Home Loan demand rises according to CIBIL

According to a survey by CIBIL, credit rating agency, the home loan enquiries have been increased up to 18% in first quarter of year 2012. This proves that the demand for home loans is increasing. In last few quarters, it has been seen that home loans enquiries are rising continuously.

With the easing of monetary policy for loans in this segment, customers are increasing in number. Customers applying for loan amounting less than 5 lakh have decreased to 20 per cent from 41 per cent where as for loan amount more than 10 lakh, the increase is 55 per cent from 33 per cent.

Customers who got their loan sanctioned amounting between 5 lakh to 10 lakh remained around 25 per cent. Consumers are now more inclined towards seeking home loans to build their dream home.

RBI asks RRBs to stop foreclosure charges on home loans

After directing the commercial banks and move by NHBs, RBI has asked Regional Rural Banks (RRBs) to remove any pre-payment penalty on home loans.

"It has, therefore, been decided that Regional Rural Banks will not be permitted to charge foreclosure charges or pre-payment penalties on home loans on floating interest rate basis, with immediate effect," RBI said in a notification.

This step will help in spreading a uniform banking system across the sector and reducing discrimination between new and existing borrowers.

This move is a consequence of Banking Ombudsmen Conference which was held last year. There the consensus suggested that the banks should not impose foreclosure charges on home loans with floating interest rate.

“Not to permit” banks to levy charges has been proposed by RBI in the annual monetary policy 2012-13 for home loan segment.

Choose right insurer for your Home Loan

"If something happens to the main borrower and the family can't afford to pay the EMIs, they can be evicted from the house," says Suresh Sadagopan, a certified financial planner and founder Ladder 7 Financial Advisories.

You can cover your home loan by choosing one of the options: - Home loan Protection Plan (HLPP) and other is Pure Term Cover which is recommended by the Financial Advisors.

"HLPP, often sold along with the housing loan, offers a risk cover (sum assured) equal to the loan amount. As the outstanding loan amount reduces, the size of the cover also reduces," says Pankaj Mathpal, certified financial planner & Managing Director, Optima Money Managers.

In case of a term cover (of Rs 50 lakh), the family would get the entire sum assured of Rs 50 lakh. "Even after settling the loan amount, the family can still make a saving of Rs 9 lakh," says Pankaj Mathpal adds.

Prepare good financial budget for Home Loans

Your Home is the Heaven on earth. So do a good research and prepare a budget to enjoy the right deal for your dream home.

• Make a realistic budget by calculating your savings and investments. Check the current real estate prices.
• Prepare an action plan by interacting with brokers, visiting real- estate websites etc.
• Calculate the down- payment amount that is suitable for you.
• Calculate other charges like registration fees, processing fees, brokerage charges etc.
• Amount of loan you are eligible for based on your income and bank norms.
• Consider no pre-payment penalty on loan.
• Try to negotiate for interest rates or some benefits with your bank.
• Update yourself for interest rate schemes available.
• Decide whether fixed interest rate with fixed EMIs schemes suits you or floating interest rate schemes.
•  Finally, try to complete the whole procedure for approval of loans smoothly.