UN­DER­STAND­ING IT BET­TER

Consumer Voice - - Bfsi -

Not many of you would know that banks cur­rently ac­count for more than two-thirds of to­tal home loans dis­bursed in the coun­try. The home loans in In­dia are pro­vided by banks (for them, RBI is the reg­u­la­tor) and hous­ing com­pa­nies (Na­tional Hous­ing Bank [NHB] is their reg­u­la­tor). From time to time, th­ese reg­u­la­tors is­sue guide­lines gov­ern­ing home loans in In­dia. As the name sug­gests, home loan is taken for ei­ther pur­chas­ing or con­struct­ing of a house/res­i­den­tial prop­erty. One can also avail of a hous­ing loan to buy a plot of land and car­ry­ing out con­struc­tion on the same – this is called com­pos­ite loan. Home loans in In­dia are pro­vided by the lenders up to a max­i­mum of 80 per cent (90 per cent for loan amount be­low Rs 20 lakh) of the agree­ment value of the house. In case of home loan for re­sale of flats, most lenders get the prop­erty val­ued in­de­pen­dently and they will pro­vide the hous­ing loan based on their value rather than the cost men­tioned in the pur­chase agree­ment. Fre­quently, the val­u­a­tion is de­ter­mined by the banker's eval­u­a­tor. Banks do not con­sider other charges like stamp duty and reg­is­tra­tion charges, and th­ese costs have to borne by the bor­rower. Home loans are re­paid through monthly in­stal­ments (EMI) spread over up to 20 years. Some banks have in­creased the ten­ure up to 25–30 years. The max­i­mum ten­ure of any loan and home loan specif­i­cally is also re­stricted by the bor­rower’s age at the end of the ten­ure so as to en­sure that the loan gets fully paid by or be­fore the bor­rower’s re­tire­ment age.

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