligation to Income Ratio

11
FOIR - INTRO
  • Fixed Obligations to Income Ratio (FOIR) is the
    parameter used by banks and other financial
    organisations to determine the eligibility for a
    loan of an individual.
  • The FOIR of a person is derived by taking into
    account all the fixed monthly obligations that he
    or she should meet without including the
    statutory deductions such as Provident Fund,
    Investment Deductions, or Professional Tax.
  • While additional expenses such as rent can also
    be considered as fixed obligation depending on
    the level of income, the FOIR reflects the
    disposable income of a candidate that can be used
    to pay off his or her debts - existing and new.
    Therefore, the loan eligibility of an individual
    highly depends on his or her FOIR.

12
FOIR - CALCULATION sLABS
  • The formula for calculating the FOIR
  • FOIR (All Existing Obligations/Net
    Monthly Salary) 100
  • FOIR SLABS

Gross Salary FOIR
Rs.20,000 50
Rs.30,000 55
Rs.40,000 59-60
13
Tax Benefits on Home Loan
Income Tax Act Maximum Deductible Amount
Section 24 Rs.2 lakh (for self-occupied house) No limit (for let-out property)
Section 80C Rs.1.5 lakh from Principal (including stamp duty and registration fee)
Section 80EE Rs.50,000 Additional interest (for first-time buyers)
14
BEST BANKS FOR HOME LOANS
  1. SBI
  2. HDFC Bank
  3. LIC Housing Finance
  4. AXIS Bank
  5. ICICI Bank
  6. IDBI Bank
  7. Bank of India
  8. PNB Housing
  9. Others

15
HOME LOAN Interest Rates - 2020
Banks Interest Rate Processing Fee
State Bank of India 7.15 - 7.55 p.a. Rs.2,000 Rs.10,000
HDFC Ltd. 8.00 - 8.30 p.a Up to 0.50
ICICI Bank 8.60 - 9.40 p.a. 0.50 to 1
Axis Bank 8.55 - 9.40 p.a Up to 1
PNB Housing Finance Ltd. 8.95- 9.95 p.a. Up to 0.25 (max. Rs.15,000) GST
LIC Housing Finance Limited 8.40 - 8.50 p.a. Rs. 10,000- Rs.15,000 (Service Tax)
United Bank of India 8.00- 8.15 p.a. Rs.1000/ or Above
Bank of India 8.00 - 8.30 p.a. 0.25 (Max. Rs.20,000)
IDBI Bank 8.25 - 8.80 p.a. 0.50
16
Title
  • Sources
  • Moneycontrol.com
  • Bankbazaar.com
  • Financialexpress.com
  • Hdfc.com
  • Investopedia.com
  • Moneytap.com
  • Goodreturns.in
  • Makaan.com
  • Housing.com
  • Rbi.org.in
  • Andrewprokos.com

Created by Rahil Mohamed Rafi CBRE Residential
17
THANK YOU
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