Housing Finance (1).pptx

7/27/2019 Housing Finance (1).pptx

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Housing finance

It refers to finance provided to individualsor groups of individuals including co-operativesocieties for purchase or build house or

houses.The purpose of a housing finance is to

provide the funds which home buyers need topurchase their homes. The objective is simpleand the number of ways in which it can beachieved is limited.


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Housing finance is what allows for the

production and consumption of housing.

It refers to the money we use to build and

maintain the nations housing stock. It also refers

to the money we need to pay for it, in the form

of rents, mortgage loans and repayments.

Contd


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RBI has stated that banks are free to

decide the guidelines on accepting such as age

of dwelling units, repayment schedules, margin

and security with the approval from the board.

The purpose of a housing finance system is

to provide the funds which home buyers need to

purchase their homes.


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Types of housing finance

Direct finance

Supplementary finance

Indirect finance


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Housing finance types

Home purchase loans

The basic home loan you can opt for purchasing

new home. This type of home loan is offered by all

kinds of banks and Housing Finance corporations.

Home construction loans

Especially meant for the construction of a new

home. The plot on which the construction is beingerected is purchased within a period of one year, the

cost of the plot is then included as the component for

the valuation of total cost of the property.


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Home extension loans

Home extension loans are offered for meeting

the operating cost of alteration to an existing building.

Extension here means addition of an extra room etc.

Home conversion loans

Are offered to those who want finance for the purchase

of another home by converting the already existing

home and on which loan is already sanctioned . Thereis no need for prepayment of the previous loan.

Contd


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Land purchase loans

This kind of loan can be availed for purchasing

land for both home construction as well as investment

purposes.

Stamp duty loans

It is offered for the payment of stamp duty in the

transaction of the property.

NRI Home LoansAre meant for NRIs who wish to build or buy a

home or expand the home in India.

Contd


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Bridge loans

Are offered for selling the existing home

and purchasing of another. The bridge loan

assists in the finance of new home, until a buyer

is found for the old home.

Refinance loans

Loans are availed when a loan from an

organization at a particular ROI is dropping

leading to a loss.

Contd


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Housing Urban Development Corporation(HUDCO) which was financing only the

government housing, has entered into the

launch of its HUDCO Niwas Scheme. Theprojects are in Delhi and most of them are

already occupied and its helping in contributing

to the developments happening in housingfinance.

Institutions offering housing finance


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Bank Of Baroda Housing Finance

The bank helps by lending the loans to

purchase of new/old dwelling unit

Construction of plot/land

Repaying a loan already borrowed

Repayment period up to 30 years.

Interest rate is 10.25% wef 09/02/13

Examples of institutions


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Can Fin Homes Ltd.Biggest Bank sponsored HFC since 1987

Interest rate 10.95%

Quantum of loan 75% to 85%

Interest up to 30 lakhs 10.95%

30- 75 lakhs- 11.20%

Above 75 lakhs -11.50%

Rural Housing Scheme 9.95%

Contd


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Dewan Housing Finance Ltd.

The tenure of the home loan ranges from 1

to 20 years.

DHLF offers one of the most competitive

rates in the market.

The interest rate applicable is based on the

DHLFs retail prime lending rate which

fluctuates from time to time based on the

money market conditions.


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Real estate market crumbles as economyslows.

Keith Bradsher , Neha Thirani Bagri,

Sept.11 2013 , New York Times NEWS service.Publicly traded real estate investment

groups in India are heavily in debt, so they

struggle to make interest payments and are notin a position to bankroll further projects.

Housing Slump


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The second reason for the said above isthe loss is more serious with the developers

holding growing inventories of unsold

apartments, shops and offices without offeringprice discounts.

One longstanding complaint about

business practices in India is that the countrysbanks lend heavily to a wealthy elite who often

put very little of their own money into deals.

Contd


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Housing finance has played a small role inthe Indian Banking system , so Indian banks are

less vulnerable to real estate downturns than

banks in the western countries.

Contd


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Income

Age

Qualification

Work experience

No. of dependents

Spouse s income Stability of income and employment

Assets and liabilities

Factors influencing housing finance


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Tax implications on home loan

Tax deduction benefits on loan repayments onmore than one property

Tax implication on pre EMI

Tax benefits are available from the financial yearin which the construction is completed.

Tax benefit for home loan processing fee is

available under sec 2 (28A)


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Contd.

Home loans are cheapest loans available inthe market.

Tax rebate on interest repayment of homeloan up to 1,50,000 / -

Tax rebate on repayment of principal up to1,00,000/- under sec 80C.

A maximum of 1 lakh /year of principal

repayment can be availed as deduction fromsalary under this section.


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Contd

Deduction under Sec 24(b) of the IT act - A

minimum of 1.5 lakh per year of interest

repayment can be availed as deduction from

salary.

Housing Finance (1).pptx

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