A PROJECT REPORT

ON

HOME LONE
Lone Against Property for Home Lone
Submitted to

Rashtrasant Tukdoji Maharaj Nagpur University

In Partial fulfillment for Award Degree of

Master of Business Administration

Submitted by

DINESH MESHRAM
Under the guidance of

Sir, Krunal Parekh

CENTRAL INSTITUTE OF BUSINESS MANAGEMENT RESEARCH AND

DEVELOPMENT,
PAWANBHUMI NAGPUR
 2022-23

CERTIFICATE

This is to certify that the Project entitled “A PROJECT ON HOME

LONE (Lone Against Property for Home Lone)” is a Bonafide work
carried out by Mr. DINESH DILIP MESHRAM is a student of Master of
Business Administration (Semester IV) of CENTRAL INSTITUTE OF
BUSINESS MANAGEMENT RESEARCH AND DEVELOPMENT,
Nagpur during the academic session 2022-23, under my guidance and
supervision.
This is also to certify that; this project is the result of candidate’s own work.
To the best of my knowledge the matter presented in this project report has
not been submitted earlier to this institute.
The Assistance and help rendered during the course of this project work in
the form of basic source material and information have been duly
acknowledged.

Project Guide Director

Sir, Krunal Parekh

Place: Nagpur
Date: ____________
 ACKNOWLEDGEMENT

I would like to express my sincere gratitude to my college

Central Institute of Business Management Research & Development
(CIBMRD), Director Krunal Parekh (Project Guide) for giving me
the permission to complete my dissertation which has been a
practical learning experience. I am thankful to Sir Krunal Parekh for
helping me in the successful completion of my project & provided
me a deep insight and was a constant source of inspiration
throughout the project. I express my deep sense of gratitude to her.
I wish to thank all of those who helped me in bringing out this
project.

Sincere Thanks,
Dinesh Meshram
MBA IV Sem.

DECLARATION
 I Dinesh Meshram student of M.B.A Semester IV of
CENTRAL INSTITUTE OF BUSINESS MANAGEMENT
RESEARCH AND DEVELOPMENT (Affiliated to RTM
Nagpur University) hereby declare that the project Report on the
topic “A PROJECT ON HOME LONE (Lone Against
Property for Home Lone)” is my original work done by me
under the guidance of Sir, Krunal Parekh and has not been
submitted any other person.

Place: Nagpur Dinesh Meshram

Date: __________ MBA IV Sem.

CHAPTAR 1
INTRODUCTION
 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, isa 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 ultimatedream of every middle-class family. Government gaveencouragement
for house finance subsidiaries by offering number of tax concessions
to individuals. With
the overall encouragementgiven to this sector, a number of players entered in housi
ng 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
variableinterest rate options are also available for home loans. Manyfinanciers also
offer home improvement loans at the same interest rate as they offer the home
loans.

ABOUT THE REPORT

 TITLE OF THE STUDY:

The present study is titled as “A PROJECT REPORT ON ICICI H O M E
L O A N S ” . T h e s t u d y i s m a d e w i t h s p e c i a l r e f e r e n c e t o ……bank……
branch.

 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 . T o a n a l y z e I n d i a n h o m e l o a n m a r k e t a n d i t s g r o w i n g trends

3.To analyze various methods of operating a home loan4 . T o g a i n k n o w l e d g e

about various home loan products5 . T o k n o w
v a r i o u s r a t e s a v a i l a b l e w h i l e p r o v i d i n g h o m e loan.

 Data and Methodology:

For the purpose of the present study both primary and Secondary data were used

Primary data collected from bank visits, interviewing with staff etc.
secondary data collected from books, websites and
newspaper.

 LIMITATION OF THE STUDY:

The present study has got all the limitations of case
study method of data collection.

Chapter Layout:

Chapters Particulars
1 Introduction to the title and the project
 2 Profile of the Bank
3 Theoretical view of home loans
4 Analysis of the study
5 Conclusion to the project

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 financially situation 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.

SCHEMES OF HOME LOANS

:
1) Home loans for construction of new house / fl
a t , purchase of old house/ flat, etc.:
Initially, lenders approved a home loan for family/own
residenceo n l y . A f t e r g a i n i n g e x p e r i e n c e a n d m o r e i m p o r t a n t l y
to bec o m p e t i t i v e , l e n d e r s n o w a p p r o v e l o a n s e v e n
w h e n t h e applicant has more than one house or flat/apartment.
T o d a y there is no general restriction on the number of houses owned b y
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 h o m e .
T h e s e a r e s o m e o f t h e i n s t a n c e s f o r w h i c h y o u c o u l d 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
i n c l u d i n g waterproof, plumbing, compound wall, digging of well/tube-well,
flooring/tiling, additions like built-in cupboards /shelves,
internalr e p a i r s i n c l u d i n g r e p l a c i n g d o o r s / w i n d o w s , e t c . A l o a
n for p u r c h a s e o f h o u s e h o l d f u r n i t u r e i n c l u d i n g s p a c e -
s a v i n g furniture (kitchen racks, cupboards, etc.) may also be sanctioned as 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 o f t h e h o m e
l o a n m a r k e t . H o w e v e r , c a r e h a s b e e n t a k e n i n structuring the
schemes for avoiding financing for purchase of land for speculative lati on
purposes.
5)Home equity loans:
A home equity loan (sometimes abbreviated HEL) is a type of l o a n i n
which the borrower uses the equity in their home. These loans are
s o m e t i m e s u s e f u l t o h e l p f i n a n c e major home repairs, medical bills or
college education. A home e q u i t y l o a n c r e a t e s a l i e n a g a i n s t t h e
b o r r o w e r ' s h o u s e , a n d reduces actual home equity.
Rate of Interest
: The lender decides the rate of interest chargeable on the home
loan, taking the following into consideration:
1.Cost of funds:
The cost of funds is different for each lender, depending upon the mix of
liabilities, liability-raising costs (based on the image of t h e b a n k i n t h e
m a r k e t ) a n d w i t h d i f f e r e n t c o s t s i n d i f f e r e n t maturity buckets.
2.Tenor of the loan:
Generally, banks have borrowed funds with maturities up to 5years, and
some capital fund surpluses, which may be available for allocation to home loan
assets.
3.Capital allocation costs:
Banks are required to allocate capital based on the risk weight of each
class of asset taken on to the balance sheet.
4.Costs of administering the specific scheme.

5. Swap costs, other funding costs

6.Profit margin

7 . T e n u r e o f t h e l o a n i s a n i m p o r t a n t f a c t o r i n p r i c i n g the
loan

8.Special considerations like group lending, which may bring down the
administration or monitoring costs.

9.Competition:
The lender may have to levy interest at market rates, even if his cost-plus
margin is higher than competition.

SECURITY:
1 ) A s i m p l e r e g i s t e r e d m o r t g a g e o r e q u i t a b l e m o r t g a g e o n the
property acquired out of the loan is taken as security. This is the primary security
for the loan.
2 ) In case of flats of a group housing society, tripartite agreement shall
be entered into.
3)In case of jointly owned properties, it should be ensuredthat all the co-
owners and co - Applicants execute the documents.
STEPS INVOLVED IN GETTING HOME LOAN:

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

T h e f i n a n c e c o m p a n y w i l l p r o c e s s c u s t o m e r ’ s a p p l i c a t i o n t o check
the loan eligibility based on the persons income and p e r s o n a l p r o f i l e .
Usually an up front (non –refundable fee) of a b o u t 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
ther e s i d e n c e t o v a r y i n f o r m a t i o n s u b m i t t e d i n t h e p
e r s o n s 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. T h i s l e t t e r w i l l c o n t a i n t h e
a m o u n t a n d t h e t e r m s o f t h e l o a n . Some companies specify the period for
which the loan
sanctions v a l i d . T h e p e r s o n w i l l h a v e t o p a y a C o m m i
tment 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)T h e c u s t o m e r
w i l l b e r e q u i r e d t o l e a v e t h e t i t l e d e e d o f t h e property with the
company as a security for the loan. He will be required to go to the company’s
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 o f
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 entire Sanctioned Loan
Amount is drawn.
EQUATED MONTHLY INSTALLMENTS (EMI):
The monthly repayment by the applicant is related to his cash f l o w .
There is an element of interest and of principal in the
monthly payments. The interest payable over the period of the loan is
calculated and added to the loan amount to arrive at the total payable amount. this
amount, divide by the total number
of m o n t h l y i n s t a l l m e n t s i s c a l l e d e q u a t e d m o n t h l y i n s t a l l m e n
t (EMI).

CHARGES IN HOME LOAN:

Acquiring a Home Loan doesn’t only involve the cost of
homel o a n i n t e r e s t r a t e s b u t i t a l s o i n c l u d e s o t h e r c h a r g e s &
f e e accompanying at various stages of taking the home loan.
Youm u s t c o n s i d e r a l l t h e s e c h a r g e s w h i l e c o m p a r i n g t h e c o s
t structure across banks. Following is the detailed fee structure incurred by
banks at different loan stages:

• Processing Charge:
It is a fee payable at the time of submitting the loan application to the bank
which is normally non-refundable. The fee ranges between 0.5 per cent and
1 per cent of the loan amount.

• Administrative Fee:

It is a fee incurred by banks at the time of loan sanction;

there are few banks who have removed this fee so you must check it with all
the banks.

• Prepayment Penalties:
 When the borrower pre-pays the loan before the loan tenure,
banks charge a penalty which usually varies between 1percentand 2 per cent of the
pre-paid amount.

• Legal Charges:

Banks also incur some charges from the customer for legal and technical
verification of the property.

• Delayed payment Charges:

When there is a delay in the payment of your EMI, banks

charge a late payment fee from the borrower which normally
ranges from 2% to 3% of the EMI.

• Cheque bounce charges:

Banks charge between Rs. 250 and Rs. 500 for every bounced cheque
towards the loan payment because of lack of funds in your account.

POINTS CONSIDERED BY BANK WHILE GRANTING HOMELOAN:

The borrower’s eligibility of getting a home loan depend upon
is/her repayment capacity & the banks establish this repayment capacity by
considering various factors such income, spouse’s income, age, number of
dependents qualifications,
assets, liabilities, stability and continuity of occupation and savings history.

IMPORTANT POINTERS 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 b o r r o w e r ’ s
C I B I L s c o r e . N o w i t i s v e r y h a r d t o g e t a l o a n f r o m 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 spouse’s 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 i n c r e a s e s t h e r e p a y m e n t c a p a c i t y o f t h e b o r r o w e r &
in turn
enhances the loan eligibility.

• Step-up Loan:

In this type of loan EMI's remain low in the begin

n i n g & increase gradually as and when the borrower’s spending
power increases. Therefore, lower EMI's in the initial years
enhancest h e b o r r o w e r ’ s a b i l i t y t o p a y & f u r t h e r i n c r e a s e
s t h e l o a n eligibility

• Increase the down payment:

You must know that in a home loan bank finances only 85

t o 90% for the property & the rest amount has to be funded by the borrower. You
should increase the down payment if you
havem o r e t h a n r e q u i r e d a m o u n t w h i c h w i l l m i t i g a t e y o u
r d e b t considerably.

TAX BENEFITS IN HOME LOAN:

Past record:
The home loan borrower enjoys Tax Benefits on both Interest p a i d & t h e
p r i n c i p a l r e - p a i d . U n d e r S e c t i o n 2 4 ( d ) o f I n c o m e Tax, the deduction
of interest payable on the home loan is up toa maximum of Rs. 1, 50,000. U n d e r
Section 80(c) of Income Tax, Principal amount for the repayment
o f l o a n a l o n g w i t h o t h e r s a v i n g s & i n v e s t m e n t s i s eligible for tax
deduction up to a Maximum limit of Rs. 1, 00,000.

Recent changes:
 According to the new policy changes of the direct tax code bill
introduced in the parliament in the month of august 2010 only u p t o R s
1.5 lakh deduction is allowed on the interest paid on the housing
l o a n a n d t h e r e i s n o d e d u c t i o n a v a i l a b l e o n t h e principal 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.
CONCLUSION
The home loan market in India has grown at a rapid an
d alarming rate of over 40% over the period of the last four years. A n d f r o m
the reports from some of the industry experts, it is evident that
there is very little chance that there will be any significant
decline in growth rates in the future. Therefore, it b e c o m e s
important at this point in time to examine the
keyfactors that have been instrumental in triggering this hi
ghg r o w t h p e r i o d . T h e r e a r e s e v e r a l r e a s o n s t h a
t c a n b e considered as having attributed to the growth of the home
loan market. On the demand side, the first and the most
importantf a c t o r f o r t h e g r o w t h h a s b e e n f a s t e r r i s e i n
incomes ascompared to property prices, thus making h
o u s i n g m o r e affordable. Most of the housing finance companies in India have
introduced several new home loan products in order to meet the needs of a w i d e
v a r i e t y o f c u s t o m e r s . T h e v a r i o u s h o m e l o a n s c h e m e s haves their
different interest rates in the market. The customer can choose those
schemes which he feels is good for him and h a v e t h e c a p a c i t y t o r e p a y
i t o n t h a t s p e c i f i e d t i m e p e r i o d . I f unwavering liability is what suits your
profile, then fixed interest r a t e h o m e l o a n s h o u l d b e t h e n a t u r a l
c h o i c e . O n t h e o t h e r hand, i f y o u c a n h a n d l e r i s k s a n d a r e
w i l l i n g t o g o t h e e x t r a m i l e t o b e n e f i t from any further fall in
interest rates, floating rate home loans will be best suited for you.