Self certification loans are perfect for anyone looking to own his or her own home, but who is self-employed and therefore without annual income verification from a third-party. Self certification loans allow for those who work for themselves to essentially self declare how much they'll make annually or how much they expect to make; thus, they don't need any official pay stubs for a bank or lender to seriously look at them as a borrower.

Of course, some self-employed persons choosing self certification loans do opt to ask for the assistance of a professional accountant or financial planner. This can be money wisely spent, by the way! The accountant or financial planner can basically verify that the borrower is going to most likely make a certain amount of money per year; having a second verifier enables the lending institution to be more confident in issuing self certification loans.

For the past two years, interest rates have been moving northwards, forcing many potential home buyers to either postpone their buying decision or bear the brunt of high home loan costs. Add to that spiralling property prices and no wonder many buyers have been scared off.

Things, however, seem to be to calming down a bit. Says Akshaya Kumar, CEO, Park Lane Property Advisors, "The basic trend of home loan rates is downwards."

According to him, interest rates have already peaked and banks are now looking at the Reserve Bank of India (RBI) to cut its indicative rates as a signal.

Last week, when HDFC  announced a festival season rate of 10.5 per cent, executive director Renu Sud Karnad clearly indicated that it was because their cost of borrowing had come down.

Others like State Bank of India (Maharashtra and Goa), Bank of Baroda , IDBI and Allahabad Bank  have also cut rates in the range of 25-50 basis points.

But coming on the back of an over-two-per-cent hike in the last one year alone, the cuts do not look spectacular enough to enthuse the potential home buyer.

As a result, many customers are still sitting on the fence expecting rates to go down further. Bankers, meanwhile, have also not been over-aggressive because many are looking at this as a cooling off period.

Therefore, a cautiously optimistic view is being taken, and no one is joining the battle to get customers.

Now that the buying season is in, lenders would like to see the RBI come up with some measures so that sentiments improve further.

Says Harsh Roongta, "With inflation under control and the currency appreciating, there is definitely some pressure on the RBI."

The counter argument is that with oil prices at over $80 per barrel, sooner or later the rising fuel prices will be passed on to the consumers. And that would lead to a rise in inflation.

However, bankers like M Sundararajan, chairman, Indian Bank , believe that there should be no pressure on the apex bank to do anything.

"The RBI had indicated that there should be a deceleration in credit in 2006-07 itself. But because, the industry did not respond, it led to an imbalance in the system and thus, a hike in rates," he explains.

But, subsequently, inflation has been brought under control. "Also, deposit rates have been slashed, so a cut in credit rates is already due," adds Sundararajan. And there is good liquidity in the system, thereby making life simpler for bankers.

Optimists like Kumar believe that the RBI is likely to give the added edge by reducing indicative rates either in October or January. And if that happens, it will be great news for the home buyer.

Source: Rediff News

Tags: home loan, home loan in india, home loans india

The slowdown in housing market has triggered Chairman of HDFC Deepak Parekh to take proactive steps by biting the rate cut bullet first.

Leading real estate players like DLF is crying foul with KP Singh, Chairman of DLF asking the central bank to reduce interest rates from a five-year high to check falling demand in homes.

Finally customers can now breathe easy as HDFC plans to slash interest rates. HDFC has cut interest rates on housing loans by 50 bps to 10.75 per cent, the bank says it is passing on the benefits of 'low cost of funds' to customers.

Leading public sector banks are also contemplating to reduce interest rates on home loans. State Bank of India, Punjab National Bank and Union Bank of India are also considering cutting interest rates by 50 bps.

Banks like Bank of Baroda and IDBI has already slashed interest rates by 50 bps. Competition is also hotting up as GE is offering home loans at 9.99 per cent. HDFC also hinted at reexamining the rates after Reserve Bank of India credit policy meet, which scheduled on October 31.

Source: NDTV PROFIT

Tags: fixed interest rate, floating interest rate, home insurance rate, home loan interest rate india, house insurance rate
Current Mood: hopeful

The lowering of interest rates on home loans has brought some cheer among the homemakers with house loan seekers in the Valley expecting banks operating in Kashmir following the suit.  Experts said during past some months the growth rate of housing sector in India, and Kashmir as well, was sluggish due to rise in interest rates and other restrictions by Reserve Bank of India while tightening its credit policy.  The housing and realty sectors, experts said, had felt the heat of high interest rates in the Valley as well.  “Restrictions put on the housing loan sector by the RBI during its last credit review have slowed down the housing loan market in the Valley,” said a banker.   However, a recent development in which three banks viz. Housing Development Finance Corporation, Bank of Baroda, and Allahabad Bank reduced the interest rates on home loans from 25 basis points to 50 basis points as a festival season offer, has generated a hope that banks operating in Kashmir may also follow the suit. Head Commerce Department KU, Khurshid Bhat said, “If the banks operating in Kashmir lower the interest rates on home loans, it will have impact on the multi players like house buyers, companies dealing in real estates and banks.” “We don’t have the big companies in the Valley in real sector. However, the small firms in Kashmir would get benefited should the major banks in Kashmir reduce the interest rates on home loans. There would be surely a positive impact on public at large,” he said. However, many experts hold a contrary view. “Just before six month the interest rates on home loans were hovering around 8-9 per cent, which mean that the recent lowering won’t have that major impact. Home loan is still on higher side,” experts said.  A senior executive of Punjab National Bank said, “PNB is the only Bank providing housing loan at cheaper rates as compared to prevalent market rates. We charge 9 per cent on the home loan to be repaid within less than 5 year.  For the loans of 5 years to 20 years duration we charge 9.5 per cent.”  Experts said: “The RBI while seeking to bring down the inflation through monetary measures has limited options apart from raising repo and reverse repo rates.” At present reserve ratios set by RBI are: CRR 7 per cent and SLR 25 per cent. “Factoring the risks attached to home loans, the RBI has prescribed a higher risk weight of 100 per cent for residential housing loans with LTV (loan-to-value) ratio of more than 75 per cent, under its final Basel II guidelines,” said MBA student Khurshid Amin. “If interest rate on housing loans comes down, it will have a favourable impact on the middle class in particular and common masses in general and thereby will increase the demand for real estate”, said Finance expert, Sovais Shafi.  Assistant Vice President, Jammu and Kashmir, HDFC Bank Zubair Iqbal said, “We don’t provide housing loans to our customers at any of the branches in Kashmir. We do have a separate institute Housing Development Finance Corporation, which provides home loans in Kashmir Valley.”    Source: Greaterkashmir

Tags: home loan banks, home loan guide, home loans, house loans india

As the nation approaches its 60th year of independence, voices of people in their 60's – people striding different eras – bring out the stark contrasts between then and now. 

 

“Though my daughter earns four times what I used to make, I feel I was much better off in terms of financial freedom because out wants were few,” says 62-year old Carmeline Lobo, a retired private sector employee.

Sharad Inamdar, a 64-year old retired navy official sounds positive and excited about the winds of change, and he wishes that globalisation had happened earlier. “Opening doors to foreign investors gives a layman more choices. There are proper rules and more transparency in the markets today – something not so evident decades ago,” he points out.

And both agree though, that today’s generation is a lot 'freer', financially. 

These are the nine reasons why we enjoy better financial freedom than ever before:

 

1.       Interest rates are market linked

Up to the early 90's, your interest rates were regulated. Meaning that the Central Bank would decide a single lending and single borrowing rate. All banks offered the same rate and you had little choice.

 

Today, interest rates are market linked, which means banks are free to price their products. As a consumer, you get to choose the best deposit and bargain for the lowest loan.

2.       Life insurance has moved beyond LIC and mutual funds beyond UTI

Up until 1987, Unit Trust of India (UTI) was the only mutual fund available, and government controlled at that. The year 1987 marked the entry of non-UTI public sector banks and insurance companies. Finally private sector mutual funds appeared in 1993 and their insurance counterparts came in 2000.

 

With the entry of private sector mutual funds came not just debt and equity funds, but floating rate funds, sector funds, theme funds and what have you. The same was the case with insurance. There were more than just endowment and money back policies. You had ULIPs and riders and so on.

 

So today you have a freedom to choose from a variety of financial instruments.

 

3.       Get loans at the click of a button, literally

Taking a home loan in India 20 years ago was unimaginable; both because only those without money took loans and then high interest rates made them practically impossible. My father took a home loan in 1983 and paid an interest of 18%. Twenty years later, I pay 8% and also get tax sops for the same.

 

Thanks to these developments, today you can earn for one just year and think of buying a home. Then, it was what you did just before retirement.

 

4.       You pay much lesser in taxes

In the seventies, you paid an income tax of as high as 93% of your income. Today you pay 30% and still cry because it seems a lot.

 

Year	Exemption limit (Rs)	Entry  Rate (%)	Peak  Rate (%)	Peak rate income (Rs)
1949-50	1500	4.69	25	15000
1970-74	5000	11	93.5	200000
1974-75	6000	13.2	77	70000
1980-81	8000	15	66	100000
1995-96	40000	20	40	120000
1998-05	50000	10	30	150000
2007-08	110000	10	30	250000

Source: Report of the Task Force July 2004, Ministry of Finance, Govt. of India

 

 




5.       Initial Public Offers are no longer a Rs 10 offer

Says Certified Financial Planner Gaurav Mashruwala, “The price of public offers is more efficiently discovered today through the process of book building.”

 

Rs 10 IPOs that were fixed by the government are just not seen around any more. Investors have the freedom to evaluate a company and choose the best price. That also means a lot more transparency.

 

6.       You can invest up to USD 1,00,000 abroad

Until the last decade your investments were restricted, not only to instruments but also to global trends. The world went one way and you just stayed put. That is not longer true today. You have an investment limit of USD 1,00,000 and you can use it the way you like. You can invest in banking products abroad, mutual funds and even buy property.

 

Even mutual funds are offering you global investment options.

 

7.       No restrictions on carrying foreign exchange when traveling

Till a few years back, getting even USD 100 to travel abroad was a herculean task, with a whole lot of formalities and basic travel quotas (BTQs) to be completed.

 

Today, not only you can carry a much larger amount, the ceiling is up to USD 10,000 per year. That does not include your credit card swipes abroad.  Moreover, for more specific needs the limits are much higher. For instance, for education abroad or medical treatment, you can take up to USD 1,00,000 per year.

 

8.       You can spend freely

Apart from the easier borrowing, investing, and taxation, there is another important development – freedom to spend. Earlier, even if you were rich, you hardly had any avenues to enjoy your money except boasting of proud ‘imported’ labels from a foreign trip. Today, all imported labels are at your doorstep and many are even made right here.

 

You have a boom of top quality consumer goods, cars and two-wheelers; you can spend on travel both in India and abroad; you can fly easily and cheap too.

 

9.       Better quality of life

But, investment advisor Sanjay Matai believes that the biggest freedom is the freedom to be able to do what you love. Earlier, with measly salaries and larger families, our parents slogged till the age of 58 or 60 and that too just for mere survival. Today, you can earn and save even while you are in your late 20s or early 30s. Once you have saved a good corpus, you can do what you love to do like taking a hobby or doing a world tour or even dedicate yourself to some cause.

Source: Money Control

Tags: home finance, home loan in india, indian economy

The government today said it would not impose ceilings on Home Loans in India and expected them to get cheaper with a moderation of inflation. Finance minister P. Chidambaram said, “There is a demand for housing loans. We cannot have quantitative ceilings on housing loans, because there is an aspiration (for homes).”  After a 52 per cent increase in home loans, the Reserve Bank of India sought to cool down the market by assigning higher risk weights on loans, leading to costlier mortgages.

To mitigate the interest impact of higher weights, the government introduced differential rates for loans below Rs 20 lakh. Chidambaram said: “I do not think that it is right to put restrictions on housing loans. Since there is a high growth, it can lead to a bubble. The RBI is right in increasing risk weight and making some regulatory prudential requirements to cool down the sector.”  The interest rate on home loans has moved to over 11 per cent from around 8 per cent in over two years.

Chidambaram said it was not for the first time that interest rates were high. In 1999-00 and 2000-01, loans were quite expensive. The minister said the RBI had informed him of its desire to follow a tight monetary policy, but often high fuel and food prices limit the impact of measures. “The RBI monetary policy works on core inflation... That is, minus fuel and minus food items.

“This is the case all over the world. So when fuel and food drive inflation, of course, you have to tighten monetary aggregates. That is what the RBI is doing,” he said. According to the RBI’s quarterly review of the monetary policy, growth in housing loans has decelerated to 24.6 per cent and real estate loans to 69.8 per cent between January and March.

Tags: home loan india, real estate loan

Reserve Bank of India (RBI) Governor YV Reddy on Tuesday unveiled the quarterly review of the credit policy. Ordering banks to keep a tight leash on lending, it hoped to keep inflation within manageable limits. Here’s how the policy affects you.

Will your loans get costlier?

Home loan and other consumer loan rates are unlikely to rise. There is cash aplenty, but it comes with a healthy leash.

What about fixed deposits?

Banks were set to cut interest rates on deposits as they had more cash to lend. With the RBI mopping up some of it, they are unlikely to cut fixed deposit rates. Reddy did this by raising the cash reserve ratio (CRR), the proportion of deposits that banks must keep as cash with the RBI, to 7 per cent from the present 6.5 per cent. This is the fourth such hike since last December.

What’s the effect on the stock market?

The Bombay Stock Exchange saw the CRR hike as a signal to raise rates and the Sensex fell 1 per cent. However, it recovered to close 1.9 per cent up at 15,550.99 as traders realised there was no devil in the policy. 

Source: Hindustan Times

Tags: credit policy, home loan india, rbi

Centurion Bank of Punjab, today announced its results for the quarter ended June 30, 2007 (Q1-2008). Operating profit for the quarter at Rs. 908 million demonstrates a healthy growth of 79% over that in the corresponding quarter last year. Profit before tax grew 66% to Rs. 525 million. The net profit for the bank stood at Rs. 330 million for the quarter ended June 30, 2007 (Q1 - FY2008), This has shown a sequential increase of 18% as compared to that in the previous quarter and is up by 15% as compared to that in the corresponding quarter last year.  

 

The bank has demonstrated strong growth along all its businesses despite the fact that the first quarter of the fiscal year is traditionally slow for the off-take of banking and financial services. The growth in advances of 60%, and in deposits of 55% is substantially higher than that witnessed by the sector as a whole. The bank continues to maintain a strong momentum in both earnings growth as well growth across all its core businesses. 

Significant growth along all businesses

The Bank’s advances towards the SME sector grew by 150% over those at the end of the corresponding quarter last year reiterating the importance of this segment as a rapidly scaling up, strong second growth engine for the Bank. Retail advances for the Bank continue to grow at a healthy rate of 59%. The bank continues its focus on retail lending and retail advances now form 69% of the Bank’s total advances.

 

Within the Bank’s retail asset portfolio, Mortgages and Personal loans grew rapidly at 134% and 154% respectively. As on June 30, 2007 mortgages formed the largest component of the Bank’s retail asset portfolio at Rs. 22,679 million constituting 27% of the Bank’s retail assets followed by personal loans at Rs. 17,244 million constituting 21% of the Bank’s retail asset portfolio. Two wheeler loans, which was historically the largest retail asset class for the bank now forms 19% of the Bank’s retail loans. Other components of the Bank’s retail portfolio such as Commercial Vehicle & Construction Equipment loans continued to grow in line with the market.

Tags: home loan india, home loans, net profit, real estate

Housing loan disbursements have dropped by about 15-20% in the first three months of the current financial year. The drop is attributed primarily to the steady hike in interest rates. The brunt can be felt in the home loans mostly in the metros and tier 1 towns. In 2006-07, total disbursements towards total home loans stood at Rs 50,600 crore, which was an increase of about 30% over the previous year.

Banks and housing finance companies said that a clearer picture on this would emerge only once the final first quarter results start coming in. It may be noted that the Reserve Bank of India (RBI) had earlier shown their discomfort with the sharp rise in housing loan demand. At present, the average interest rates being charged by the public sector banks on home loans is around 9.25%-10.5%. 

A senior official at Punjab National Bank pointed out that there has been a decline in the demand in personal loans. Housing loans comprise 50% of the total personal loan portfolio. However, bankers say that with the level of inflation dropping below the 5% mark, banks may take a decision on reducing interest rates in the coming months. “In that case, there could be an immediate pick up in demand for housing loans,” the official said. 

An LIC Housing executive said that speculative buying and purchases specififically aimed at investments have dropped significantly. The central bank in its annual monetary policy, reduced the risk weight on residential housing loans to individuals from 75% to 50% for loans upto Rs 20 lakh to provide relief to those purchasing properties for the first time.

Bankers indicated that the non-performing assets (NPA) from the housing loans may rise due to the sudden increase in interest rates. “Though home loans are secured lendings there may be a rise in the NPA level due to the rise in interest rates,” an industry expert said.

Tags: home equity loan, home loan india, real estate india

The Indian real estate market will be particularly lucrative for overseas investors in the immediate years ahead as the Indian Government moves toward passing real estate investment trust (REIT) legislation, according to a senior real estate investment officer with a recognised Indian fund manager. 

“Unlike a lot of the overseas markets, there is very little commonality between  the property markets and the capital markets in India because there is no existing REIT legislation,” explained Kotak India Realty Fund chief investment officer Hari Krishna.

“But we believe that over the next three to four years going forward, the capital markets and property markets will come together and that will create a lot of value,” he added. Krishna cited several sections of the real estate market that would offer the best value, one of which was commercial property space; that is industrial parks as opposed to downtown office premises, mainly due to India’s growth in the IT sector.

However, he was quick to point out that investing in retail shopping centres was not likely to be as attractive. “The main reason for this is that the international retailers, either the hypermarkets or supermarkets, are not allowed into the country on a wholly owned basis. So while a Louis Vuitton can set up its own stores, a Walmart is not allowed,” Krishna explained.

Without these players, he feels the yield on investments cannot be maximised. Another area Krishna thought would make a worthwhile investment is hotels, as a large gap in the market between five star establishments and cheap accommodation exists. The driving factor for this situation has been bank reluctance to lend money to projects that have to be developed and then held compared to those that are developed and then sold. It typically means capital for these schemes have had to be sourced from within.

Krishna reinforced the attractive nature of these sectors because they also carried exemptions to allow overseas investment via debt as opposed to other areas that only allow foreign investment through equity. 

Source: Money Management

Tags: fdi, homr loan india, india properties, indian property, nri, real estate india