The document discusses various types of home loans offered by private banks in India. It provides details on home purchase loans, home construction loans, home extension loans, and other loan options. It also explains key concepts like EMI calculation, fixed vs floating interest rates, loan eligibility and terms for both resident and non-resident Indians. Various costs associated with obtaining a home loan and the process of loan application, sanctioning and disbursement are outlined.

1. Presented By:
Nitish Bhargava Ashish Gupta
Saurabh Goel Kunal Jhingrun

2. To Compare Different Home Loan Options
of Private Sector Banks Available In The
Market And Select the Best Out of Them.
To Compare Private bank and Public bank
Home Loan Option.

3. Home Loan is offered to individuals who wish to
purchase or construct a house. The property is
mortgaged to the lender as a security till the repayment
of the loan. The bank or financial institution will hold
the title or deed to the property till the loan has been
paid back with the interest due for it. i.e. if the borrower
is failed to pay back the loan, the banker can retrieve
the lent money by selling the property.

4. Buying a home for the first time can be daunting to any
person but in today’s time various banks are lending a
helping hand to the people to purchase their dream
house. Thus people look forward towards choosing a
home loan.
Home Loan is one of the fastest growing retail and mass
banking area. Almost all public and private sector banks
are offering home loans at attractive rates for
purchasing their dream home.

5. Home Loans are the consumer loans.
Home loans are long term loans provided by various
banks at cost-effective rates.
These are large amount loans which provide financial
support to the people who want to purchase their
dream home.
Tax concessions make home loans more attractive than
other loan products.
The borrowers can get tax deduction on repayment of
the principal amount of a loan taken to buy or construct
a house.
The interest paid on a loan is deductible from 'income
from property', even if it has not been paid during the
year.

6. Home Purchase Loans: Home Purchase Loans are the
basic home loan you can opt for purchasing new home.
Home Construction Loans: Home Construction Loans
are especially meant for the construction of a new
home. Formality of availing this loan has a little
different from the normal Housing Loan. The plot on
which the construction is being erected is purchased
within a period of one year, the cost of the plot is then
also included as the component for the valuation of
total cost of the property.
Home Extension Loans: Home Extension Loans is
offered for meeting the operating cost of alteration to
an existing building. Extension here means addition of
an extra room etc.

7. Home Conversion Loans: Home Conversion Loans are
offered to those who want finance for the purchase of
another home by converting the already existing home
and on which loan is already sanctioned . Through this
loan, the existing loan is transferred to the new home
including the extra amount required and there is no
need for pre-payment of the previous loan.
Land Purchase Loans: Land Purchase Loans can be
availed for purchasing land for both home construction
as well as investment purposes.
Stamp Duty Loans: Stamp Duty Loans is offered for the
payment of stamp duty in the transaction of the
property.
Bridge Loans: Bridge Loans are offered for selling the
existing home and purchasing of another. The bridge
loan assists in the finance of new home, until a buyer is
found for the old home .

8. Balance-Transfer Loans: Balance Transfer of the loan is
the transfer of the balance of an existing home loan at a
higher rate of interest (ROI) to either the same company
or another .
NRI Home Loans: NRI Home Loans are meant for Non-
Resident Indians who wish to build or buy a home in
India .

9. Purpose : Depending on the borrowers requirements,
home loans can be taken for a variety of purposes such
as to purchase a new home, to construct a new home,
for expanding or extending an existing home, to
purchase land for both home construction or
investment purposes, etc.
Selection Of a Particular Home Loan :The selection of a
particular home loan depends on the affordability
position of the borrower. The monthly repayment on the
loan should not be more than 40 per cent of the net
monthly income. This ratio is called the Income to
Installment ratio.

10. Finding The Cost Of The House :Down-payment and
monthly-payment are main financial cost of the house.
Renovation and repair cost, property taxes, property
insurance, service charges are some of the costs which
has to be considered .
Selection of suitable bank: Rate of interest, total
financing cost and flexibility of repayment plans
decides the financial institution. This will be discussed
later.

12. Submission of application form: The application is
submitted along with photographs, credit documents
and a cheque for processing, documentation and
administration fees by the customer. The credit
documents comprise documents to establish income,
age, residence, employment, investments, etc.
Personal Discussion with customer: Some banks/FIs
require the customer be present at the time of the
credit appraisal. Some banks/FIs may insist on a
personal interview with the customer and perform a
reference check on the references provided by the
customer on the application form.
Field Investigation by the bank/FI:This stage
revolves around two key aspects. Critically
appraising the credit worthiness of the customer
and analyzing the risk in lending.

13. Credit Appraisal and loan sanction: The next phase in
the home loan process is the credit appraisal and loan
sanction. After checking the customer's repayment
capacity, the bank/FI sets norms that define the
customer's eligibility for a loan amount.
Issue of offer letter to the customer: The bank/FI sends
an offer letter to the customer with the loan sanction
details which mention: Loan amount, ROI, Duration,
Mode Of Payment.
Submission of property / legal documents by the
customer to the bank/FI: After the selection of the
property, the customer is required to submit the
original documents pertaining to the property being
purchased or mortgaged .

14. Legal check on the property by the bank: The bank/FI
sends all the documents to their empanelled lawyer for
a thorough scrutiny. On receiving the lawyer's report
that the documents are clear, the bank/FI decides to
disburse the loan to the customer.
Technical check on the property by the bank/financial
institution : Prior to disbursement, the bank/FI conduct
a site visit to the customer's property to verify the
following:

16. Disbursement: After verifying that the property is legally
and technically clear, the bank/FI disburses the loan
amount on the basis of the stage of construction of the
property. The customer needs to pay the margin money
from his own contribution prior to the disbursement.
Repayment: The repayment of the loan by the customer
starts only after the full disbursement of the loan
amount has been made by the bank/FI. The loan is
always repaid by way of EMIs.
Interest tax certificate: This certificate is given by the
bank/FI to the customer to avail of tax benefits that
accrue through a home loan. The customer can submit
this to his employer or Chartered Accountant to account
it while calculating the customer's tax liability.
Prepayment by the customer : Prepay fully or partially
through EMI.

17. An equated monthly installment (EMI) is what you pay
every month towards repayment of your loan. Your
Home Loan EMI depends on the loan amount, the rate of
interest and the tenure of the loan. For a given loan
amount and interest rate, your EMI can be lower if you
increase the loan tenure.

18. Loan Amount:- Rs15,50,000
Loan Tenure :- 240 month
Interest Rate:- 10.90 %
Calculated monthly Emi:- Rs 15,893.57
Yearly Interest amount:- Rs 1,13,222.84
Total interest amount:- Rs 22,64,456.8
Total Amount with Interest:- Rs 38,14,456.8

19. Calculation of EMI
(L X i) X (1+i)^N
EMI = -----------------------------
{ (1+i)^N } – 1
L = Loan Amount
i = Interest Rate
N = loan period in months

20. (1550000X0.0090833)X(1+0.0090833)^240
EMI = ---------------------------------
{ (1+0.0090833)^240 } – 1
14079.115 X 8.75960
= ----------------------
7.75960
= Rs 15,893.57/-

21. Fixed interest rate means repayment of home loans in
fixed equal installments over the entire period of the
loan. In this case, the interest rate doesn't change with
market fluctuations. During the early part of the loan
tenure the majority of monthly payments are used to
service the interest and the principal is served in the
later parts of the tenure.
Floating interest rate by name implies that the rate of
interest varies with market conditions. Home loans on
floating interest rates are tied to a base rate plus a
floating element thereof. So, if the base rate varies the
floating interest rate also varies.

22. Interest rates charged by hosing finance companies vary
depending upon your individual status – either resident
or non resident in India, the loan amount ,scheme type
and are sometimes even based on the tenure of the
loan.
The way banks / FIs charge interest to arrive at the
value of EMI can be broadly classified into ‘Flat rate
system’ and ‘Reducing balance rate system’ .
In the flat rate system, the rate of interest on the loan
amount is calculated over the entire duration of the loan
and the principal plus the interest is divided over the
number of installments and the value arrived is the EMI.

23. But in case of 'Reducing Balance system’, the interest is
charged on the outstanding balance of the loan, which
goes on reducing.
The reducing balance can be further classified into
monthly reducing, quarterly reducing and annual
reducing methods based on the number of times the
principal is reduced/credited in a year.
Suppose the principal is reduced 12 times a year, it is
termed as monthly reducing balance method, if the
principal is reduced 4 time a year, it termed as quarterly
reducing balance method and if the principal is reduced
1 time a year, it known as annual reducing balance
method.

24. Buying a new house from a builder/promoter
Banks and FIs offer resident Indians loans upto Rs
10,000,000 for upto 30 years for buying a new flat from
a builder

25. Buying a house from a second owner
Banks and FIs offer resident Indians loans upto Rs
10,000,000 for upto 30 years under this scheme.

26. Home Improvement
Banks and financial institutions offer non resident
Indians loans upto Rs 1,000,000 for periods ranging
from 1 to 10 years under this scheme.

27. Buying a new house from a builder/promoter
Banks/ FIs offer non resident Indians loans upto Rs
10,000,000 for upto 10 years for buying a new flat from
a builder.

28. Buying a house from a second owner
Bankls/ FIs offer non resident Indians loans upto Rs
10,000,000 for upto 10 years under this scheme.

29. Home Improvement
Banks and FIs offer non resident Indians loans upto Rs
1,000,000 for periods ranging from 1 to 10 years under
this scheme.

32. Banks charge a processing fee for every
home loan application.
This fees is non refundable.
ICICI & DHFL

33. http://profit.ndtv.com/news/your-money/article-home-
loans-fixed-vs-floating-rates-which-one-to-choose-
323701
https://www.cibil.com/home-loan
http://www.covermiles.com/investment/home-loan/
what-is-home-loan/
http://www.dhfl.com/resources/home-loan-interest-rates-
and-charges/