The paradigm of home loan marketing is set for a change. The practice of using ordinary direct selling agents (DSAs) by home loan financiers will soon be history. National Housing Bank (NHB), the apex body for promoting and regulating specialised housing finance companies (HFC), is stressing on engaging certified mortgage counsellors to ensure customers get fair advice before finalising home loan deals. This is aimed at protecting the interest of scores of home loan borrowers and insulate them from frauds.

 The proposed system will allow borrowers to take informed decisions. With almost 25-30% annual growth in the home loan market, the DSAs have gained prominence over the years. Almost all leading financiers engage them for marketing their products. There is, however, no uniformity in DSAs’ marketing policies. These agents are not also accountable for their advisory service. In many cases, this leads to complications at a later stage. According to a managing director of a HFC, the practice of using DSAs also encourage malpractice to a large extent. This system is likely to change now. NHB is trying to bring in transparency in home loan marketing by introducing a certified course for loan advisors, sources close to the development said.

 The matter has been discussed at a recent meeting between NHB and HFC officials.The Indian Institute of Banking & Finance (IIBF) has for the last six months been working with NHB for developing the module for this certified course. A senior IIBF official said, this has now come to a conclusive stage and the course is ready to be introduced in a month. It is, however, yet to be decided whether certified agents will work for a single company or whether they can market home products of several companies. The agents will advise home loan borrowers on interest rates and documentation process. They are likely to earn a fee from borrowers. The fee structure is likely to be finalised by NHB. There is a parallel proposal to set up a joint forum of banks and HFCs which will function as a self regulatory organisation, especially to oversee home loan marketing practice of lenders. NHB and the Indian Banks Association are working on this plan. The proposal is evolved in the lines of the Associations of Mutual Funds in India or Fixed Income Money Markets & Derivative Association of India. The whole exercise is to align domestic practices with global best practices in customer protection. The three major mortgage markets in the world — the UK, US and Australia — follow comprehensive practices towards customer protection. For instance, in the US markets, lenders need to disclose all lending costs. There are several other Federal and state laws in the US which compelled home loan originators to disclose their lending practices to customers and general public.

Home loans are considered as a secured loan option, where you can borrow a loan amount according to the equity present in your home. A borrower can avail benefits like lower interest rates and longer repayment term. The lenders have the prerogative to decide that how much money you can borrow with this loan type. Before offering loans the lenders decide on the factors like the present value of your home, amount for outstanding mortgages, and any other debt which you have right now. You can borrow a loan amount according to some percentage of the equity present in your home. But, some lenders may offer you loan amount up to 125 % of the present value of your home.

Home loans can be used for your varied purposes like buying a luxurious car, going for an exotic holiday trip, educational purposes, home improvement etc. Most of your needs can be easily met with this loan type. People with bad credit history can also opt easily for this loan type. A bad credit history could be anything like missed payments, defaults, bankruptcies, County Court Judgements. With this loan type you have a chance to improve your credit history as well. Home loans are the best loan option to get a loan, if you have a bad credit record. The security of your home will help you in getting loans will increase the probability for getting loans. There are many lenders in the UK, who can easily offer you loans against your property (home). There are several loan sites which offer Home loans. Merely, applying for the loans online may help you to get loan quotes from different lenders of the UK. Once you get a loan quote, you can easily compare and select a loan quote according to your personal circumstances.

The days of living on cheap credit may be over. In a precursor to things to come, the country’s largest private sector bank — ICICI Bank — has hiked lending rates by 50 basis points (100 basis points = 1%) on retail loans. The bank has increased its floating reference rate (FRR) for consumer loans (including home loans) to 10.75% with effect from December 18. The bank has also increased its I-benchmark advance rate by 50 basis point to 13.75%. This increase will have an impact on corporate loan rates. ICICI Bank is expected to increase its lending rates, particularly home loan rates by 25 to 50 basis points. Apart from the prospective customers, the existing floating rate loan customers will also feel the pinch as the increase in FRR will become effective in their case from January 1, 2007. However, the current fixed rate customers whose loans are fully disbursed will not be impacted by the increase as their contracted rates will remain unchanged. A small consolation is that the bank has also increased interest rates on deposits of less than Rs 1 crore by 0.25%-0.75% across tenors with effect from December 18. State Bank of India, the country’s largest bank, had also increased its deposit rates similarly last week. ICICI Bank’s decision to hike rates comes RBI recently raised the CRR by 50 basis point in two phases. The hike in CRR will have an impact on the liquidity as banks will now have to park additional funds with the RBI. Banks have been averse to hiking retail lending rates, particularly housing loan rates, due to strong competition. However, the RBI’s recent action has forced banks to review their strategy.