REALTY+ IN CONVERSATION: SANJEEV NARYANI, CHIEF GENERAL MANAGER, REAL ESTATE & HOUSING, STATE BANK OF INDIA
Home loans are a great financial assistance tools for a first time homebuyer. But taking a home loan is a long time commitment and must be taken after a thorough research and resolve. A homebuyer should opt for the shortest loan tenure that meets your loan requirement. Apart from your own salary, take into account, other income sources and income of other earning family. The home loan EMI (Equated Monthly Instalments) may make up to as much as 60-65% of your monthly income and the loan period one can avail is up to 30 years. Buyer’s eligibility generally depends on their repayment capacity and property price. Also, the loan amount cannot exceed 75 – 80% of the cost or market value of the home you are buying.
Generally builders sell projects under time linked plans (TLP), construction linked plan (CLP), subvention schemes. Most banks fund projects only under CLP. Some housing finance companies fund projects under TLP and subvention schemes as well.
Things to Keep in Mind
First and foremost understand your borrowing capacity in consideration with the monthly expenses. Don’t forget the processing fee which mostly is 0.25%-1% of the loan amount plus GST. It’s a non-refundable fee paid to the bank to process your application.
Deal directly with the seller or builder to avoid intermediaries’ commissions and shop for the best interest rate. Be practical in selecting the home and make sure it fits your budget, has clear titles and approved by the competent authorities.
Save for down payment as a home loan is not 100% financed. More the down payment, lesser loan or tenure you would need resulting in saving interest. Choose a tenure that is relatively shorter while ensuring the instalment is affordable for you.
At present, SBIs market share in home loans is 20.6% after taking into other public sectors banks, private banks and HFCs. Among just banks our market share is 35%. The general age of home loan takers is 21-35 years - comprising 30% of customers. The 30-45 age group make up 45% of loan takers. Total 83% of the loan takers are below 50 years. The average ticket size of a property is 30 lakhs. Even getting homes loan has become easier. To avail SBI home loan, an individual must be minimum 18 years at the time of loan sanction and maximum 70 years at the end of loan tenure.
What are your views on the current real estate scenario?
The government push for affordable housing, reduced GST and the reasonable pricing of housing which has not gone up, are the positive signs. We have done more than double of last year in PMAY CLSS scheme. Also, people’s incomes are on a rise and the mind set to buy a house early on in their careers are driving the housing market. At present, the growth is happening only in 8 major cities - Mumbai, Delhi NCR, Hyderabad, Pune, Chennai, Bangalore and Ahmedabad.
For developer, there is a cash flow crunch for various reasons. They are finding it difficult to raise capital, especially after the NBFC crisis. Earlier NBFCs were the main sources of finance for the developers but that has now dried up. However, PE funds are increasingly investing in good projects and have reduced their margins.
All financial institutions have internal risks department that looks at the risks and put a cap and a figure on a developer. For instance, we determine a developer’s eligibility based on external rating such as CARE, CRISIL, etc and our own internal rating which is much more extensive and stringent.
Advice to homebuyers
The right age to avail home loan is 30-40 years and the loan EMI multiplied by 12 should not go beyond 55% of annual salary. Insuring home loan is a must to protect your home and family in case of mishap or loss of life.
In my opinion people should not rush into buying a property, due diligences of the property is a must including builder’s credentials and previous track record of project delivery. There should not be any deviation in construction plans cannot be changed and building has to be sold based on RERA carpet area.
In terms of availing home loans, PSU banks are preferable At SBI, we not only offer the best home loan rates but also the most secure infrastructure to protect property documents. To determine the loan eligibility, we have a risk scoring model with around 15 parameters, from credit history, employability fitment to the employer, expected growth in the company, family size, etc.
