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23 Jul 2001

The Housing Finance industry has undergone a  sea   change over the years. It is long since people waited   in queues to reach a counter where they could get   financing schemes to build a home. Flexibility,   multiple options, innovation and improved service have become the second name for Housing Finance   companies. Most of them have started offering reduced interest rates, loans for vacant plots and   spot approval for loans.

SOPS in the Union budget and entry of Nationalised banks and private companies into this sector have boosted the growth of the market. This has also resulted in intense competition among companies and eventually, a borrower, today has several options.

Housing Finance Companies (HFCs) have started offering additional facilities to reach out to a customer. Even public sector monolith, HUDCO has entered the retail sector and is offering incentives like insurance, counselling assistance on design and waiver of the last two installments in the event of adherence to proper payment schedules.

The Government's role.
The Union Budget '99 had surprises for the Housing industry.  According to The Finance Act, 1999, " The ceiling on deduction of  interest on borrowed capital invested in the acquisition of a house  has been increased from Rs.30,000 to Rs. 75,000." Further, the housing sector has been given the 'infrastructure' status, to rekindle  economic growth.  

Finance Companies introduce new options
Finance Companies have done their best to reduce interest rates, which are probably at the lowest ebb now. Companies like HDFC  have also started a 'floating' scheme by which a borrower has the  freedom to change the way he/she repays the loan. There is a fixed  rate option which one can choose, by which the rate of interest at  the time of obtaining the loan remains constant until the period ends. The other scheme allows a 'floating' rate of interest, applicable  as and when the rate of interest changes.

The Players
HDFC, IDBI, Punjab National Bank to name a few.

A Comparative Analysis on Housing


Max.Amt. (Rs.)

Interest Rate p.a.



 Please click the link on the left for details

LIC Housing


13.5 % - 15%

15-20 years


 Please click the link on the left for details

Punjab National Bank

 Please click the link on the left for details
Tips on Housing Loans  
  • Tread carefully in the property market after understanding its dynamics says Akshaye Kumar Colliers Jardine.

       You should structure your housing loan so that  your   monthly outlay is no mare than 25% of  your   salary.  

         The amount that is borrowed is subject to repayment capacity. As such  upto 80% of the property value can be borrowed.

         Documents required - Salary statement or relevant document. Documents to prove the purchase is genuine for e.g. registration, title deed.  

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