DIFFERENCES BETWEEN HOUSING-LOANS PROVIDED BY SBI AND HDFC BANK

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DIFFERENCES BETWEEN
HOUSING-LOANS PROVIDED BY SBI AND HDFC BANK
which bank more beneficial?

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DIFFERENCES BETWEEN HOUSING-LOANS PROVIDED BY SBI AND HDFC BANK

  1. 1. A PROJECT REPORT ON DIFFERENCES BETWEEN HOUSING-LOANS PROVIDED BY SBI AND HDFC BANK SUBMITTED BY:- VAGHELA MANISHA D. BMS/BBA :–3rd YEAR, SEMESTER: - 5th SUBMISSION DATE:-18 -9-2012 ACADEMIC YEAR:- 2012-2013vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 1
  2. 2. ACKNOWLEDGEMENT There is always a sense of gratitude which one express towards others for their help and supervision in achieving the goals. This formal piece of acknowledgement is an attempt to express the feeling of gratitude towards people who helpful me in successfully completing of My Project . I would like to express my deep gratitude to our principle MISS. DEVIBEN DAVE and our HOD MISS SHILPA BHATT . Special thanks to PRF. I. M . TRIVEDI who guided me to work honestly and to give valuable suggestion for improving my work Last but not least I would also like to place of appreciation to all Family members or Bank managers whose responses were of utmost importance for the project.vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 2
  3. 3. Above all no words can express my feelings to my parents, friends all those persons who supported me during my project. I would like to give special thanks to My Brother and My Father whose cooperation & support has helped me a lot in collecting necessary information. I would also like to thank almighty God for his blessings showered on me during the completion of project report. - MISS. MANISHA VAGHELA T.Y B.M.S SEM:-5TH ROLL. NO. 33vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 3
  4. 4. OBJECTIVES OF THIS STUDY  To study the Differences Between Housing-Loans Provided By SBI And HDFC Bank  To study the cost of home loans provided by the SBI and HDFC BANK.  To know the consumer perception about the home loan of SBI and HDFC BANK.  To know the procedure for taking housing loan of SBI and HDFC BANK.  To search the different types of housing loans of SBI and HDFC BANK.  To know the necessary documents which are needed for taking housing loan of SBI and HDFC BANK.vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 4
  5. 5. FLOW OF PRESENTATION  CURRENT RATE OF INTREST ON HOUSING LOAN PROVIDED BY SBI AND HDFC  INTRODUCTION OF HOUSING LOAN  TYPES OF HOUSING LOAN  ADVANTAGES OF HOUSING LOAN  DISADVANTAGES OF HOUSING LOAN  PROCEDURE FOR GETTING HOUSING LOAN  DOCUMENTS NEEDED FOR HOUSING LOAN  HOUSING LOAN PROVIDED BY STATE BANK OF INDIA (SBI)  FEATURES AND INTREST RATEvaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 5
  6. 6.  HOUSING LOAN PROVIDED BY THE HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED (HDFC)  FEACHURS AND INTREST RATE OF HDFC BANK LOAN  DIFFERENCES BETWEEN HOUSING-LOANS PROVIDED BY SBI AND HDFC BANK  WAY SHOULD YOU TAKE HOME LOANS FROM SBI AND NOT HDFC?  WHICH IS THE BEST BANK FOR HOME LOAN ?  Conclusions  BIBLIOGRAPHYvaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 6
  7. 7. SHOULD YOU SHIFT TO LOWER HOME LOAN RATES OR SWITCH LENDERS?Preeti Kulkarni, ET Bureau Apr 5, 2012, 06.42AM IST times of india vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 7
  8. 8. INTRODUCTION OF HOUSING LOAN  Everyone dreams of owning his own land and property one day and to turn this dream into reality is what the system of home loans do in India.  Now a day there is a cut throat competition in each and every sector of economy. It is same for banking sector.  Now a days rural people are migrating towards urban areas for employment as well as for education purpose. So they are demanding more for housing loan.vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 8
  9. 9.  Many banks are providing home loans at cheapest rate to attract consumers towards them.  Taking home loans these days has become simpler. With the RBI regularly bring down interest rates; taking home loans have become extremely easy.  Housing loans which were 16.5% to 18% a few years ago fell by 11.5% to 13%. With interest rates going down, people increasingly number apply to take these loans.vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 9
  10. 10. TYPES OF HOUSING LOANS  Home Purchase Loans:  Home Improvement Loans:  Home Extension Loans:  Home Conversion Loans:  Land Purchase Loans:  Stamp Duty Loans:  Bridge Loans:  Balance-Transfer Loans:  Re-finance Loans:  NRI Home Loans:vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 10
  11. 11. ADVANTAGES OF HOME LOANS:-  Help in owning a home:-  Attractive interest rates:-  Loan period:-  Door-Step Services:-  No requirement of guarantor:-  For accidental death insurance :-vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 11
  12. 12. DISADVANTAGES OF HOME LOANS:-  High Cost:-  Fluctuating interest rates :-  Delays in processing :-  Problems in disbursement:-vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 12
  13. 13. PROCEDURE FOR GETTING HOUSING LOAN  Step 1: Application form  Step 2: Personal Discussion  Step 3: Banks Field Investigation  Step 4: Credit appraisal by the bank and loan sanction  Step 5: Offer Letter  Step 6: Submission of legal documents & legal check  Step 7: Technical / Valuation check  Step 8: Valuation  Step 9: Registration of property documents  Step 10: Signing of agreements and submitting post- dated cheques  Step 11: Disbursementvaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 13
  14. 14. DOCUMENTS NEEDED FOR HOUSING LOAN Completed loan application form with one passport size photograph Proof of individual’s identity (any one of the following)  Passport  Photo PAN card  Defense identity card  Voters identity card  Driving license  Photo ration card  Government identity card Proof of residence (any one of the following)  Passport  Ration card  Telephone (land/mobile) billvaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 14
  15. 15.  Electricity bill  Driving license  Society outgoing bill  Voters identity card  Life Insurance Policy  Only Passport can be used as both Proof of individuals identity and Proof of residence. Proof of age (any one of the following)  Passport  Valid driving license  Voters identity card  Birth certificate  School leaving certificate  LIC Policy or Premium receipt clearly indicating the applicants age  Letter from the employer stating the age of the employeevaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 15
  16. 16. HOUSING LOAN PROVIDED BY STATE BANK OF INDIA (SBI)vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 16
  17. 17. FEATURES AND INTEREST RATES 1.)ELIGIBILITY:  Minimum age: 18 years as on the date of sanction  Maximum age: 70 years. i.e. the age by which the loan should be fully repaid, subject to availability of sufficient, regular and continuous source of income for servicing the loan repayment.vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 17
  18. 18. 2.)REPAYMENT  Repayment period: Maximum 30 years (or) Up to the age of 70 years (the age by which the loan should be fully repaid) of the borrower, whichever is early.  Moratorium period (Repayment holiday): The moratorium period is included within the maximum repayment period.vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 18
  19. 19. All Rate are floating only(Base Rate= 10.00% p.a.)vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 19
  20. 20. HOUSING LOAN PROVIDED BY THEHOUSING DEVELOPMENT FINANCECORPORATION LIMITED (HDFC)vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 20
  21. 21. FEATURES AND BENEFITS OF HDFC HOME LOANS 1. Home loan: 2. Home improvement loan: 3. Home extension loan: 4. Land purchase loan: 5. Loan cover term assurance plan: 6. Automated repayment of home loan emi: 7. Customer privileges:vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 21
  22. 22. DIFFERENCES BETWEENHOUSING-LOANS PROVIDED BY SBI AND HDFC BANKvaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 22
  23. 23. SBI V/S HDFCvaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 23
  24. 24.  HDFC’s new home loan product comes at a fixed rate of 8.25 per cent per annum for the first three years (up to March 2012). However, these rates are applicable for loans up to Rs. 30 lakh and a maximum tenure of 20 years, and not on the other two slabs, i.e., loans between Rs. 30 lakh and Rs. 50 lakh; and Rs. 50 lakh and above.vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 24
  25. 25. 2.)vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 25
  26. 26.  HDFC’s new loan offer is in direct competition with SBI’s Easy Loan scheme, but it is difficult to guess the winner. Now let us have a rundown on SBI’s Easy Loan scheme. Loans under this scheme are offered at a fixed rate of 8 per cent for the first year, 8.5 per cent the next two years and thereafter at a floating rate of 2.75 per cent belowvaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 26
  27. 27.  its benchmark rate (SBAR, State Bank Advance Rate) or at a fixed rate of 1.25 per cent below SBAR. Currently, SBAR stands at 11.75 per cent. The comparative rates of both SBI and HDFC are given in Table 1. Recently, SBI extended its special loan offer till March 31, 2013 to maintain its credit growth target and build up retail portfolio in lieu of a slump in commercial lending.vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 27
  28. 28. 3. HOME LOAN TAX IMPLICATIONSvaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 28
  29. 29.  Here, we have analyzed HDFC and SBI offers in terms of interests paid in the first three years, total interest paid and effective interest rate for the complete tenure (refer Table 2 and 3). In Table 2, we see that there is a marginal difference in the first 3-year interest components of both the lenders. However, in terms of total interest payments, HDFC scores over SBI; HDFC borrowers save Rs. 75,683 in interest compared to SBI borrowers. The effective interest rate in case of HDFC comes to 8.69 per cent compared to SBI’s 8.85 per cent.vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 29
  30. 30. 4.vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 30
  31. 31.  However, in case of a Rs. 60-lakh loan (refer Table 3), interest component in the first 3 years varies considerably, i.e., 19.90 per cent and 22.34 per cent of the total interest paid for SBI and HDFC, respectively. If the borrower is looking to prepay his/her loan, SBI’s offer would be a good bet in this case. SBI also scores over HDFC in terms of total interest paid, and thus, the effective interest rate comes to 9.69 per cent for SBI in comparison to 9.78 per cent for HDFC. Here, HDFC borrowers end up paying Rs. 70,348 more than SBI borrowers.vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 31
  32. 32. WHY HDFC BANK IS BEATING THE HELL OUT OF STATEBANK OF INDIA?  On Tuesday, an astonishing thing happened. HDFC Bank briefly overtook the State Bank of India (SBI) and became India’s most valuable bank when SBI’s balance-sheet is five times bigger than HDFC Bank’s— even without counting the former’s five major subsidiaries.  Though Wednesday saw things reverse a bit, the fact is investors now think the two banks are worth more or less the same – around Rs 1,10,000 crore each, give or take a bit. It is only a matter of time before HDFC Bank overtakes it permanently.vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 32
  33. 33. Way should you take home loans from SBI and notHDFC?  The war is on but there is nothing new in it. Banks and financial institutions are offering lower floating rate loans to new borrowers while old borrowers are made to pay high rate of interest of the floating rate.  As usual banks and financial institutions are not passing new rates to the existing customers.  One of friend Rahul Sharma borrowed money for home loan from HDFC three years back. He is currently paying 11.5% rate of interest for a loan amount of 23.5 lakhs while new borrowers in the same category are eligible for floating rate loans at 10.5% ( See table below). This results into huge cost of 1% on loan of 23.5 lakhs.vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 33
  34. 34.  Since banks and financial institutions do not pass the benefit of floating rate of interest to new borrowers, where should you borrow your money from a bank i.e. SBI or a financial institution i.e. HDFC. While existing rate of interest is indeed a key consideration, you should also evaluate whether you will benefit from reduced floating rate of interest.vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 34
  35. 35. Conclusions  Housing loan are necessary for making own house for middle class people. This project report can be used for necessary information regarding Differences Between housing-loans provided by SBI and HDFC bank. The project report is based on SBI and hdfc bank’s housing loan . I try my best to satisfy my project topic. I use all relevant information regarding housing loan which help me to compare two bank’s housing loan facility policy ,rule and regulations .vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 35
  36. 36. BIBLIOGRAPHY  1.)BOOKS:  The Indian financial system & development - Vasant Desai  2.)VISIT :  SBI –Neelam baugh branch HDFC – BRANCH - DOWN CHOCK,BHAVNAGAR  3.) SITES :  www.sbi.com [History, introduction & other more]  Wikipedia.org / wiki / bank  www.wikipedia.com  www.managementparadise.com  www.scribd.com  www.hdfcbank.com  http://en.wikipedia.org/wiki/HDFC_Bankvaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 36
  37. 37.  https://www.sbi.co.in/user.htm?action=viewsection&lang= 0&id=0,1,20,115  https://www.sbi.co.in/?action=viewsection&lang=0&id=0,1 ,20,115,742  http://jerinjoseph.wordpress.com/2011/02/02/sbi-home- loan-process-explained-in-steps/  http://www.rediff.com/money/2009/feb/13perfin-sbi-8- percent-home-loan-rate-lure.htm  http://articles.economictimes.indiatimes.com/2012-03- 27/personal-finance/31244886_1_prime-lending-home- loan-customers-base-ratevaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 37
  38. 38. vaghela_manisha13@yahoo.com BY:MANISHA VAGHELA 38

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