Home n Mortgage Loan Products

Posted in Home Loans - 20 March 2011 - 2 comments Banks have different type of products for different needs of customers. A customer can choose from the wide range of products that bank offer under the umbrella of Home Loans n Mortgage loans. Banks will treat the loans differently and have different terms and conditions to each product. For the convenience of our customers and for better understanding we are listing below the products that usually all banks offer to all the customers who wants to go for a Home or Mortgage Loan. New Purchase: Its the product which is suitable for those customers who wants to buy a Flat or Independent House or Villa from a builder of a Individual person. The property should be a newly constructed one of 0 years age. The disbursement percentage under this category of products will be 85% of the property cost including the stamp duty and registration cost or the sanctioned amount of the agreement amount whichever is less. Disbursement of loan will be done in one single shot if the property is in ready to occupy position. If the property is under construction at the time of loan processing the loan will be disbursed in parts depending on the construction stage. Banks will not charge EMI until and unless the loan is completely disbursed. Banks will charge only the Pre EMI (Interest on the loan amount disbursed) during the construction stage. The Pre EMIs paid to the bank will not come into consideration of customers repayment period but will have Tax Exemption on it. Resale Purchase: This product is suitable to those customers who want to buy a property from a person who already owns it. The property may be a Flat or Independent House or Villa of any years of age. But usually banks dont fund to those properties which are above 25 years of age. Banks will make property evaluation and take depreciation 2% per year over the property. The funding will be done in one single shot up to a maximum of 85% of the property cost or the Technical Value or the Sanction amount whichever is less. Tax exemption is applicable to this loan. Resale Purchase (Vendor Liability): It is the similar product as the Resale but the only difference that it has is the seller will have a loan on the property in other bank and wants the customer to take over that loan. In this case banks will disburse the loan to the amount of outstanding that the seller is having in his bank and will

release the balance funds after receiving the documents from the vendors bank. The products will have Tax exemption benefits. Plot Purchase: A person who wants to buy an open land can opt for this product. The purchase of plot can be from a builder or developer or from an Individual person. Under this product category banks will fund up to a maximum of 75% of the property cost including the stamp duty and registration cost or the sanctioned amount of the agreement amount whichever is less. The plot must have approved layout from the competent authority. Customers have to pay 2% 4% of the outstanding amount as the pre-closing charges if he/she wants to pre-close the loan between the tenure. Tax exemption is not applicable to this loan. Construction Loan: This product is suitable to those customers who already owns a plot and wants to do construction on that plot. Banks will fund 100% of the construction cost on the basis of the abstract and detailed estimations submitted, but the disbursement will be in parts depending on the stage of construction. The plot must have approved layout from the competent authority. Tax exemption is applicable to this loan. Enhancement: This product is applicable to those applicants only who have availed a construction loan from the bank before and which is not completely disbursed. It is just another construction loan from the bank. Balance Transfer (BT): One who wants to transfer their loan from one bank to another for better benefits can choose this product. Banks will fund up to a maximum of 85% of the property cost or the sanctioned amount whichever is less. The property should have all the required approvals from the competent authorities. Tax exemption is applicable to this loan. Customers have to pay 2% 4% of the outstanding principle towards the pre-closing charges of the loan. Top Up: This is the product which is applicable to the existing customers of any bank. Customer can ask the bank for funds for his personal or official needs. Banks will fund up to a maximum of 85% of the property cost by taking the prior loan into consideration. If the funding percentage crosses 85% of the total property cost then banks will not provide any top up facility to the customers. Commercial Purchase: Customers who wants to buy a property which is meant for commercial purpose can opt for this product. Banks will fund up to a maximum of 75% of the property cost including the stamp duty and the registration costs or the sanctioned amount or the agreement amount whichever is less. The property should have commercial approval for the construction from the competent authority. Tax exemption is not applicable to this loan.

Commercial Mortgage: Customers who wants to mortgage commercially used Flat or Shop or house for availing funds for his official or personal needs can go for this product. Banks will fund up to a maximum of 60% of the property cost or the sanctioned amount whichever is less. Maximum tenure for this product is 10 years and Tax exemption is not applicable to this loan. Residential Mortgage: This product is applicable to those applicants who wants to mortgage their residential property and wants to avail funds. Only Flats or Independent Houses or Villas are allowed to mortgage under this category. The maximum tenure for this loan is 15 Years. Funding will be done to a maximum of 60% of the property cost of the sanctioned amount whichever is less. Banks ask customers to deposit the original Title deeds before disbursement only. Tax exemption is not applicable to this loan. Mortgaged property should have all the necessary permission from the competent authorities. Plot Mortgage: Applicants who have plots and who wants to avail funds by making plots as equitable mortgage to the bank can choose this product. Banks reserves the right to ask for registered mortgage if needed. Funding will be done up to a maximum if 50% of the property cost or the sanctioned amount whichever is less. Tax exemption is not applicable to this loan. Lease Rental Discount (LRD): This product is applicable only to those applicants who want to mortgage the property which they have leased to companies for commercial purposes. Banks will consider the rents that the customer is receiving every month from those properties. Maximum tenure will be less than the leased period over that property. Funding will be done to a maximum of 60% of the property cost or the sanctioned amount whichever is less. Customer has to mortgage the same property on which he is receiving rents. Banks will consider the rents which the customer is receiving through bank only. Allowed combinations: All Banks do allow customers to go for more than one product at a time for fulfilling their needs. The allowed combinations of products are listed below. Balance Transfer (BT) + Construction Balance Transfer (BT) + Top Up New Purchase + Top Up New Purchase + Mortgage Commercial Purchase + Mortgage Construction + Mortgage Balance Transfer (BT) + Mortgage Construction + Enhancement Resale Purchase + Top Up Resale Purchase + Mortgage Plot + Construction

Please read all the documents which you sign before submitting the loanapplication to the bank as it is a long term (Life Time) agreement with the bank

Know your Agreement It is the Agreement which a customer need to sign before going for disbursement of the loan which he requested to the bank to fund on the property. Its consists of all terms and conditions that the bank asks the customers to fulfil. Please read the document carefully before signing it as it is a long term contract between the customer and the Bank. Once you sign the document it cant be altered or modified until and unless you repay the loan in all respects. >> SHOW DETAILS (...) A. AGREEMENT AND DEFINITIONS >> SHOW DETAILS (...) B. BANKS AND BORROWERS AGREEMENT >> SHOW DETAILS (...) C. RATE OF INTEREST (ROI) >> SHOW DETAILS (...) D. DISBURSEMENT >> SHOW DETAILS (...) E. REPAYMENT >> SHOW DETAILS (...) F. SECURITY >> SHOW DETAILS (...) G. COVENANTS >> SHOW DETAILS (...) H. EVENTS OF DEFAULT >> SHOW DETAILS (...) I. WAIVER >> SHOW DETAILS (...) J. MISCELLANEOUS

A. AGREEMENT AND DEFINITIONS

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HOME LOAN AGREEMENT

This Agreement is made at ____________ on this ___ day of _________20__ between ________________ Bank Ltd of the one part and Mr. /Mrs ______________ S/O ___________ residing at _________________ here in as referred as Borrower of the other part. Whereas the borrower(s) whose names are mentioned above are requested _______ bank to provide him/them/it a loan facility in relation to a property and the _____bank agreeable to provide such loan facility.
IT IS AGREED BY AND BETWEEN THE PARTIES AS FOLLOWS

1. Definitions In this agreement the following words shall have the following meaning Agreement means The Home Loan Agreement. Bank means a banking company incorporated and registered under the provisions of the companies Act 1956, having its registered office at ______________________. Borrower means one or more individual(s), a sole propriety firm, partnership firm or a limited company whose name(s) and address(s) is are stated in executing this agreement as borrower(s) and a. In case when the borrower is one or more individuals each one being deemed to have made this agreement individually and in case of more than one, all of them having agreed to liabilities hereunder jointly and severally and the term Borrower shall include his/their respective heirs, executors, administrators and legal representatives and permitted assigns. b. In case of the borrower is a sole propriety firm, the person whose name appears as sole proprietor and the term Borrower shall include his heirs, executors, administrators and legal representatives and permitted assigns. c. In case the borrower is a partnership firm, the persons whose names are mentioned in conducting their activities in partnership in the name and the style as mentioned in the Firm column. The said firm together with his partners in their individual capacities here in after referred to collectively as the Borrower and shall include them and survivors and survivor of them or partners or partner for the time being thereof and his/her/their respective heirs, executors, administrators, legal

representatives, successors and permitted assigns. d. In case the Borrower is a limited company the term Borrower shall include its successors, administrators and permitted assigns. EMI or Equated Monthly Instalment shall mean the amount payable every month by the Borrower to the Bank comprising of Interest or as the case may be principal and interest. Home Loan means the principal amount of loan granted by the Bank to the Borrower in terms of this agreement. Improvement includes construction, modification, renovation, maintenance or any act for the i) upkeep ii) maintain iii) enhance the utility of, the property. Interest Rate means the rate at which the bank shall compute and apply interest on the Home Loan. Default Interest Rate means the rate at which the bank shall compute and apply interest on amounts not paid when due for payment by the Borrower to the Bank. B. BANKS AND BORROWERS AGREEMENT
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The bank agrees on the borrowers request, representations, warranties, covenants and undertakings contained in the application for Home Loan and other documents executed by the Borrower in relation to the Home Loan, to lend to the borrower and the Borrower agrees to Borrow from the Bank , the Home Loan on the terms and conditions as fully contained in this agreement. The relationship between the Bank and Borrower as lender and Borrower shall commences from the date of this Agreement and subsist until all monies dues and payable by the Borrower to the bank under this Agreement and in all the other documents pursuant here to shall have been fully paid to and received by the Bank. The Bank shall be entitled at any time at its sole discretion to review/ modify/ add to, all/ any of the terms and condition of sanction/ grant of the said loan to the Borrower and also which are contained herein, by giving a written notice to that effect to the Borrower and the Borrower shall be bound by/ bound to comply with the same. Fees, Charges and Claims The Home Loan shall bear Processing Fees, Administrative Fees and any other fees as mentioned in this Agreement, Which the Borrower Agrees to

reimburse to the Bank separately. The Bank shall be entitled to recover from the Borrower, Commitment charges at the rate mentioned in this Agreement on the amount of Home Loan. The Bank shall be entitled to recover from the Borrower Prepayment charges mentioned at the rate mentioned in this agreement on the amount of Home Loan, repaid by the Borrower ahead of the Repayment terms and conditions mentioned in this Agreement. C. RATE OF INTEREST (ROI)
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The Borrower shall be charged with interest (Fixed or Floating) for the Home Loan and the Interest on the loan shall begin to accrue from the date of the debit to Home Loan Account. Fixed ROI : In the event the Borrowers opts for Fixed Rate of Interest (ROI) offered by the bank, the rate of interest applicable to the loan as at the date of execution of this Home loan agreement is mentioned in the schedule. Though the ROI is fixed at the beginning of the Loan, is subject to change / revision upwards or downwards at the sole discretion of the bank under the exceptional and extraordinary changes in the money market conditions. The Borrower shall reimburse or pay to the Bank such amount as may have been paid or payable by the Bank to the Govt on account of any tax levied on interest on the loan by the Govt. The reimbursement or payment shall be made by the Borrower as and when called upon to do so by the Bank. Floating ROI: In the event the Borrowers opts for Fixed Rate of Interest (ROI) offered by the Bank, the rate of interest applicable to the loan as at the date of execution of this Home loan agreement is mentioned in the schedule. The variable rate of interest mentioned in the schedule is that prevailing on the Effective date of this Agreement. The interest rate shall be subject to variation from time to time at the sole discretion of the bank prospectively. The spread will remain constant / unchanged during the course of the loan. The interest shall be computed at month/ quarter/ half year/ year rests, on actual outstanding balance of the loan at the beginning of the month, on the basis of a year of 365 days.

Interest on Home Loan shall be payable every month separately until the repayment of Home Loan by way of Equated Monthly instalments (EMI) shall have commenced. Interest Tax and other levies as may be applicable from time to time on the Home Loan shall be borne by the Borrower.

D. DISBURSEMENT

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The Bank shall disburse the loan in one instalment or in suitable instalments by taking needs of the Borrowers and construction progress in to consideration. The Bank shall disburse the Home Loan by issuing a Bankers payment order or Demand Draft crossed as A/c payee only in the name of the seller or vendor of the property which is being purchased by the Borrower. If in case of the Balance transfer the loan amount shall be disbursed in the name of the previous financier towards the payment of the previous loan. In case of construction loan the loan amount shall be disbursed in the name of the Borrower if it is a self construction, otherwise in the name of the builder or developer by whom that construction work was done and the disbursal shall be subject to verifications of progress of work and satisfactory end use of previous disbursements supported by valuer / site engineers reports to the bank satisfaction. The Borrower shall pay the charges which are in relation to the Disbursement. The Bank shall not disburse any amount in further if the customer gets default in paying the repayment amounts. Interest on the loan will begin to accrue in favour of the Bank as and from the date of the cheque or pay order preparation irrespective of the collections/realisations. The disbursement of the loan will be made after the Borrowers own contribution has been made for the same to the Builder/ Developer/ Vendor, and proof is furnished to the Bank. E. REPAYMENT
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The Home Loan be payable by the Borrower to the bank by the way of Equated Monthly Instalments (EMI) towards repayment of Principal and Interest.

The Borrower shall pay the interest amounts or Pre EMI (PEMII) to the Bank on the part of loan availed from the Bank in case of properties which are under construction. The Equated Monthly Instalment (EMI) amount shall be arrived at so as to comprise repayment of both principal and interest calculated on the basis of the interest rate, periodicity of compounding, repayment and of effecting credits in the account so as to aim repayment of the entire liability under the Home Loan at the end of its tenure. The Borrower shall make separate payments in case of the Home Loan to be closed before the commencement date. In the case of Default the Borrower shall be liable to pay additional Taxes, expenses and charges applicable on the Home Loan to the bank. No notice, reminder or information will be given to the Borrower regarding his obligation to pay the EMI regularly on due date. The Borrower is responsible for the timely repayment of the EMI to the Bank. PDCs should be duly signed by the borrower, bear the exact EMI amount written and should be drawn on the Salary Account / Business Account, as the case may be evidenced by signature verification from the bank on which the PDCs are drawn. All payments of principal and payment of interest and all other amounts by way of EMI or otherwise shall be given effect to in the Home Loan Account in accordance with the method of effecting payment as stated in the agreement or as adopted by the Bank from time to time. F. SECURITY
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The Borrower shall create security and or guarantees for the repayment of the loan with interest in favour of the Bank as may be required by the Bank In addition to the above security the Borrower shall deposit all the original documents / agreements of the title relating to the said property. The Borrower may be directed to execute irrevocable Power of Attorney cum Declaration in connection with such deposit of the original documents. The Bank shall have the right to decide the type of mortgage / security to be created by the Borrower for securing the loan and all other amounts and the Borrower shall be bounded to create mortgage as required by the Bank. The Borrower shall be available to the Bank officials until all accounts between the Bank and Borrower in respect of the loan are settled

completely. G. COVENANTS
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The Borrower hereby covenants with the Bank that the Borrower shall a. Use the said flat/house for the personal occupation of himself/herself and the members of his/her family only, and for no other purpose whatsoever. b. Comply with all the applicable laws / obtaining permissions with respect to purchase of property for which the bank has advanced and ensure that the property is not in violation of laws in force. c. Always have until all his dues hereunder are not repaid to the bank, a clear and marketable title to the property, free from all encumbrances whatsoever. d. Pay all rents taxes, cess and other outgoings payable by him / her in respect of the said flat / house to the Government, Municipal Corporation, Co-operative Housing Society, and Revenue Authorities etc. e. Maintain the property in good and substantial state or undertake repair as and when necessary for well keeping of the house and use it for residential purpose and not for any non-residential purpose. f. Shall not, during the tenure of this Agreement, avail of or obtain any further loan or facility on the security of the property without the prior written consent of the Bank. g. Notify the bank of any change / termination in the address, employment, business or profession of the Borrower with in 10 days of such change. h. Execute all such other agreements, documents, declarations, undertakings as may be required by the bank at any time during the term of the loan. i. Shall at all time be entitled through its authorised representative/s to enter the said flat / house for the purpose of inspecting and viewing the condition thereof, without any obstruction from the Borrower or any other person in occupation thereof. j. Shall not leave India for employment or business or long stay with out first fully repaying the Home Loan then outstanding due and payable with interest and other dues, including repayment charges.

H. EVENTS OF DEFAULT

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The bank may by a written notice to the Borrower, declare all sums outstanding under the Home Loan including the principal and all accrued interest to have become due and payable forthwith and the security created in favour of the Bank for the loan shall become enforceable upon the occurrence of the any one or more of the following events. a. Payment of Dues If default shall have occurred in payment of the Pre EMIs (PEMII) and or EMIs and/or in payment of any other amounts due and payable to the Bank in terms of this Agreement and/or in terms of any other agreement(s) / document(s) that may be subsisting or that may be executed between the Borrower and the Bank. b. Performance of Covenants If default shall have occurred in the performance of any other covenants, conditions and representations or agreements on the part of the Borrower under this agreement or any other agreement(s) between the Borrower and the Bank in respect of the Loan or any other loans. c. Supply of misleading Information If any information given by the Borrower to the Bank in the application or otherwise is found to be misleading or incorrect in any material respect or any representation or any warranty referred to in this Agreement is found to be incorrect. d. Sale or Disposal of property If the property or any part thereof is sold, disposed of , charged, encumbered or otherwise alienated in any manner whatsoever without prior permission of the Bank. e. Attachment or Distraint of property If an attachment or distraint is levied on the Property or any part thereof and/or certificate proceedings are taken or commenced for recovery of any dues from the Borrower. Borrower fails to pay any taxes, duties and other statutory dues/ obligations required to be fulfilled. g. Non-delivery of cheques

If the Borrower fails to deliver post dated cheques in accordance with the terms of the Loan or as and when demanded by the Bank. h. Security becoming unenforceable If any security or guarantee of the Loan becomes unenforceable or in fructuous or is challenged by the Borrower or any other person. i. Cross default If the Borrower makes a default in performance of any of the terms, covenants and conditions of any other loan or facility provided by the bank / Financial Institution / Non Banking Finance Company/ Housing Finance Company and other lenders to the Borrower. j. Death of the Borrower In the event of the death of the Borrower. k. Insolvency If the Borrower commits an act of insolvency or if the Borrower is declared insolvent or bankrupt or if a liquidator, receiver or official assignees is appointed in respect of any property or estate of the Borrower of if the Borrower makes any application for declaring himself an insolvent or if an application for declaring the Borrower as insolvent/bankrupt is made or any order is passed by any competent authority for taking the Borrower into insolvency then in any of these events the entire Loan amount shall become due and payable forthwith. l. Notice on the Happening of an Event of Default In the event of occurrence of an event of default as provided herein or upon happening of an event, which would have or perceived to have a material adverse effect on the ability of the Borrower to repay the loans in terms of this agreement or dilutes the value or the enforceability of the securities offered, the Borrower shall forthwith give notice to the Bank in writing within ____ days specifying such event of default and without prejudice to the rights of the Bank, upon such notice by the Borrower or the Bank coming to Know such events or events of defaults, the entire principal amount of loan together with interest and all other amounts as stated herein shall become due and payable forthwith and the Bank shall be entitled to enforce the security and recover the Loan with interest and all other amounts. m. Collections

The Borrower expresses, recognizes and accepts that the Bank shall, without prejudice to its right to perform such activities itself or through its officers or employees, be entitled and full power and authority to appoint one or more third parties as the Bank may select and to delegate to such third party all or any of its functions, rights and powers under this agreement relating to the administration of the loan including the right and authority to collect and receive on behalf of the Bank from the Borrower the PEMI, EMI and other amounts due by the Borrower under this agreement. The Borrower expressly agrees that, in the event of the Bank appointing an agent as aforesaid The Bank shall be entitled to provide information held by the Bank in relation to the Borrower and the Loan. The Borrower shall cooperate with such agent appointed by the Bank in the name manner as it would with the Bank in terms of this agreement. I. WAIVER
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No delay in exercising or omission to exercise, any right, power or remedy accruing to the Bank upon ay default under the Loan or any other agreement or documents shall impair any such right, power or remedy nor shall it be constructed to be a waiver thereof or acquiescence in such default; nor shall the action or inaction of the Bank in respect of any default or any acquiescence in any default, affect or impair any right, power or remedy of the Bank in respect of any other default. J. MISCELLANEOUS a. Place and Mode of Payment by the Borrower All monies, cheques and Bank drafts payable by the Borrower to the Bank under or in terms of this agreement shall be drawn in favour of Bank on a scheduled Bank and/or any other Bank in the town or city where the Office of the Bank is situated or in any other manner as may be approved by the Bank and shall be so paid as to enable the Bank to realize the amount sought to be paid on or before the due date of payment Credit will be given only on realization thereof by the Bank The Borrower may, if he so chooses, issue standing instructions to the Bank in which the Borrower has an account, to debit the account of the Borrower every month and credit such account as directed by the Bank,
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for the value of the PEMI, EMI and/or any other amount due. The Bank shall apportion the monies credited to the account of the Borrower with its office as aforesaid towards repayment and payment of the Bank Loan and interest in accordance with the schedule of amortization and interest payments. Any amount deposited by the Borrower before the date on which it is to be appropriated for repayment or payment or any amount due to it shall be appropriated by the Bank towards repayment and payment of amounts due only on its due date. b. Cost and Expenses The Borrower shall additionally pay , forthwith on demand to the Bank all costs between legal counsel and clients on a full indemnity basis incurred and/or to be incurred by the Bank in connection with the investigation of the title of the property, valuation of the property, preparation, execution, performance, enforcement and realization of the Loan, security documents and other instruments executed in pursuance hereof as also charges for Standing Instructions, Electronic Clearing System (ECS), salary deductions. The Borrower shall pay to the Bank a charge not exceeding Rs. ____ /for dishonour of any cheque given by the Borrower. If payment is delayed beyond ___ days from the due date of the repayment or actual date of presentment such cheque, the Borrower shall be liable to pay penal charges at the rate as specified in the schedule, on the amount of overdue EMI / PEMI. c. Assignment The Borrower, his heirs, legal representatives, executors, administrators and successors are bound by the terms of this agreement. However the Borrower shall not be entitled to transfer or assign any of his rights and obligations under this agreement. The Bank shall be entitled to sell, assign, securities or transfer the Bank rights and obligations hereunder to any persons of Banks choice in whole or in part and in such manner and on such terms as the Bank may decide. Any such sale, securitisation, assignment or transfer shall conclusively bind the Borrower. d. Sharing of Information The Borrower hereby authorizes the Bank or its subsidiaries/ affiliates and their agents to exchange, share or part with al the information relating to the Borrowers loan details and repayments history

information and all information pertaining to and contained this Agreement to affiliates/subsidiaries of the Bank/ Banks / Financial Institutions / Credit Bureaus / Agencies / Statutory Bodies as may be required and undertakes not to hold affiliates / subsidiaries of the Bank and their agents liable for use of the aforesaid information. e. Service of Notice Any notice or request to be given or made by a party to the other shall be in writing. Such notice or request shall be deemed to have duly received by the party to whom it is addressed if it is given or made at such parties address specified below or at such address s such party shall have designated by notice to the other party giving such notice or making such request. FOR ____________ Bank: Address of the Bank Effective Date of Agreement: This Agreement comes into force from the date mentioned in the schedule and shall remain in force and effective until all the monies due payable to the Bank under the Loan as well as under other Agreements.