Parliamentary panel recommends pro-buyer measures in Real Estate Bill 2013

A Parliamentary Committee today(30-July-2015) recommended a slew of measures favouring property buyers, which include a three-year jail term or a fine for a defaulting builder under a new law which will now cover projects of 500 sqm or eight flats.  


The Select Committee of  Rajya Sabha, which examined the  Real Estate Bill 2013 and submitted its report in the House today, also recommended that 50 per cent of payments made by homebuyers for a real estate project should be kept in a separate account and used for that specific purpose only while the rest can be spent on other projects.  

The Bill aims at establishing the Real Estate Regulatory Authority (RERA) for regulation and promotion of the sector and setting up of an adjudicating mechanism for speedy dispute redressal. It also aims at establishing the appellate tribunal to hear appeals against the decisions of the  RERA. 

Under the proposed new law, a jail term of up to three years or a penalty of up to 10 per cent of project cost or both can be imposed on a builder in case of defaulting on commitments made to a buyer.  The committee also recommended that the new law should cover projects of 500 sqm and more or eight flats, instead of 1000 sqm or 12 flats as proposed initially in the bill.  

The panel recommended that promoters should get their accounts audited within six months after the close of every financial year by a practising chartered accountant.  

It was also of the view that real estate development beyond town planning area may be brought under the ambit of the Bill.  

The committee, however, did not agree that a person holding more than two apartments or plots in the same project should be treated as a promoter.  

It said that a promoter, while applying for registration of any project with the authority, should enclose details of its existing projects, details of approvals, land title and payment dues.  

The panel also redefined the carpet area, saying it means the net usable floor area of an apartment, excluding the area covered by the external walls and that under service shafts, exclusive balcony or verandah and open terrace areas, although it would include the area covered by the internal partition walls of the apartment

Hybrid Home loan - two options

Hybrid loan, according to RBI, is a two step mortgage. It is an ARM (Adjustable Rate Mortgage) that has one rate for part of the mortgage and a different rate for the remaining part of the mortgage. The interest rate changes in accordance with the market rates. The borrower, on the other hand, may have the option of making a choice between a variable rate or a fixed rate on the adjustment or agreement date. 

Hybrid loan products are popular options that package the advantages of both floating and fixed rate products.

Hybrid loans are popularly referred to as 'partly fixed partly floating loans' . This mixed option lends flexibility and greater choice to the home buyer. A part of the home loan is anchored under fixed rate and the rest is exposed to the prevailing floating rate of interest. This enables the borrowers to minimize the impact of adverse rate movements and benefit in times of favorable changes.

There are two options you can opt for after the fixed rate period of your loan is over. One is either you opt for a lower percent of your loan amount as floating and higher percent of the loan amount as fixed and vice versa, or the other option is you take a 50:50 for both the rates. Example for both the types is given below.

A homebuyer decides to take a loan for Rs 80 lakhs. If he feels that the rates are likely to move upwards in the coming months, he can lock 60 percent at a fixed rate. The remaining 40 percent is exposed to floating rate fluctuations. In case the interest rate goes upwards, the part of the loan locked under fixed rate remains unchanged. However, in the event the rate drops, the borrower will benefit only on the 40 percent of the loan that is under the floating component.

Some borrowers may decide to lock their loan at 50:50 under fixed and floating . This is the safest bet for homebuyers who cannot predict the future direction of rate movements. So the Rs 80 lakh loan is actually treated as two loans of Rs 40 lakhs - one at a fixed rate and another at the prevailing floating rate of interest.

So, your bank might ask you to sign two separate loan agreements-one for fixed rate of interest and the other for floating rate of interest. However, many banks may combine the same and use a single agreement for both the components. You must read the terms and conditions of your agreements with utmost care and your relationship manager is bound to explain to you, if you do not understand them.

When should you foreclose or convert from one component to other?

Under Hybrid loans, many banks offer you the option of foreclosing the floating component if the interest rates move up, with or without any pre-payment fees. And if the interest rates move down, may foreclose the fixed part, with or without pre-payment penalty, as per banks policies. Other banks offer you facilities such as converting your fixed portion to floating if the interest rates move down and converting the floating rates into fixed, if interest rates move up. Of course you will be charged a certain amount of fees for doing so, which can more often than not, be negotiated.

Some examples of hybrid loans include State Bank of India's offer of SBI-Flexi Home Loans, HDFC's 2-in-1 Home, Part Fixed,-Part Floating loan by ICICI and Bank of Baroda's Flexi-home loans.

Though RBI discouraged the hybrid home loans for a period of time, now they are back again after a break of two years. Hybrid loan is recommended to those who are not ready to accept the frequent fluctuations in the EMI or for those who have to get used to the home loan for a period of time.A hybrid loan bails a borrower out of the dilemma of choosing between a pure fixed and a floating product.

HDFC Home Loan - Retail Prime Lending Rate (RPLR) trends.

HDFC's home loan interest rate is dependent and decided based on Retail Prime Lending Rate (RPLR). 

If the base rate changes due to changes in the interest rates in the economy, your rate will be affected. This base rate typically varies from lender to lender, and so does their nomenclature. HDFC calls it the RPLR -- Retail Prime Lending Rate. ICICI Bank uses the term FRR -- Floating Rate Reference.

HDFC follows a three month reset cycle for its floating rate loans and hence the change in RPLR will impact all the existing customers over the next three month period depending on their date of first disbursement. 

The maximum period of repayment of a loan shall be up to 30 years for the Telescopic Repayment Option under the Adjustable Rate Home Loan.

Here is the Historical Data for HDFC Bank’s Base Rate and Benchmark Retail Prime Lending Rate

April 13, 2015 Base Rate: 9.85% Benchmark Prime Lending Rate: 18.35%
November 02, 2013 Base Rate: 10.00% Benchmark Prime Lending Rate: 18.50%
August 03, 2013 Base Rate: 9.80% Benchmark Prime Lending Rate: 18.30%
March 30, 2013 Base Rate: 9.60% Benchmark Prime Lending Rate: 18.10%
December 31, 2012 Base Rate: 9.70% Benchmark Prime Lending Rate: 18.20%
June 30, 2012 Base Rate: 9.80% Benchmark Prime Lending Rate: 18.30%
August 13, 2011 Base Rate: 10.00% Benchmark Prime Lending Rate: 18.50%
July 12, 2011 Base Rate: 9.50% Benchmark Prime Lending Rate: 18.00%
May 12, 2011 Base Rate: 9.25% Benchmark Prime Lending Rate: 17.75%
March 14, 2011 Base Rate: 8.70% Benchmark Prime Lending Rate: 17.25%
February 24, 2011 Base Rate: 8.20% Benchmark Prime Lending Rate: 16.75%
January 01, 2011 Base Rate: 7.75% Benchmark Prime Lending Rate: 16.25%
October 05, 2011 Base Rate: 7.50% Benchmark Prime Lending Rate: 16.00%
July 01, 2010 Base Rate: 7.25% Benchmark Prime Lending Rate: 15.75%

Graphical representation :

Top 8 reasons why you can choose HDFC for your home loan :

*Home Loan for Properties Across India :

Through any of its offices across India and abroad, you can purchase properties from their current location.

*Interest subsidy :

Most PSUs offer interest subsidy facility on loans their employees take from banks or FIs. HDFC considers this interest subsidy as part income and offer high loan amounts to you.

*Tailor-made easy EMI Schemes ;

Besides the regular EMI scheme, they also have step up, FLIP and other payment plans to help you choose repayment scheme which is just right for you.

*Loans on Alternate Securities :

In case, it can't accept the funded property as security on the loan, it offers loan against an alternate security. Any other immovable property can be taken as alternate security subject to its legal and technical clearance. HDFC will retain the documents of the property as well as of the collateral security.

*ADD-ON Loans on a single property :

You can avail of a Home Loan, Home Extension Loan, Home Improvement Loan, Top up loan or Loan against Property subject to total exposure on the property not exceeding the limit ascertained by HDFC from time to time. No additional security required.

*Subvention and Flexi payment schemes with reputed developers :

These are the two attractive schemes -

In subvention schemes, the interest of the home loan is borne by the developer, for a specific period.

In Flexi-payment schemes, the developer offers you discount in some form.

*Easy Access :

• Door Step assistance is available by sales officers who provide complete information on the products.
• Can also apply on the mobile site. m.hdfc.com
• Complete online access to the home loan, where you can view all the related important information.

*Due-diligence of developer projects by the in house legal and technical team :

Developer projects are approved only after the due-diligence by the expert team, so that you can buy a legally sound property.

Hence, with the trends of rplr and the advantages you can make a wise decision regarding your home loan.

HDFC Home Loan - Interest Rates and MOST IMPORTANT TERMS AND CONDITIONS.

The most important terms and conditions (MITC) and points to know about  HDFC home loans is as follows :

* Loan :

Types Of Home Loans

• Adjustable Rate Home Loan

  A Home Loan under the Adjustable Rate is linked to HDFC's Retail Prime Lending Rate (RPLR). If there is a change in the RPLR, the interest rate on your loan will be revised once in three months depending on the date of your first disbursement with or without a change in EMI. If the interest rate increases, the interest component in an EMI will increase and the principal component will reduce resulting usually in an extension of term of the loan, and vice versa when the interest rate decreases.

• TruFixed Plus Home Loan – 2 Year Fixed Rate Variant

  A TruFixed Plus Home Loan offers you a part fixed rate term and a part adjustable rate term. Under this variant of the TruFixed Plus Home Loan, you can avail of a fixed rate for a maximum term of 2 years, post which the loan will automatically convert to an adjustable rate, adding up to a total term of 20 years.

• TruFixed Plus Home Loan – 3 Year Fixed Rate Variant

  A TruFixed Plus Home Loan offers you a part fixed rate term and a part adjustable rate term. Under this variant of the TruFixed Plus Home Loan, you can avail of a fixed rate for a maximum term of 3 years, post which the loan will automatically convert to an adjustable rate, adding up to a total term of 20 years.

* Interest rates with respect to the amount and the scheme (as of 16 May 2015):

Adjustable Rate Loan

RPLR: 16.30%

Loan Slab	Interest Rates (% p.a.)	RPLR Minus Spread
For Women* (Any Loan Amount)	9.40 to 9.90	RPLR - (6.90 to 6.40)
Any Loan Amount	9.45 to 9.95	RPLR - (6.85 to 6.35)

TruFixed Loan – 2 & 3 Year Fixed Rate Variant

RPLR: 16.30%

Loan Slab	Interest Rates During The 2 & 3 Year Fixed Rate Term (% p.a.)	Post The Fixed Rate Term The Applicable Interest Rates Shall Be The Prevailing Rate Of Interest Under Adjustable Rate
For Women* (Any Loan Amount)	9.50 to 10.00	RPLR - (6.80 to 6.30)
Any Loan Amount	9.55 to 10.05	RPLR – (6.75 to 6.25)

TruFixed Loan – 10 Year Fixed Rate Variant

RPLR: 16.30%

Loan Slab	Interest Rates During The 10 Year Fixed Rate Term(% p.a.)	Post The Fixed Rate Term The Applicable Interest Rates Shall Be The Prevailing Rate Of Interest Under Adjustable Rate
For Women* (Any Loan Amount)	9.70 to 10.20	RPLR - (6.60 to 6.10)
Any Loan Amount	9.75 to 10.25	RPLR – (6.55 to 6.05)

* Loan Term and Maximum Loan Amount:

• The maximum period of repayment of a loan shall be up to 30 years for the Telescopic Repayment Option under the Adjustable Rate Home Loan. For all other Home Loan products, the maximum repayment period shall be up to 20 years.
• The tenure of the loan is also dependent on the customer’s profile, age of customer at maturity of loan, age of property at loan maturity, depending upon the specific repayment scheme as may be opted and any other terms which may be applicable based on prevalent norms of HDFC.

Loan Amount Maximum Funding - 

Up to Rs.75 lacs             - 80% of the property cost

Above Rs.75 lacs            - 75% of the property cost

* Documentation :

Salaried Customers	Self Employed Professionals	Self Employed Businessman
Application form with photograph	Application form with photograph	Application form with photograph
Identity and Residence Proof	Identity and Residence Proof	Identity and Residence Proof
Latest Salary-slip	Education Qualifications Certificate and Proof of business existence	Education Qualifications Certificate and Proof of business existence
Form 16	Last 3 years Income Tax returns (self and business)	Business profile
Last 6 months bank statements	Last 3 years Profit /Loss and Balance Sheet	Last 3 years Income Tax returns (self and business) Last 3 years Profit /Loss and Balance Sheet
Processing fee cheque	Last 6 months bank statements Processing fee cheque	Last 6 months bank statements (self and business) Processing fee cheque

*Fees and Charges :

 Processing Fee                               - One time non refundable fee as mentioned in the letter of offer. 

PDC/ ECS Bounce Charges         - Upto Rs 200/- 

CERSAI Charges                           - Rs 250 or Rs 500 (respectively for creation/modification of security interest) 

Additional Interest                       - A maximum of 24% per annum on the defaulted sum 

Note: Stamp Duty applicable on Memorandum of Deposit (MOD) may vary depending on location and may be charged in addition to the processing fees. 

Fees on account of external opinion from advocates/technical valuers, as the case may be, is payable on an actual basis as applicable to a given case. Such fees is payable directly to the concerned advocate/technical valuer for the nature of assistance so rendered. Incidental charges & expenses are levied to cover the costs, charges, expenses and other monies that may have been expended in connection with recovery of dues on account of the non-performance of the loan. HDFC retains the right to alter any charges or fees from time to time or to introduce any new charges or fees as it may deem appropriate with due intimation to the borrower.

*Security of the loan :

Security of the loan would generally be security interest on the property being financed and / or any other collateral / interim security as may be required by HDFC. 

Stamp duty, e-filing charges, and other statutory dues applicable on the Security documents or Transaction documents may vary depending on the location and will be charged in addition to processing fees.

*Insurance of the property :

The borrower shall be vigilant and he shall ensure that the property is, during the pendency of the loan, always duly and properly insured against all risks such as earthquake, fire, flood, explosion, storm, tempest, cyclone, civil commotion, etc, HDFC being made the sole beneficiary under the policy / policies, and produce evidence thereof to HDFC on his own from time to time. The Borrower shall pay the premium amounts promptly and regularly so as to keep the policy/ policies alive at all times during the said period.

*Tenure :

The loan can be repaid generally over a maximum period of 30 years subject to the age , risk profile, age of the property at loan maturity and the specific product availed by the Borrower.

*Repayment of Loan and Interest :

Pending final disbursement, simple interest is applicable on the loan disbursed. This interest on the amount disbursed is called Pre-EMI . 

Pre-EMI interest is payable every month from date of each disbursement upto date of commencement of EMI. The loan is repaid by way of Equated Monthly Installments (EMI), which comprises of both principal repayment and interest component calculated on the outstanding principal. Interest shall be calculated on monthly reducing basis. Repayment commences from the month following the month in which final disbursement of the loan is availed. 

PEMIs and EMIs may be repaid through post dated cheques (PDCs), Electronic Transfer (NEFT) or the Electronic Clearing Service (ECS) method, by the 5th day of every month. HDFC also offers “Tranching” facility for repayment of loan disbursed. Instead of paying Pre-EMI on amount disbursed, the customer can choose to pay interim EMI, of an amount lesser than or equal to EMI on the total loan amount, convenient to him thus commencing the repayment of the loan before the loan is fully disbursed.

*Prepayment Charges :

• Dual Rate Home Loans [DRHL] / Fixed First Home Loans / TruFixed Rate Home Loans / TruFixed Plus Home Loans / TruFixed Plus Home Loans – 2 & 3 Year Fixed Rate Variants - Nil.
• NRP Loans/Home Equity Loans/Top Up Loans/Home Loans with company as a co-applicant  - Prepayment charges of 2% + applicable taxes of the amount being prepaid are payable if the amount being repaid is more than 25% of the opening principal in a financial year.

* Recovery of Overdues :

On occurrence of any event of default as mentioned in the Loan Agreement (“Event of Default”), all outstanding amounts owned by the Borrower to HDFC shall become payable forthwith and HDFC reserves the right to undertake all such necessary processes/measures to enforce its rights under the Loan Agreement. 

•  Additional Interest - Delayed payment of interest or EMI shall render the Borrower liable to pay additional interest @ 24% per annum. Additional Interest shall be charged on delay in payments of the EMI or PEMI or any other amounts due to HDFC beyond the specified due dates. 
•  Recovery of over dues shall be governed by the Loan Agreement (and any other document) executed between the Borrower and HDFC and as per the applicable Law.

* Customer Services : 

Customer Service Queries including requirement of documents can be addressed through the following channels: 

Website : www.hdfc.com 

or 

Mail: 

HDFC Ltd, 

HUL House, 

H T Parekh Marg, 

165-166, Backbay Reclamation, 

Churchgate, Mumbai 400 020.

* Grievance Redressal :

There can be instances where the Borrower is not satisfied with the services provided. To highlight such instances & register a complaint, the Borrower may follow the following process: 

•  The Borrower can complain to customer care on the website www.hdfc.com or
•  Borrower can meet or write to the Business Head for the respective dealing branch. 

In case the concern remains unresolved beyond a period of 7 days , the Borrower may escalate the matter to The Managing Director at

The Managing Director, 

HDFC Ltd, 

HUL House, 

H T Parekh Marg, 

165-166, Backbay Reclamation, 

Churchgate, Mumbai 400 020. 

 In case the Borrower is still not satisfied with the response that matter may be further escalated to : 

The Complaint Cell National Housing Bank, 

4th Floor,

Core 5A India Habitat Centre 

Lodhi Road, ND -110023.

Most Inspirational Quotes from A.P.J Abdul Kalam

A.P.J Abdul Kalam great man with modesty, simple thinking and great living sets a standing example of innovation in the thought process for decades. Abdul Kalam also served as the 11th President of the Country for five years. APJ had massively contributed his knowledge and observations during the nuclear tests of Pokhran – II that were done in the year 1998. Kalam also penned a popular book, India 2020, where he laid foundation for the vision to see a developed India by the year 2020. His thoughts and words of inspirational quotes are very famous among youngsters who dream of reaching heights in life. The student community of India is heavily motivated with Kalam’s many speeches and interactions. 

“Failure will never overtake me if my definition to succeed is strong enough”. - A.P.J Abdul Kalam 

“Don’t take rest after your first victory because if you fail in second, more lips are waiting to say that your first victory was just luck.” - A.P.J Abdul Kalam 

“All Birds find shelter during a rain. But Eagle avoids rain by flying above the Clouds.” - A.P.J Abdul Kalam

“Man needs difficulties in life because they are necessary to enjoy the success.” - A.P.J Abdul Kalam

“If you want to shine like a sun. First burn like a sun.” - A.P.J Abdul Kalam  

“It is very easy to defeat someone, but it is very hard to win someone” - A.P.J Abdul Kalam 

"All of us do not have equal talent. But , all of us have an equal opportunity to develop our talents.” - A.P.J Abdul Kalam 

"Be more dedicated to making solid achievements than in running after swift but synthetic happiness." -A.P.J Abdul Kalam 

"Thinking should become your capital asset, no matter whatever ups and downs you come across in your life."  - A.P.J Abdul Kalam 

"Without your involvement you can't succeed. With your involvement you can't fail. " - A.P.J Abdul Kalam

In progress .. we will continue to add the best quotes.

Favorite banks for Indian Home loan borrowers

Favorite banks for Indian Home loan borrowers

                            In India, saving and investing money is the option which everyone looks for. Investing money in buying a home is in everyone's to do list. So no wonder that they go for a detailed analysis about the home loan and the process involved in it to choose the best, the fastest and the safest home loan provider.

                            According to the recent analysis, here are the details of the favorite banks for Indian home loan borrowers.

1. SBI  Home Loan capturing 25.5% market share.
2. HDFC Ltd. with 24.13%
3. LIC Housing with 15.83%
4. ICICI Bank with 13.10%
5. Axis Bank with 6.23%
6. IDBI Home Loan with 4.67%
7. PNB Home Loan with 4.22%
8. Others with 6.32%

These are the points usually borrowers look at while applying for a home loan.

1. Interest rate - Fixed, floating, hybrid
2. Home loan processing speed and the fees involved.
3. Loan qualification
4. Repayment terms

Let us go deep into these topics.

• Interest rate :
  

                               

  Interest rate offered is the primary factor of comparison. It affects the EMI and total amount payable. For a home loan, it is advised to go for a loan with low interest rates. Also it is recommended to decide whether to go for a fixed or flexible or hybrid loan rate.

Interest rates of various banks are as follows :

1. SBI                          -             9.70% - 9.75%
2. HDFC Ltd.             -            9.85% - 10.40%
3. LIC Housing          -           10.10%
4. ICICI Bank             -           9.85% - 9.90%
5. AXIS Bank              -          9.95% - 10.45%
6. IDBI Bank               -          10.00% - 10.15%
7. PNB                          -          10.00% - 10.50%

Here is the graph showing the trends of Home loan base interest rate over the five years :

• Home Loan processing speed and the fees involved :

                            

It is a bit difficult process to apply for the home loan. You have to submit a large set of income and property related documents. The timeline for the approval will differ from bank to bank. Some banks are comparatively slower than others in carrying out the procedures, while some banks will approve your loan in simple and less time-consuming way. 

                            You can choose your bank as per your convenience. If you can spend enough time to carry out the procedural work, then you can apply for the slower banks. 

Here is the list of some major banks processing fees :

Bank	Processing Fees
ICICI Bank	0.50% – 1.00% of the loan amount or Rs. 1500/- (Rs. 2000/- for Mumbai, Delhi & Bangalore), whichever is higher + applicable Service Tax & Surcharge
HDFC Ltd	0.5% or 10,000+service tax (12.36%), whichever is higher
SBI Home Loan	Up to 25 lacs : 0.25% of loan amount minimum Rs.1000/-25-75 lacs : Rs. 6500/-75 & above : Rs. 10,000/-
Axis Bank	Up-to 1% of the loan amount subject to minimum of Rs.10,000/-
LIC Housing	0.50% of the loan amount
IDBI Home Loan	Nil
PNB Home Loans	0.50% of the loan amount

• Loan Qualification :

                            Each bank, internally, has its own rules to grant the loan.  The different aspects usually lenders look into are the age, the source of income, credit history, employment stability, etc. Hence, each individual chooses the lender according to one's own preferences.

• Repayment terms : 

                            Housing finance regulator, National HOusing Bank (NHB), has already barred home finance companies from charging any prepayment penalty. Among banks, State Bank of India was the  first to do away with the pre payment fee on both fixed and floating rate loans. Following this, nearly 20 banks withdrew the penalty on floating rate loans. however, most lenders continue to charge the penalty on premature closure of fixed rate loans. Hence, it is another aspect a borrower looks at while taking a loan.

                            Different lenders use different yardsticks for measuring the borrower's eligibility. Why shouldn't borrowers consider doing research and compare several competitive feature of home loans offered by different lenders? It is better to have the policies, facts, terms and conditions clarified well in advance before locking in a seemingly ideal home loan with any lender.