PROJECT REPORT ON CONVERGENCE OF BANKING SECTOR TO HOUSING FINANCE
PROJECT REPORT ON CONVERGENCE OF BANKING SECTOR TO HOUSING FINANCE
Introduction towards Project Report :
Earlier it was very difficult to take a loan from the financial institutions. Interest rates were high and a lot of documentation was there. But today when there are a large number of financial institutions in India, who are providing credit facility, it has become very easy to take a loan.
Terms and conditions are liberal i.e. low interest rates, less documentation etc. Interest rates are becoming globally competitive and declining continuously. Now a day just think of purchasing a car and car-financing companies will start knowing at your door and ringing your phone.
Financial institutions have adopted liberal credit policies. They enquire less about end use of funds. Various types of loans are there and easily available at cheap rates.
When we take the case of home loans, it is a very safe area of loans from the point of view of financial institutions. They are easier to increase their share in the home loan sector. So they are coming with the attractive schemes. Customers can have the benefit of liberal terms and conditions as well as tax benefits if they choose to take a home loan. So the use has gain attention. The increasing number of home loans available today as strengthened the middle class individual to venture forth and fulfill his dreams.
Today, the demands of the current social status necessitate that varied means are tapped into in order to achieve the ultimate goal-better living Home loan proposals are thus gaining popularity due to their easy-installments schemes, low interest rates and high returns on the standards of living. While a home loan generally includes financial for home extension, home improvement loans are well as loans for property medication; the terms are more commonly applied to finance schemes for purchasing houses.
Home loans are loans you have access to, depending on whether you want to buy or build a house and can also be used to repair or extend an existing house.
Who can avail of these loans?
According to lending institutions, any Indian resident who is over 21 years of age at the beginning of the loan and below 65at its maturity can avail of the loan. Salaried Employees as well as Self- Employed citizens can apply. NRI Salaried and RBI Self Employed, under RBI guidelines, can approach only nationalized banks and other HDFC for loans.
Why should one option for a loan to buy a house?
Taking a loan seems like a good option when the money at hand is insufficient to buy the house of your dreams. Consider couples in their twenties and thirties. They enjoy a good income currently, buy their accumulated capital isn’t enough to purchase a house. Whereas a home loan can give them access to capital their current earnings.
Also, if you take a 10 years old loan when you are thirty, you could repay it by the time you’re forty. So you don’t have to be burdened with the interest and are free to plan your retirement savings.
The Quantum of loan that one can avail of :
Loan sanctioned depend on your repayment capacity – which is based on your current income and your future repayment capacity. You would include your spouse’s name to enhance the loan amount.
The maximum loan can be sanctioned varies with each bank/institutions and ranges from Rs.10 lakhs to Rs. 1 crore.
Benefits of taking a home loan:
A home loan is very different from a personal loan like a car loan for instance. You can utilize a home loan for financing an asset that will hold its value and even appreciate over the period of the loan. Though its price could fluctuate in the short terms, Total Estate will show capital appreciation over the years.
The value of your house generally while the loan remains constant. If you had opted to wait, save up and buy a house, it would, in the long run cost you much more; home loans also come with many tax benefits.
Tax benefits of taking a home loan:
The income tax authorities look with favor upon those servicing a housing loan from specified financial institutions. And, it is up to you to be wise enough to take advantage of this.
Section 24 of the Income Tax:
Interest on loan till Rs.1.5 lakhs per annum is exempted form income tax (under section 23/24(1) of th Income tax act).
Section 88 of Income Tax Act:
You get a 20% rebate on repayment of principle during a financial year. Once again, over the years, the principle repayment eligible for rebate has been enhanced from Rs.10,000 to the current limit of Rs.20,000 Stamp duty, registration fee or transfer of such house property to the assesses is also considered under this amount.
Financial Institutions, which give, home loans:
Housing finance companies
Financial implications of availing a loan, small or big.
There are several expenses involved apart from repayment of the actual loan amount:
1. Processing fees- A processing fee (PF) is charges at the time of submission of the application form and covers expenses incurred for processing the application form. This fee has to be paid upfront by the customer – in some cases, it is non-refundable.
2. Administration fees- to meet operating expenses.
3. Pre-EMI- A simple interest calculated on the disbursement amount in case of a plot under construction.
4. EMI- The EMI is an abbreviated form of the equated money installment and is simply referred to as monthly installment in common parlance. And, being a self-explanatory term that is exactly what it is. The amount you will have to pay you financier every month when repaying your loan. Being a monthly payment, at the end of the year, you would have paid 12 EMIs.
Types of loans available
Broadly two types- fixed rate and variable rate loans; while the former deals with a fixed rate of interest over the entire duration of the loan, the latter has the rate of interest changing according to the fluctuations in the market.
Loan that one can avail
Up to 85-90% of the total cost based primarily upon the individual’s payback capacity.
General conditions that govern a home loan:
These are likely to vary with respect to the different types of housing loans:
ü The maximum period of the loan is normally fixed by HFIs. However, HFIs do provide for different tenors with different terms and conditions.
ü The Installment that you pay is normally restricted to amount 45% of your monthly gross income.
ü You will be eligible for a loan amount, which is the lowest as per your eligibility. This is calculated on the basis of your gross income and payback capabilities.
ü Some HFIs insist on guarantees from other individuals for due repayment of your loan. In such cases you have to arrange for the personal guarantee before the disbursement of your loan tasks place.
ü Most HFIs have a panel of lawyers who go through your property documents to ensure that the documents are clear and are not misrepresented. This is an added benefit that you get when you avail of a loan from an HFI.You repay the loan either through Deduction against Salary, Post dated cheques, and standing instructions or by Cash/DD.
3. Research Methodology
4. Home Loan Scheme of Various Bank
SBI Home Loan Scheme
PNB Home Loan Scheme
BOB Home Loan Scheme
HDFC Home Loan Schemes
5. Analysis & Finding
7. Recommendations and Conclusion
8. Annexure :-
Project Description :
Category : Project Report for MBA
Title : Project Report on Convergence of Banking Sector to Housing Finance
Pages : 70
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