Home LoansSept 2014

The organized mortgage market in India is about 30 years old. The first private HFC was HDFC Ltd promoted by World Bank, ICICI Ltd and Aga Khan Foundation in Year1977.In the years to follow, most of the nationalized banks and other leading Public Sector Financial Institutions like LIC, GIC etc. also entered the Home Loan market. Last few years (since Yr 1999) has seen a lot of private banks, MNC banks and other institutions entering the mortgage market leading the CAGR to about 42%. The growth in the said business is one of the highest among all the other sectors. Most of the mortgage lenders are traditionally First Mortgage lenders on Equitable Mortgage by way of deposition of Title deeds. The Indian Mortgage market can be categorized in the following segments• Private sector banks• HFCs• Nationalized / Public sector banks• MNC banks & NBFCs Mortgage market is in the real growth phase now and almost all the lenders especially Private sector banks, MNC banks & NBFCs are moving their focus in this segment.

Product Summary

Home loans are secured loans granted for the following purposes. • Under construction ( Builder/ Society)• Self construction• Ready Property• Plot plus self construction• Home Improvement• Home loans to Non Resident Indians (NRI)• Home loan take over and enhancements

Product Description

Product Position The basic target market for Home Loan product is salaried and business segments.•  Salaried• Self employed professionals• Self employed non professionals• NRI Salaried only Proprietorship firms Private limited companies• Unlisted and closely held public limited companies• TATA Ecosystem.

Rate and Charges

The loan rates & charges will be advised to the customer at the time of applying the loan. Loans will be on adjustable interest rate basis. These loans interest rate may be revised at the company’s discretion. The rates may be different for different borrower categories or for different programs. All re-pricing decision will be informed to the borrower. The loan documentation must contain appropriate clause to ensure the TCHFL ability to re-price and the borrower’s agreement to be the same.

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Pre Log-in Norm to be followed1. Applicant should be among the approved borrower entities based on the

approved borrower entity defined.

2. Each applicant should meet pre-sanction documentation norms

3. Each applicant should meet credit norms for the approved borrower entity as applicable.

4. All income documents, Identity proofs and bank statement need to be signed by the applicant / co- applicant before submission. The KYC documents should be counter verified by TCHFL.

5. Applicant should sign all documents (income, identity) including app form and

photograph with identical signature as on processing fees chq. Please Note: Files with deviations & beyond individual credit authority limit shall move to the

respective levels for sign- off, as per authority delegated in writing and deviation authority delegation time to time before approving the loan.

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Customer Insights

Customer SegmentationTarget Market Definitions

Salaried

Salaried individuals working for Cat A, B and C

companies.

The companies are classified into CAT A, B, C based on

Listing in BSE/ NSE, Min Share Price, Years In existence,

Minimum Turnover, Minimum Net-worth, net profit and share

holding. Refer Company categorization annexure

Self employed Professionals

Professionals based on Individual Income tax

returns. ( Professionals include Doctors, CA,Engineers).Proof

of professional qualifications and registration to be obtained

Self employed non professionalsProprietors,(Partners, Directors of Private Ltd.

based on their individual Income tax returns)

Non individualsPrivate limited companies

Unlisted and closely held public limited companies

Customer Offerings

Minimum Age Requirement

Borrower Income considered Income not considered

Applicant and co-applicant Minimum 25 yrs at loan

origination for applicant.

Minimum 23yrs at loan

origination for co-applicant.

Minimum 18 yrs at loan

origination

Customer

segments

Maximum age criteria

Salaried Maximum 65 yrs or age of retirement, whichever is less at loan maturity

Self

employed

1. 65 years

2. KEY partner/director whose share of income is being considered, must be within

65 years of age at loan maturity.(Key is defined as majority shareholder )

3. Where rental income is being considered , property owner’s age must not

exceed 70 years at loan maturity

General

criteria

1. Co-applicant whose income is not considered may be of unrestricted age.

2. Owner of property whose income is not being considered can be up to 70 years

at loan maturity. In case age exceeds 70 years, NOC from all legal heirs is required.

Maximum Age Requirement

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Maximum Loan amount

Customer Category

Normal Income

Limited Income

Program

Gross Margin

Gross Receipts

Surrogate Income

Program

Non-Residential Purchase

SalariedMax Rs.10

crsNot

applicableNot

applicableNot

applicableNot

applicableMax

Rs.5.00 crs

SEP Individual

Max Rs.10 crs

Max Rs.2.00 cr

Not applicable

Max Rs.5.00 crs

Not applicable

Max Rs.5.00 crs

SENP Individual

Max Rs.10 crs

Max Rs.2.00 cr

Max Rs.5.00 crs.

Not applicable

Max Rs.1.00 cr

Max Rs.5.00 crs

Non Individual

Max Rs.10 crs

Max Rs.2.00 cr

Max Rs.5.00 crs.

Not applicable

Not applicable

Max Rs.5.00 crs

NRI loansMax Rs 10

crsNot

applicableNot

applicableNot

applicableNot

applicableNot

applicable

Maximum Loan TenorType of Property Maximum Tenor

Under construction ( Builder/ Society) 20 years

Self construction 20 years

Ready Property 20 years

Plot plus self construction 20 years

Home loan take over and enhancements 20 years

Home loans to Non Resident Indians (NRI) 10 years

Non-Residential Premises purchase 10 years

Minimum Loan AmountParticulars Min loan amount

Minimum Loan amount Rs. 2.00 lacs

Minimum Loan amount under gross margin Rs.7.50 lacs

Minimum Loan amount for NRI’s Rs.10 lacs

Note: Residual age of property to be at least 10 years at the time of loan maturity

For salaried a tenor of 30 years can be offered

Minimum Income Parameter

Income level Customer Segments

Rs.15,000 net salary per month Salaried

Rs. 2.50 lacs gross total income p.a. after tax as

declared in ITR.

• Self employed professionals and non

professionals.

• Self employed non professionals

include Proprietors, Partners/Directors

(applying in their individual capacity).

Firm to be profitable for last 2 years.

Rs. 3.00 lakhs gross total income p.a. after tax as

declared in ITR.Firm to be profitable for last 2 years.

Partnership Firms and Companies

Policy Parameter

Bank Analysis Parameter

Signature Verification Required for all

borrowers

Required for all

Borrowers

Required for

all borrowers

Mandatory

Negative Profile Applicant/Co-Applicant not to be from negative profile list. Caution profile can be funded

based on additional mitigants as specified in the policy

Negative Areas # Property not to be located in negative area

# Customer’s residence not to be in negative area. If the customer is moving from -ve Area

to +ve area then can be approved by RCM

Collateral Only 1 collateral / property per applicant (two collateral this is applicable for cases for single

flat which has two agreements due to government regulations) .Property should be in

TCHFL Operating location.

Locations applicable TCHFL operating locations

Rate of Interest & Fees As communicated by the business from time to time.

Mode of repayment

( EMI) only

Either thru-

*Post dated Cheques from

core banking only

*Deduction at source

* ECS

Either thru-

* Post dated Cheques from core banking only

* ECS

No of PDC for EMI Minimum 36 nos and in multiples of 12 thereon

Pre-Payment fees

Security of the loan.

As communicated by Business from time to time. Mortgage of property by memorandum of

entry or as mandated by legal from time to time. First and exclusive charge of the property.

Product Features of Home Loan

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Parameters Policy & Underwriting normsLoan Amount

Minimum– Rs.2 LacsMaximum:a) SIP : 1 Croreb) LIP- Rs.2 Croresc) Gross Margin- Rs.5 Crores d) Normal Income- Rs.10 Crores

Loan To Value (LTV)Note: Market Value means lower of the Values given by 2 valuation reports as per the policy

Upto Rs.20 Lacs- 85% of Cost of Property (COP) subject to 90% of Market Value (MV)Above Rs.20 Lacs upto Rs.75 Lacs- 85% of COP subject to 80% of MV (80% of COP for SENP/ SEP/ NI- Above Rs.50 Lacs upto Rs.100 Lacs)Above Rs.75 Lacs- 80% of COP subject to 75% of lower MV (75% of COP for SENP/ SEP/ NI)Self Construction/Extension/ Improvement/ Renovation- 100% of Estimate from Regd. Valuer/Architect subject to 80% of combined Value of Plot + Estimate for construciton for loan upto 75 lacs & loan >75 lacs, LTV on MV is max 75%.

Loan for acquiring/ constructing/ extending/ renovation residential property

Product Features of Home Loan…….. contd.

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Parameters Policy & Underwriting normsLoan To Value (LTV) Plot Purchase + Self Construction- Plot Purchase: 75% of

Cost including Stamp duty+ Regn charges subject to 60% of market value ; Construction - 100% of Estimate from Regd Valuer/Architect ; Overall Plot+ Constn loan not to exceed 80% of Plot Value+ Constn Estimate for loan upto 75 lacs and loan >75 lacs, LTV has to be max 75%.

Debt Burden Ratio (DBR)

Maximum DBR for Salarieda) < 75k per month : 55%b) > 75k upto 2-lacs : 60%c) > 2-lacs per month : 65%Maximum DBR for SENP/SEP/NIa) Normal Income- 70%b) Gross Margin- 60%c) LIP and SIP- 55%

Tenor Minimum– 12 monthsMaximum– 240 months (300 months for Tata Group Employee & Salaried employees)* for NANO-LIHF, max tenor allowed is 15 yrs.

Prime Target Segment

Salaried & SENP in age group 30 – 40 yrs.

Loan for acquiring/ constructing/ extending/ renovation residential property

Loan against non self occupied commercial/ residential property. In order to targetcustomers with rental income as main source of income, this programme is useful.

Parameters Proposed Policy & Underwriting normsEligible borrower Individuals, proprietorship, partnership, Public Limited

Companies and Private Ltd. Companies owning the properties

Minimum Rent Rs.40K per monthLoan Amount Minimum– Rs.10 Lacs

Maximum- Rs.10 CroresLoan To Value (LTV) Note: Market Value means lower of the Values given by 2 valuation reports as per the policy

Residential property:a) Upto Rs.5 Crores- 65% b) Above Rs.5 Crores- 60%Commercial property:a) Upto Rs.5 Crores- 55% b) Above Rs.5 Crores- 50%

Product Features of Funding against Rent Receivables

Loan against non self occupied commercial/ residential property. In order to targetcustomers with rental income as main source of income, this programme is useful.

Parameters Proposed Policy & Underwriting normsDebt Burden Ratio (DBR)/ Loan eligibility(Policy defined calculator is used for arriving at eligibility based on only rentals)

Eligible loan amount (EMI) is equal to 80% of the NPV of net rentals after adjustment of TDS. Annual maintenance( if paid by the property owner) and other municipal taxes to included as part of obligation while calculating eligibility.

Tenor Minimum – 12 monthsMaximum – 120 months

Other criteria 1. Reputed companies and Govt. entities to be tenants. If Commercial Organizations, should be profit making with 10 years’ of existence.

2. Rental agreement to have minimum 6 months’ vintage.

Prime Target Segment Customers having good rental income from well known tenants.

Product Features of Funding against Rent Receivables …….. contd.

Other Credit Norms• End Use

- Personal needs- Business needs- Renovation of property- Investments- Asset acquisition- Consolidation of debt- Mortgage buyout- Refinance on self financed property

• Collaterals- At least one property being offered for mortgage should be occupied by at least one of the applicant whose income is considered for the loan -The other collateral may be vacant or rented

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Income Assessment Methods• Normal Income (as per ITR and/ or Form 16)

- Business Income : Profit after tax as reflected in the Income tax returns and Profit and Loss statement.- Depreciation : 2/3rd of the depreciation as claimed in the P&L- Salary: Income as reflected in Net Salary reflected in salary slips- Rental Income: Rental Income can be considered if it reflects in Income tax returns / Bank statement/ Rental agreements- Other Income: Interest income, dividend income, etc. can be added if reflected

consistently in the Income tax returns for at least two years- Income which cannot be considered: Incomes from speculative business, capital gains

• Gross Margin Program- Margin as per policy OR 15% of Sales OR Margin provided by CA , whichever is lower- Interest Leverage (PBDIT/ Interest paid) Ratio => 2- Debt/ Equity to be less than 3- Current ratio should be more than 1- CPA report is required for correct business assessment

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Income Assessment….contd.• Surrogate Income Plan

- Annual Income= EMI (other financier) * 12*2 (where 2 is a multiplier)- Only EMI based loans to be considered under this Program- Loan closed up to 6 months to be considered for surrogate- EMI (in case 2 or more) should have run parallel for at least 12 months- maximum number of loans clubbed cannot be more than 5

• Limited Income Program- Assessment of income and repayment capacity of the customer by an empanelled external CPA (normally a qualified Chartered Accountant)- Business income = PAT as declared in ITR * 3 OR (CPA PAT – ITR PAT)*0.75 + ITR PAT, whichever is lower

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Negative Properties

• Properties belonging to HUFs• Properties under construction• Title deeds pending with

registrar• Cinema Halls• Schools• Hospitals• Godown• Industrial Plot• Vacant Land

• Properties located outside India• Chawl type property• Pagdi • Banquet halls• Agricultural Land• Farmland• Old Age Homes and Orphanage• Guest Houses • Gala /industrial estate

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Note: Industrial estate with RCC structure can be funded

Processes

Common Documentation Requirements for HL / LAP

SENP - Additional

Latest list of Share holding pattern & list of directors certified by Company Secretary (Corporate cases)For corporate cases - Certified copy of MOA/AOA Certified Copy of Partnership Deed in case of Partnership FirmBusiness Profile on the letter head of the companyAddress Proof - OfficeProof Of BusinessProof of Existence2 years ITR, both personal & business with computation of Income

6 months Bank Statement with Maximum vintage of 1 year

SEP - Additional

Proof of qualification & registrationAddress Proof - Office2 years ITR, both personal & business with computation of Income6 months Bank Statement with Maximum vintage of 1 yearXerox of front page of Bank statement attested by Applicant / co-applicant

Common Documentation Requirements for HL / LAP ….contd.

SALARIED

Employment Proof - Employee ID Card3 Month Salary Slips attested by Applicant / Co-applicant, orLast two years Form-16 & Appointment Letter / Increment Letter attested by Applicant / Co-applicant6 months Bank Statement of Salary A/c with Maximum vintage of 1 year

SURROGATE INCOME PROGRAM

– HE

Repayment Track Record - 12 months

Banking - 12 months Bank statement

BALANCE TRANSFER

Repayment Track Record - 6 months min.Banking - 12 months Bank statement

LEGAL DOCUMENT

All legal papers of Collateral Property as required for legal report & valuation

Mortgaging

Mortgages file processing flow

CPA EXTERNAL AGENCIES CREDITSALES

START

Brings the file to CPA

CPA checks as per login checklist

Quick data entry in LOS

All documents ok?

Initiate CIBIL and dedupe

Basic data entry in LOS

Additional Data Entry in LOS

FI & RCU Update

FinancialEligibility met?

Initiate FI/RCU

YES

Income estimate from CA for

alternate income program(applicable

to other than salaried)

NO

If CIBIL -ve send to credit manager for login approval

Send report to CPA

File login approved?

YES

Rejected

NO

Any query?

YES-Move to ADE to respond to CAM query

1 NO Move to CAM underwriter queue

Receive reports from CA YES

Respond with necessary documents

NO-Send to sales

2:Rework by ADE

In principal approval? YESFollow process for

in final approval NO

Generate CAM/Regenerate CAM(in

case of rework)

Do a personal discussion & insert

commentsYES

Mortgages file processing flow

CREDITCPA

1

Insert property details & legal

documents and valuation

Send to credit mangers queue

for Final approval

Credit managers queue for in

prinicipal approval

Deviation?

Take approvals as per approval

matrix

In prinicipal approved

Take sanction letter for in

principal approval

Receive property details &

documents

Initiate valuation & lawyer report

2:Rework by ADE

YESNO

CUSTOMER

Hand over to sales to

give to customer/ sales

Give property details

& documents

Deviation?

Regenerate the CAM & move to CAM writers

queue

2:Rework by ADE

Any query?

Receive valuation and lawyers report

NO

CAM writer to insert comment

Any query?

Any query?

Take approvals as per approval

matrix

NOYES

YES

Any query?

YES

Any query?

Accepted/rejected

NO

Approved

Send rejection letter to customer Rejected

Accepted/rejected

Rejected

END

Accepted

NO

Customer FAQs

• What is mortgage loan?A conditional pledge of property to a creditor as security for repayment of a debt, typically equitable mortgage.

• What is Loan against Property loan?Loan against secured / free of charge market value of a property (may be residential or a small / medium retail commercial space).

• What are the minimum and maximum loan amounts?

You can avail of loans ranging from Rs.2 Lacs to Rs.10 Crores depending on your collateral property value, income eligibility and repayment capacity.

Customer FAQs

• What are the loan tenure options? The loan can be repaid over a period of 12 to 240 months , for HL (Tata Group Employee/Salaried employees : 300 months) and 120/180 months for LAP. • Are there any additional charges?

A non refundable fee of Rs.5000/- (plus applicable service tax) is payable upfront with the application form for HL. Further, processing fees as per grid will be payable post sanction and prior to disbursement of the loan.

• How do I repay the loan?You may repay through ECS (Electronic Clearance system) by instructing your Banker to deduct the EMI (Equated Monthly Installment) from the nominated Bank Account your loan account, or you may repay the loan through post-dated cheques or through Auto Debit instruction.

Customer FAQs

•  How will TCL/ TCHFL decide my loan eligibility? We assess the applicants’ repayment capacity and proposed collateral property value while deciding on the loan eligibility. Repayment capacity is based on factors such as applicant and co-applicant(s) income, age, number of dependants, financials, banking habit, loan repayment history and business / employment stability. • Can I prepay my loan?

Yes, you can prepay the part / entire loan outstanding amount. Prepayment charges is not applicable in case of HL under floating ROI, while in case of Cash out Loans as applicable would be levied on the outstanding loan amount. • How do I approach TCL/ TCHEL for a Home

Finance Loan?You can approach us in any of the following way- homeloans@tatacapital.com

Customer FAQs

Application form

Microsoft Office Excel 97-2003 Worksheet

Mortgages Processing fee calculator

Microsoft Office Excel 97-2003 Worksheet

EMI & BPI Calculator

Application Form

Adobe Acrobat Document

Annexures – 14

Annexures – 15

Annexures – 16

Pre Sanction/Post Disbursal Docs checklist

Microsoft Office Excel 97-2003 Worksheet

Microsoft Office Excel 97-2003 Worksheet

CPA Check List Pre Sanction HL

CPA Check List Pre Sanction HE

Ops Check List HLMicrosoft Office

Excel 97-2003 Worksheet

Adobe Acrobat Document

Ops Check List HE

Annexures – 17

Annexures – 18

Annexures – 19

Annexures – 20

Thank You