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It refers to finance provided to individuals or groups of individuals including co-operative societies for purchase or build house or houses. The purpose of a housing finance is to provide the funds which home buyers need to purchase their homes. The objective is simple and the number of ways in which it can be achieved 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.
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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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.
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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.
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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.
Examples of institutions
Bank Of Baroda Housing Finance
Construction of plot/land
Repaying a loan already borrowed
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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%
Housing Slump
Real estate market crumbles as economy slows. 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 not in a position to bankroll further projects.
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The second reason for the said above is the loss is more serious with the developers holding growing inventories of unsold apartments, shops and offices without offering price discounts. One longstanding complaint about business practices in India is that the countrys banks lend heavily to a wealthy elite who often put very little of their own money into deals.
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Housing finance has played a small role in the Indian Banking system , so Indian banks are less vulnerable to real estate downturns than banks in the western countries.
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Home loans are cheapest loans available in the market. Tax rebate on interest repayment of home loan up to 1,50,000 / Tax rebate on repayment of principal up to 1,00,000/- under sec 80C. A maximum of 1 lakh /year of principal repayment can be availed as deduction from salary under this section.
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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.