INTRODUCTION

Owning one’s own home has always been a cherished dream for all of us.Homehas
always been considered one of the basic necessities of life.In the presentglobal as
well as Indian scenario, scarcity of affordable housing to common peopleis
becoming a sort of a problem.Even employed people in cities who have
incomecannot afford house as it is too costly for them.Here comes the need for
homeloan and a business opportunity which is exploited by banks and other
financialinstitutions.This also helps to make home affordable to most people and
earn profit.
Technically, home loan is a kind of loan provided by banks and other financial
institutions for buying, renovating, or expanding home
LOAN
A loan is a type of debt.Like all debt instruments, a loan entails the redistributionof
financial assets over time between the lender and the borrower.The
borrowerinitially does receive an amount of money from the lender, which they
pay back,usually but not always in regular installments, to the lender.This service
isgenerally provided at a cost, referred to as interest on the debt.A loan is of
theannuity type if the amount paid periodically (for paying off and interest
together) isfixed.
Loans are mainly two types-

1.secured loans

2.unsecured loans

SECURED LOAN:A secured loan is a loan in which the borrower pledges some
asset (e.g. a car or property) as collateral for the loan
UNSECURED LOANS: Unsecured loans are monetary loans that are not secured
against the borrowers assets.These may be available from financial institutions
under many different guises or marketing packages.
MORTGAGE
A mortgage is the transfer of an interest in property (or in law the equivalent -
acharge) to a lender as a security for a debt - usually a loan of money.While
amortgage in itself is not a debt, it is lender's security for a debt.
It is a transfer of an interest in land (or the equivalent), from the owner to
themortgage lender, on the condition that this interest will be returned to the owner
ofthe real estate when the terms of the mortgage have been satisfied or performed
In other words mortgage is a security for the loan that the lender makes to
theborrower.

BANKING SYSTEM
The various banking systems have undergone very important changes
globally.More specifically, increased competition, technological developments and
thegrowth of the various institutions have significantly altered the environment
inwhich banks operate.At the same time, many banking activities are
nowperformed by non-banking institutions.In reality, banking institutions
indeveloped countries have started to lose their market shares, while technology
hasminimized transaction costs and the number of competitors is continuously
increasing

Legislative liberalization has strengthened competition not only among banking

institutions but also among other non-banking organizations.
Until recently, regulations imposed restrictions in invoicing, distribution
andparticular characteristics of offered services.Yet, restrictions in the accession
ofnew enterprises in the market have become notably less, while the liberalization
ofthe banking sector has led to the fall of prices and banking profits.
Moreover, banking transactions are now characterized by increases in terms
ofvolume, dissemination, location, type and quality.Changes in customer
behaviorhave also imposed changes in decisions related to offered services, as
theseservices need to be of high quality in order to satisfy today’s demanding
clients.The International Research Journal of Finance and Economics - Issue 10
(2007)154 price must be proportional to the perceived value, while distribution
meansshould be used in order to achieve a high level of satisfaction.
Thus, most of today’s banking institutions pay great attention to mortgages
bypromoting and advertising more and more competitive products within
anenvironment that is based on offering the best services and suitable products for
theclient’s benefit.
The rates for the provision of mortgage products have been maintained
atparticularly high levels for the last years with commercial banks having the
leadingrole.Today’s bank clients are more informed on market products due to the
loadof circulating information, making them capable of directly comparing the
variouscompetitive products.Clients communicate with other clients, study
brochures andreceive information from television and the Internet.Therefore,
clients are moreinfluenced than in the past by bank pricing policies and seek low
borrowinginterest rates and low costs for the provision of services.Today’s clients
turneasily towards the services of another bank than in the past, especially when
they