Home Loans

National Housing Bank 1. Regulation of HFIs 2. Financially helping HFIs 3.Agent of RBI

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HFIs 1. Obtain certificatre of registration with NHB. 2. Net owned funds – Rs 25 lakhs. 3. 5 -25 percent of deposits in approved securities. 4.Deposit – 12 to 84 months. 5.Maximum interest – 12.5 percent. 2

Home loans The formula for calculation of EMI given the loan, term and interest rate is:

EMI = (p*r) (1+r)^n ___________ (1+r)^n - 1 p = principal (amount of loan), r = rate of interest per instalment period, i.e., if interest is 12% p.a. r = 1, n = no. of instalments in the tenure, ^ denotes whole to the power.

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Key Concepts • • •

Securitization Reverse Mortgaging Asset Liability Management.

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Reverse Mortgage Loan 1.Above the age of 60 years. 2. Own a house. 3.Maximum period of 15 years. 4. Loan amount varies with age of the borrower within the range of 45 to 60 percent of the value of the property.

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