Professional Documents
Culture Documents
PROJECT REPORT
On
CONTENTS
1.
Introduction
2.
Objective
3.
Company Profile
4.
Industry Scenario
5.
6.
7.
8.
Research Methodology
9.
Data Analysis
10.
SWOT Analysis
11.
Conclusion
12.
Recommendation
13.
Bibliography
INTRODUCTION
A roof over one's head and ground beneath one's feet count as the
bare necessities of life. Theres nothing quite like owning a home,
however humble, to give one that warm and glowing feeling. But
when one buys a home, one has much more than a feel-good
purchase in mind: its also a crucial investment decision, perhaps
the biggest spending decision of one's life. There are ample
opportunities today for young salaried investors to plan their
moves early and buy a house at the right time and at the right
price. In the process, not only do they fulfill that cherished dream
of owning a house, but also put themselves on the path to
acquiring property that would meet the needs and aspirations of
their growing family, even as it leads to wealth creation. Every
individual aspires to own a home. But many either spend a
lifetime saving to purchase a house or exhaust money on monthly
house rents.
Take a house loan and let the monthly rent (easily converted
into affordable EMIs) build dream home.
Profitable Proposition
The overall demand in the residential sector has grown by about
7-8 per cent in the past few months as compared to the same
period last year. The growth is on account of two main factors:
One, income-tax exemption;
Two, with no similar rebates available for individuals in the
high-income group, they are creating a second asset.
Add to this the stable property prices over the last year and
plunging interest rates, planning for dream home could not have
been better timed. Rock-bottom interest rates, standardization of
the periodicity of interest calculation across lenders (which makes
it easier to compare loans), lower
interest charges, waiver of loan application processing fees and, a
customer-friendly attitude is reason enough to celebrate the
ascension of the home loan consumer as the king.
In response, private players like ICICI Bank, and a few others
too lowered their rates. Market leader HDFC also brought down
its interest rates to 8.0%, very recently, to participate in the
interest rate war. If one is still not satisfied with the lowered loan
rates, theres more. Some industry watchers believe the floating
home loan rate will slip to 8 per cent for long-term loans in
another two to three years.
Most banks have changed the way interest is calculated from
annual rests to monthly rests. Under the annual rests method, the
EMIs (equated monthly installments) one pays through a year are
factored in as part-repayment of the principal component only at
the end of each year. In other words, one has to pay interest even
on the installments one has paid until theyre reduced from the
principal at the end of each year. Under monthly rests, the
principal is lowered by the appropriate amount each month. The
thumb rule being that the more frequently interest is calculated,
the better for the creditor. Recently, HDFC added monthly rests on
its fixed-interest loans apart from annual rests. As a result, the fall
COMPANY PROFILE
ICICI HOME FINANCE COMPANY LIMITED
-consumer
friendly
housing
finance
company
History:
ICICI Home Finance Company Limited was incorporated on May 28, 1999
as 100% subsidiary of ICICI Personal Financial Services Limited (ICICI
PFS). ICICI Home Finance Company Limited, was set up with the objective
of providing long term housing loans to individuals and corporate. The
Company was registered on March 30, 2000 with National Housing Bank
(NHB) under National Housing Bank Act, 1987 in terms of Housing Finance
Companies (NHB) Directions, 1989. With effect from May 3,2002, ICICI
Home Finance has become a 100% subsidiary of ICICI Bank Limited.
Overview:
ICICI Home Loans are at present available to customers in 150 cities/towns
across the country. Loans are offered for purchase of new homes, purchase of
resale homes and home improvement. Besides, the company also offers loans
for commercial property and loans against existing property. The loans are
offered for tenors up to 30 years. The company has also introduced several
customer friendly services such as 'door-step' service, 'know your loan on
phone' facility and 'ICICI Home Search' - free property brokerage services.
ICICI
Personal
financial
services
limited
(ICICI
PFS),
operations
from
leasing
and
hire
purchase
to
PERSONAL BANKING
At ICICI BANK, they are commited to making banking a
pleasure. This commitment is manifested in the services they offer
a wide range of accounts, investment schemes, and facilities.
Each service offers their customers security, flexibility of
operation and maximum returns. The various services provided
under this is as follows:
Maxi Cash savings Account
Quantum Fixed Deposits
Quantum optima Value added Savings Account
Money plus Current Account
ATM
Phone Banking
Treasure Chest Locker facility
Power Pay Payroll
Retail Treasury Instruments
CORPORATE BANKING
MOBILE COMMERCE
ICICI Bank now brings Bank Account and ICICI Credit Card to
customers fingertips. With Mobile Commerce , customers can
perform a wide range of query-based transactions from their
OrangeTM (MUMBAI) and AIRTEL (DELHI) Mobile Phone,
without even making a call.
Access multiple accounts
Balance enquiry to the linked accounts
Home loan
Customer must be at least 21 years of age when the loan is
sanctioned.
The loan must terminate before or when you turn 65 years of
age or before retirement, whichever is earlier.
Customer must be employed or self-employed with a regular
source of income.
Loan Amount
A number of factors are taken into account when assessing
repayment
dependants,
capacity.
Customers
qualifications,
assets
income,
age,
number
and
liabilities,
of
stability/
fiance's
sanctioning
the
income
loan
on
can
your
also
be
considered
for
income?
The
combined
Bank
Home
Loans
announces
it's
Special
Interest
Rates.These interest rates are valid for new home loans for a
limited period only. The interest rate on these loans is linked to
the ICICI Home PLR and moves up or down with the ICICI Home
PLR The ICICI Home - PLR for ICICI Home Loans is currently
10.25% p.a.The EMI table for ARHL is given below:
Fixed Rate Loans
Home Loan: Special offer - 0% processing fee
ICICI Bank Home Loans has now brought Fixed Rate Home
Loans at par with Adjustable Rate Home Loans, starting from
January 17, 2003. The EMI table for Fixed Rate Home Loans is
given below:
Fixed rate
Tenure
Rate
(yrs)
Interest *
2064
10 9.25%
1281
15 9.75%
1060
20 9.75%
949
30 10.25%
897
years
11
years
16
years
21years
Credit Appraisal
Interview
Checking with
Sanction by
committee
Defer
Letter to
applicants
Reject
Approval
guarantor
EMI repayment
Step 1
Step 2
Step 3
Step 4
Step 5
Step 6
Step 7
Step 8
Step 9
Step 10
Improvement
Loans:
These
loans
are
given
for
Bridge Loans: Bridge loans are designed for people who wish to
sell the existing home and purchase another one. The bridge loans
help finance the new home, until a buyer is found for the home.
Amount
This largely depends on a number of factors like ones age,
profession, salary, the city one resides in among other such
factors. It varies between Rs. 2.1 lac to Rs. 1 crore depending on
the lender. As a rule of thumb, depending upon the HFC, one will
have to cough up 15%-20% of the loan amount as a down
payment. For smaller amounts, this may not be much. But for
figures running into lakhs, this could make loads of difference.
For eg. An apartment costing Rs 10 lakh may get 85 per cent
financing. So, one will have to arrange for the remaining Rs 1.5
lakh. If one takes this into account, the additional thousands will
definitely put a strain on ones finances.
Tenure
Generally, the maximum tenure of home loans is 15 years, with a
few lenders offering tenure of 20 years or more (ICICI has
recently launched a 30 year loan). The longer the tenure, more one
pays in total interest, but ones monthly payments will be less. So
depending on ones earning potential and bank balance, one can
choose an appropriate tenure. An important requirement of most
banks/HFCs is that one pays up the entire loan before one retires.
One can always prepay ones entire loan amount before it is due.
is
in
the
form
of
EMI's
(equated
monthly
installments). The longer the tenure, the more one pays in interest,
but ones monthly payment will be less.
Refinance
This is a concept that is yet to catch on in the home loan market
but is bound to be a major service in the months to come. Under
this facility, one can take a new loan from another bank/HFC to
pay back an old loan before its natural tenure. It gives one the
opportunity of prepaying ones high cost debt and gets a lower cost
one. In today's falling interest rate scenario one should use this
vehicle to lower ones debt payments as much as possible. The
lender facilitates the shift by paying the outstanding and
transferring the asset to their portfolio.
Miscellaneous charges
A heading that should be ignored at ones peril! The interest rates
and EMIs are not the only cost factor. Never underestimate how
much the processing and administration fees amount to. A 0 .5%
d) Commitment Fees
INDUSTRY SCENARIO
The housing finance industry, encompassing banks and housing
finance companies (HFCs), has exhibited a 36 per cent growth
between April and December 2004 despite the high prepayment
levels experienced by some HFCs.
Were it not for prepayments, the industry's outstanding assets
would have grown at a higher 43 per cent. Aggressive marketing
efforts of banks and HFCs have further precipitated this trend.
Banks have an inherent advantage in retail finance, especially in
housing loans, because of the lower cost of funds, existing retail
relationships in liability products and large branch network.
It is expected that banks will further increase their market share in
the housing finance sector in the medium term.
It is also expected that the housing finance sector will maintain its
high growth rates in future given that the key growth drivers the
government's thrust on the housing sector in terms of fiscal
incentives for individual housing loans coupled with the demandsupply gap in housing - would remain strong.
HDFC BANK
in
convenient
and
cost
effective
manner
at
:Operational
Excellence,
Customer
Focus,
Product
Competitors
Bank faces strong competition in all of their principal lines of
business. Their primary competitors are large public sector banks,
other private sector banks, foreign banks and, in some product
areas, non-banking financial institutions.
Wholesale Banking: Principal competitors in wholesale banking
are public and new private sector banks as well as foreign banks.
The large public sector banks have traditionally been the market
leaders in commercial lending. Foreign banks have focused
primarily on serving the needs of multinational companies and
Indian corporations with cross-border financing requirements
including trade, transactional and foreign exchange services,
while the large public sector banks have extensive branch
networks and large local currency funding capabilities.
DOCUMENTATION
Following documents should be produced for approval of loan:
a) Common for all applicants:
1. Allotment letter of the co-operative society / association of
apartment owners.
2. Copy of approved drawings of proposed construction /
purchase.
3. Agreement for sale/sale deed/detailed cost estimate from
architect/engineer
for
the
property
to
be
purchased
constructed.
4. If you have been in your present employment / business or
profession for less than a year, mention details of occupation
for previous 5 years, giving position held, reasons for change
and period of the same.
5. Applicable Processing Fees.
6. Any other information regarding your repayment capacity that
is necessary and will assist HDFC in appraising the case.
b) Additionally,
If borrower is Employed:
1. Latest salary slip/salary certificate showing all deductions.
2. If
your
job
is
transferable,
permanent
address
where
If borrower is Self-Employed:
1. Balance
Sheets
and
Profit
&
Loss
Accounts
of
the
Branch Network: HDFC has offices spread all over the country.
This extensive network helps HDFC in providing service to large
and well spread out clients. This network of interconnected offices
(on Data Circuits) helps HDFC to process applications for
purchase of property anywhere in India. HDFC has further
established an office in Dubai and Service Associates in Kuwait,
Oman, Qatar, Bahrain and Saudi Arabia to make it easier for
Middle East based Non-Resident Indians to apply for a loan to
HDFC - India.
Experienced and Trained Staff: HDFC is the pioneer of housing
finance in India and has been a leader in the business for the last
25 years. HDFC has vast experience and a very committed and
skilled staff to handle housing loan applications and solving
customer problems.
Free Counselling: HDFC believes that it is in the business of
providing solutions to an individuals need for owning a house,
and not just in the business of providing finance. Keeping this in
mind HDFC will provide free counselling to on how and where to
buy a house in India (Property Services) or what are the prices and
trends in the real estate market or what precautions one should
take before buying a house. This service is offered at any of
HDFC's offices.
Legal and Technical Guidance: HDFC has qualified Legal and
Technical staff who liase with the developers to collect and
scrutinise the property documents and permissions. We have
another means
for
contacting us. In our effort to reach out globally dispersed NonResident Indians, we will continuously enhance our Website.
Home Conversion Loans: HDFC offers the option of a Home
Conversion Loan to its existing customers who are interested in
moving to a new house. Through this scheme customers can apply
to have their existing loan transferred towards the purchase of the
can
be
made
before
selecting
property:
Fees
Rs. 100
Rs. 1,00,000
Rs. 500
acceptance of the
offer, you will have to pay an administrative fee of 0.5% of the
loan approved. You can also pay the processing and administrative
fees upfront i.e. 1% of the loan at the time of submission of the
loan application itself.
Rate of Interest
Adjustable rate of Interest
The interest rate on your ARHL is linked to HDFC's Retail Prime
Lending Rate (RPLR). The rate of interest is revised every three
months from the date of first disbursement, if there is a change in
RPLR. However, the EMI on the ARHL will not change. For
instance, if the interest rate increases, the interest component in
EMI will increase; the principal component would reduce,
resulting in an extension of the term of the loan and vice-versa
when the interest rate decreases. customer will be provided with
an annual statement indicating the details of the interest and
principal payments made during the year.
Annual Rest Option
Term of Loan (No. of Years)
1 20
Monthly Rest Option
Term of Loan (No. of Years)
Upto 5
6 - 10
11 20
9.75
Rate of interest under ARHL is linked to HDFC's RPLR (Retail
Prime Lending Rate) which currently is 8.00% per annum.
customer repay the loan in EMIs comprising principal and
interest. Pending final disbursement, you pay interest on the
Rupees
979
Option
Term of loan (No. of years)
5
10
Rupees
2,076
1,281
20
949
6 - 10
9.25
11 20
Monthly Rest Option
Term of Loan (No. of Years)
Upto 5
9.75
6 - 10
9.50
11 20
9.75
You repay the loan in Equated Monthly Instalments (EMIs)
Rupees
2,157
1,313
963
Rupees
2,088
1,294
966
decided to acquire a house, even if the house has not been selected
or the construction has not commenced.
HDFC will consider your application, make enquiries as it deems
necessary and convey its decision to you. On approval of the loan,
a loan offer is made to you. On acceptance of the offer, you will
have to pay an administrative fee for the loan approved.
customer can take disbursement of the loan after the property has
been technically appraised, all legal documentation has been
completed and you have invested your own contribution in full
(Own contribution is the total cost of the property less HDFC's
loan). The loan will be disbursed in full or in suitable instalments
(normally not exceeding three in number) taking into
account the requirement of funds and progress of construction, as
assessed by HDFC and not necessarily according to a builder's
agreement.
for
the
property
to
be
purchased
constructed.
4. If you have been in your present employment / business or
profession for less than a year, mention details of occupation
for previous 5 years, giving position held, reasons for change
and period of the same.
5. Applicable Processing Fees.
6. Any other information regarding your repayment capacity that
is necessary and will assist HDFC in appraising the case.
b) Additionally,
If You Are Employed:
1. Latest salary slip/salary certificate showing all deductions.
2. If job is transferable, permanent address where correspondence
relating to the application can be mailed.
3. A letter from
Balance
Sheets
and
Profit
&
Loss
Accounts
of
the
note
giving
information
on
the
nature
of
Total Payments In
Rupees Lakhs
25
Principal Paid
20
Interest Paid
10
15
4.98
4.13
10
5
0
1.5
9.37
10.09
11.6
5.25
60
120
134
192
Months
Imaging how much the value of their home will have to appreciate
to just be worth the value you finally paid for it!
COMPARATIVE ANALYSIS OF
HOME LOAN AND HOMESAVER
Home Loan
HomeSaver
A fixed repayment structure The interest customer pay
with high interest & low
principal recovery
&
consequently
towards
repayment
principal
can
be
is
interest
reduced
component
the
comes
down.
Inflexible repayment plan
Customer
have
option
to
penalties.
excess
customer
use
to
monthly
monthly
in a separate current/saving
account
is
interest.
where
money
to
principal recovery
principal
high
Flexible
can
be
repayments
calculated
or penalty
balances
and
applied
monthly
monthly
Their home loan account is One single account where
separate from bank account
home
loan
integrated
principal
with
is
their
Reduction in Tenure
10.00
5.00
8.00
6.00
11.60
4.00
6.60
2.00
0.00
Normal hom e loan
Hom eSaver
12.00
200
180
160
140
120
100
80
60
40
20
0
74
192
118
HomeSaver
RESEARCH METHODOLOGY
Research Methodology is an important part of every project. Because it help
in knowing how to select representative sample from the world or
the general population, the right research tools and techniques to
complete the research.
To satisfy the customer the study of comsumer behavior is important because
he is the king. The Research Process is based on survey method, so
in order to implement the survey we go to Service Provider and the
Services user which is the customers.
The research involves the following steps : Define the problem & research objective - The problem and objective is
to assess the services offered by various service provider and
what the consumer wants.
Developing the research Plan - The second stage of research
methodology is to develop a research plan.The research plan
desigined to take decesion on the data soruces, research
approaches, research, instruments, sampling plan and contact
methods.
Survey Research It was a descriptive research.
DATA ANALYSIS
The home loans provided by various banks are more or less same
at a basic level. The banks generally try to go ahead of other
banks in terms of attracting number of customers to their
countries. For this they are trying to offer some unique services as
per the unique requirements of the unique and important
customers.
In the next page various datas have been shown which shows that
are the home loans provided by various banks and SCB have also
tried to compare the services offered by the banks,.
TRENDS IN INTEREST RATES OF HOUSING LOANS
Interest Rates Have Dropped
18
16
14
12
10
8
6
4
2
0
16.5
15
13.25
12.5
10
2000
2001
2002
2003
2004
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
45,000
29,359
19,723
22,425
11,352
Source: http://indiaproperties.com
Market Share of Players
8
32
10
5
45
The market for home loans has been sizzling in India. The spurt in
growth in recent years and the prospects of continued buoyancy in
demand have attracted many players to the industry, which till a
couple of years back had two major players - HDFC and LIC
Housing Finance. The result - cut throat competition, which has
benefited the loan seeker.
The home loan market has grown at a compounded rate of over
40% over the last four years. And from what industry experts will
have us believe, there is little chance that there will be any
significant decline in growth rates going forward. So what have
been the key factors in triggering of this high growth period?
There are several reasons for the same. On the demand side Faster rise in incomes as compared to property prices, thus
making housing more affordable
Declining interest rate, which has greatly reduced the cost of
servicing a loan.
Tax benefits, which further reduced the effective cost of
borrowing (both on interest and capital)
Then there are factors on the `supply side' too which have
supported this growth More competition in the housing finance sector resulted in
companies charging lower interest rates, sometimes even at the
cost of the spread (i.e. profit margin)
The fee for getting a home loan has reduced dramatically over the
last couple of years, from over 2% of the loan amount to as low as
0.25% (some companies are known to waive off the fee entirely!)
Housing finance companies have introduced several new products
to meet the needs of a wide variety of customers. One such
scheme, the step up loan, where the EMIs increase as the income
of the individual increases has been a big hit with individuals just
starting off with their careers.
One other factor is the increasing collaboration between housing
finance companies and builders. Such partnerships minimise
service and funding related issues significantly, thus making it
easier to buy property.
Gather
data
on
interest
rates
Get interest rate information from more than one source, and get
the same information from each so you can compare the offers.
2.
Get
info
on
fees
Get
pre-approval
letter
in your hand will set a limit to the amount of money you can
commit to a property. This will help in identifying the right
property.
4.
Bargain
for
lower
rate
of
interest
Watch
out
for
predatory
lending
110 per cent of the agreement value. This means your loan not
only pays for the property, it helps with stamp duty and
registration charges, and even furnishings. Its been a sweet deal
so far, as borrowers not only need have no access to other funds,
they also get tax breaks.
The RBIs position is that lending such sums will mean additional
risk for the bank. In case of default, the bank may not have
sufficient collateral to recover dues, and may have to write off the
additional borrowings. However, bankers do not seem unduly
worried. Non-performing assets in the housing segment are quite
low--below 1 per cent--and that, say bankers, is due to the high
asset quality.
As per officials of Bank: "For a house to become a home, there
are additional costs incurred by the borrower, which he meets by
borrowing from friends or family members. Also, the default risk
in housing loans is
quite low, so they think that with proper checks, theres nothing
wrong in lending more." Bank was the first to see this and slashed
the interest on its 15-year.
per cent down payment from the house buyer. They try to make
sure that their risks are well-covered.
For the moment, however, banks can continue lending more than
100 per cent of the property value. But if push comes to shove,
and if RBI makes its suggestion a rule, this sweet deal may not
last long.
More proof that home is indeed sweet home. Bimal Jalans latest
announcement of a cut in bank rate is a clear sign that the soft
interest rate policy is all set to continue. The 25 basis points
decrease in the bank rate means the central bank has reduced the
rate at which banks borrow from it. This means that banks, in
turn, could reduce the interest rates they charge on housing
mortgages.
Already, State Bank of India, one of the biggies in the housing
finance business, has announced a rate cut of 25 basis points. Its
rates for loans up to 10 years have been reduced to 8.75 per cent
from 9 per cent, and for loans over 10 years to 9.25 per cent from
9.5 per cent. The cost of funds has come down; therefore, they
have decided to reduce their home loan rates.
When interest rates fall, lenders lower not the EMI amount but the
number of months that you pay those EMIs. The table shows the
number of months
by which your loan tenure is cut when interest rates are lowered
by 0.25 to 1 percentage point.
% cut
-0.25
20 yrs
11
15 yrs
5
10 yrs
2
On a 9 per cent Rs 1 lakh
-0.5
20
10
4
loan
-0.75
29
14
6
-1
37
18
8
There's good news for those wanting a home loan. Over the past
few months, lenders have been cutting interest rates on home
loans by 25-50 basis points. Banks like HDFC, ICICI Bank, and
State Bank of India have cut rates by 0.75 per cent in the last two
weeks to 9.75 per cent for 15-year loans.
One reason for the rate cut is that borrowing costs have come
down, which is a result of a cut in interest rates in the general
economy.
The general economy apart, lenders have been forced to cut rates
to keep up with competition. More players want to enter the home
loan market, and existing players are fighting for a larger share.
HDFC has also felt the heat. It has decided to reduce the review
time of its variable interest rate from 6 months to 3 months, so
that existing variable rate borrowers can benefit faster in the
falling interest rate scenario. ICICI too has kept pace with its
peers. While interest rates on fixed mortgages tend to be higher,
ICICI has decided to offer the same rate it charges floating rate
borrowers.
Fixed rate products are not widely available now; lenders like and
Citibank do not offer fixed rate home loans. Others like
Corporation Bank
are not extending fixed rates loans beyond a 10-year period. This
is good in the short-term, but if rates go up, floating rate
borrowers may be in for a tough time.
CONCLUSIONS
The Indian customer has come a long way from purchasing to fulfilling their
needs from buying a house. Customers now grab everything that comes their
way but they do their own survey of optimum loans; same is the case with
banks, and housing loans. With innumerable choices before him, the
customer is indeed the king. It is therefore imperative that if a bank has to
succeed in the competitive world, it should be technological savvy, customer
centric progressive driven by highest standards of corporate governance and
guided by sound ethical values and above all should be cordial and should
have personalize customer services.
There is scope of exploiting the vast middle income group by releasing loans
with special interest rate which would be beneficial to both parties.
RECOMMENDATIONS
The following suggestions are strongly recommended:
1. To broaden the customer base the vast middle income strata should be
fully exploited
2. Simplify the procedure, reduce service charges, and demand only the
basic essential proof.
3. Most banks are reluctant to advance loan to the service class e.g. lawyers,
police officers etc.. This aspect must be exploited.
4. Adoption of flexible and more lenient penalty should the customer fail to
deposit the payment on time. The penalty should be on case to case basis
rather then the same for the entire customer base.
5. Restriction to be reduced to bare minimum for loan advances and for
repayment. For e.g. offer long-term repayment facilities and have no age
restriction to choosing repayment.
6. The maximum age for repayment could be increase to 65-70 years of age.
Such facility will help grow fast retail segment of the bank.
7. Offer multiple repayment loans.
8. Service class to be exploited by offering special reduced rates and linking
the repayment from the source from where the pay-cheque to the
employee is issued.
GLOSSARY
monthly /daily rest loan. The shorter the tenure of the loan, the
greater the effective interest rate difference will be.
AbodesIndia.com has standardised all interest rate quotes from
companies on a MONTHLY REST basis ( rates will therefore look
different from Company brochure quotes which maybe on a
annual rest basis)
Processing Fee:
A one time fee which is normally non-refundable and payable
along with your initial loan application. Rates can vary from 1-2%
of the loan amount.
Administrative Fee:
A one time fee which is normally non-refundable and payable
before your loan is disbused. Rates can vary from 1-2% of the
loan amount.
Commitment fees:
This interest is charged if you do not draw the sanctioned loan
within a period of 6-9 months. The rate of interest is usually about
1-2% a months.
Interest Tax:
Housing Finance companies have to pay a tax on the interest
income they receive from you. They sometimes pass this on to the
customer. Always check with the company if the interest rate they
are quoting includes interest tax or not. This tax normally about
2% of the interest rate charged. E.g if the interet rate quoted is
14% then the actual interest rate including interest tax is about
14.28%. AbodesIndia.com has standardised all rates AFTER
Interest Tax, on a monthly rest basis to aid comparison across
companies.This rate is called the Effective rate.
Prepayment charge:
Most Housing Finance companies charge a fee for prepaying your
loan before its full tenure is over. This helps them plan their
finances, at your expense. Your earning capacity will normally
increase with age and a prepayment fee can be a big cost. This fee
also limits your ability to refinance the loan if interest rates fall
after a few years. The fee is normally in the range of 1-2% of the
prepaid amount.
Refinance Charge:
Some Housing Finance companies do not charge you for
prepayments from your own savings. However, if you retire a loan
using money borrowed from another Finance Company, you will
have to pay a Refinance charge of 1-2% of the loan outstanding.
Down payment:
Housing finance companies would normally give a loan up to 8085% of the value of the property. The remaining amount would
have to paid by the buyer (to the seller), as a down payment
before the he draws on the loan.
Tenure of the loan
Normally, loans are given for a period of 1-15 years. Some
companies also give loans upto 20 years at an additional interest
cost of 0.25% -0.5%. Most companies do not allow loans for a
fraction of a year.
BIBLIOGRAPHY
www.indiaproperties.com
www.apnaloan.com
The Economic Times, 15 February 2005
The Financial Times, 06 December 2004
Philip Kotler, Marketing Management, 9th edition
Akkar ;Marketing Research
Business Today, July 20 2004 issue