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Home Loans- The Best Way To Own A Home
In the last decade or so, housing loan scenario
in India has changed drastically. It has become a major part
of buying houses and people are looking forward to owning
their own houses on the base of these home loans provided
by almost every bank in India today. It is no more a cherished
dream that required lifetime saving and a difficult decision
to make. Today the new home purchase loan is easily available
and is very cheaper as compared to what was available earlier.
Banks are now everywhere and the schemes are implemented even
in villages and smaller towns. The housing loans are popular
there too, however, the activity of building flats is little
slow. It would not be wrong to say that there has been a boom
in the home loan market and with this boom; there is also
a boom in the number of home loans mortgage brokers in India.
The main reason for this boom in home loan market is the change
in government policies. It is our government's motivation
that the home loan interest rates in India have fallen greatly.
Lots of home loan provider banks are offering home loans at
very low EMIs (equated monthly installments). High EMIs are
now a thing of past. Today lending rate is in the range of
7.5 to 15 %.
There are different types of home loans available today.
The interest rate available is also of two different types.
One is the fixed rate loan and the other is the floating rate
loan. In the fixed rate loan, whatever interest is fixed on
the start of loan is carried on for the complete period. However,
in the other one, the interest rate is not fixed and as the
interest rate goes up or low the effect is directly transferred
to the person who is taking the loan. In the last few years
the floating interest rate has been a favorite among most
of the people taking home loans.
Another option which is available today is home construction
loan. This loan is available to those who want to design their
homes according to their requirement and taste. In other words,
this loan is meant for those who themselves want to construct
their new home.
Indian middle-class, which is estimated to be 216 million
strong, is coming off its conventional aversion to take loans
for buying homes, consumer electronics, and automotives, as
per Mckinsey & co. a New York-based consulting firm. As
a consequence of this change in the perception of India middle
class, there has been a continuing increase in retail lending.
Compared to 13% four years ago, retail lending increased 69%
of the loan portfolio of ICICI. Banks have been eased up and
can now give away the loans they weren't able to provide three-four
years before. Increased costs of borrowing have not smashed
credit growth because rising incomes allow individuals to
reimburse their loans. ICICI is expanding to medium and small
enterprise segment. The bank has observed robust growth both
in corporate and retail advances, which has added to its profitability.
International and rural banking are powerful growth engines
for the bank. Foreign trade has also added to its fee income,
as per experts. As per a research analyst's view at INCOS,
who has recently done a report named "Indian retail banking
sector analysis (2006)", rising consumer mortgages, growing
investment by Indian corporations, and foreign acquisitions
together with government's push for expanding credit in rural
areas of India will help sustain growth in the fourth largest
economy of Asia.
But now getting a home loan in india is no more an easy task.
Reserve bank of India has released strict directives for all
the banks to check whether a housing loan is being sought
for an authorized structure. Also, the responsibility to ensure
that the construction is being carried out in accordance with
the sanctioned building plan will fall with these banks. As
a follow up of the orders from the high court, banks are advised
to comply promptly with instructions in this regard without
failing while considering the applications for home loans.
These given directives vary according to the type of application.
In case of the loan application for buying constructed property,
applicant will need to submit a declaration form to the bank
stating that the construction of the built up property is
going in process with the sanctioned plan. Likewise, in case
of housing loan application for building construction, banks
are required to get a copy of the sanctioned plan from the
knowledgeable authority in the name of the person applying
for such credit facility. Other legal formalities include
a signed affidavit cum undertaking by the borrower according
to which the borrower shall not violate the sanctioned plan.
But as said earlier, taking a loan is not a difficult task.
However, before taking a loan, one must realize that the relationship
with the bank will be for a longer period usually 15 to 20
years so one must ensure faith and integrity in bank. Apart
from low rate of interest, the bank should also provide some
value added services. The other thing is to look into is the
property that is to be brought. Making sure that the builder
has all sanctions and facility to build a good building is
very important.
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