Home Loan ......into the details.

[arkolli]

Hello friends,

Thanks everyone for helping me understand various percentage areas when referring to the flats ( see my earlier post titled "percentage of carpet area). Now, i moved to the next phase of taking loan after booking the flat. I feel, some discussion on housing loans would help everyone like me to understand better the process.
Last week, I approached one person from LIC and here is the benifits he mentioned while comparing with other loans like SBI.

1. Registration on the guidence value.

He told when i take loan from other banks like SBI or HDFC, we need to register the property for market value rather than govt specified the value. In whitefield, govt value is around 1500 psft, where as market value is 2100psft. He is showing a saving of Rs46500 overall when i take loan from LIC.

2. No registration needed for the sale agreement.

Not sure of this. he is saying no need to register the sale agreement for LIC loans but for SBI, we need to register that by paying 1% stamp charges ( a saving of around 20K)

3. No insurance needed

Again , saying like no need to take any insurance as house itself would be a collateral.Moreover he is saying , for SBI, we need to take the loan by paying the upfront premium for entire loan tenure. ( around 1.2Lacs total). Is this true?

4. No prepayment charges.
I believe now, most of the banks or housing finace comapnies are not charging any prepayment charges.

And when referring to interest charges, he mentioned diff types of int. rates like
RATE INTEREST TYPE LOAN AMOUNT
10.80% Floating Upto 30 lakhs
10.70% Fixed for 3 year's Upto 30 lakhs
11.15% Fixed for 5 year's Upto 30 lakhs

I feel this is bit higher side compared to other banks. Can anyone clarify me , whether i can trust my agent on the above points and go for a loan from LIC? or approaching SBI or HDFC to hear their points would be better?

Thanks and Regards,
Anil.

[abhinkoi]

Hello Anil,

I am also looking for a 2BHK apartment in whitefield or near by areas and need to finalize on a bank to get the load...Its good to see a thread like yours..great inputs provided by you.

I saw a couple of projects in Whitefield and the government value builder is saying is 1700-1800, varying in 100-200 range.
I havent done any research on the banks yet but I have shortlisted the banks with whom I am going to get the loan details. The shortlisted banks are -

SBI
LIC
HDFC
AXIS

I am not sure about the point number 2 or 3 above but yes now no banks are charging the pre closure penalty which earlier was 2%. You need to check with the bank whether it is applicable for loan closure from your own source of money or its applicable on loan transfers as well.

The most important factor while taking a home loan is that how a bank is calculating the interest? If they are flexible to show their calculation on the interest calculations?
When you prepay some amount in the middle of the loan how your overall EMIs are decreased etc etc....These are the things which we should check before finalizing on a bank.

Also what was the frequency of the interest rate hike compared with when RBI increases the repo rate etc...

Let me know your thoughts on it.

Thanks
Abhinav

[arkolli]

Hi Abhinav,

Thanks for ur reply and good that you raised some more points , which we need to confirm before going for the loan application. I am in a process of consolidating what all the points needs to discuss with the bank. As per my understanding so far,
1. Pre payment charges are "0' only when we prepay the loan from the own sources. In the discussion , the agent told, money taken as a loan from ur friends / parents or money got by selling the stocks / MF or agricultuarl income...all comes as own sources.

2. Need to discuss the interest calculation method. the options are "montly rest" or "annual rest". Though most of the banks are offering daily reducing method ( or monthly rest) , we need to confirm this with the bank.

3.I think, when we prepay the money , it would be directly debited from the outstanding balance.

Please add other important points to discuss. Next week i would be going to HDFC bank .

Thanks,
Anil

[abhinkoi]

Hi Anil,

Agreed with point 1

Point 2 - We need it on a daily reducing balance...most of the banks are giving it on daily by default..but confirmation is required. for example if you are paying 1 Lakh against the principle on 1st day of a month, you shdnt be charged the interest on the same outstanding principle entire month....the outstanding principle shd be reduced instantly. so u save on some interest there.

Agreed on point 3

I have an excel sheet which gives you this information...if u want I can share it with you...

thanks
abhinav

[naveenv]

Hi Anil,

Some answers to your points.

1) You cannot register a property below the govt specified value. So the govt specified value is the min value for registration and the max can be anything depending on the current market rates. No banks have any say on this unless your value is equal to or more than the govt specified value.

2) Registration is mandatory by paying the necessary stamp values and other charges.

3) Insurance is good but not mandatory. I have a loan in SBI and they had given me as an option to go for insurance. No banks can force an insurance for homeloans.

4) Prepayment charges depends on the negotiations you have with the banks. Some banks have 0% and some have 2%.

Cheers,
Naveen

[arkolli]

Hi Naveen,
Thanks for the Info. However, i feel u are mistaken my points 1 and 2. My concern was,

1. say, Govt specified value is Rs1450psft, and the buying price is 2000psft. I heard some banks are not agreeing to register with the Govt specified value, as we are taking loan on the buying price. So, in this case, they are asking us to register for the price of 2000psft. So, this costs us some 50K more.

2. I agree that registration is mandotory by paying the necessary stamp charges. But i have been told, we need to even register the sale agreement which we do with the builder after paying the initial advance( 1% of total cost means some 20K).Ofcourse, this includes in the total cost of registration. But we need to lose this amount, incase if we are selling the property immd after completion and before registration.

Some one who already availed the loans can better explain these concepts. But this is what the agent explained to me when comparing theirs with the competitor.

Thanks and Regards,
anil.

[sreekbda]

Regarding #2 above, i think you are talking about franking. Some banks will ask for the Sale Agreement to be franked by paying 1% of the total registration amount. When you finally go for registration, you can register the sale deed by paying the remaining amount of registration (i.e total registration amount minus the 1% that has already been paid to the government as part of franking of the sale agreement).

I have taken 2 site loans in the past. IDBI bank wanted me to frank the sale agreement by paying 1%. Dewan housing Finance limited was happy with just 200 rupees franking of the sale agreement.

[arkolli]

Hi Sree,

Thanks for sharing the info on franking. When my agent told abt this, i had no idea and thought of asking some one for help. Can u please explain me , is there any advantage of going for this. Clearly , i assume , i am not losing anything even if i go for this by paying 1%, as it would be debited from the final registartion value. But on the brighter side, is there any benifit on this?

How abt insurance? If i need to take home insurance with the SBI, do i need to pay the insurance premium upfront for all 20 years? My agent told like that. But paying such a huge amount upfront is very difficult for me.


Thanks and Regards,
Anil.

[sreekbda]

Hey Anil,

Franking has no benefit as such from the Buyer's point of view. Some banks insist on it and so the Buyer will have to comply. The only downside is if you don't go ahead with the purchase for some reason then you will lose the amount paid while franking.

There are 2 insurance premium payment modes. One is lump sum at the time of taking loan and this is what your agent is talking about. The other is to add the premium amount to the EMI. The second option is better because if you prepay the loan, the number of EMIs will come down and so you don't have to pay the corresponding insurance amount. I have observed that agents will always push for the lump sum approach. Probably there is some benefit to them.


Thanks..

[arkolli]

Hello friends,

Finally i completed the formalities for applying the loan. And , yes i went for SBI, despite all the research done on home loans , reasons not known. The more i do the study on this, the more confusing it was. Here is the summary,
1.SBI employee not yet confirmed the Loan int rates. Seems SBI central loan processing offcie will decide that at the time of sanctioning. In the website its showing like , present int rate is "0.75% above base rate" (base rate is 10%) and there is an offer till 31st Dec, as 0.25% concession on the card rate for the entire loan tenor. But, dont know, whether we need to apply by that date or loan should be approved by that date. No clarity on this with the SBI staff itself.
2. Legal: Rs 1500
valuation: Rs 1500
Processing fees: 0.25% of the loan amount
After sanctioning, stamp charges for loan agreement:Rs 2000
Documentation charges: Rs 1000( approx)
3. Insurance is mandatory and it is coming as rs52000 for the loan amount of 25L. This one we can pay upfront or include4in the laon amount. ( payable in 5years with monthly EMI)
4. Going to take atleast a month, as this property is not pre-approved by the SBI. Good thing is, even the two of the bank staff took the flats in this apt,and along with them 6 more applied for the loan from the same branch.
5. And last but not the least, the one which attracted me was the loan prodcut called "SBI Maxgain". You can see lot of dicussion in the net on this product.

Regards,
Anil