Easier credit to build a house or buy a flat now

11 Apr, 2009

A series of stimulus packages announced by the Reserve Bank of India is expected to shrug off the gloomy picture in the real estate and financial sectors. One of the major advantages of the packages is that homebuyers can look forward to borrowing at reasonable rates.

All nationalised banks have come up with tempting offers, although they have fixed a timeframe for some of these.

Such offers are highly beneficial for the salaried class and businessmen. Borrowers have to produce either the salary certificate or Income Tax return since banks have tightened norms.

The loan is determined based on the income of the homebuyer.

The repayment capacity and security are looked into before the loan is sanctioned.

Under the stimulus package, the State Bank of India and other public sector banks have been offering loans up to Rs.5 lakh at a rate of 8.5 per cent with rate reset every five years from the date of disbursement of the first instalment.

For loans above Rs.5 lakh and up to Rs.20 lakh, the rate is 9.25 per cent.

This is also a fixed rate with reset every five years from the date of disbursement of the first instalment.

However, the customer has the option at the end of five years to convert the fixed rate into floating rate.

The rate will be that prevailing at the time of conversion. The State Bank of India has come up with a “SBI Happy-Home Loan Offer” for loans sanctioned after February 2009 and partially disbursed by April 30. The rate of interest is 8 per cent for a year.

The interest rate will be reset after one year as per the contracted rate at the time of sanction of loan depending on the fixed and floating rates, total amount and the period of loan.