To increase the eligibility individuals can apply for a joint home loan. The most significant benefit of joint home loan is that the loan amount increases for purchasing the dream home. Moreover all the joint home applicants can avail tax rebates under Section 80C for principal repaid and under Section 24 for interest repaid. But these tax deductions are capped at 1lakh for the principal repaid and 1.5lakh for the interest repaid.
Following are some of the benefits of joint home loan:
1. To increase the home loan eligibility joint home loan is most beneficial. Wife and husband, son and father, brothers can pool for joint home loan and this increases the loan amount.
2. All the applicants in joint home loan can avail tax rebates under Section 80C for principal repaid and under Section 24 for interest repaid and HRA deduction. Under Section 80C, you can get a maximum tax deduction of Rs 1 lakh on principal repaid and under Section 24 you can get a tax break of up to Rs 1.5 lakh on interest repaid.
3. Around 4 and 6 people can take joint home loan, depending on their credit profiles.
4. In case of joint home loan bank insist on one most important point that all co-applicants should be the co-owners of the property.
In some cases two brothers want to take joint home loan or brother and sister want to take loan. However banks prefer to give joint loan to husband and wife, or parent and child. Some of the banks allow brothers to take joint home loan but both should be co-owners of the property. Banks do not give joint home loan to sisters, friends or unmarried couples living together.
Wednesday, June 30, 2010
Tuesday, June 29, 2010
No more teaser rates on home loans as bank move to base rate
From Wednesday teaser rates offered by big banks will withdrawn back as banks move to a new system of pricing loans from July 1.
The big lenders – HDFC, ICICI Bank and State Bank of India had last year launched special loan schemes in which they offered low rates at fixed rates for the first couple of years — will end on June 30. The bank officials said, now none of these schemes can be extended.
India’s largest bank — SBI’s and ICICI Bank’s home loans will be priced on new base rate from July 1. SBI was the first lender to introduce teaser rate scheme offering home loans at 8% for the first year, 9% for the next two years and linked to market rates in the subsequent years.
Followed by, HDFC bank, which offered loan at fixed rate of 8.25 % up to March 2011, 9% for 2012-13 and the prevailing rate thereafter.
Then ICICI Bank offered a fixed rate of 8.25% during the first year, 9% in the second year with the loan then being shifted to a floating rate linked to the prevailing benchmark.
SBI during the special scheme witnessed aggressive sanctioning of loans on an average of Rs 2,000 crore of home loans every month. Therefore bank extended the scheme, as did HDFC, the leader in the mortgage lending segment.
But shift to new benchmark it is not clear that how banks will price their home loans, although banks have indicated that their base rates will be in the range of 8-10%. Banks are not clear that how they would lend.
Under the new base rate system no bank can lend below the base rate. Moreover old borrowers will have the option to shift to the base rate as the new benchmark. According to some bankers they might have to continue announcing the prime lending rate as a benchmark simultaneously as they have signed contract with borrowers to peg interest rates to the PLR.
The base rate will be favorable for borrowers in a falling interest rate regime as lenders will have to revise the base rate to reduce lending rates.
However RBI has made it clear to the banks that any changes in base rate will have to be applicable to existing customers also. The most important thing to notice is that RBI has only told banks to adopt the base rate system, and the new system will not be applicable to housing finance companies and NBFCs.
In the old system the benefits offered to new borrowers were not forward to the old customers on their home loans as banks offered low rates to new customers while old customers continued to pay higher rate.
According to banking analysts if the base rate is set in the range of 8-10%, home loans, will have to be priced higher than this. Furthermore, home loan rates are likely to increase as interest rates are expected to rise.
Meanwhile, many banks have held back a review of their interest rates until the adoption of the new benchmark. RBI executive director Deepak Mohanty pointed out that the base rate system will not increase the effective cost of borrowing as projected by the corporate lobby and that it is aimed at bringing transparency in the lending rates.
On the other hand bankers say that interest rates on home loans will continue to be competitive as it is a secured loan.
The big lenders – HDFC, ICICI Bank and State Bank of India had last year launched special loan schemes in which they offered low rates at fixed rates for the first couple of years — will end on June 30. The bank officials said, now none of these schemes can be extended.
India’s largest bank — SBI’s and ICICI Bank’s home loans will be priced on new base rate from July 1. SBI was the first lender to introduce teaser rate scheme offering home loans at 8% for the first year, 9% for the next two years and linked to market rates in the subsequent years.
Followed by, HDFC bank, which offered loan at fixed rate of 8.25 % up to March 2011, 9% for 2012-13 and the prevailing rate thereafter.
Then ICICI Bank offered a fixed rate of 8.25% during the first year, 9% in the second year with the loan then being shifted to a floating rate linked to the prevailing benchmark.
SBI during the special scheme witnessed aggressive sanctioning of loans on an average of Rs 2,000 crore of home loans every month. Therefore bank extended the scheme, as did HDFC, the leader in the mortgage lending segment.
But shift to new benchmark it is not clear that how banks will price their home loans, although banks have indicated that their base rates will be in the range of 8-10%. Banks are not clear that how they would lend.
Under the new base rate system no bank can lend below the base rate. Moreover old borrowers will have the option to shift to the base rate as the new benchmark. According to some bankers they might have to continue announcing the prime lending rate as a benchmark simultaneously as they have signed contract with borrowers to peg interest rates to the PLR.
The base rate will be favorable for borrowers in a falling interest rate regime as lenders will have to revise the base rate to reduce lending rates.
However RBI has made it clear to the banks that any changes in base rate will have to be applicable to existing customers also. The most important thing to notice is that RBI has only told banks to adopt the base rate system, and the new system will not be applicable to housing finance companies and NBFCs.
In the old system the benefits offered to new borrowers were not forward to the old customers on their home loans as banks offered low rates to new customers while old customers continued to pay higher rate.
According to banking analysts if the base rate is set in the range of 8-10%, home loans, will have to be priced higher than this. Furthermore, home loan rates are likely to increase as interest rates are expected to rise.
Meanwhile, many banks have held back a review of their interest rates until the adoption of the new benchmark. RBI executive director Deepak Mohanty pointed out that the base rate system will not increase the effective cost of borrowing as projected by the corporate lobby and that it is aimed at bringing transparency in the lending rates.
On the other hand bankers say that interest rates on home loans will continue to be competitive as it is a secured loan.
Tuesday, June 22, 2010
Shriram Group to launch home loan segment by December
Chennai-based financial player, Shriram Group is planning to enter into home loan segment by December. At present the group is offering general and life insurance products. The group plans to offer housing and mortgage loans under Shriram City Union Finance. It is a non-banking financial services company that accepts deposits and offers personal loan, business loan, auto loan and loan against gold.
In the beginning Shriram City Union Finance will offer housing loans in south and western regions. Shriram Group founder R Thyagarajan said, “If we have to remain profitable, we can’t be just a life insurance or general insurance company. We need to be a distributor of multiple financial products.”
The Shriram Group will also expand its wealth management advisory services to tier-II and tier-III cities. Currently it is carrying out operations under Shriram Wealth Advisors in Mumbai which caters to high net worth individuals. Thyagarajan said, “Going forward we will take our wealth management expertise to tier-II and tier-III cities in Tamil Nadu, Andhra Pradesh and Karnataka.”
Although the group is expanding its array of financial products but it has no plans to enter into the health insurance sector. The company has also clarified that it is not entering into mutual funds and has not applied for license for mutual fund operations in a joint venture with Sanlam Group of South Africa.
He said, “We will never get into the health insurance segment as the Indian market needs to get more sophisticated as far as health insurance goes. And though we aim to offer an array of financial products, we have no plans of getting into mutual funds.”
Earlier in 2006 Shriram Group had ventured into the life insurance business through Shriram Life Insurance and general insurance business through Shriram General Insurance Company in 2008 and both of the business has been launched in a 74:26 joint ventures with the Sanlam Group of South Africa.
This year company is planning to expand its general insurance business to the Philippines and Indonesia.
In the beginning Shriram City Union Finance will offer housing loans in south and western regions. Shriram Group founder R Thyagarajan said, “If we have to remain profitable, we can’t be just a life insurance or general insurance company. We need to be a distributor of multiple financial products.”
The Shriram Group will also expand its wealth management advisory services to tier-II and tier-III cities. Currently it is carrying out operations under Shriram Wealth Advisors in Mumbai which caters to high net worth individuals. Thyagarajan said, “Going forward we will take our wealth management expertise to tier-II and tier-III cities in Tamil Nadu, Andhra Pradesh and Karnataka.”
Although the group is expanding its array of financial products but it has no plans to enter into the health insurance sector. The company has also clarified that it is not entering into mutual funds and has not applied for license for mutual fund operations in a joint venture with Sanlam Group of South Africa.
He said, “We will never get into the health insurance segment as the Indian market needs to get more sophisticated as far as health insurance goes. And though we aim to offer an array of financial products, we have no plans of getting into mutual funds.”
Earlier in 2006 Shriram Group had ventured into the life insurance business through Shriram Life Insurance and general insurance business through Shriram General Insurance Company in 2008 and both of the business has been launched in a 74:26 joint ventures with the Sanlam Group of South Africa.
This year company is planning to expand its general insurance business to the Philippines and Indonesia.
Wednesday, June 9, 2010
Top 10 banks post 13.8% increase in home loan for FY 2009-10
In the FY 2009-10 the top 10 banks have registered a 13.8% increase in their home loan portfolio outdoing their smaller counterparts. Whereas, the growth of home loan market for the fiscal has been slow with industry posting a rise of 8%.
Amongst the top banks, country’s largest lender the State Bank of India is on the top of all home loan lenders with an increase of 32%.
In 2009-10, top 10 banks cornered 65% of the total outstanding housing loans as against 61.5% in the previous year.
However for FY 2009-10 SBI’s contribution in incremental home lending is valued at 78%. The bank's teaser loan rates have helped in increasing its home loan portfolio.
Following SBI is private lender, ICICI Bank in the 2nd place. Although the bank has reported a dip of 17% in its home loan book. Amongst the private banks HDFC Bank and Axis Bank reported increase by 74% and 41% respectively.
Amongst the public sector banks, Bank of India is the sole major public sector bank to post a single digit increase of 7%.
On the other hand NBFCs, HDFC and LIC Housing Finance posted a growth by 15% and 38% respectively.
Amongst the top banks, country’s largest lender the State Bank of India is on the top of all home loan lenders with an increase of 32%.
In 2009-10, top 10 banks cornered 65% of the total outstanding housing loans as against 61.5% in the previous year.
However for FY 2009-10 SBI’s contribution in incremental home lending is valued at 78%. The bank's teaser loan rates have helped in increasing its home loan portfolio.
Following SBI is private lender, ICICI Bank in the 2nd place. Although the bank has reported a dip of 17% in its home loan book. Amongst the private banks HDFC Bank and Axis Bank reported increase by 74% and 41% respectively.
Amongst the public sector banks, Bank of India is the sole major public sector bank to post a single digit increase of 7%.
On the other hand NBFCs, HDFC and LIC Housing Finance posted a growth by 15% and 38% respectively.
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