[kalpeshc]

1. Is there any limit to the amount of loan that can be offered, taking into account the in-hand salary?
Yes - This varies from bank to bank and generally nationlized banks are stricter about this. But nowadays even the private players have started being stringent on this one.

2. Is there any limit on the % of actual cost of property that can be given as loan?
Yes - All banks (without any exception) would give you only 70-80% (this amount varies from bank to bank) of the loan amount. Not only this, you have to make the rest of the payment first before the bank would disburse the amount (something to that effect).

3. If the borrower is not able to continue work and earn, due to a sickness/illness/accident, is there any protection plan that covers this risk? Both for critical illness and any other(say blindness/loss of limbs/handicap) ?
You can take insurance on your loan amount. Most of the players have their own sister concerns taking care of it. But be extremely careful before opting for this (read the fine print finely!)

4. Are home loan available for resale properties? If yes, what do points 1-2-3 hold for it?
Yes - home loans are available for resale property too but there would be more hassles and less loan amount. Also, there are some extra fees for valuation and title clearance that banks will charge you for. Pts 1-2-3 will hold true for the same.

5. Is part-prepayment & full prepayment of home loan possible?
Most of the banks do not charge on part-prepayment (except some very niche private players) but do charge 2.25% (with service tax) on full prepayment before tenure. However nationalized banks do not charge this too provided you can prove that the full payment happened from your own source of income e.g. rich uncle left you a load of money! Otherwise you will have to keep 12 outstanding EMIs with the bank to avoid the penalty.

6. Is home-loan given for new projects with Construction linked plans? If so, how does it work ? Say a property has completion date 3 years hence from now, and in-between construction linked payments have to be made to the builder. Does home loan cover that?

Yes - home loans take care of that. Depending on the demands raised by builder as they complete the structure, you can request your bank to disburse the amount. However, the EMI that you would pay on this would be called pre-EMI (as you have not taken possession of the house) and it will only include interest portion (I think there are some tax related repercussions because of this.


Do keep posting your queries here.

[akroy]

Originally Posted by kalpeshc

Hey Abhi,
I am sailing in the same boat and am already looking to switch to SBI (MaxGain) as they are offering me loan of 15L (same outstanding) at 10.75%. I am trying to see if they reduce the processing fees of 0.05% of 15L. They may come down to 5K flat fee.

Also, they are ready to pay the 30K penalty (2% on 15L) as part of the loan amount. I will keep info posted on this thread. Going to meet them this Saturday

Ya pls keep posted. I m also thinking to meet the executive in the nearby SBI branch and check out if any.

Abhi

[Shakensoul]

This is my newbie perpective which I have understood after dealing with a home loan.

Originally Posted by DCEite

I am newbie when it comes to home loans, as i don't have a home loan yet. However, in the coming 4-5 years, i might have to take one for buying my own house.
I have a few general queries:

1. Is there any limit to the amount of loan that can be offered, taking into account the in-hand salary?

Most banks will provide loans upto 5 times your annual take home salary. If you have a co-applicant, the co-applicants salary will be combined for loan eligibility. However if you or your co-applicant have a existing personal/car loan going one, banks might insist that you close that loan account first. Plus if will further reduce your loan eligibility.

2. Is there any limit on the % of actual cost of property that can be given as loan?

Mostly banks finance upto 80-85% for a new property. The initial payments like booking amount has to be paid by you.

3. If the borrower is not able to continue work and earn, due to a sickness/illness/accident, is there any protection plan that covers this risk? Both for critical illness and any other(say blindness/loss of limbs/handicap) ?

AFAIK, you can only avail a life insurance plan along with the home loan which covers only death of the owner, it does not cover any illness.

4. Are home loan available for resale properties? If yes, what do points 1-2-3 hold for it?

The problem wih resale property is, most of the property owners ask for black money to be paid in lumpsum first.

5. Is part-prepayment & full prepayment of home loan possible?

Yes, varies from bank to bank.

6. Is home-loan given for new projects with Construction linked plans? If so, how does it work ? Say a property has completion date 3 years hence from now, and in-between construction linked payments have to be made to the builder. Does home loan cover that?

Yes. Lets suppose, you buy a property for 30L under construction linked plan. The bank sanctions a loan of 24L. You need to pay the initial booking amount of around 3L to the builder. After that, depending on the stages of construction, builder will send you a demand letter of certain amount to you, you need to submit that demand letter to the bank and the bank disburses the amount to the builder. You will also need to pay from your side the balance amount of 3L.

[kalpeshc]

AFAIK, you can only avail a life insurance plan along with the home loan which covers only death of the owner, it does not cover any illness.

I was approached by a few insurance organizations (ICICI Lombard included) which had a life insurance and also a facility where you can afford to default on your loan for around 6 months because of illness or out of job, etc. I don't quite remember the details but approaching the sales executives is a good idea

[rkg]

Originally Posted by kalpeshc

I was approached by a few insurance organizations (ICICI Lombard included) which had a life insurance and also a facility where you can afford to default on your loan for around 6 months because of illness or out of job, etc. I don't quite remember the details but approaching the sales executives is a good idea

1.Never ever do that. Almost all banks give a personal accident cover with home loan freely. Some of them may not mention it but they do take a single master policy covering all their home loan account holders. Mostly PSU banks may not be doing this.

2. If you want to take personal life insurance check different life insurers for term policies and compare for a given tenure and amount. Never inform Bank about this.

3. Do not take life insurance offered by home loan issuer. It is called mortgage insurance and it is a huge rip off ( HDFC provides this at a cost). Here the insurance cover keeps coming down year by year. But the premium very high when compared to plain term policy.

4. If the loan amount is more than 25 lakhs check LIC Amulya Jeevan and also others. recently i have read that premium's for term policies have dropped by good percentage . Religare is the first one reduce the rates. I also heard KOTAK also reduced. But check the respective websites

[DCEite]

Thanks for detailed reply, kalpeshc and Shakensoul.

I did research on various insurance plans (both home loan insurance and general insurance), and surprisingly there is absolutely nothing in our country, not even a term plan, that covers Disability due to Sickness (as against Disablity due to accident which is covered as a rider in most Insurance plans).

Shocking.

[kalpeshc]

I just spoke to a SBI's sales rep. She told me that SBI generally has their loan melas where they reduce the rate of interest and also offer discounts on their processing charges.

Last year they had a loan mela in monsoons, but this year they may have it in Diwali. I am thinking of waiting for the same as its quite close by now. The processing and documentation charges themselves amount to around 10-12K for a loan of 15L which I am not quite comfortable with (as I had not paid a single penny when I had taken a loan with ICICI through my builder)

[Shakensoul]

Has any member having a home loan with HDFC opted for their Home Loan Protection Plan (HLPP) ?

I have recently transferred my home loan to HDFC. When I calculate my premium, its coming upto 56098 which I can include in my loan amount and pay along with the regular EMI. However I am not sure, what will I get back after 20 yrs ?

[NetfreakBombay]

This policy from HDFC is a rip off, you will end up paying 56k + interest on it.

That means paying 7k additional EMI every year for next 20 years. And protection will decrease every year.

Better buy a separate term insurance policy from LIC/ICICI/Anyone else. With your age, it would cost approx 6k per year and would give you protection for 22 lakh for total duration of 20 years.

[animdas]

Originally Posted by prabhusati

Hi AK Roy,

...............in addition to the processing charges of the nationalised bank. When i got my loan transferred from Citibank to Indian bank, this charge was Rs.1000.00 Not sure of the home loan processing charges now. When i ............
Best Regards
Satish Prabhu

Hi Satish,
Do let me know how did you get the documents from Citi. SBI is asking for the ECs and during my 1st intercation with Citi, they refused to give me even the photocopy!

Thanks,
~Animesh

[amohit]

Hi,
Did not want to start a new thread, so hijacking this thread for a while. I have been approached by LIC Housing Finance agents to transfer my existing home loan to LIC.
Now my general impression about LIC (and almost every other govt org) is that it sucks! But leaving that aside, my biggest concern is in case of LIC for existing customers how does the floating rate go. Only upwards/it comes down with market/it comes down but rarely? (Someone who had taken the loan in 2004-05 @7-8% would know better)
This agent guy tells me that starting April 2009, interest rate for existing customers will be 8% (currently 8.75%).
I find it hard to digest. I dont know of any other bank which will pass on the benefit of lower interest rates to existing customers and why should they. If you stay with them, they will milk you in instalments. If you leave they will milk you in one shot.

Any way, so people, if you have loans from LIC, please let me know, should I switch my loan to them or should I stay away from them.
Note: My current blood sucker is ICICI.

Regards,

[vasudeva]

I have a loan from HDFC from Jan 2006 onwards. My experience is not good. Their interest rates increases have been swift and almost in sync with RBI's monetary tightening. However, over the past few months, the reverse has not happened, with my loan interest coming down only from 11.75% to 11.25%. I am seriously considering switching to someone else (and get the benefit of a new customer). The cost of switching could be offset in 1-2 yrs (present outstanding of 37 lakhs).

Any advice??. How easy is the process?? Seriously, not considering a switch to another private sector player.

[bharanidharang]

vasudeva.. i would always recommend switching over to a public sector. i am sure they do bring down the interest rate corresponding to RBI moves.

[m8002?]

I shifted from HSBC ( was charging me 13% ) to HDFC...got it at 9.75% in Jan. My friend is in the process of shifting to HDFC and he is being offered 9.5%. HSBC never reduced the rates after it peaked in May/June 08.

I am hoping Govt/RBI puts some regulation on these bankers on the max margin of thier PLR rates. Somehow their PLR rates only go up and never go down.

[NetfreakBombay]

Originally Posted by vasudeva

I have a loan from HDFC from Jan 2006 onwards. My experience is not good.

Am in the same boat. With hdfc since 2006 and current rate is 11.25% .

Only good thing about HDFC is its services and transperancy. NO DSA is involved in the processes and employees know what they are talking about.

Looking at govt banks, interest rates are around 8% for those.