Q. Can two loans be given to one individual?

Ans: Yes. Two loans may be given to an individual provided he/she has the capacity to repay. The two loans may be given simultaneously or at different times either for purchase / construction and subsequent repair / renovation of a single property or for purchase / construction / repair / renovation / of two different properties.

Q. Can loans be granted at a centre different from the location of the property?

Ans: Yes. Where the loan is granted to employees of reputed companies, preferably with a check off facility, the loan should be granted by a branch at the centre where the employee works and account should move along with him. The mortgage should however be created by a branch where the property is located. However, where the sanctioning authority is satisfied about ensuring regular repayment of loan by establishing a check off with the employers of the borrower under which the EMI is remitted regularly, the loan can be selectively granted at the place where the property is located. This discretion is to be used judiciously.

Q. What are the additional instructions relating to loan proposals for purchase of old house / flat ?

Ans: a) In addition to the usual prescribed documents for Housing finance, the undernoted 2 documents should be obtained, the expenses of which should be borne by the borrower:
i) Valuation Certificate from a Government approved valuer.
ii) Certificate from the Government approved architect / structural engineer regarding the condition of the house/flat. The life and the condition of the house should be such that the Bank's security coverage is not affected till full repayment of the loan.
b) Further, if the house/ flat is more than 10 years old, proposals require administrative clearance of the Zonal Manager,

Q. What are the monetary ceilings on loans for plots alone or for repairs / renovation or furnishings / consumer durables?

Ans: Loans for plots alone or for repairs / renovation: Rs.20 lacs : Under SBS reality loan upto Rs.20 lacs can be given for purchase of land for construction of house.
Loans for furnishings and consumer durables : 10% of the project cost or Rs.3 lacs whichever is less where check off facility or additional security or 3rd party guarantee good for the amount is available.

Q. Income from which sources can be included in the NMI/NAI to arrive at the Total Eligible Loan Amount?

Ans: Income from the following sources can be considered to enhance total eligible loan amount :
a) Income of spouse : where
The property is held jointly and the spouse is a co-borrower.
The property is held in single name and the spouse stands as guarantor.
b) Income of Son/Daughter: If he/she is working in a reputed Organisation and is a co-borrower / guarantor.
The husband, wife, unmarried children and married son living with the parents, are considered as close relatives. As such if a son/daughter is in employment and wants to be co-borrower there is no difficulty as long as his / her salary is routed through us and the property is validly mortgaged to SBS.

c) Expected Rental : Less taxes, cess etc. in the case of house / flat being purchased if it is proposed to be rented out.

d) Other Income : Regular income from all sources provided the sanctioning authority is satisfied about the proof of income.

Q. Should EMI be altered with every Interest rate fluctuation ?

Ans: In the case of Floating Rate option, the EMI need not be altered should interest rates rise or fall. The net effect of interest rate fluctuations is accounted for by way of increase or decrease in the number of instalments.

Q. Can EMI be reset downwards during the tenure of the loan?

Ans: (A) Under Floating Rate option, in case there is a decline in rate of interest, the sanctioning authority may refix the EMI downwards (for select customers) upon written request of the borrower, only if -

i) the downward revision in rate of interest is 1% or more as compared to the original rate of interest at which the loan was given.
ii) the original loan was of Rs.5 lac or more,
iii) the account is a Standard Asset.
iv) the conduct of the account has been satisfactory.

[B] Under both the Fixed Rate as well as Floating Rate options, since part payments and balloon payments are permitted, in case the borrower pays 20% or more of the outstandings in one instance and requests for downward resetting of the EMIs, the same may be done by the branch after establishing a fresh check-off or obtaining fresh PDCs. In case of Fixed Rate option, however the bulk payment in excess of the EMI would attract prepayment charge.

The facility of downward refixing of EMI can be granted only TWICE during the tenure of the loan:

Q. Can EMI be reset upwards?

Ans: Refixing of EMI upwards may be permitted at the request of the borrower after establishing a fresh check-off or obtaining fresh PDCs.

Switch fee :

Q. Is there any provision for existing customers under floating rate option to avail the benefit of downward revision in interest rates ?

Ans: The benefit of the new housing loan interest rates is extended to the existing borrowers also ( who availed loans on floating rate basis earlier at higher rates) by charging a fee of 1% on the outstanding in the loan account.

Q. Is there any provision for a change - over from Fixed to Floating rates?

Ans: No such provision exists at present.

Q. What is meant by Fixed Rate of Interest?

Ans: Fixed Rate of Interest, as the name suggests, is the rate that remains fixed throughout the tenure of the loan. Initially at the time of sanction of the loan, the fixed rate is also linked to the Base Rate (BPLR). However, till full repayment of the loan, the rate does not change with the changes in Base Rate .

Q. What is meant by Floating Rate of Interest?

Ans: Floating Rate of Interest changes with every change, whether upward or downward, in the Base Rate (BPLR) to which it is linked.

Q. Fixed versus floating rate - which is to be selected ?

Ans: The decision to choose the interest rate scheme depends on a lot of factors, given the volatile nature of the home loan market. An understanding of the advantages/ disadvantages of both, fixed and floating rate options will help the borrower to decide in the matter:

· The total housing cost remains unaffected by interest rate hikes.
· It offers the advantage of knowing in advance the liability per month (EMI),which remains fixed during the entire period of the loan enabling better financial planning.
· In times of rising interest rates, fixed rates are a better option as they are not affected with the further rise in interest rates.
· While a rise in interest rates will not affect one's cash flows,at the same time one does not benefit from a fall in interest rates. Hence it is advisable to go in for a fixed rate scheme if one feels that the interest rates have touched rock bottom and hence they may have nowhere to go but up.

· Floating Rates are lower than the Fixed Rates initially
· Any change in interest rates is reflected either in the form of a change in the EMI or a change in the tenure of the loan.In times of falling interest rates, Floating Rates are the better option as the borrowers are able to get the benefits of the falling rates. 90 % of the existing housing loans in India are said to be disbursed under floating rate schemes considering the current soft interest rate regime.
Takeovers

Q. What are the conditions for takeover of housing loans given by other Banks / Financial Institutions?

Ans: The Bank will consider the takeover of Housing loans from other institutes provided following conditions are satisfied :
· Possession of house/flat has been taken
· Repayment of the existing loan has already commenced
· Instalments are being paid as per terms of sanction
· The owner has valid documents evidencing his title to the house/flat
· In the case of a Take-over, whether a higher loan amount and a longer repayment period than the one sanctioned by the original lender can be allowed by us?
The assessment of the borrower should be made as in the case of regular housing loan accounts.
The sanctioning authority, based on the merits of the case and requirements and eligibility of the borrower at the time of the takeover, can sanction an amount higher than the amount taken over and can also extend the repayment period beyond the period sanctioned by the original lender, provided the stipulated criteria are not diluted.

· What is the procedure for take-over of housing loans?

i) The prospective borrower should address a letter (on the Bank's standard format) to the Bank/institution from whom the finance has been availed asking them to deliver the title deeds and other securities direct to the Branch upon receipt of the loan amount and authorising them to furnish
· information about outstanding in the loan account with up-to-date interest;
· statement of account for the period of loan or for the last 10-12 months (where the loan has run for a longer period) to ensure that the instalments and interest were paid regularly and are not in default
ii) The prospective borrower, upon receipt of a reply from the original lender containing the aforesaid information, should submit the said letter to our Bank along with a letter (on the Bank's standard format) containing a request to us to repay his outstanding loan with the original lender by debit to the loan account with us and authorising us to obtain delivery of the title deeds and other security documents, if any, from the original lender. This will confirm, inter-alia, that the original lender is actually holding an Equitable Mortgage over the property in question.

where an applicant is of undoubted integrity and standing, interim security/third-party guarantee may be waived.
The interim security may also be waived in the case of take-over of bulk loans of employees of corporations and institutions of repute, provided check-off facility and irrevocable undertaking for making payment out of any amount payable to the employee (eg. terminal benefits etc. in case of his/her retirement, resignation etc.) towards all dues pertaining to the account is furnished.
However, when interim security is waived, no deviation from take-over conditions is to be permitted except in cases of take-over of Standard Asset loans in bulk, of employees of good corporates/ institutions with a check-off facility.

Q. What are the papers / documents required for availing a housing loan ?

· Duly completed application form with passport size photograph
· Statement of Bank Account/Pass Book for the last six months.
· Information about the borrower--

Proof of identity :
voter ID card, Passport, driving licence, PAN card
Proof of residence : recent telephone/electricity bill, property tax receipt/ Passport/Voters ID card.
Proof of business address for non-salaried individuals etc

Proof of income:
From Employees -Salary certificate from employer and TDS certificate - Form 16 or Copy of IT Return for last two financial years, duly acknowledged by ITO.
From Self Employed/Other l.T.assessees : Three years' IT Returns duly acknowledged by ITO/Assessment Orders (for computation of income).
Photocopies of challans of Advance I.T. paid.

o Papers relating to the property :

Sale Deed/Agreement of sale.
Letter of Allotment from Housing Board/Society etc. (wherever applicable)
Copy of approved plan (wherever applicable)
Permission for construction (wherever applicable)
Estimate/Valuation Report from approved valuers in respect of the property to be financed (wherever applicable)
In case of conversion of agricultural land - copy of the relative order.
Search Report/Non-encumbrance certificate for 13 years from Bank's Advocate.
NOC under the provisions of ULC Regulation Act, 1976, in Original

o Documents relating to repayment :

Where Check-off is available:
a) Irrevocable Letter of Authority (on Banks standard format).
b) Letter from employer (on Bank's standard format).
c) Irrevocable Letter of Authority where applicant himself is Drawing and Disbursing Officer (on Bank's standard format).
or in other cases PDCs or standing instructions wherever required may be obtained.