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HOUSING FINANCE(i2tutorials)

Housing Finance

All you need to know about Housing Finance

The term “Housing Finance” means acquiring finance for buying a property; these could include home loans, home extension loans, land loans, and much more.

Housing finance may be a broad topic, the concept of which may vary across continents, because of the terms of the areas it covers. For instance, what’s understood by the word “housing finance” during a developed country could also be very different from what’s recognized by the term during a developing country.

The Housing Finance Company is yet one more sort of non-banking financial company that’s engaged within the principal business of financing the acquisition/construction of homes with the creation of plots of lands for the development of the latest houses.

Types of Housing Finance:

  1. Home Loans – It is a loan taken for a Housing finance company to acquire or modify a property of land. 
  2. Home Extension Loan – It gets used to extend the existing area of a property.
  3. Land Loan – It is taken from a housing finance company to purchase a part/plot of land. 
  4. Home Equity Loan – This is a loan that comes in use to get utilized for the financial requirements of a person who already owns a house.

Eligibility for getting a housing finance-

  1. The individual who is getting housing finance doesn’t need to be a resident of the country. 
  2. The individual can acquire a loan even before purchasing the land. 
  3. The Housing Finance Institutions (HFIs) help the individual plan his budget, keeping in mind his affordability based on individual or clubbed income.
  4. He can have someone with him to enhance loan eligibility.

Terms and Conditions for acquiring a Housing Loan:

  1. The credit to cost rate should not exceed a set percentage.
  2. The HFIs fix the tenure of the loan.

And much more.

Charges Applicable:

  1. Pre-Disbursement Charges 
  • Processing fees
  • Administrative fees
  • Interest rate
  • Legal charges
  • Registration and stamp charges
  • Technical charges
  • Costs holding a personal guarantee
  1. Post-Disbursement Charges
  • Bounced cheque charges
  • Payment delay charges
  • Additional charges
  • Incidental charges
  • Prepayment charges
  • PDC Swapping charges

Housing financial institutions mean a corporation incorporated under Companies Act 1956 (1 of 1956), which transacts or has together all of its objects, the negotiating of the business of providing finance for housing, directly or indirectly. In this way, there’s no shortage of sources of housing finance as there are many suppliers of Housing Finance, including Cooperative Banks or Commercial and Non-Banking Finance Companies, and other private lending agencies. With so many sources of housing finance existing, their sector is still undersized. 

There is still a need to infuse an enormous amount to realize the momentum in

the speed of development within the housing sector.

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