Home loans: Payment convenience as important as rates

Home loans are not all about low interest rates. The most important factor of a home loan is serviceability of the equated monthly instalment (EMI). Lenders too realise this. For the convenience of the customers, many banks have come up with products that can suit individuals needs.

Here’s a look at some products that offer customers convenience of payment:
Loan with savings a/cState Bank of India (SBI) markets this products as Maxgain, ICICI calls it Money Saver and Standard Chartered has branded it Home Saver. This home loan product is meant for borrowers who have cash but need liquidity.
When you take a home loan from any of these institutions, you are required to open up a savings account with them. The money kept in the account is considered as principal. Banks deduct the balance in savings account from the principal and charge interest on the remaining amount.
For Instance, a borrower takes Rs 20 lakh loan from a bank. He keeps Rs 5 lakh in the savings account. While calculate the EMI, the bank will charge interest on Rs 15 lakh.
Most of the banks calculate interest on a daily basis and charge it at the end of every month. The customer has the freedom to withdraw and use the money any time.
Interest calculation is a deterrent for these loans. “As EMIs fluctuate month-on-month, depending on the usage of cash in savings account, some customers prefer to stay away as they cannot ascertain the method of interest calculation,” said Tushar Narvekar, director, Dream Finance, a direct selling agent (DSA).
Hybrid loansFor those who cannot decide whether to go for a fixed or floating loan, banks have combined the two. In this product, lender charge fixed rate of interest on half the loan and floating on the other half.
“This product makes sense when interest rates are falling, like it’s happening currently, and there is general perception that they may go down further,” said an investment adviser. This enables borrowers to take advantage of the falling interest rates.
Almost all lenders have this option including ICICI, Bank of Baroda, Corporation Bank et al. Deutsche bank calls it Flexi Home Loan, whereas HDFC offer this under a scheme called 2-in-1 Home.
Many other banks, such as Kotak Mahindra, offer this loan with variation. Rather than keeping half fixed and half floating, lenders keep the loan fixed for a particular tenure and then make it floating. In case of Kotak, the fixed tenure is 3 years. SBI and Canara Bank offer fixed rate for one year.
Structured loansDeutsche Bank has two products called as StepUp Home Loan and StepDown Home Loans. In the former once can avail of smaller EMIs in the initial period. The EMI increases with the progression of the loan. “The interest payment in this loan is higher as banks charge only interest in the first few years,” said Vinod Prajapati, director, Money Point, a DSA. This loan also increases the eligibility of a borrower as it takes future earning potential.
In StepDown loan, the borrower pays higher EMIs in the initial years of the loan tenure. The EMI reduces in the later years. Other Banks that offer these loans include HDFC and Union Bank of India.
In case you prefer a certain financial institution and its product list does not mention these products, talk to the lender. “Many banks do not market these products formally. But they would be willing to work out similar repayments options,” said Harsh Roongta, CEO, Apnaloan.com.

Source: http://www.business-standard.com

ICICI Bank cuts floating home loan rates

Soon after the RBI reduced policy rates by 25 basis points, the country's largest private sector lender, ICICI Bank, on Tuesday slashed the benchmark lending rate by 50 basis points, a move that would benefit millions of home, consumer and corporate loan borrowers.

The benchmark advance rate will be reduced by 50 basis points to 16.25% with effect from Wednesday, ICICI Bank said in a statement. At the same time, the bank also decided to reduce deposit rates by 25-50 basis points across various tenors. The new fixed deposit rates would be effective from April 24, it said.


Meanwhile, the RBI on Tuesday reduced the short-term lending (repo) and borrowing (reverse repo) rate by 25 basis points each to 4.75% 3.25%, respectively, with immediate effect.

The bank has also reduced the floating reference rate by half a percentage point to 13.25%.

All the existing floating rate customers will benefit from the cut, the statement added.

Mahindra Lifespace plans affordable homes in Nagpur

The firm is building 1,500 apartments in a special economic zone in Nagpur, with price tags of less thanRs3,000 per sq. ft, said Pawan Malhotra, chief executiveof Mahindra Lifespace.

Real estate firm Mahindra Lifespace Developers Ltd, a subsidiary of auto maker Mahindra and Mahindra Ltd, is the latest to join the so-called budget housing bandwagon as more buyers shun pricier projects for affordable homes.The firm, known more for its of high-end projects, particularly in Mumbai, is building 1,500 apartments in a special economic zone (SEZ) in Nagpur, with price tags of less than Rs3,000 per sq. ft, said Pawan Malhotra, chief executive of Mahindra Lifespace.The SEZ is part of an international airport that would function as a cargo hub, and includes a 25-acre residential project. SEZs are economic enclaves that enjoy tax holidays and other financial incentives.

Property prices in and around Nagpur , Maharashtra’s third largest city by population, are typically in the range of Rs1,600-2,600 per sq. ft, a consultant at property advisory Jones Lang La Salle Meghraj said, requesting anonymity.“The idea to provide housing that would give the target buyers good value for money. The SEZ and the airport will demand at least 1.5 million sq. ft of development once all the industries come up,” Malhotra said.The Nagpur residential project, a venture of Mahindra Lifespace and BE Billimoria and Co., will see an investment of Rs500 crore in the next four years.

Mahindra Lifespace also plans mid-segment apartments starting at Rs3,000 per sq. ft alongside more expensive villas in its Chennai SEZ. In the past eight months, as the Indian realty market began slowing following a global slump, developers such as Puravankara Projects Ltd, Omaxe Ltd and Ansal Properties and Infrastructure Ltd have leant towards more affordable housing projects. Others such as DLF Ltd and Sobha Developers Ltd have cut prices by 15-30% in some of their projects. But at a time when developers are struggling to generate liquidity, Malhotra says Mahindra Lifespace has Rs260 crore in hand. Its standalone revenue for the year ended December rose 28% to Rs55.7 crore.Formed in 2001, Mahindra Lifespace, earlier known as Mahindra Gesco, has nearly 4 million sq. ft of development in various cities.The company stopped buying land nearly two years ago and is now pursuing joint development projects. A 10 February report by brokerage Motilal Oswal Securities Ltd says the firm has no major borrowings against land it has bought.

Macquarie Research, an arm of Australia’s Macquarie Bank Ltd, says in a February report that Mahindra Lifespace has low debt levels, primarily due to its conservative management style, and relatively slow pace of acquiring land and launching few projects in the past three years. The company’s gearing, or debt as a percentage of equity capital, is only 0.2%, says the report. In comparison, rival Unitech Ltd’s gearing is at 34%, it says.“The company has been conservative and restrained during times when liquidity was available with multiple debt options and other developers availed of them,” said Unmesh Sharma, an analyst with Macquarie Research.

Nagpur — the Growth Nucleus of India

Recent studies rated Nagpur among the fastest growing investment destinations of India as it is focusing on investment opportunities in urban infrastructure,SEZ and MIHAN, multi-modal logistics and tourism infrastructure. A number of mega infrastructure projects coming up in and around Nagpur have changed the city’s profile adn will continue to do so in the future.

One such project is a multi-modal international airport and a multi-product SEZ over 4,025 hectaresbeing developed by Maharashtra Airport Development Company (MADC).
The multi-modal cargo hub project and SEZ, with an estimated investment of $11,625 million, is expected to be a major driver of economic growth not only for Nagpur, but also for the entire Vidarbha region, said MADC vice-chairman and MD RC Sinha.

According to property consultants Jones Lang LaSalle, Nagpur is among top IT/ITeS commercialdestinations among tier III cities. IT majors like TCS, Wipro, Satyam, HCL and Hexaware Techhave purchased around 500 acres for their proposed projects. On the investment front, four major sectors are expected to fetch an investment of around $16,135 million over the next decade or so. The tourism sector has pegged an inflow of $120 million.

Voters' Can Vote Based on following Documents also !!

Election Commission of India (ECI) has allowed the voters to exercise their franchise on April 16,even if they do not have Elector's Photo Identity Card (EPIC).The voters who do not have EPIC would be allowed to cast their vote if they have any of thefollowing 13 documents.
These Documents include:
1) Passport

2) Driving Licence

3) PAN Card

4) Photo Identity Card issued by Office (Company)

5) Bank or Post Office Passbook

6) Photo Identity Cards issued by Educational Institutions

7) Documents related to immovable assets like copy of sale deed etc.

8) Ration Card

9) Caste Certificate issued by Competent Authority

10) Documents related to Pension including Pension Book

11) Freedom Fighter's Identity Card

12) Arms Licence or

13) Certificate of Handicap issued by Competent Authority