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Home Loan

Home Loan

Definition – Home Loan provides home purchase purposes only. For instance, if someone wishes to purchase a residential property and needs a loan from Bank and NBFCs that product called Home Loan. The purchase value & market value of that property and the repayment capacity measure eligibility of loan amount. This product is available in two options.

  1. Monthly EMI with tenure up to 30 years
  2. Home Saver (Flexi a/c)

 

Why this product? 

It’s a big dream of every human being to build or have their own beautiful home for his/her loved ones. Home Loan gives a boost to his/her dream faster and easier to achieve. It’s cover all class of our society like lower-middle, middle, upper-middle and upper class. This product is very demanding due to the below-mentioned reasons that make it comfortable for every customer.

  1. Made for all – Salaried/Business Men/Retail/ Professional/Service 
  2. Easy to Apply
  3. Limited documentation
  4. Doorstep service
  5. Speed process. 
  6. Variety of product calculation
  7. Structured income calculation
  8. Cost-effective
  9. Customer capability to avail
  10. Repayment Features

Who are the Lenders of this loan?

Home Loan is a very popular product in our economic system and there are many Banks and NBFCs are available to serve all types of customers in this segment.

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Bank – HDFC Bank, Kotak Mahindra Bank, ICICI Bank, RBL Bank, Axis Bank, IDFC First Bank, Deutsche Bank, Federal Bank, Standard Chartered Bank, Indusind Bank, etc.

NBFCs– HDFC Ltd, PNB Housing Finance, LIC Housing Finance, Hero Fincorp, Fullerton India, Tata Capital, Edelweiss, Indiabulls, Profectus Capital, ICICI Finance, Fedbank Finance, Clix Capital, Sriram Union Finance, etc.

What are the features of this Product?

There are two types of products like term loan (Month EMI basis) and Home Saver A/c (Flexi a/c).

  1. Monthly EMI
  • Cheaper Rate of Interest
  • Quick disbursement
  • Easy repayment up to 30-year tenure
  • Part-payment option with the limit 
  • LTV – 75% to 80% subject to property value and product demand
  • Prepayment allowed any time after one EMI with 0% foreclosure charges in case of individual borrower and co-borrower. If any company borrower or co-borrower foreclosure charges are there depending upon Bank/NBFCs.
  • Loan for construction up to 75% of construction estimate in case of plot purchase.
  • Home Saver (Flexi A/c) – This product is very unique and makes the purpose to match the requirement of the home saver. It means you can anytime deposit extra money which you have and also withdraw extra money other than the EMI amount.
  • Repayment same as Home Loan
  • The interest charges only on the amount outstanding.
  • Deposit and withdraw the facility 
  • LTV – 75% to 80% subject to property value and product demand
  • Loan for construction up to 75% of construction estimate in case of plot purchase.

Who can avail Home Loan?

Any citizen of India who earns money or generating income from any legal source. They should have a relevant document that proves the repayment capacity. The person should identify the property of sufficient market value according to his capacity for repayment.

  1. Self Employed Business – Manufacturing /Trading/Retail/Service  
  2. Salaried 
  3. Professional
  4. Rental Income
  5. Any legal business

How many funds can get from this loan?

There are three main parameters to fund on this product.

  1. Repayment Capacity
  2. Value of the property
  3. Registry of the property
  4. Property legality 

Scheme to calculate the repayment capacity of the borrower.

  1. Cash profit 
  2. Banking ABB
  3. Gross profit or gross margin 
  4. NIP (Non-income program)
  5. LIP ( Liquid income program)
  6. Low LTV 

Process – 

  1. Login
  2. CIBIL
  3. Valuation & technical – 2 visit by different agencies 
  4. Legal- title search and other property documents check
  5. Calculation sheet to check eligibility
  6. PD ( Physical Discussion)
  7. Post PD queries
  8. Decision- Sanction/Reject
  9. Sanction
  10. Agreement formalities
  11. Registry transaction – Disbursement cheque handover to the seller.  
  12. Original chain documents handover to Bank person 
  13. Title document receive from an authority 
  14. Legal Vetting Report for original property documents
  15. Disbursement of the top-up amount if any.

How much LTV ( Loan to Value)?

  1. Build up property – 75% -80% MV
  2. Plot purchase without construction loan – 60% to 75%
  3. Plot Purchase with a construction loan – 75% 

Special product for low registry value with high market value.

If anyone purchases property of high market value with low registry value then some products are available in which you can have more amount as a top-up for renovation or furniture fixture. Home Loan like 150% of registry value, 100% to seller, and 50% to borrower subject to 75%-80% of market value.

Maturity or prepayment of Loan and Property documents release process.

After the maturity of the loan or in case of pre-closure by your own fund or balance transfer of loan against property. You have to follow the process of the property document release. 

  1. You have to apply for foreclosure letter to their customer care or loan branch 
    • After register your request for a foreclosure letter you have to wait for 7 to 10 days as per their TAT of that process.
    • In that period their retention team will call you and try to retain you.
    • If you still wish to close your loan, they will provide you a foreclosure letter.
    • You have to submit it to the Bank.

 

 

Case Study:-

Borrower Name: Mr. Roshan Singh

Bank Name: XYZ Bank

loan amount requires- 80 Lacs

Tenure – 30 Year 

Product -Cash Profit

Borrower Financial 

Net profit – 20,00,000

Depreciation – 3,00,000

Interest on loan- 1,00,000

Cash profit = 24,00,000

Existing EMI = 1,00,000*12 = 12,00,000

Cash Profit @100 FOIR/12 – Existing EMI  

24,00,000/12 = 2,00,000- 1,00,000 

Monthly amount available for proposed EMI = 1,00,000

Borrower– Mr. Roshan Singh ( Business owner)

Bank Name– XYZ Bank

Loan application – 80 Lacs

Proposed EMI – 54,574/-

ROI @ 7.25%

Mr. Roshan Singh requires a Home Loan of Rs. 80 Lacs for his business expansion and he wishes to apply in XYZ Bank. He has to follow the below points.

  1. He contacts a representative or agency holder of XYZ Bank
  2. He asks about ROI and other charges
  3. He gives his complete details about his financials 
  4. Bank check his financial eligibility for Rs. 80 Lacs and found ok.
  5. He prepares a complete list of documents as required by XYZ Bank

Mr. Roshan Singh gives his complete documents to the Bank for a home loan and waits for their response.

Mr. Samrat Sharma is a Bank representative meet Mr. Roshan Singh for some details about his business profile and signing of application form with initial fee cheque. He also asks some points related to property details. Mr. Samrat Sharma communicates with him about Bank Procedure, the number of days to complete the process, and the ROI scheme. Mr. Roshan Singh understands the details and agrees on the costing scheme.

Step 1:– Mr. Samrat Sharma initiates for login in the system, CIBIL run, initiate valuation visit, Legal reports of the property, and verification of Mr. Roshan Singh’s residence and office. 

Step 2:– He sends the file to CPA for the calculation sheet. CPA  put all financial figures to their systems like a complete balance sheet and Bank statement. 

Step 3:- They plan for PD with Mr. Roshan Singh after checking CIBIL reports and the Calculation sheet. The credit manager enquires all their queries related to CIBIL reports, existing loan details, and financials. They also ask about the loan amount and end-use. After PD they visit the whole factory and click some photographs for his PD reports. 

Step 4:– The credit manager prepares a list of queries and details as per discussion on the PD, it is called post PD documents. Mr. Samrat receives this mail from the credit manager and sends it to Mr. Roshan Singh. He receives mail and replies to Mr. Samrat Sharma with complete details as required.

Step 5:-  Mr. Samrat Sharma sends this mail to the credit manager. Also, she asks for the valuation report and legal reports of the property. She updates to his credit manager and he checks all details while preparing his sheet. Now he analyses the complete case with complete facts and figures. He found everything ok in this case, he recommends the case to his approval authority. 

Step 6:– Case is approved by XYZ Bank for Rs. 80 Lacs. Mr. Samrat Sharma congratulates Mr. Roshan Singh for the loan against property sanctioned for Rs. 80 Lacs. Mr. Samrat completes all agreements formalities him. 

Step 7:– Mr. Samrat send an agreement for booking and ask him to fix up a registry date with the property seller. Mr. Samrat verifies all original chain documents as per a legal report from the seller and take a copy of KYC documents of him with cancel cheque and Bank statement of payment a/c. 

Step 8:- Payment cheque of registry amount handover to the seller while registry by Bank legal agency representative. Seller handover all original documents to that person as per the legal report. Registry sign by both borrower and seller then register in authority. The borrower gets a top-up amount cheque.

Step 9:– Mr. Samrat submit the property registry document with a vetting report.

Regards

Ankit Rastogi

BIG Loan & Financial Consultants

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