| If you are thinking of buying a home, then, do not worry if you lack in funds. There are many lenders who are providing home loans in India to cover housing needs of almost all types of borrowers. However, you are required to meet certain conditions laid down by the lenders, in order to get smoother approval. Home loans are being offered for variety of purposes in India. Through these loans you can purchase a home, which is a common use of the loan. The loan can be used for any alteration to the home you already own. You can construct a new home or the loan can be used for purchasing a piece of land for investment or construction purpose. These loans are also used for paying stamp duty. Interest rates on home loans vary from lenders to lenders. But, public sector banks charge interest at lower rate than the private lenders. If you take out the loan from banks, then ensure that first you have made an extensive comparison of their rates. Note that there is a vast difference of rates amongst the public sector banks. So, if is advisable to make an extensive comparison of these bank rates first in order to pick up a suitable deal. Government of India (GOI) is actively considering to provide a subsidy of 5% on home loan interest rates to the economically weaker sections of the society in the next year's budget. Being considered by major political outfits as a buildup towards the 2009 elections, this subsidized home loan scheme might go a long way in fulfilling a long cherished dream of the common man - owning a house. The home loan interest charged by banks and other housing finance institutions (HFCs) will be subsidized and government will bear the costs. This step will put an extra burden on the the exchequer at Rs. 1600 per year. Expressing concerns over the benefits of the real estate boom being limited to the affluent and upper echelons of the society, the urban poverty alleviation minister Kumari Selja said, "The objective of the interest subsidy scheme is to ensure the economically weaker section gets the opportunity to own houses." Presently the housing sector for the economically weaker section (EWS) of the society is facing a shortfall of 31 million dwelling units and with this scheme GOI is expecting to meet the requirements of more than 50% of this segment in the next five years. The modalities of this scheme are being worked out and this subsidy scheme is likely to fix a loan ceiling of Rs 80,000 for EWS and Rs 1.50 lakh for the low income group (LIG). People who earn up to Rs. 3,300 per month are classified as EWS whereas those earning between 3,301 and 7,300 are classified as LIG. Earlier the National Housing Bank (NHB), which used to refinance housing loans especially to the weaker sections of society, withdrew the concession of 0.5 % offered on refinances and industry experts believe that this step by the NHB has affected the credit flow. In the absence of a suitable incentive from NHB, the HFCs in India have not been able to extend affordable loans to the weaker sections of the society. With the GOI extending a 5% subsidy it looks like the weaker sections will finally get their due from the HFC's. |
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