Home Loans in India by CBRE

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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

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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
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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

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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

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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.
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LTV

• Loan to Value Ratio

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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.

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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
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FOIR

• Fixed Obligation to Income Ratio

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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.

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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
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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)
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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

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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
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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
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THANK YOU