Home loan approvals become tougher

Posted: 26 Oct 2009 04:05 AM PDT

Chennai:

The emergence of ‘affordable’ housing has revived the real estate market, but prospective buyers have found out that getting a home loan approved has just got a little more difficult.

For one, banks, wiser from the meltdown, are rechecking the installment to income ratios (the figure that determines the EMI). Earlier, banks extended EMI (equated monthly instalment) on the loan up to 50% of the monthly salary. Now, this instalment to income ratio stands between 30% and 50%. “It’s not advisable to have a single number,” says Renu Sud Karnad, joint MD, HDFC.

Moreover, many banks are taking into account only the recurring income of the potential buyer to compute the monthly EMI. “Banks are no longer looking benevolently at other sources of income such as performance bonus, variable pay, while computing the instalment to income ratio ,” says Praveen Kutty, executive V- P and head (retail banking), Development Credit Bank. “Our focus is on income sources that are consistent while arriving at the ratio,” says Karnad.

Kotak Mahindra Bank takes into consideration only the monthly income to calculate the EMI. “We don’t look at other incomes such as bonus because it may not be there every year,” says Kamlesh Rao, executive V-P , Kotak Mahindra Bank. Some banks are assigning sector-wise ‘installment to income’ ratios so that there is consistency in loan disbursals. Such ratios are determined on the performance and the credit rating of the industry.

Analysts say banks are taking the cautious route to improve their risk management. “Some time back, capital was hard to come by. Banks did not want to set aside huge amounts towards lending because if delinquencies arose, they would have had to make provisions for those,” says Clyton Fernandes of AnandRathi Financial Services.

Even when it comes to documentation , banks are more stringent before disbursing home loans. Apart from the pre-requisite documents like IT
returns of three years, PAN card copy and bank statements of the last six months, banks are also scrutinising details such as passbook entries to check withdrawal patterns. “Banks like us are actively tapping the Cibil (Credit Information Bureau) list to check the credit card payment history . Such checking is now integral to the credit buying process,” says Rao.

In case of professionals who have shifted from hometown, banks are asking for title deeds of house in the native place even if it is registered in the name of the parents, to determine repayment capacity of the executive.Safety Tips
Online shopping is a fast, convenient and modern form of shopping. But just like you need to be careful while shopping in a traditional retail store, you must act smartly when shopping online too.

Disclaimer by Hoster:The content of this website does not constitute legal advice and should not be relied upon as such. If you need legal advice on a specific matter, please contact a lawyer.This website contains links to third party web sites and resources. Because this blog portal has no control over these sites and resources, you acknowledge and agree that http://chennaifreeclassifieds.blogspot.com is not responsible for the availability of such external sites or resources, and does not endorse and is not responsible or liable for any content, advertising, products, or other materials on or available from such sites or resources.You further acknowledge and agree that http://chennaifreeclassifieds.blogspot.com shall not be responsible or liable, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with use of or reliance on any such content, goods or services available on or through any such site or resource. Consequential, or indirect damages (including, but not limited to, damages for loss of profits, business interruption, loss of programs or information, and the like) arising out of the use of or inability to use the service, or any information, or transactions provided on the service, or downloaded from the service, or any delay of such information or service.

1 comments:

  1. I have read this post. This post is a nice one that similar to loans in chennai , personal loans in chennai , home loans in chennai . That I will inform about your post to my friends and all the best for your future post..

    ReplyDelete

POST BELOW ADVERTISEMENTS AS "POST A COMMENT"
PREVIEW AND SUBMIT
ANY STYLE and in ANY FORMAT

ADVERTISEMENT MAY CONTAIN (NOT A MUST)
Title:Contact Tel/email:Content:City:Area:Looking for / Available :Category:URL if any :Date posted:You can copy/paste too.

Subscribe to: Post Comments (Atom)
...Indian Universities Web Directory... International Property AddThis Feed Button New business? However small it may be, success requires proper planning, preparation and insight. YOUR RIGHTS In business, there are no guarantees. There’s simply no way to eliminate risks associated with starting an enterprise. But you can improve chances of success with good planning, preparation and insight. Find out what to consider when starting a business. Drawing up a business plan It’s important to draft a comprehensive and thoughtful business plan. Much hinges on it: Outside funding, credit from suppliers, management of your operation and finances, promotion and marketing of your business, and achievement of your goals and objectives. Creating a business plan will force you to think about key issues before you start your enterprise, such as raising money and your projected start-up costs and marketing strategies. This will help you figure out if your idea is a winner. Naming The core of naming a business lies in understanding the trademark law. Trademarks help consumers identify the makers of the goods or services. Often, the name of your company may also be used as a trademark to identify your company’s offerings. What’s in a name, you may wonder. But if you choose something too similar to a competitor’s name, you might be accused of violating the their legal rights, and you could be forced to change it and even pay monetary damages. A good business name should be: ■ Distinctive ■ Memorable ■ Easily spelled and pronounced ■ Suggest the products or services you offer ■ Distinguish you from your competitors Partnerships Many people opt for partnerships with their friends or relatives for doing business, because they feel very comfortable dealing with people they have known for a long time. But before you do, create a Partnership Agreement which should include the following: ■ Amount of equity invested by each partner ■ Type of business ■ How profit and loss will be shared ■ Each partner’s pay and compensation ■ Distribution of assets on dissolution ■ Provisions for changes or dissolving the partnership ■ Dispute settlement clause ■ Settlement in case of death or incapacitation ■ Restrictions of authority and expenditures Financing A new business Money can be raised either by borrowing it from a friend, family member, bank or selling ownership interests (equity) in your business. There’s no hard and fast rule on the best way to raise money; you’ll have to evaluate your situation and decide what kind of loan or investment you’re willing to take. If you are going beyond family and friends for loans or equity investments, you’ll definitely need a business plan. If you take a loan, you will have to repay the money over time (usually monthly), with interest. The lender won’t receive an ownership interest in your business, and you won’t have to share any of your future profits with the lender. On the other hand, if you raise money by selling equity (ownership interests), you will not have to make these monthly payments or repay the investment at any particular date. L e g a l All about you The business of doing business your business is profitable, you’ll need to share the profits with your investors, generally in proportion to the percentage of the business they own. Licences and permits Business licences and permits can range from the general (a basic trade licence to operate a business within a city), to the specific (a permit to sell alcohol/ firearms/food items). Bear in mind that regulations vary by industry. Investigate into the licensing and permit requirements that affect your industry, and avoid any temptation to ignore these important regulatory details. Being out of licensing and permit compliance could leave you unprotected legally, which may lead to expensive penalties, and can jeopardise your business. Location of workplace There is no universal rule for choosing a business location. The biggest consideration is sometimes not where it is but what it is. The building facilities need to be appropriate for your business whether you are working from home, a business centre or a rented space. Or you could take up space in a market with similar businesses or consumer groups. Entering into agreements Be mindful of employment contracts as these take different forms. All employees at a company may be asked to sign the same form of contract, or each employee may have a contract with the employer that is exclusively applicable to his or her employment agreement. It mentions the kind of work the employee will do, for how long, and at what rate of pay. Please consult an attorney who can advise you about Confidentiality and Non-Competition Agreements, and clauses pertaining to ownership of inventions, exclusive employment, termination, minimum wages, bonus, arbitration and jurisdiction. In almost all business dealings, every time you or your company agrees to take some action or make a payment in exchange for anything of value, a legal contract is created. Make sure that you and the other party agree on the meaning of any potentially ambiguous words or phrases. Even a misplaced (or unnoticed) punctuation mark can dramatically change the scope of your rights and obligations under a contract. Watch out for commonly misused words. When you agree to bimonthly payments, for instance, do you understand that you will be paid every other month? Or do you expect to be paid twice a month? Some business agreements may be simple enough for the regular person to draft, while others may require the help of a lawyer. Advertising If your advertisement is deceptive, you’ll face legal problems even if you had the best intentions while framing it. In addition, if your advertisement contains a false statement, you have already violated the law. The fact that you didn’t know ‘the information was false’ is irrelevant. Advertisements should conform to laws and should not go against morality, decency and the religious susceptibilities of people. Business Advisors Finally, the key to success for any entrepreneur is to have the best set of advisors, not necessarily the most expensive but the ones you can trust totally. These may includes lawyers, chartered accountants, insurance advisors, and bankers among others. Decide on the meaing of potentially ambiguous phrases. Even a misplaced punctuat ion mark can change the scope of your rights and obligat ions