MORTGAGE

A mortgage is a method of creating charge on immovable properties like land and

building. Section 58 of the Transfer of Property Act 1882, define a mortgage as follows:
"A mortgage is the transfer of an interest in specific immovable property for the purpose
of securing the payment of money advanced or to be advanced by way of loan, an
existing or future debt, or the performance of an engagement which may give rise to a
pecuniary liability."
In terms of the definition, the following are the characteristics of a mortgage:
1. A mortgage can be effected only on immovable property. Immovable property
includes land, benefits that arise out of land and things attached to earth like trees,
buildings and machinery. But a machine which is not permanently fixed to the earth
and is shift able from one place to another is not considered to be immovable
property.
2. A mortgage is the transfer of an interest in the specific immovable property. This
means the owner transfers some of his rights only to the mortgagee. For example,
the right to redeem the property mortgaged.
3. The object of transfer of interest in the property must be to secure a loan or
performance of a contract which results in monetary obligation. Transfer of property
for purposes other than the above will not amount to mortgage. For example, a
property transferred to Liquidate prior debt will not constitute a mortgage.
4. The property to be mortgaged must be a specific one, i.e., it can be identified by its
size, location, boundaries etc.
5. The actual possession of the mortgaged property is generally with the mortgager.
6. The interest in the mortgaged property is re-conveyed to the mortgager on repayment
of the loan with interest due on.
7. In case, the mortgager fails to repay the loan, the mortgagee gets the right to recover
the debt out of the sale proceeds of the mortgaged property
 WHAT IS MORTGAGE LOAN

A mortgage is a long-term loan taken out to buy property or land. You repay the loan
plus interest over a period of anything up to 35 years.

A mortgage is the biggest, most expensive financial product most people ever take out,
so its important to understand the terms and pick the right mortgage for you. Also, since
a mortgage is secured against the property, if you dont keep up with your mortgage
repayments your lender can repossess your home.

Get the wrong one and even if you dont lose your property you could end up paying
tens of thousands of pounds more than you need to in interest and fees

A mortgage is a loan in which property or real estate is used as collateral. The borrower
enters into an agreement with the lender (usually a bank) wherein the borrower receives
cash upfront then makes payments over a set time span until he pays back the lender in
full.

A mortgage is a debt instrument, secured by the collateral of specified real estate

property, that the borrower is obliged to pay back with a predetermined set of payments.
Mortgages are used by individuals and businesses to make large real estate purchases
without paying the entire value of the purchase up front. Over a period of many years,
the borrower repays the loan, plus interest, until he/she eventually owns the property
free and clear. Mortgages are also known as "liens against property" or "claims on
property." If the borrower stops paying the mortgage, the bank can foreclose.
 HISTORY OF MORTGAGE LOAN

You may think mortgages have been around for hundreds of years -- after all, how could
anyone ever afford to pay for a house outright? It was only in the 1930s, however, that
mortgages actually got their start. It may surprise you to learn that banks didn't forge
ahead with this new idea; insurance companies did. These daring insurance companies
did this not in the interest of making money through fees and interest charges, but in the
hopes of gaining ownership of properties if borrowers failed to keep up with the
payments.

It wasn't until 1934 that modern mortgages came into being. The Federal Housing
Administration (FHA) played a critical role. In order to help pull the country out of the
Great Depression, the FHA initiated a new type of mortgage aimed at the folks who
couldn't get mortgages under the existing programs. At that time, only four in 10
households owned homes. Mortgage loan terms were limited to 50 percent of the
property's market value, and the repayment schedule was spread over three to five
years and ended with a balloon payment. An 80 percent loan at that time meant your
down payment was 80 percent -- not the amount you financed! With loan terms like that,
it's no wonder that most Americans were renters.
 IMPACT ON DEMONETISATION

The easing of property prices following the demonetisation of Rs 500 and Rs 1,000 notes will
prove beneficial for lenders and housing finance companies (HFCs) as the average size of home
loan is likely to increase. This is because the share of cash component in property deals will
drastically come down, while the value will be rise proportionally.HFCs and banks expect a drop
in demand for housing loans in the short-term. However, as the situation becomes clearer,
property prices would come down pushing up demand, they say.

With industrial sector demand for credit remaining weak for more than three years, banks have
trained their attention in growing a retail loan book especially housing credit.

This being a secure asset class with low delinquencies, bank lending for buying houses has
grown a steady rate of 18 per cent (year-on-year) for the past two years.

The outstanding housing finance portfolio of banks grew to Rs 8,05,800 crore in September
2016 from Rs 6,82,900 crore a year ago, according to Reserve Bank of India data.

CRISIL in its sector analysis said loan against property (LAP) as asset class would witness
pressure. Delinquencies in this segment were already on the rise, and the likely fall in resale
prices of property and elongation of time to liquidate a property, would add to the woes of
financiers in this segment.

Edelweiss Securities in a report said in the short-term, there would be pressure on asset quality
for both banks and non-banking financial
 WHAT YOU NEED TO GET A MORTGAGE

A DEPOSIT

You need to save a deposit to get a mortgage, and the bigger the better. If you save a
10% deposit, your mortgage will be 90% of the propertys value. This is known as the
loan-to-value (LTV).

In general the lower the LTV, the better the interest rate youll be eligible for.

A GOOD CREDIT HISTORY

A lender will check your credit history when you apply for a mortgage. They will want to
see how youve handled borrowing money in the past and if you pay bills on time. The
better your credit history the lower the interest rate you will be offered on your
mortgage.

PROOF OF AFFORDABILITY

Mortgage lenders will check if you can afford your mortgage. To do this they look at your
income and outgoings. If youre employed they will want to see your payslips, and if
youre self-employed theyll want to see your accounts for several years. Then they will
look at your other financial commitments and decide how much they will lend to you.

A POTENTIAL HOME

Your mortgage lender may well give you a mortgage in principle before you have
chosen your dream home. But they wont release the funds until theyve carried out a
valuation of the property you want to buy. This is so they can make sure it is worth what
you intend to pay for it, so they can be sure theyd get their money back if they had to
end up repossessing your home.
 DIFFERENT TYPES OF MORTGAGE

FIXED RATE
With a fixed rate mortgage, your interest rate is set for a period of time, usually two,
three, five or ten years. This means that your monthly payments will always be the
same during that period, even if the Bank of England base rate goes up or down.

These mortgages are best suited to people who are prepared to pay slightly more for
the security of knowing exactly what theyll pay each month.

VARIABLE RATE

With a variable rate mortgage, your interest rate can go up or down each month,
depending on external factors. There are two main types:

Tracker
These have an interest rate that tracks either the Bank of England base rate or your
lenders own standard interest rate.

If you choose a mortgage that tracks the base rate, your interest rate, and the amount
you repay each month, will change if the Bank of England changes the base rate. For
example, a tracker mortgage might be 1% above base rate. If the base rate is 0.5%,
youll pay 1.5%. So, if the base rate rises to 2%, youll pay 2.5%.

If your mortgage tracks your lenders standard rate known as the standard variable
rate or SVR what you pay is based purely on your lenders whim. In general, SVRs
go up and down in line with the base rate and the lender is allowed to change the rate
whenever it sees fit.

DISCOUNT

This is a variable rate mortgage that tracks the lenders SVR, but several percentage
points lower. For example, the discount might be 1% off the SVR. So if the lenders SVR
is 3%, youll pay 2%.
A variable rate mortgage may suit you if you want to pay less now and are prepared to
risk the chance of your monthly repayments rising if the interest rate you are tracking
moves upwards. Read more in our dedicated guides to tracker and discount mortgages.

OFFSET

An offset mortgage lets you link your savings account, and sometimes your current
account as well, to your mortgage so you only pay interest on the difference. For
instance, if you have a mortgage of 100,000 and savings of 20,000 and 1,000 in
your current account, you would only pay interest on 79,000 of your mortgage if you
linked it to these accounts.

Offset mortgages are ideal for anyone with a large amount of savings

The good thing about offset mortgages is that while you benefit from lower interest
charges (as you would if you paid off large chunks of your mortgage), you can also
access your savings whenever you like, giving you the best of both worlds .

Offset mortgages can be an ideal option for anyone with a large amount of savings, or
self-employed workers who build up money to pay their tax bill each year. If thats you,
then an offset mortgage will probably save you more money in unpaid interest on your
mortgage than you could earn with a traditional savings account.

BUY-TO-LET

Buy-to-Let (BTL) mortgages are specifically designed for landlords who want to buy a
property to rent out to tenants. They are more expensive than ordinary residential
mortgages because banks see rental property as higher risk, but if you are going to rent
out a property using a mortgage you have to have a BTL mortgage.

BTL mortgages are virtually identical to normal mortgages, for example you can choose
between a variable or a fixed-rate interest rate. But, how much you can borrow will
depend on the potential rental income of the property rather than your personal income.
Also, BTL mortgages generally require a larger deposit than other types of mortgage
Where to get a Mortgage

Banks, building societies and specialised mortgage lenders all sell mortgages. But dont
just wander into your local bank and start filling out application forms. To get the best
deal you should use a comparison website. Our mortgage tool searches over 5,000
mortgages in seconds.
 PROCESS OF LOAN

PRE-QUALIFICATION

"Pre-qualification" occurs before the loan process actually begins, and is usually the first
step after initial contact is made. In a pre-qualification, your Everett Co-operative Bank
Mortgage Lender gathers information about the income and debts of the borrower and
makes a financial determination about how much house you may be able to afford.
Different loan programs may lead to different values, depending on whether you are
qualified for them, so be sure to get a pre-qualification for each type of program you are
suited for.

APPLICATION

This usually occurs between days 1 and 5 of the loan.

You, the buyer, now referred to as a "borrower", complete a mortgage application with
an Everett Co-operative Bank loan officer and supply all of the required documentation
for processing. Various fees and down payments are discussed at this time and the
borrower will receive a Good Faith Estimate (GFE) and a Truth-In-Lending statement
(TIL) within three days which itemizes the rates and associated costs for obtaining the
loan.

OPENING THE FILE

This occurs between days 3 and 10.

At this time, as your lender, we would order a property appraisal, property survey and
credit reports, mail out requests for verifications, if necessary, for employment (VOE)
and bank deposits (VOD) and any other documents needed for processing of the loan.
All information supplied by you (the borrower) is private, secure and reviewed at this
time. Then a list of items not yet received is compiled.

PROCESSING

Processing occurs between days 5 and 25 of the loan.

The "processor" reviews the credit reports and verifies your (borrower's) debts and
payment histories as the VODs and VOEs are returned. If there are unacceptable late
payments, collections for judgment, etc., a written explanation is required. The
processor also reviews the appraisal and survey and checks for property issues that
may require further discernment. The processor's job is to put together an entire
package that may be underwritten by your Everett Co-operative Bank lending officer.

UNDERWRITING
"Lender underwriting" occurs between days 15 and 25.

The underwriter is responsible for determining whether the combined package passed
over by the processor is deemed as an acceptable loan. If more information is needed,
the loan is put into "suspense" and you (the borrower) will be contacted to supply more
documentation.

"Mortgage insurance underwriting" occurs when the borrower has less than 20% of the
loan amount to put towards a down payment. At this time, the loan is submitted to a
private mortgage guaranty insurer, who provides extra insurance to the lender in case of
default. As above, if more information is needed the loan goes into suspense.
Otherwise it is usually returned back to us your mortgage company within 48 hours.

Pre-Closing

"Pre-Closing" occurs between days 20 and 30.

During this time the title insurance is ordered, all approval contingencies, if any, are met,
and we would schedule a closing time for your loan.

CLOSING

Closing usually occurs between days 30 and 45 of the loan.

At the closing, we "fund" your loan for you with a cashier's check, draft or wire to the
selling party in exchange for the title to the property. This is the point at which you, the
borrower, finishes the loan process and actually buys the house.

REPAYING YOUR MORTGAGE

When you take out a mortgage youll agree a term with the mortgage lender. This
is how many years it will take to pay it back. 25 years is the standard mortgage term
but most lenders allow terms of up to 35 years. If you can pay the loan off quicker,
you can agree a shorter term.
Your mortgage lender will tell you the monthly payments you need to make to
repay the mortgage by the end of the term, but you can get an idea of what youll
pay with this calculator

Mortgage repayments have two parts:

CAPITAL This is the money you borrowed.

INTEREST This is your payment to the lender.

There are two ways you can repay a mortgage:

REPAYMENT This means you pay off some of the capital and some of the
interest each month. So that, at the end of the term, youll own your property
outright.

INTEREST-ONLY - This means you just pay off the interest each month so your
repayments will be smaller. But, the big drawback here is that at the end of the
term youll still owe the capital you borrowed. For this reason mortgage lenders will
insist you have a plan in place such as an investment to repay the
capital.Interest-only is also more expensive in the long-run as you are paying
interest on the full loan for the entire length of the mortgage. In contrast, with a
repayment mortgage the amount of interest you are paying slowly falls as you
repay the capital.

If you fall behind on your monthly mortgage payments, this is known as arrears. If
you dont pay off your arrears when requested by your mortgage lender, it may
eventually repossess your home.
 MORTGAGE INSURANCE

Mortgage insurance is an insurance policy designed to protect the mortgagee (lender) from any
default by the mortgagor (borrower). It is used commonly in loans with a loan-to-value ratio
over 80%, and employed in the event of foreclosure and repossession.

This policy is typically paid for by the borrower as a component to final nominal (note) rate, or
in one lump sum up front, or as a separate and itemized component of monthly mortgage
payment. In the last case, mortgage insurance can be dropped when the lender informs the
borrower, or its subsequent assigns, that the property has appreciated, the loan has been paid
down, or any combination of both to relegate the loan-to-value under 80%.

In the event of repossession, banks, investors, etc. must resort to selling the property to recoup
their original investment (the money lent), and are able to dispose of hard assets (such as real
estate) more quickly by reductions in price. Therefore, the mortgage insurance acts as a hedge
should the repossessing authority recover less than full and fair market value for any hard assets
 ADVANTAGES OF MORTGAGE

BUYING CAPACITY
The cost of property has increased like anything in the last couple of years. With lesser hike in
peoples salaries, it is impossible to think of buying land or house. That is where mortgage
comes to help. A mortgage loan definitely helps increase the buying capacity of people

COST EFFECTIVE
The mortgage loan is granted with your property as security. So, the lender need not worry
about the loan not being repaid. If anything goes wrong, the lender still has a valuable property
to rely upon. It can be sold to cover the debts. Due to this option, the interest rate on mortgage
loans is lower.

EASY TO REPAY
When you take a loan, you do not have to repay the amount in one go. It can be paid as
monthly installments. For example, you can avail loan over a 25 year term which means that
you have 25 years to repay the loan as installments. So, one installment is not as big an amount
when compared to your salary which makes repayment easy.

BETTER CREDIT SCORE

A good credit score is guaranteed in the credit report if the current status of the mortgage loan
is good. That means if you have correctly paid the installments, it helps you get other loans with
lower interest rates. On-time payment of loans would improve your credibility in the eyes of the
creditors.
TAX BENEFITS
Availing mortgage loans qualify a person for income tax benefits. They reduce the amount of tax
to be paid to the government. The money you pay as interest may be excluded from the tax.
This is the reason why people take a second loan for a new property or a house when the first
one is paid off.
DISADVANTAGES OF MORTGAGE

Let us discuss some disadvantages which are lesser in number than the advantages.

PAYING MORE THAN BORROWED

Mortgage loans are always accompanied with interests. Ultimately when you pay back, you pay
the principal amount plus the interest. Some lenders charge a high interest rate compared to
others. In situations where you urgently require a loan, you are forced to overlook this and will
have to pay a lot of money as interest.

EXTRA CHARGES

In addition to the principal amount and the interest to be paid back, there are other fees which
seem unimportant in the beginning. These charges like legal fees, insurance fees etc will come
upon you as extra burden when you actually start repaying.

HIGHER INTERESTS FOR VARIABLE RATE MORTGAGE

Unlike the fixed rate mortgage, the interest rate in variable rate mortgage changes periodically.
Initially the rate may be lesser than that of the fixed rate mortgage. This largely attracts people
to it. But at the end of the introductory period, the rate either goes up or down depending on
the market interest rates. This means that the rates would be unpredictable and you may end
up paying more interest

AFFECTED BY LOSS OF PROPERTY VALUE

Any property will not retain the same value forever. It keeps on changing according to the
market fluctuations. As a result, the rates in variable rate mortgages tend to increase. This may
make people unable to pay the installments due to lack of funds and eventually lead to
foreclosure.
 FORMS OF MORTGAGES
Section 58 of the transfer of Property Act enumerates six kinds of mortgages:
1. Simple mortgage.
2. Mortgage by conditional sale.
3. Usufructuary mortgage.
4. English mortgage.
5. Mortgage Ly deposit of title deeds.
6. Anomalous mortgage

Simple Mortgage
In a simple mortgage, the mortgager does not deliver the possession of the
mortgaged property. He binds himself personally to pay the mortgage money and
agrees either expressly or impliedly, that in case of his failure to repay, the
mortgagee shall have the right to cause the mortgaged property to be sold and apply
the sale proceeds in payment of mortgage money.
The essential feature of the simple mortgage is that the mortgagee has no power to
sell the property without the intervention of the court. The mortgagee can:
apply to the court for permission to sell the mortgaged property, or
file a suit for recovery of the whole amount without selling the property
2. Mortgage by Conditional Sale
In this form of mortgage, the mortgager ostensibly sells the property to the
mortgagee on the following conditions:
the sale shall become void on payment of the mortgage money.
the mortgagee will retransfer the property on payment of the mortgage money.
the sale shall become absolute if the mortgager fails to repay the amount on a
certain date.
the mortgagee has no right of sale but he can sue for foreclosure.
Foreclosure means the loss of right possessed by the mortgager to redeem the
mortgaged property. The mortgagee has the right to institute a suit for a decree so
that the mortgager will be absolutely debarred from his right to redeem the property.
The right to foreclosure arises when the time fixed for repayment expires and the
mortgager fails to repay the mortgage money. Without the fore closure order the
mortgagee will not become the owner of the property.

3. Usufructuary Mortgage
Under this form of mortgage, the mortgager delivers possession of the property or
binds himself to deliver possession of the property to the mortgagee. The mortgagee
is authorized to retain the possession until the debt is repaid. The mortgager
reserves the right to recover the property when the money is repaid.
The essential feature of this form of mortgage is that the mortgagee is entitled to
receive rents and profits relating to the mortgaged property till the loan is repaid and
appropriate the same in lieu of interest or in repayment of the loan or both.
The mortgager is not personally liable to repay the mortgage money. So the
mortgagee cannot sue the mortgager for repayment. He can neither sue foreclosure
nor sue for sale of the mortgaged property; the only remedy for the mortgagee is to
remain in possession of the property and pay himself out of the rents or profits of the
mortgaged property. Since there is no time limit he has to wait for a very long time to
recover his dues.

4. English Mortgage
The English mortgage has the following characteristics:
The mortgager transfers the property absolutely to the mortgagee. The mortgagee,
therefore, is entitled to take immediate possession of the property. The transfer is
subject to the condition that the property shall be transferred on repayment of the
loan.
The mortgager also binds himself to pay the mortgage money on a certain date.
In case of non-repayment, the mortgagee has the right to sell the mortgaged
property without seeking permission of the court in circumstances mentioned in
section 69 of the Transfer of Property Act.

5. Mortgage by Deposit of Title Deeds

When a debtor delivers to a creditor or his agent document of title to immovable
property, with an intention to create a security there on, the transaction is called
mortgage by deposit of title deeds. Such a mortgage is restricted to the towns of
Kolkata, Mumbai and Chennai and other towns notified by the State government for
this purpose in the Official Gazette. This type of mortgage requires no registration.
This form of mortgage is also known as equitable mortgage.

6. Anomalous Mortgage
In terms of this definition an anomalous mortgage is one which does not fall under
anyone of the above five terms of mortgages. Such a mortgage can be effected
according to the terms and conditions of the mortgager and the mortgagee. Usually
it arises by a combination of two or more of the above said mortgages. It may' take
various forms depending upon custom, usage or contract.
 Legal Mortgage Vs Equitable Mortgage
On the basis of transfer of title to the mortgaged property, mortgages are divided into
two types, namely:
1. Legal Mortgage.
2. Equitable Mortgage

Legal Mortgage
In a legal mortgage, the legal title to the property is transferred in favour of mortgagee
by a deed. The deed is to be registered when the principal money is Rs. 100/- or more.
On repayment of the loan, the legal title is retransferred to the mortgagor. This method
of creating charge is expensive as it involves registration charges and stamp duty.

Equitable Mortgage
An equitable mortgage is effected by mere delivery of documents of title to property to
the mortgagee. The mortgagor through Memorandum of deposit undertakes to grant a
legal mortgage if he fails to pay the mortgage money.

Essential Requirements of Equitable Mortgage

1. An equitable mortgage requires three essential features
a) There must be a debt existing or future,
b) There must be deposit of title deeds, are the title deeds should be deposited as
security for the debt.
2. Registration of documents is not necessary.
Royal Printing Works and Others Vs. Oriental Bank of Commerce (7990). It was
established in the above case, that where a security is furnished by deposit of title
deeds, no registration is necessary.
3. An equitable mortgage can be effected only in the towns of Kolkata, Mumbai and
Chennai and in certain places notified by the State Government.
Sulochana and Others Vs The Pandyan Bank Ltd. It was held in the above case
that the debtor need not produce the documents and deposit the same in person in
any of the towns mentioned in that Section. If the intention was to deposit the
documents in the towns mentioned and the documents were duly forwarded, such
deposit shall be deemed to have been made in the towns specified in the Section.
Sabasiva Rao Vs Bank of Baroda (1989). It was held that even if certified copies of
documents of title to goods are deposited, if the intention of the deposit is for.
Security to cover a loan, it would amount to equitable mortgage.
4. The documents are to be retransferred to the mortgagee on repayment of the
debt.
5. The mortgagee is empowered to apply to the court to convert the equitable
mortgage into a legal mortgage, if the mortgager fails to repay the loan on a
specified date.
 WHAT IS A 'MORTGAGE BANKER

A company, individual or institution that originates mortgages. Mortgage bankers use their own
funds, or funds borrowed from a warehouse lender, to fund mortgages. After a mortgage is
originated, a mortgage banker might retain the mortgage in portfolio, or they might sell the
mortgage to an investor. Additionally, after a mortgage is originated, a mortgage banker might
service the mortgage, or they might sell the servicing rights to another financial institution. A
mortgage banker's primary business is to earn the fees associated with loan origination. Most
mortgage bankers do not retain the mortgage in portfolio.
 RESEARCH AND METHODOLOGY

ABOUT THE REPORT

TITLE OF THE STUDY

The present study is titled as A PROJECT REPORT ON ICICIHOME LOANS. The study is made
with special reference tobankbranch
 DATA AND METHODOLOGY:

1.For the purpose of the present study both primary andSecondary data were used.

2. Primary data collected from bank visits, interviewing withstaff etc. secondary data
collected from books, websites andnewspaper.
 OBJECTIVE OF THE STUDY:

The following are the objective of the present study:

1. The main objective of doing this project is to study the corporate culture

2. To analyze Indian home loan market and its growing trends

3. To analyze various methods of operating a home loan

4.To gain knowledge about various home loan products

5.To know various rates available while providing home loan.

 HOME LOAN

Housing is a primary human need next in importance only to food and clothing. A first priority
for a youngster who begins life is therefore to plan for a house. This takes precedence over
other household expenditure and creature needs. Housing, however, is a major expenditure and
cannot be funded out of a family's normal monthly income or savings. The prospective
homeowner must look for a loan substantial in size and so structured that he can repay it over a
longer period of time, in many cases almost one's entire working life. Loan is offered to a
borrower to purchase or build a new house on the basis of his/her eligibility and the bank's
lending rules. One of the important basic human needs is shelter. House is the ultimate dream
of every middle class family. Government gaveen couragement for house finance subsidiaries by
offering number of tax concessions to individuals. With the overall encouragement given to this
sector, a number of players entered in housing finance. One of the most important benefits of
taking a home loan is the interest rate that is allowed on the home loan. Fixed and variable
interest rate options are also available for home loans. Many financiers also offer home
improvement loans at the same interest rate as they offer the home loans.
 A THEORETICAL VIEW-HOME LOAN

The section 5 (b) of the Banking Regulation Act 1949 defines Banking as," Accepting for the
purpose of lending or investment of deposits of money from the public, repayable on demand
or otherwise and withdrawable by cheque, draft or otherwise."A "home loan" is a credit to a
consumer for the purchase or transformation of the private immovable property he owns or
aims to acquire secured either by a mortgage on immovable property or by a surety commonly
used in a Member State for that purpose."A home loan requires you to pledge your home as the
lender's security for repayment of your loan. The lender agrees to hold the title or deed to your
property until you have paid back your loan plus interest. In simple words a home loan is a fund
or the loan which the buyer has taken from any financial institution or bank to purchase a new
home at an agreed rate of interest specified during the contract. Home loan is the finance
borrowed from a bank or financial institution to buy or modify a residential real estate property.
Any Resident or Non-resident individual who is planning to buy a house in India can apply for a
Home loan. If you have decided to buy a property in the near future you can even apply for a
loan before you select your property.
 POINTS CONSIDERED BY BANK WHILE GRANTING HOME
LOAN:
The borrower's eligibility of getting a home loan depend upon his / her repayment
capacity &the banks establish this repayment capacity by considering various factors
such income, spouse's income, age, number of dependants qualifications ,assets,
liabilities, stability and continuity of occupation and savings history.

IMPORTANT POINTS IN HOME LOAN:

INCREASE YOUR LOAN ELIGIBILITY

CREDIT HISTORY:
Your chances of getting a home loan are increased if you have a good credit history
which is known by banks by checking the borrowers Cibil score. Now it is very hard to
get a loan from another bank when you already have a bad debt with one bank.

CLUBBING OF INCOME:
Your eligibility to take a home loan will augment when you club your income with your
spouses income, bank in this case will calculate your eligibility on the basis of the
clubbed income of both the applicants. You can club incomes of spouse, children&
parents staying with you and having regular income.

ENHANCE YOUR LOAN TENURE:

Longer is the loan tenure, lower will be the EMIs which further increases the
repayment capacity of the borrower & in turn enhances the loan eligibility.

STEP-UP LOAN:
In this type of loan EMI's remain low in the beginning &increase gradually as and when
the borrowers spending power increases. Therefore lower EMI's in the initial years
enhances the borrowers ability to pay & further increases the loan eligibility
 INCREASE THE DOWN PAYMENT:
You must know that in a home loan bank finances only 85 to90% for the property & the
rest amount has to be funded by the borrower. You should increase the down payment if
you have more than required amount which will mitigate your debt considerably.

STEPS INVOLVED IN GETTING HOME LOAN:

STEP 1:
Submit an Application form along with relevant documents:

The finance company will process customers application to check the loan eligibility
based on the persons income and personal profile. Usually an up front (non refundable
fee) of about 0.5-1% of the loan amount must be paid before processing begins.

STEP 2:
Verification of the property and supporting documents:(Usually takes 5-7 working days
after Step1)A company representative may visit the property as well as the residence to
vary information submitted in the persons application form. Further, a property valuation
maybe carried out by the company to determine the maximum amount they are willing
to lend you. Any references submitted by the person in the Application Form may also
be contacted. The person maybe personally interviewed and any further clarifications in
the documents submitted maybe sought.

STEP 3:
Sanction of the loan: Usually on the 7th working days after Step 1A sanction letter is
issued which the customer will have to sign. This letter will contain the amount and the
terms of the loan. Some companies specify the period for which the loan sanction is
valid. The person will have to pay a Commitment fee

Normally 1% of the unutilized loan amount) if you do not draw on the entire sanctioned
amount before that period.

STEP 4:
Submission of the original Property documents and signing the loan Agreement(Usually
on the 8-10th working days after Step 1)The customer will be required to leave the title
deed of the property with the company as a security for the loan. He will be required to
go to the companys office to execute the legal loan papers.
STEP 5:
Disbursal of the Loan Cheque (Usually on the 10 15 working days after Step 1)The
person can draw the loan in parts depending on the stage of construction of the
building. Until such time that the entire sanctioned amount is NOT drawn, you will pay a
simple interest on the Actual Amount drawn (without any principal repayments).The EMI
payments will commence only after the entireSanctioned Loan Amount is drawn
 SCHEMES OF HOME LOAN

1) Home loans for construction of new house / flat, purchase of old

house/ flat, etc:
Initially, lenders approved a home loan for family/own residence only. After gaining experience
and more importantly to be competitive, lenders now approve loans even when the applicant
has more than one house or flat/apartment. Today there is no general restriction on the
number of houses owned by an individual. The only stipulation is that the home loan
funds should not be used for commercial purposes.
2) Home extension loan:
These loans are given for expanding or extending an existing home. These are some of
the instances for which you could take an Extension Loan.

To construct an additional room or floor by getting additional FSI granted.

Using grills or sliding windows to enclose the balcony.

Construction of a garden or garage in the building vicinity.

3) Home improvement loan:

Home improvement loans for repairs /renovation including waterproof, plumbing,
compound wall, digging of well/tube-well, flooring/tiling, additions like built-in
cupboards /shelves, internal repairs including replacing doors/windows, etc. A loan for
purchase of household furniture including space-saving furniture (kitchen racks,
cupboards, etc) may also be sanction a home improvement loan.

4) Home loan for purchase of housing site:

Here again, initially many banks did not approve such loans. However, market forces
have now made this a universal feature of the home loan market. However, care has
been taken instructuring the schemes for avoiding financing for purchase of land for
speculative lation purposes.

5) Home equity loans:

A home equity loan (sometimes abbreviated HEL) is a type of loan in which the
borrower uses the equity in their home as collateral. These loans are sometimes useful
to help finance major home repairs, medical bills or college education. A home equity
loan creates a lien against the borrower's house and reduces actual home equity.
 ICICI BANK EXTRA HOME LOAN

ICICI Bank Extraa Home Loans allow you to enhance your loan amount by up to 20% and also
provide you an option to extend the repayment period up to 67 years of age. This facility
provides the dual advantage of improved affordability and a longer repayment period.The
enhancement in loan/repayment period is backed by Mortgage Guarantee.

The facility is currently offered in Greater Mumbai, National Capital Region, Bengaluru and
Surat. ICICI Bank Extraa Home Loans is available in three variants designed to address the needs
of a wide range of customers:

A.FOR MIDDLE AGE, SALARIED CUSTOMERS:

Suitable for salaried borrowers up to 48 years of age. While with regular home loan, you get a
repayment schedule until the age of retirement, with this facility you may now extend the loan
tenure up to 65 years of age.

Illustration

Mr. Raj Mehta, aged 47 years, aspires to buy a 2 BHK house worth Rs. 65 lakh. Mr Mehta has a
family with two children, lives in Mumbai and has a monthly gross Income of Rs. 75,000.

He has accumulated Rs. 21 lakh for his own contribution. When he applies for a home loan,
bank sanctions a loan of only Rs. 39 lakh with an EMI of Rs. 45,000 and 13-year tenure till 60
years of age. He faces a gap of Rs. 5 lakh to buy his dream house!

With Extraa Home Loans

He gets a higher loan of Rs. 45.5 lakh (increase of 17%) with the same EMI

Longer repayment tenure of 18 years till 65 years

He pays a guarantee fee of Rs. 70,000

Mr. Mehta is now a relieved man and on his way to buy his dream home.

B.SELF EMPLOYED CUSTOMERS:

Suitable for self-employed customers who earn higher income in some months of the year,
given the seasonality of the business they are in.

Illustration

Mr. Ajay Sharma, aged 44 years, is a synthetic garment trader in Surat and aspires to buy a 3
BHK house worth Rs. 74 lakh. Mr. Sharma earns Rs. 80,000 on an average per month with his
seasonal business. He stays with his family of two growing sons and a wife.

He has accumulated Rs. 17 lakh for his own contribution. When he applies for a home loan, the
bank sanctions a loan of only Rs. 47.5 lakh with an EMI of Rs. 52,000 and seasonality of his
business is considered. He faces a gap of Rs. 9.5 lakh to buy his dream house!

With Extraa Home Loans

Gets a loan of Rs. 57 lakh approved at a guarantee fee of Rs. 1.2 lakh

He is able to increase his eligibility by 20%

He is ecstatic and satisfied that his dream is finally coming to life.

C.FOR YOUNG, SALARIED CUSTOMERS:

The salaried borrowers up to 37 years of age are eligible to avail a 30-year home loan with
repayment tenure till 67 years of age.
Illustration

Ms. Sneha Gupta is 37 years old and aspires to buy an apartment worth Rs. 35 lakh in
Bangalore. She earns Rs. 40,000 per month and stays with her husband.

She saves Rs. 8 lakh using up all her resources of Employee Provident Fund and a loan from the
family for her own contribution. When she applies for a home loan, the bank sanctions only Rs.
26 lakh with an EMI of Rs. 24,000 and a 23-year tenure till 60 years of age. She faces a gap of Rs.
1 lakh to buy her dream house!

With Extraa Home Loans

She gets an extended tenure of 30 years, which she can now pay till the age of 67 years

EMI remains the same

Loan increases to Rs. 27.7 lakh at a guarantee fee of Rs. 58,414

She is now dreaming of her new life in her own home.

ICICI Bank Extraa Home Loans are offered in association with Indian Mortgage Guarantee
Corporation (IMGC), a joint venture between National Housing Bank, Genworth Financial Inc.,
Asian Development Bank and International Finance Corporation.
 TAX BENEFITS IN HOME LOAN:

PAST RECORD:
The home loan borrower enjoys Tax Benefits on both Interestpaid & the Principal re-paid. Under
Section 24(d) of IncomeTax, the deduction of interest payable on the home loan is up toa
maximum of Rs. 1, 50,000.Under Section 80(c) of Income Tax, Principal amount for the

repayment of loan along with other savings & investments iseligible for tax deduction up to
aMaximum limit of Rs. 1, 00,000.

RECENT CHANGES:
According to the new policy changes of the direct tax code billintroduced in the parliament in
the month of august 2010 onlyupto Rs 1.5 lakh deduction is allowed on the interest paid onthe
housing loan and there is no deduction available on theprincipal amount. So if your equated
monthly installment is Rs1.50 lakh, comprising interest and principal outgo of RS 75000each,
you can avail deduction of only the interest
 INTEREST RATES PROVIDED BY VARIOUS BANKS

Loan Period EMI / Lakh EMI / Lakh

Finance Institution Fixed Floating
(in years) (INR) (INR)

Up to 5 9.00 2076 8.00 2028

6 to 10 9.25 1230 8.25 1227

Bank of Baroda
11 to 15 9.50 1044 8.25 970

16 to 20 9.50 932 8.50 868

Up to 5 9.50 2100 8.75 2064

6 to 10 9.75 1300 9.25 1280

State Bank Of India
11 to 15 - - 9.25 1029

16 to 20 - - 9.75 949

Up to 5 11 2175 9.50 2101

6 to 10 11 1375 9.50 1294

HDFC
11 to 15 11 1137 9.50 1045

16 to 20 11 1033 9.50 933

Up to 5 10.75 2162 9.50 2101

6 to 10 10.75 1364 9.50 1294

ICICI Bank
11 to 15 10.75 721 9.50 1045

16 to 20 10.75 1016 9.50 933

 Loan Period EMI / Lakh EMI / Lakh
Finance Institution Fixed Floating
(in years) (INR) (INR)

Up to 5 10.50 2149 9.50 2100

6 to 10 11 1373 9.50 1294

LIC Housing Finance
11 to 15 11 1137 9.50 1044

16 to 20 11 1032 9.50 932

Up to 5 9.00 2076 10.50 2150

PNB Housing Finance
6 to 10 9.00 1267 10.50 1350

11 to 15 9.25 1030 10.50 1106

16 to 20 9.50 933 10.50 999

 Summary Profit and Loss Statement ( crore)

Q4-2015 FY-2015 Q3-2016 Q4-2016 FY2016

Net interest
5,079 19,040 5,453 5,405 21,224
income

Non-interest
3,496 12,176 4,217 5,109 15,322
income

- Fee income 2,137 8,287 2,262 2,212 8,820

- Dividend and
633 2,196 513 707 2,442
other income1

- Treasury
726 1,693 1,4422 2,1903 4,0603
income

Less:

Operating
3,107 11,496 3,110 3,406 12,683
expense

Operating
5,468 19,720 6,560 7,108 23,863
profit

Less: Provisions 1,345 3,900 2,844 3,326 8,067

Profit before 4,124 15,820 3,716 3,782 15,796

collective
contingency
 Q4-2015 FY-2015 Q3-2016 Q4-2016 FY2016

and related
reserve and tax

Less: Collective
contingency and 3,600 3,600
related reserve

Profit before
4,124 15,820 3,716 182 12,196
tax

Less: Tax 1,202 4,645 698 (520) 2,470

Profit after tax 2,922 11,175 3,018 702 9,726

1. Includes net foreign exchange gains relating to overseas operations of 642

crore in FY2015, 182 crore in 2015, 143 crore in Q3-2016, 261 crore in Q4-
2016 and 941 crore in Q4-2016

2. Includes profit of 1,243 crore on sale of shareholding in ICICI Prudential Life

Insurance Company

3. Includes profit of 2,131 crore and 3,374 crore on sale of shareholding in

ICICI Prudential Life Insurance Company and ICICI Lombard General Insurance
Compamy in FY2016 respectively

4. Prior period figures have been re-grouped/re-arranged where necessary.

Balance Sheet ( crore)
 March December March
31, 2015 31, 2015 31,2016

(Audited) (Audited) (Audited)

Capital and Liabilities

Capital 1,160 1,163 1,163

Employee stock options

7 7 7
outstanding

Reserves and surplus 79,262 88,423 88,566

Deposits 361,563 407,314 421,426

Borrowings (includes
172,417 177,161 174,807
subordinated debt)1

Other liabilities 31,720 28,183 34,726

Total Capital and

646,129 702,251 720,695
Liabilities

Assets

Cash and balances with

25,653 22,176 27,106
Reserve Bank of India

Balances with banks and

money at call and short 16,652 15,524 32,763
notice

Investments2 158,129 163,543 160,412

Advances 387,522 434,800 435,264

Fixed assets 4,725 4,778 7,577

Other assets2 53,448 61,430 57,573

Total Assets 646,129 702,251 720,695

 Summary Balance Sheet ( crore)

1. Borrowings include preference share capital of 350 crore.

2. Pursuant to the RBI guideline dated July 16, 2015, the Bank has, effective the
quarter ended June 30, 2015, reclassified deposits placed with NABARD, SIDBI
and NHB on account of shortfall in lending to priority sector from Investments to
'Other Assets'.