NHB LAUNCHES PRO-POOR HOUSING LOANS

Concerned over the rising shortage of housing in India, the National Housing Bank (NHB) has announced the launch of pro-poor housing finance schemes in India.

Speaking at a conference attended by senior officials of the United Nations Economic & Social Commission for Asia and the Pacific (UNESCAP), S Sridhar, CMD of National Housing Bank, said, “India is facing an acute crunch of housing space and the weaker classes remain the most suffered sections of the society. At present, the country is reeling under an urban housing shortage of 24.7 million units, of which 99% comprise the weaker sections of society. The non-affordability of poor to avail loans and inability to re-pay is increasing this shortage year-on-year.”

The NHB has decided to enhance coordination between the formal and non-formal financial institutions of the country. “The informal finance institutions will provide key information about micro-finance deeper down the poorer classes to the formal ones, which will enable them to reach markets, so far considered too risky and inaccessible by them,” he said.

The public sector home finance regulator has also decided to establish effective network linkages for information exchange among other countries like Indonesia, Malaysia, Thailand, Mongolia, Sri Lanka, Pakistan and Bangladesh, concerted through UNESCAP.

Speaking on the sidelines of the summit, Ravi Ratnayake, director (poverty & development division), UNESCAP, said, “Nearly 500 million people in the Asia-Pacific region don’t have access to decent housing. We have initiated the process to establish a mechanism in the region at national levels.”

“After sharing the information, we can have a comparative analysis of the documentation and research on the home finance system. We can resource the study and expertise conducted in India to the rest of Asia,” he said.

                                                                                                   Courtesy: TOI dtd: 5th Feb 2008

thE RBI'S CREDIT POLICY LEAVING KEY RATES UNCHANGED WOULD, IN ALL LIKELIHOOD, TRANSLATE INTO A STABLE INTEREST RATE REGIME AND BENEFIT HOME LOAN BORROWERS

the overall stance of the Reserve Bank of India in its Mid-Term Review policy is one of caution to rein in any inflationary potential so that the growth momentum actually materialises. Towards this, the Reserve Bank has kept its key rates unchanged with the repo rate at 7.75 per cent and the reverse repo rate at 6 per cent. It has, however, hiked the Cash Reserve Ratio to be maintained by banks by 50 basis points to 7.5% with effect from November 10.

Explaining the Policy, R V Verma, Executive Director, National Housing Bank says the fifty basis point hike in CRR is inflation targeted and will lead to money contraction. the move will result in bank money being impounded by RBI and to that extent, the inflationary potential will be curtailed. the CRR hike will lead to a mop-up of Rs 15,000 crore, and the potential impact that will be curtailed will be much more.

Finance consultant Ravi S Kumar is of view that banks will be forced to reduce interest rates to take advantage of the festive demand. Being the festive season, bookings will take place. Home buyers can take advantage of offerings during exhibitions wherein they will get concessions in interest rates and attractive schemes and pricing from developers.. "there is liquidity in the market. Any tightening in liquidity would have restricted interest rates. If more liquidity infusion continues, then we will see the supply of money increasing, and may have an impact on interest rates softening," Verma concludes.

                                                                                                  Courtesy: ET, dtd: 09th Nov.2007

As the interest rate has started falling, things are picking up in the residential real estate segment. In the first nine months of the current calendar year, because of the rise in interest rates, end users had been staying away from the realty market.

However, in the last couple of weeks, as interest rates have started softening up, developers and builders say the number of enquiries they are receiving from end users and investors have shot up manifold. Some builder’s say the number of deals have also gone up in the last couple of weeks.

MD of Assotech, Sanjiv Srivastava, said there is a clear change in trend in the last couple of weeks. Many, who had dropped the idea of buying an apartment after the interest rate hike in January 2007, want to complete the deal now. However, he said the demand is coming back in the non-premium segment. Assotech is developing apartments in Noida and Crossings township on National Highway 24.

the premium segment will suffer because of over supply in almost all markets. Global consultancy firm DTZ has predicted that Gurgaon will face the problem of oversupply in the next one year in the premium segment. It said that most of the projects, which were launched in 2005 and 2006 when the real estate boom was at its peak, are likely to be completed in the next one year. Total number of apartments that are likely to be ready for possession in 2007 to 2009 is over 11,000. A similar situation prevails in Noida and other markets.

In the medium term of two to three years, consultants feel the trend will reverse in the premium segment also.

Director of KLJ builder, Hemant Jain, said there are clear indications of growing demand in the middle category—that is, apartments costing around Rs 50 lakh. He said that the group’s ongoing residential projects in Faridabad Nahar Paar area, Bahadur Garh and Gurgaon are receiving a good number of enquiries.

Avinash Agrawal of Meriton group, which is developing residential projects in Indirapuram and Vasundhara, said the easy availability of loans at lower rate will certainly go a long way in enabling end-users’ buying homes. Director of Amprapali group, Shiv Priya, too said that in the last fortnight things have started looking up. Besides residential projects, the group is also implementing a large commercial project in Greater Noida. the demand in smaller cities is also on the rise. Amit Khaneja of Collage group said that the company’s residential projects in Jalandhar, Dehradun, Amritsar and Bhopal have received very good response.

                                                                                                                   Courtesy: TOI dtd: 17th Oct. 2007

ALthOUGH BANKS HAVE CHOSEN TO LAUNCH OFFERS IN thE FESTIVAL SEASON, EXPERTS FEEL SLUGGISH LOAN GROWth HAS PROMPTED thEM TO GO thE EXTRA MILE

Prospective home loan borrowers have something to cheer about in this festive season. Housing finance players are out to woo them by lowering lending rates. they have all geared up to cash the increased flow of money in people’s pockets in the next two months or so.

Housing Development Finance Corporation (HDFC) has lowered its floating interest rates on new home loans by 0.75 percentage points to 10.50% for a limited period. State Bank of India (SBI), too, announced similar concessions for fresh home loan borrowers in Kolkata. SBI is offering the scheme only at its home mela held in Kolkata.

the country’s largest bank is offering 10.50% interest for loans above Rs 5 lakh in case of approved housing projects. In all other cases, the bank will charge 10.75% from borrowers in Kolkata. these rates are available for loans beyond a five-year term.

the latest in the bandwagon is Allahabad Bank. the Kolkata-based bank has reduced interest rates on fresh housing loans by 0.50-0.75 percentage points for the next three months starting from October 1. For loans below Rs 20 lakh, Allahabad Bank will charge a 9.75% rate for maturity up to five years, 10.25% for maturity above five years and up to 10 years, 10.50% for maturity above 10 years up to 15 years and 11% for maturity above 15 years and up to 25 years.

the reduction in interest rates for fresh borrowers, however, does not apply to existing floating rate home loan customers.

Incidentally, Bank of Baroda (BoB) lowered its rates in the first week of September itself, well before the onset of the festive season. It cut rates by up to 0.50 percentage points. Union Bank of India has recently reduced the rate by 0.25 percentage points across all maturity buckets. Both BoB and Union Bank have reduced their rates for an unspecified period.

A senior official with SBI said the move to lower home loan rates is to target the large pool of middle-class borrowers. “the lowering of rates would lure fresh borrowers when they have additional flow of cash in hand,” he said.

Although banks and other housing finance players have chosen the festive season to push their home loan products, industry observers say that the sluggish home loan growth since April has prompted them to go the extra mile to mobilise new home loan customers. the banks’ home loan books have grown less than 5%, as opposed to 25-30% growth seen in the last few years.

Interestingly, ICICI Bank has so far kept its home loan rates unchanged. the country’s largest housing finance company HDFC, announced the `special’ 10.50% rate for new customers willing to avail of home loans at the floating rate of interest. the offer is valid for all loans disbursed on or before October 31, 2007.

NEW OFFERS

• HDFC has lowered floating interest rates on new home loans by 0.75 percentage points to 10.50% for a limited period
• State Bank of India, too, announced similar concessions for fresh home loan borrowers in Kolkata
• Allahabad Bank has reduced interest rates on fresh housing loans by 0.50-0.75 percentage points for the next three months starting from October 1
• Bank of Baroda lowered its rates in the first week of September itself, well before the onset of the festive season
• Union Bank of India has recently reduced the rate by 0.25 percentage points across all maturity buckets. Both BoB & Union Bank have reduced rates for unspecified period
• the banks’ home loan books have grown less than 5%, as opposed to 25-30% growth seen in the last few years
• ICICI Bank has so far kept its home loan rates unchanged

If Skyscraping interest rates have grounded your dreams of owning a home, take heart. You now have the option to borrow at just 9.99% rate of interest.

Consumer finance services provider GE Money and international mortgage player Wizard on thursday announced a joint venture —Wizard Home Loans — that promises to offer loans at a floating interest rate of 9.99%. the company will invest $200 million in equity by 2011 and set up over 250 branches across the country by then.

“GE has 75% stake in the JV and will accordingly invest in the venture,” Wizard India CEO Egisto Franceschi said on thursday. the remaining 25% will be held by the founders of Wizard Home Loans.

As much as $1 million has already been infused. By the close of this fiscal year, over $10 million would be invested, he added.

GE Money has been scaling up its presence in emerging markets such as India, as General Electric hopes to enter banking in the country in 2009 when the government is expected to further open up the banking sector. the company has 15 branches. Wizard India is currently operating under licence from GE Money, pending approval from National Housing Bank and RBI.

“By 2011, we expect our loanbook size to be at least $2 billion. We see India as a steady growth market and want to be among the top five lenders in this country in the next 5-10 years,” Wizard Home Loans chairman Mark Bouris said.
“Interest rates in India have recently gone high. We feel we can challenge that,” he added.

Wizard India expects to grow at 100% in the first three years, after which growth will taper to 30-50%. the JV will create 3,000 jobs through branches.

While the renewable agreement between the promoters is for 10 years, the intention is to forge a long-term partnership that can go beyond 30 years, Mr Bouris said.

the domestic home loans segment has been growing at a compounded annual growth rate of 30% since 2001. According to National Housing Bank, India faces a shortage of 30 million housing units.

Speaking of an innovative operational model that reduces the cost of funds, Mr Bouris said consumers would be offered home loans through franchisees, who would be paid an upfront fee and a monthly commission as long as the loan remains on the company’s books. this would ensure the loan is serviced properly during its tenure.

the company plans to be transparent in its dealings with customers at the time the loan is sold and till the loan is serviced. “there will be hand-holding for customers. We are selling transparency as a motto,” he added.

Mr Franceschi said the cost of funds would be relatively lower as the company would get funds via its GE relationship. In addition, Wizard will provide loans against property to enable consumers meet needs such as business expansion or other financial needs, he added.

                                                                                         Courtesy: ET dtd: 21st September 2007

WHY YOU SHOULD INSURE YOUR HOME LOAN
FOR IT PROTECTS DEPENDENTS FROM thE BORROWER’S LIABILITY

Prakash Zalake just brought the house of his dreams. Zalake, who got married two years ago, and is now the proud father of a four month old, had been scouting for a house for sometime. Finally, he decided to take the plunge. “this house means everything to my family and me,” he says. “Buying a house in a prime location costs a fortune. But with a housing loan, it seemed like a cakewalk. It helps, of course, that I earn decent money from my event management business,” he adds.

Congratulations are in order. But would he mind if we asked him a question? Has he bought a home loan insurance cover? the look on Zalake’s face goes from blank to incredulous. He says, “What is that?” It turns out he had no idea there existed something like home loan insurance cover. Unfortunately, Zalake is not alone. Many people, like him, do not understand why they should buy an insurance cover on their home loan. Well, the reason is quite straightforward.

Protect your home loan
Simply put, home loan insurance provides cover on your housing loan, just as a life insurance policy covers you. If you were to die during the term policy, the cover would provide a lumpsum amount equal to the outstanding amount on your home loan. As the outstanding amount on the loan decreases over time, so does the cover under the policy.

Let us consider an example. Suppose an individual took a housing loan of Rs 10 lakh for a period of 15 years. Suppose, too, that after repaying the principal amount of Rs 3 lakh, he met with an accident and died. His insurance company will pay the remaining amount of Rs 7 lakh to the housing finance company or bank that gave him the housing loan. “A home loan protection plan provides immense comfort to the customer, as it can ease some of the financial burden when a crisis strikes,” says Renu Sud Karnad, executive director, HDFC. “It is in keeping with this benefit that we advise our customers to insure their home loan,” she adds.

Premium options
You can opt for either a single premium or a regular premium while buying home loan cover. A single premium is a one-time payment, while the regular premium option comes with a choice of annual, half yearly or quarterly payment options. In some cases, like HDFC Standard Life Insurance, one has a “limited pay” option. this means you pay the premium for only two-thirds of the total term. For example, if your home loan cover is for 15 years, you would pay premiums for only 10 years, even though the cover continues for the entire period.

Let’s see how much this cover will cost. Say, for example, that you have a Rs 15 lakh housing loan for a term of 15 years. If you choose the single premium option, a cover from HDFC Standard Life Insurance will cost you around Rs 33,270. If you choose to pay regular premiums, you would have to pay approximately Rs 6,510 for the next 10 years.
As mentioned above, even though you’d pay premiums for 10 years, the cover would continue for the entire term of 15 years.

Uday Sankar Roy, managing director and CEO, SBI Life Insurance, says, “As people’s awareness on the need for credit protection increases, we see credit life products growing at least as much as the overall industry growth rate. SBI Life Insurance has covered around 6.5 lakh home loan borrowers since 2004.” Around 20% of HDFC customers also opt for a home loan insurance cover.

Already have life insurance?
Says Kartik Jhaveri, director, Transcend Consulting, “Having a home loan cover is like having a hedge against liabilities. Your insurance cover and other assets should be equal to or greater than your liabilities. If you are inadequately insured, you must buy extra cover.”

For example, let’s assume that an individual has a life cover for Rs 10 lakh and he takes a home loan of Rs 10 lakh. He might argue that since he already has a cover for Rs 10 lakh, he doesn’t need to buy a home loan cover. He is wrong.

If something happens to him, his dependents will be forced to shell out money from his life cover to settle the outstanding home loan. It is possible that they will be left with little or nothing after that. thus the purpose of the life insurance is completely defeated.

Tax benefit
the Premium paid under this plan qualifies for deduction under Section 80C of the Income Tax Act, 1961. Returns (in case of a claim) are fully exempted under Section 10 (10D).

                                                                                                Courtesy: ET dtd: August 10, 2007

SAFEGUARD YOUR HOME

ET Realty offers some advice on what you should not do while renovating your house

A doctor always advises ' prevention is better than cure', it is the same for the safety of the structure of your own house.

Even though, undoubtedly, there are many solutions and remedies to repair a damaged structure, we must understand the importance of respecting the existing structure, nurturing it and maintaining it for the safe and happy use of your own space. Generally RCC structures do not collapse like a pack of cards because they are designed for minimum one and half times prescribed and allowable loads. Here are some minimum ' don'ts ' of certain critical elements of structures in interiors which must be adhered to while carrying out any interior renovations:

RCC Works:
Reinforced cement concrete beams and columns are the most common structural membrane of any building. Do not ever chase concrete or cut the steel - leave aside removing or reducing the size of these membranes.

Why? All RCC membranes are designed with concrete cover to protect steel. While chasing it is likely to damage the cover over reinforcement, which may result into corrosion of bars and slowly develop cracks and weaken the structure.

Balconies:
Do not use enclosed balconies for kitchen, toilets, heavy storage, etc. Why? While balconies are permitted to be enclosed by BMC for habitable purposes, as per regulations they ought to be overhung or cantilevered. Adding additional load certainly adds stress to existing structural framework.

Toilets and Kitchen:
Avoid changing the location of toilets and kitchen. Why? All toilets and kitchens have common drainage and supply lines. these areas are also specifically waterproofed and likely to be overtly used. Any change in location damages the waterproofing and dampness or leakage within RCC membrane certainly corrodes the steel and weakens the concrete.

Chajjas and Planters:
Do not extend your interior space over planters and chajjas.

Why? Chajjas are designed to protect doors and windows from weather and planters are a so-called façade feature allowed by BMC. these are again cantilevered structures with no provisions of additional dead or live loads. Any stress on these cantilevered portions directly impacts the dynamics of surrounding beams and columns.

Pipe Shafts:
Do not extend your interior space and enclose any pipe shafts.

Why? Pipe shafts are meant to hide pipes and other utilities commonly laid in the building. It is illegal to enclose these common spaces. While BMC does not have any regulation on size and shape of these shafts and they are hollow, however, in recent times it is observed that it is tempting to enclose these shafts to enhance the size of your bathroom, kitchen, etc. where there is no structural provision.

Plinth:
Do not lower the existing plinth level.

Why? By lowering the plinth level, you may gain extra height but it is likely to damage plinth or tie beams, top of footings, and so on, which are at the very base of any structure. Lowering of the plinth also endangers water ingress into your building.

Concealed electric, plumbing and AC works:
Do not chase or cut a hole in any structural membrane to conceal electrical, plumbing or any utility services.

Why? For the same reasons as mentioned in the first item.

these are just few basics and most common abuses to RCC structures, which are observed in many buildings in our city.

Always use the best material you can afford.

Follow good building practice and insist on best workmanship and craftsmanship.

You must appoint a qualified interior designer or Architect and if in doubt, obtain additional advice from a structural consultant for major civil alterations.

Lastly, be vigilant to the smallest of cracks in the structure and attend to it urgently.

                                                                                               Courtesy: ET dtd: August 10, 2007

FLOATING HOME LOAN: CHECK thE BENCHMARK RATE & RESET CLAUSE

1. If constructing on own land .
2. If the property is being purchased is in Cooperative Society
3. If a flat is purchased from the builder
4. Self-Employed/Businessmen
5. Salaried Individuals

1. Salary slip/Form 16 A.
2. A photocopy of the first and last pages of Ration card or copy of PAN/Telephone/Electricity bills.
3. A photocopy of Investments (FD Certificates, Shares, any fixed asset etc. or any other documents supporting the financial background of the borrower.
4. A photocopy of LIC policies with the latest premium payment receipts (if any).
5. Photographs (as applicable).
6. A photocopy of bank statement for the last six months.

Self-Employed/Businessmen

1. A brief introduction of Business/Profession.
2. Balance Sheet, Profit and Loss account and statement of income with Income Tax returns for the last 3 years certified by a CA.
3. A photocopy of Advance Tax payments (if applicable).
4. A photocopy of Registration Certificate of estatblishment under shops and Establishments Act/Factories Act.
5. A photocopy of Registration Certificate for deduction of Profession Tax (if applicable).
6. Bank statements of Current and Saving accounts for the last 6 months.
7. A photocopy of Certificate of Practice(if applicable).
8. A photocopy of any bank loan (if applicable).
9. A photocopy of the first and last pages of the Ration card or a copy of PAN/Telephone/Electricity Bills.
10. A photocopy of LIC policy (if applicable).
11. A photocopy of investments (FD Certificates, Shares, any other fixed asset).

For a builder Flat

1. Original copy of your agreement with the builder.
2. 7/12 extract or property register card of the land under construction.
3. Index II extract of your agreement with the builder.
4. Copy of N.A. permission for the land from the collector.
5. Search and title report (with the details of documents) for the last 30 years.
6. Development agreement between the owner of land and the builder.
7. Copy of order under the Urban land Ceiling Act.
8. Copy of building plans sanctioned by the competent authority.
9. Commencement certificate granted by Corporation / Nagar Palika.
10. Building completion certificate(if available).
11. the latest receipts of taxes paid.
12. Partnership deed or memorandum of association of the builders firm.

For a Cooperative Society Flat

1. Original share certificate of the Society.
2. Allotment letter from the society in your name.
3. Copy of the lease deed, if executed .
4. Certificate of the registration of the society.
5. Copy of the byelaws of the society.
6. No objection certificate from the society.
7. 7/12 extract or property register card in the society's name.
8. Copy of N.A permission for the land from the collector.
9. Search and title report(with the details of documents) for the last 30 years.
10. Copy of order under the Urban Land ceiling Act.
11. Copy of the building plans sanctioned by the competent authority.
12. Commencement certificate granted by Corporation / Nagar Palika.
13. the latest receipts of taxes paid.
14. Original Agreement to assign / Deed of assignment.

For a Flat Constructed on own Land

1. Original sale deed of land and extract of Index II.
2. Extract or property register card in his name.
3. Copy of N.A. permission for land from the collector.
4. Search and title report (with the details of documents) for the last 10 years.
5. Copy of order under Urban Land Ceiling Act.
6. Copy of the building plans sanctioned by the competent authority.
7. Building permission granted by Corporation / Nagar Palika.
8. the latest receipts of taxes paid.
9. Estimate of cost of construction certified by the architect.