JEEVANDEEP SAHAIKSHNIK SANSTHA POI’S ARTS,

COMMERCE AND SCIENCE COLLEGE, GOVELI.

Project Report On
“ A STUDY ON HOUSING FINANCE IN INDIA”

SUBMITTED TO

MUMBAI UNIVERSITY FOR THE DEGREE OF

MASTER IN COMMERCE
FACULTY : COMMERCE

SUBJECT : “A STUDY ON HOUSING FINANCE IN INDIA”

MISS : MANALI KIRAN NICHITE

Div : A
Roll No. 255842

UNDER THE GUIDANCE OF

MISS. Deepswini Chavan (HOD)

MISS. Mayuri Kamble (PROF)

SUBMITTED TO
UNIVERSITY OF MUMBAI
2025-26
 Certificate

This is certify that Ms. Manali Kiran Nichite and duty completed his Project Work for the degree

of Master Of Commerce ( Advanced Accountancy) under the faculty of Commerce in the

subject of his project is initiated, “A STUDY ON HOUSING FINANCE IN INDIA”

under my supervision. I further certify that the entire work has been

done by the learner under my guidance and that no part of it has been submitted previously for

any Degree or Diploma of any University. It is his own work and facts reported by her

personal findings and investigations.

………………………… …………………………

External Examiner Principal

………………………… …………………………

Project Guide Head Of Department

 DECLARATION BY STUDENT

The undersigned Manali Kiran Nichite hereby, declare that the work embodied in this project work titled
“A STUDY ON HOUSING FINANCE IN INDIA” forms my own contribution to the research
work carried out under the guidance of

MISS. Mayuri Kamble (PROF) is a result of my own research work and has not been previously
submitted to any other University for any Degree/ Diploma to this or any other University.

Wherever reference has been made to previous work of others, it has been clearly indicated as
such and included in the bibliography.

I, here by further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

Manali Kiran Nichite

Name and Signature of the learner

Certified by __________________________

Name and Signature of the Guiding Teacher

MISS. Mayuri Kamble (PROF)

 ACKNOWLEDGEMNT

To list who all have helped me is difficult because they are so numerous and the depth is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh dimensions in the
completion of this project.

I take this opportunity to thank the University of Mumbai for giving me choose to this project.

I would like to thank our Director (Education) and Principal Dr. Ashok Wagh for providing the
necessary facilities required for completion of this project.

I take this opportunity to thank our Co-Ordinator, for his moral support and guidance.

I would also like to express my sincere gratitude towards my project guide

MISS. Mayuri Kamble (PROF) whose guidance and care made the project Successful.

I would like to thank my College Library, for having provided various reference books and magazines
related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped me in the
completion of the project especially my Parents and Peers who supported me throughout my project .
Chapter No Content Page
No
1 Introduction

1.1.1 Meaning 1

1.1.2 History of Loan 1

1.1.3 Phases of Housing Finance 1

1.1.4 Housing development under Five Year Plan 3
1.1.5 Types of Loan 9
1.1.6 Home Loan Procedure 9
1.1.7 Advantages and Disadvantages of Home Loan 14
1.1.8 Eligibility Criteria 15
1.1.9 Documents Required for Home Loan 16
1.2 Statement of problem and Need of the Study 20
1.3 Rational Study 21
2 Research Methodology

2.1 Objective 23
2.2 Hypothesis 23
2.3 Scope of the study 23
2.4 Limitations 23
2.5 Research Methodology 23
3 Review Of Literature 27
4 Data Analysis, Interpretation and Presentation
4.1 Data Analysis and Interpretation 34
4.2 Hypothesis Testing 51
5 Conclusion and Suggestions 54
 References
 Appendices
 Questionnaire

 Abbreviations
 1. Introduction

1.1.1 Meaning
Home loans, also known as mortgages, use the borrower’s home for collateral. This
home can be a single- family house up to a four- unit property, as well as a
condominium or cooperative unit. Lenders fund home loans, but both the lenders
themselves and brokers who act on behalf of the lenders originate, or process, them.

1.1.2 History of Home Loan

Home loans came into widespread use in the United States in the boom years of the late
1800s. Since the average person usually cannot afford to pay cash for something as
expensive as a home and the cash down payment supplied by the buyer. These loans
were interest- only loans of between the purchase price of a home and the cash down
payment supplied by the buyer. These loans were interest- only loans of between 5 and
10 years that were due in full at the end of the loan term. Home owners would
refinance the loan at the end of each term or save up enough cash to pay off the loan in
the meantime. The Great Depression and its resulting foreclosures demanded a move
to the modern amortized mortgage, which configures payments into both principal and
interest portions. These 15-30 years loan pay off the home by the end of the loan term.

1.1.3 Phases of Housing Finance in India

The housing finance sector in India has no doubt, experienced unprecedented change
in its structure from its formulation stage. Indian housing finance has far moved from
the stage of being a solely government undertaking provided service during the 1970’s
to a very competitive sector with more than 45 housing finance entities providing
housing loans worth 781000 million to home buyers across India.

The housing finance revolution in India can be divided into five distinct phases:

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Table 1.1 Phases of Indian Housing Finance
Phase 1 Before 1970 Government Domination
Phase 2 1970- 1980 HUDCO and HDFC establishes
Phase 3 1980- 1990 Establishment of NHB
Phase 4 1990- 2000 Liberalization of interest rate
Phase 5 2000- present High Growth

The first phase began before 1970 when the solo provider of any house building
support was the government of Indian through its various social schemes for public
housing. The government implemented these schemes through state housing boards
which were responsible for allocating serviced land and houses to individual based on
the principles of social equity.

The second phase starts with the establishment of the public housing company,
Housing and Urban Development Corporation (HUDCO). HUDCO was created to
assist and promote housing and urban development programs with government
agency. HUDCO still plays an important role in implementing government initiatives
such as the Valmiki Ambedkar Awas Yojna which was launched by Government of
India in 2001- 02 to provide shelter or upgrade the existing shelter for the people
living below poverty line in the urban slums. Another important private player, HDFC
was establishment in 1977. HDFC pioneered in individual lending, based on market
principles. HDFC today is one of the largest home loan providers of the country and its
success displayed that financing homes can be a very profitable business.

The third phase covers the decade of 1980s, which is marked by the establishment of
the country’s housing finance regulator NHB in 1987. The era also involved the
government in directing various agencies like insurance companies, commercial banks
(Under priority lending requirements which allowed banks to allocate 1.5 percent of
their incremental deposit to housing under RBI guidelines), provident funds and
mutual funds to invest part of their increment sources on housing. Two Insurance

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 companies, LIC and GIC, started supporting the sector both directly through their
newly established HFCs and indirectly by investing a proportion their net accretion sin
socially oriented schemes.

The fourth phase is the era after liberalization and is characterized by dramatic
changes in pricing of loans. Before 1994, the pricing of home loans was regulated by
the NHB based on a differential rate charged according to the size of the loan. This
policy was amended in 1994 and providers were free to charge market rates for the
loans above 25000. The fourth phase saw a dominance of fixed interest rates, but
variable rate offers started emerging at the end of the decade.

The fifth Phase of rapid growth in the sector started after the millennium. Home loan
disbursement rapidly grew during the first few years of this phase. The lower interest
rate regime, rising disposal incomes, stable property prices and financial incentives
made housing
finance an attractive business. Home loan disbursement grew to 768192 million in
2005 from 147012 million in 2001. The year 2003 witnessed an annual growth rate of
76 percent in loan disbursement (Reports on trend and progress of housing in India
2000- 2013, NHB)

1.1.4 Housing development under Five Years Plans

The Housing Industry has been placed under Priority Sector Industry by the Central
Government. The Housing Financing Scheme was emphasized in the Five- Year
Plans, especially for the poor and weaker sections of society. In India, almost all the
expenditures are guided through plans and the housing sector is also not an exemption.
The Government of India allocated funds for Housing through various Five-Year Plans.

Housing is one of the basic needs of human beings, keeping this point in view, the
Government of India right from the First Five Year plan allocates funds to the housing
sector. To tackle the housing problems in the country, the Central Government has
initiated its Housing programmes and policies from time to time over various plans and
the State Government implemented them. Five- Year plans have been formulated by

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the Government for the developments undertaken from 1st to 12th Five Year Plans are
given below:

First Five Plan (1951-1956)

The First Five Year Plan’s main objective was to raise the minimum standard of
housing. It suggested reducing the construction cost of houses, especially labour and
material cost, by encouraging economical architectural and structural designs. Due
consideration was given to research in the field of construction materials and
techniques. The thrust of the research was on optimum utilization of indigenous inputs
for the manufacturing of construction materials. The plan gave due attention to the
role of private participation in solving the problem of the housing shortage. During
this plan period , two social housing schemes, namely the integrated subsidized
Industrial Housing Scheme (1952) and the Low-Income Group Housing Scheme
(1954) were launched during this plan period.

Second Five Year Plan (1956-1961):

During the Second Five Year Plan, subsidized industrial housing schemes for the low-
income group were further strengthened. Apart from the schemes for slum clearance
and slum improvement, new schemes like Plantation Labour Housing Scheme (1956),
Village Housing Scheme (1956), Land Acquisition and Development Scheme, and
Middle-Income Group Housing Scheme (1959) were introduced. Specific housing
schemes, handloom weavers and
displaced, etc. were introduced. Specific housing schemes, handloom weavers and
displaced, etc. were introduced in rural areas for the benefit of Schedule Tribes, and
Backward Classes. Housing programs for employees and workers of various State
Government / Central Government departments were carried out on a large scale.
During the plan period, the Government revised its policy of giving direct loans to the
LIG (Low Income Group) category for building houses. It also stated assisting state
governments and local authorities to develop sites and plots for sale to beneficiaries
belonging to the LIG category. Public Financial Institution have been associated with
Government housing programs for the Second Five Year Plan period.

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Third Five Year Plan (1961- 1966)

The third five-year plan specified the need for land acquisition and the control of the
real estate market. The extent of finance provided was usually a maximum of 80% of
the cost of construction and this varied from plan to plan. In the case of land
acquisition and development plans, financial assistance was given to the local bodies/
urban Property Department. Towards the end of this plan, Housing Boards stated
programs to eradicate the housing problem of low- income groups and slum categories.
To find a solution to the housing shortage in the state, respective state governments
increase the number of State Housing Boards funds. City level organization like
Development Authorities, Urban Improvement Trusts, and Slum Clearance Board
(SCB) were set up by many states.

Fourth Five Year Plan (1969- 1974)

In the Fourth Five Year Plan period, more emphasis was placed on low-cost housing
schemes dure to high cost of construction of houses, inadequate contribution from
private and cooperative sectors to meet the growing needs of the poorer sections and
deteriorating condition of old slums. A special public agency called Housing and
Urban Development Corporation (HUDCO) was started during this plan period.
Various state governments had funded Housing Boards through state budgetary
allocations and slum clearance schemes. State Housing Board began to issue
debentures on State Government guarantees to institutions such as nationalized banks
funding. It provided financial assistance to various Housing Board and Cooperative
Housing Societies across the country.

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Fifth Five Year Plan (1974- 1978):

Housing Finance Development Cooperation (HDFC) was started in the fifth-year plan
period. It was a significant addition to the housing sector. A scheme for improving
housing was also started during the planning period. The Minimum Needs Program
(1974) and the Twenty- point Program (1975) were introduced to provide housing to
the poor and construction of houses through wage employment, apart from creating
minimum health conditions in the slum areas. Accordingly, steps were taken to
improve the environmental conditions to provide housing sites for landless laborers
and weaker sections of rural areas as well as urban slums.

Sixth Five Year Plan (1980-1985)

The Sixth Five Year Plan focused on the provision of shelter and services for the poor.
The scheme seeks to utilize the resource of the public sector in such a manner to
achieve maximum results and provide the maximum possible houses to the entire
homeless population.

Seventh Five Year Plan (1985-1990)

The Seventh Five Year Plan identified the problems faced by the urban poor and
introduced the Urban Poverty Alleviation Plan. The National Housing Policy (NHP)
was announced during this plan. The long-term goal of the NHP was projected to
eliminate homelessness, improve inadequate housing conditions and provide
minimum level of basic services and facilities to all. The plan called for the setting up
of fair and diversified institutional credit for housing development. It also stressed the
need of strengthening HUDCO and creation of new cooperative building societies.

Eight Five Year Plan (1992- 1997)

During the Eight Five Year Plan period, an enabling strategy was attempted to create
an enabling environment for the housing activities by removing various constraints and
providing direct assistance to the disadvantaged groups of poor, self- employed,
physically challenged widows, and single women. The new housing and housing
policy was unveiled in 1998 to ensure “shelter for all” and better quality of life for all

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citizens by hamessing the untapped potential in the public, private and domestic
sectors. The main objective of the policy was to create strong public- private
partnership to tackle housing problems. Under the New policy, the Government
proposed to give financial concession, introduce legal and regulatory reforms and
create and enabling environment for the development of the housing sector. The
policy emphasized the role of the private sector as another participate in promoting
investment in land
connectivity, housing construction and infrastructure. Ever since additional emphasis
has been placed on private initiatives in housing development. Private investment in
housing has grown rapidly, with the rise of real estate developers, primarily in
metropolitan cities and other rapidly growing townships.

Tenth Five Year Plan (2002-2007)

The National Common Minimum Program (NCMP) has said that housing for the
weaker section in rural areas will be increased in big way. Therefore, the tenth plan
has the suggested provision of free housing only to landless SC/ ST families and
shifted to credit- cum subsidy scheme for other BPL families. The repeal of the Urban
Land (Roofing and Regulations) Act, 1976 is an important step towards reform of the
urban land market. After the repeal of the Central Law, many State Governments have
also replaced the state level law.

Eleventh Five Year Plan (2007-2012)

To improve the quality of life in urban areas, the eleventh five-year plan (2007- 2012)
emphasizes the need for better housing stock through urban renewal, In-situ slum
improvement and the development of new housing Stock in existing cities as well as a
new township. In addition, the Bharat Niman Program has also given priority to end
the problem for need of shelter. The program targeted for construction of 60 lakhs
houses from 2005-2009. The housing component under the program was implemented
parallel to the Indira Awas Yojana. In Eleventh Five Year Plan, the focus was on
targeting the poorest of the poor, targeting the remaining housing shortages, among
other interventions.

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Twelfth Five Year Plan (2012-2017)

The Twelfth Five Year Plan emphasize affordable housing is particularly important
concerns for a weaker group that meets their needs in the absence of a viable model.
India can meet the challenges through a set of policies and incentives that will bridge
the gap between price and affordability. This will enable a sustainable and
economically viable affordable housing model for both government housing agencies
and private developers. India especially needs to encourage rental housing as an option
for the poorest of the poor, who may not be able to affordthe house even for these tasks.

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1.1.5 Types of Home Loans

The two most widely used types of home loans are fixed rate loans and adjustable-
rate loans. A fixed rate loan keeps the same interest rate for the life of the loan, which
means that the principal and the interest portions of the monthly payment stay the
same, Adjustable- rate mortgages begin with a lower interest rate of the first few years
and the adjust to market rates after the initial period is over. Caps are placed on how
much the rate can adjust at any given time, as well as on how much the rate can
increase over the duration of loan. This means the principal and interest portions of the
monthly payment change repeatedly through the duration of loan.

There are different types of home loans tailored to meet our needs. Here is a list of few:

1) Home Purchase Loans: This is the basic home loan for the purchase of a new home.
2) Home Improvement Loans: These loans are given for implementing repair
works and renovations in a home that has already been purchased.
3) Home Construction Loan: This loan is available for the construction of a new home.
4) Home Extension Loan: This is given for expanding or extending an existing
home. For eg: addition of an extra room etc.
5) Home Conversion Loan: This is available for those who have financed the
present home with a home loan and wish to purchase and move to another home
for which some extra funds are required. Though home conversion loan, the
existing loan is transferred to the new home including the extra amount required,
eliminating the need of pre- payment of the previous loan.
6) Land Purchase Loans: This loan is available for purchase of land for either
construction or investment purposes.
7) Bridge Loans: Bridge loans are designed for people who wish to sell the
existing home and purchase another one. The bridge loans help finance the new
home, until a buyer is found for the home.

1.1.6 Home Loan Procedure

With the increasing competition in the market for offering Home Loans, the otherwise
tedious process of availing loans has gone a tremendous change in the recent years.
However, there is still some process involved in the procurement of home loan. It is

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advisable for borrower to first look at the different stages required for obtaining a
Home Loan. Here is step by step procedure of procuring home loan.
Step 1: Application form

The first step involved in applying for home loan is the procurement of application
form from the HFC of applicant’s choice. The Performa of application every HFC
(Housing Finance Companies) is different from the other but about 80% information
required to be furnished is the same. Along with the application from necessary
documents like address proof, age proof, proof of income, bank balance etc, are also to
be furnished is the same. Along with the all these document HFCs also ask for
processing fee of the home loan that varies 0.25% to 0.50% of the total loan amount.

Step 2: Personal Discussion

After successfully filling the application from and submitting it to the authority the
next step is face to face with bank or HFC where you have applied for the home loan.
The bank first evaluates the papers submitted and summons the applicant for the
personal discussion regarding the home loan applied for.

Step 3: Bank’s Field Investigation

The next step is the field investigation done by the HFC or banks. They send
representatives to the existing residence of the applicants or their offices for the
validation of the documents submitted. This is the essential part for the banks to
establish the trust with the applicants.

Step 4: Credit appraisal by the bank and loan sanction

This is the make-or-break stage of the process. The bank or HFC will establishes
repayment capacity based on applicant’s income, age, qualification, experience,
employer, nature of business etc, to access credential. The bank can refuse loan
application if any discrepancy is found at this stage. But if everything goes according
to the conditions negotiated by the parties then the bank or HFC sanction the loan that
may be unconditional or with some conditions levied.

Step 5: Offer Letter

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After the sanction of the Home Loan, the applicant gets offer letter from the bank or
HFC with the following details.
Loan amount, Rate of interest, Fixed or variable ROI, Tenure of the loan, Mode of repayment.
General terms and conditions of the loan, Special conditions etc. If the terms and
conditions are agreed the applicant has to sign the duplicate copy of the offer letter
and that is to be submitted to the Bank or HFC.

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Step 6: Submission of legal documents & legal check

The bank or the HFC now asks for the legal documents of the property involved for
applying home loan. All the legal documents of the property involved have to be
submitted. The bank does all the legal checks on the property. The documents remain
with the bank until the repayment of the home loan.

Step 7: Technical/ Valuation check

The Banks or HFC then go about the technical valuation of the property. The experts
of the bank visit the site to be purchased and value it as per the existing rules and
regulations. The valuation of the property is the most important aspects that the bank
considers before financingany property.

Step 8: Registration of property documents

After the legal and technical valuation of the property the draft documents has to be
cleared by the lawyer and stamping and registration of the documents is needed.

Step 9: Signing of agreements and submitting post- dated cheques

Now it is time of signing the final agreement of the home loan. After the signing
of the agreement a bunch of post- dated cheques are to be submitted as agreed on the
agreement.

Step 10: Disbursement

It is time for the final Disbursement of the Home Loan. After the bank or HFC ensures
financing the property is involves no risk they pay the final amount that is agreed
upon. The mode of payment varies from full to part payment. In the case of under
construction property the mode is part payment and in the case of ready possession
properties disbarment is full and final.

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Graph 1.1: Housing Growth Trajectory

Graph 1.2: Housing Shortage in India

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 Table 1.2: Low Income Housing in India, a big business opportunity

Source: Monitor; CRISIL- Budget Analyst, 2010

1.1.7 Advantages and Disadvantages of Home Loan

Advantages of Home Loan

1. Home Ownership – A home loan allows you to purchase your own home, which
can be a significant accomplishment and provide a sense of pride and security.
2. Tax Benefit – Home loans come with tax benefits, where the interest paid on
the loan can be claimed as a deduction from your taxable income. This can help
lower your tax liability and increase your savings.
3. Building equity – As you make payments on your home loan, you are also
building equity in the property. This can be helpful if you ever decide to sell
your home or refinance your loan.
4. Forced savings – A home loan can be a way to save money, as you are forced
to make regular payments towards the loan. This can help you establish a savings
habit and build a nest egg for the future.
5. Appreciation – Real estate has historically appreciated over time, meaning the
value of your home can increase over time. This can make your home a
valuable asset that can generate wealth.

Disadvantages of Home Loan

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 1. Long term commitment – A home loan is a long- term commitment, requiring
regular payments over a period of several years. This can be a significant
financial burden, and make it hard to adjust to unexpected changes in your
income or expenses.
2. Interest cost – Home loans come with interest charges, which can add a
significant amount to the overall cost of the home. Over time, the interest cost
can add up, making the home much more expensive than the original purchase
price.
3. Risk of foreclosure – If you’re unable to make your loan payments, the lender
may foreclose on the home, which means they can take possession of the
property. This can be devastating event and result in a significant financial loss.
4. Limited flexibility – A home loan can limit your financial flexibility, as a
significant portion of your income will be dedicated to loan payments. This can
make it difficult to save money or make other major purchases.
5. Credit Score Dependent – Your credit score plays an important role in getting
approved for a home loan and determining the interest rate. If your credit score
is low, you may have a harder time getting approved, or may have to pay a
higher interest rate.

1.1.8 Eligibility criteria of Housing finance in India

The individual, who is planning to buy a house in India, can apply for home loan,
whether he is “Resident” or “Non-resident” individual. The individual can apply for
loan even before the selection of the property which is to be purchased. Once an
individual decides the maximum amount that he can put into the property, all Housing
Finance Institution (HFIs) can help to plan his budget by calculating his
“Affordability” which is based on his individual or clubbed income.

The loan applicant has an option of having co- applicant to his loan to enhance his
loan eligibility. All HFIs lay down conditions on who can be co- applicants. All co-
owners to the property need to be co- applicants to the loan necessarily. But any minor
cannot be co- applicant as he is not eligible to enter into contract as per law. HIFs do
not permit friends or relatives who are not blood relatives to take property jointly.

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 Income of co- applicants as decided by HIFs can be clubbed together to get higher
loan eligibility.

The following table shows some acceptable relationships of co- applicants for
clubbing of income :-

(a) Husband – Wife (Yes)

(b) Parent – Son (if only son) (Yes)
(c) Parent – Daughter (if only daughter) (Yes)
(d) Brother – Brother (if currently staying together and intend staying together
in new property) (Yes)
(e) Brother – Sister (No)
(f) Sister - Sister (No)
(g) Parent – Minor Child (No)

1.1.9 Documents Required for Home Loan

Documents Required for Salaried and Self- Employed Applicants

1. Completed and signed home loan application form

2. Proof of Identity: (Any one of the below)
 PAN Card
 Passport
 Aadhaar Card
 Voter’s ID Card
 Driving License
3. Proof of Age: (Any one of the below)
 Aadhaar Card
 PAN Card
 Passport
 Birth Certificate
 10th Class Marksheet
 Bank Passbook
 Driving License
4. Proof of Residence: (Any one of the below)
 Bank Passport

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  Voter’s ID
 Ration Card
 Passport
 Utility bills (Telephone Bill, Water Bill, Gas Bill)
 LIC Policy Receipt
 Letter from a recognized public authority verifying the customer’s address
5. Proof of Income for Salaried:
 Form 16
 Certified letter from Employer
 Payslip of last 3 months
 Increment or Promotion letter
 IT returns of past 3 years
6. Proof of Income for Self Employed:
 Income Tax Returns (ITR) of last 3 years
 Balance Sheet and Profit & Loss Account Statement of the
Company/Firm (duly attested by a C.A.)
 Business License Details (or any other equivalent document)
 The license of Professional Practice (For Doctors, Consultants, etc.)
 Registration Certificate of Establishment (For Shops, Factories &
Other Establishments)
 Proof of Business Address
7. Property documents:
 Receipts of payments made to the developer (in case of a new house)
 Allotment Letter / Buyer Agreement
 Title Deeds including the chain of previous property documents (in
case of house resale)
 A copy of the sale agreement (if already executed)
 Receipt of initial payment made to the house seller
 Title Deeds of the plot (in case of house construction)
 A detailed estimate of house construction by an Architect / Civil Engineer
 A copy of the plans, approved by the Local Authorities
 Proof of no encumbrances on the property


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 
8. Other Documents
 Passport size photographs of all the applicants / co- applicants (to be
affixed on the application form and signed across)
 Proof of own contribution
 Last 6 months bank statements showing the repayment of ongoing loans (if any)
 The details of ongoing loans (such as the outstanding amount, monthly
instalments, purpose, remaining loan tenure, etc) in the name of an
individual or business entity (if any)
 A cheque for processing fee favouring the home loan provider.

For Salaried:

 Employment Contract / Appointment Letter if the current employment

is less than a year old.

For Self Employed:

 Business Profile
 Latest From 26 AS
 A list of Directors and Shareholders with their individual shareholding
certified by a CA / CS in case of the business entity being a company
 Partnership deed in case of the business entity being a partnership firm
 Memorandum and Articles of Association of the

Company List of Home Loan Documents Required for NRIs/PIOs

Applicants

1. KYC Documents:
 Passport with VISA stamps / PIO Card
 Proof of Address mentioning the current overseas address
2. Proof of Income for Salaried:
 Work Permit
 Employment Contract / Appointment Letter / Offer Letter (Duly attested by
employer/ consulate / foreign office / embassy in case it is in any other
language)
 The labour card/ identity card (documents in language other than English

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 must be translated in English and countersigned by the consulate)
 Last 3 months Salary Certificate / Slips (in English) specifying name, date of
joining, designation and salary details for applicants working in the Middle
East
 Last 6 months Bank Statements showing salary credits NRE / NRO account
(if any) Credit Bureau Report (in case available in the country where you are
residing)
 Duly acknowledge copy of last year ITR (except for NRIs / PIOs located in
Middle East countries and employees in the Merchant Navy)

 A copy of Continuous Discharge Certificate (CDC) for applicants employed

in the merchant navy
 Form P60/P45 and latest employment contract (for salaried)
If any previous loan from other Banks/Lenders, then Loan A/C statement for
the last 1 year
3. Proof of Income for Self Employed:
 Business License / license of Professional Practice (for Doctors, Consultants, etc.)
 Registration Certificate of Establishment ( For Shops, Factories & Other
Establishments)
 Business proof of address
 Proof of income in case of self- employed professional/ businessmen
 Last 3 years Balance Sheets and P&L Accounts audited or certified by a C.A.
 Last 3 years ITR (except for NRI/PIO located in Middle East countries)
 Last 6 months Bank Statement of overseas account in the name of individual
and/or company/unit
4. Property documents
 Original title deeds tracing the title of the property
 Encumbrance Certificate
 Agreement for sale/ sale deed/ detailed cost estimate from the Architect/
Engineer for property to be purchased/ constructed/ extended/ improved
 A copy of approved drawings of proposed construction/ purchase/ extension
 Receipts for payments made for buying the dwelling unit
 ULC clearance/ conversion order, etc
 Receipts for investing the margin money through normal banking channels

19
 from the NRE/NRO accounts in India
 Latest tax paid receipt
 Allotment letter from the co- operative society/ association of apartment owners
Documents Required for Home Loan Transfer

1. KYC Documents: Aadhaar Card, PAN card and Proof of Residence (Utility
Bills, Ration Card, Passport, etc.)
2. Proof of Income: Salary slip and Form 16 (for salaried), previous years ITR
along with necessary financials (for salaried, self- employed and professionals)
and last 6 months bank statements
3. Additional Documents: Latest principal outstanding letter, list of documents
from existing financer and repayment track record

1.2 Statement of Problem and Need of study

Housing Problem in India

1. Problem related to too many formalities

For getting a home loan, the borrower has to provide certain documents which
are required for a home loan, in the absence of any documents, the loan
application could be rejected. Sometimes a collection of too many documents
creates problem for the borrowers..
2. Problems related to Higher rate of Interest and its effect on savings
The borrowers take the interest rate on their housing loans seriously as it
impacts the final cost of the house and also the EMIs outgo. The frequently
increasing home loan interest rate is one of the serious problems of the
borrowers and it also affect their savings.

Need of the Study

This Study has been conducted to unravel the intricate dynamics of housing markets,
financial systems, and societal well- being. This study’s significance lies in its potential
to inform policy formulation for addressing housing affordability challenges, mitigate
risks associated with mortgage lending and financial stability, foster innovative and
inclusive financial models, comprehend the interplay between housing and economic
growth, and enhance our understanding of the socio- economic implications of
housing finance decisions, ultimately contributing to informed decision making for

20
individuals, communities, and policymakers in building resilient and sustainable
housing ecosystems.

1.3 Rational of Study

1. Economic Significance: Housing finance plays a pivotal role in the overall
economy. It not only promotes homeownership but also contributes significantly
to GDP growth, construction industry expansion, and job creation.
2. Market Competition and Dominance: Studying banks offers insights into the
dynamics of competition within the housing finance industry and the strategies
employed by market leaders.
3. Policy Implications: The Indian government has introduced several policies and
incentives to promote affordable housing and financial inclusion. Understanding
how banks align with these policies can inform policymakers and regulators.
4. Consumer Impact: Housing finance directly affects the lives of millions of
Indian citizens. Analyzing customer experiences, satisfaction levels, and the
impact of housing finance on homeowners can provide valuable insights into the
social impact of these institutions.
5. Investor and Stakeholder Interest:. Researching their financial performance, risk
management, and future prospects is of interest to shareholders, potential
investors, and the broader financial community.
6. Strategic Decision-Making: The study can assist executives and managers in
making informed strategic decisions. It can identify areas of strength and areas
needing improvement.
7. Academic Contribution: Research on these prominent housing finance
companies can contribute to the academic understanding of finance, banking,
and housing sectors. It can serve as a reference for future researchers and
students.
8. Market Trends and Challenges: Understanding the challenges faced, as well as
the strategies they employ to address these challenges, can provide valuable
insights into broader market trends and dynamics.
9. Technology and Innovation: The housing finance sector is witnessing rapid
technological advancements. Analyzing banks are adopting and leveraging
technology can provide insights into the digital transformation of financial

21
 services.
10. Social Responsibility and CSR Initiatives: Both companies are involved in
corporate social responsibility (CSR) initiatives related to housing and
community development. Studying these initiatives can shed light on their
commitment to social welfare.
11. Regulatory Compliance: Housing finance companies are subject to regulatory
oversight. The study can assess how bank comply with these regulations and
highlight areas where further regulatory attention may be needed.

22
 2. Research Methodology

2.1 Objective

1. To study the concept of housing finance in India.

2. To understand the problem of higher interest rates and its effect on savings.
3. To analyse how too many formalities act as barriers to homeownership.
4. To understand the behaviour and preference of consumers when seeking
HousingFinance.

2.2 Hypothesis

H0 There is no correlation between higher interest rate and

savings. H1 There is a correlation between higher interest

rate and savings.

H0 There is no significant relationship between the number of formalities and barriers to

homeownership.

H2 There is a significant relationship between the number of formalities and barriers to

homeownership.

2.3 Scope of the study

The study is focused on interest rates of housing finance and its effect on savings. It
also states the problem of too many formalities faced by customer while taking a
Home Loan.

2.4 Limitations

1. This research study was time bound and only certain criteria were taken up for study.

2. Some of the respondents might have been biased in their responses as it depends
on their experience gained by them during processing of such loans.

2.5 R.M

Introduction to Research Methodology

23
Research is a careful and detailed study into a specific problem, concern, or issue
using the scientific method. Research in common parlance refers to a search for
knowledge. One can also define research as a scientific and systematic search for
pertinent information on a specific topic. In fact, research is an art of scientific
investigation. Some people consider research as a movement from the known to the
unknown. It is the pursuit of truth with the help of study,
observation, comparison and experiment. In short, the search for knowledge through
objectives systematic method of finding solution to a problem is research.

“Research comprises defining and redefining problems, formulating hypothesis or

suggested solutions, collecting, organising and evaluating data, making deductions
and reaching conclusions; and at last, carefully testing the conclusions to determine
whether they fit the formulating hypothesis”

- Clifford Woody

Research methodology is a science of studying the research in a scientific and

systematic way. Abraham Kaplan defines it as: Research methodology is “The
description, explanation & justification of various methods of conducting research”.
Research Methodology has many dimensions, research methods are one of the parts
of Research Methodology. The scope of Research Methodology is wider, as research
methodology not only considers research methods but also the logic behind the
methods which are used. So that research results are capable of being evaluated
either by the researcher himself or by others. (C. R. Kothari, 2004).

a.) Research Instrument – Structured Questionnaire

It is a tool that consist of a set of standardized questions with a fixed scheme, which
specifies the order of the questions, for collecting the information from respondents.
This tool was selected for the data collection for this study.

b.) Sample Size

Sample size is a statistical concept that involves determining the number of

observations or replicates ( the repetition of an experimental condition used to
estimate variability of a phenomenon ) that should be included in a statistical sample.

24
It is an important aspect of any empirical study requiring that inferences be made
about a population based on a sample. Essentially, sample sizes are used to represent
parts of a population chosen for any given survey or experiment.

c.) Sampling Method – Snowball

The sampling method which involves primary data sources nominating another
potential primary data sources to be used in the research. In other words, snowball
sampling method is based on referrals from initial subjects to generate additional
subjects. Therefore, when applying this sampling method members of the sample
group are recruited via chain referral.
Also, snowball sampling is the most popular in business studies focusing on
collecting data on a specific parameter. Once you have contact details of one the
respondent, she/he can suggest you the other respondent as per his/ her knowledge
for the purpose of further research by providing contacting details of another
respondent.

d.) Data Collection

The data was collected from two sources primary and secondary sources of data.

Primary Data:

Primary data in research refers to original and firsthand information that researchers
collect directly from sources. This type of data is specific to the research question or
objective and is not previously published or documented by others. There are several
methods for collecting primary data, including surveys, experiments, observations,
interviews and focus groups. Key characteristics of primary data are originality,
relevance, control, reliability. In this study the data is collected form respondents
through Questionnaire, Personal interview and even via google form.

Secondary Data:

Secondary data in research refers to pre-existing data that researchers collect from
sources other than their own direct data collection efforts. This type of data has been
previously gathered, recorded and published for purposes other than the current
research study. Secondary data is used to analyze, interpret, and draw conclusions

25
relevant to the specific research questions or objectives. Secondary data can be a
valuable resource in various research fields, as it can save time and resources
compared to collecting primary data. Key characteristics of secondary data are source
of data, purpose, accessibility, time and cost-efficiency.

Secondary sources are the other important sources through which that data was
collected. These are the readily available sources of the data where one doesn’t need to
put much effort to collect it because it has already been collected by some researcher.
In this study secondary data is used like the working experience, Articles, Magazines,
Company websites, Research Papers, and MBA projects.

26
 3. Review of Literature

Literature review is a process of reading, analyzing, evaluating, and summarizing

scholarly materials about a specific topic. Its purpose is to summarize, synthesize
and analyze the arguments of others. The literature review is a critical look at the
existing research that is significant to the work that you are carrying out. Some
people think that it is a summary. This is not true.

1. Bandyopadhay has demonstrated the importance of borrower specific

characteristics as well as local situation factors in determining the demand
prospects as well as the riskof credit, loss on residential housing loan repayment
behaviour in India. This paper attempts to find out the critical factors that drive
demand for housing and its correlation with borrower characteristics using a
panel regression method. (Bandyoupadhy, 2011)
2. Subburaj has articulated that the housing sector plays an important role in the
economic development of the country. It is important to know about the home
loan agreement clauses before signing, as it will help the borrower to bargain
with the lenders. The result indicated that the majority of the consumers are not
aware about the various clauses in the home loan agreement and majority of the
customers do not know the importance of majority of the customers do not
know the importance of reading it. (Subburaj, 2010)
3. Manoj has opined that formal system for housing finance in India is primarily
dominated by two major types of institutions viz. Commercial banks (CBs) and
Housing finance companies (HFCs). This paper aims at (i) making an overall
review of the emergence of the institutional system for housing finance in India
and to trace the broad pattern of its composition over the years. ii) studying the
major group iii) suggesting suitable strategies for enhanced operational
efficiency of HFCs in India. (Manoj, 2010)
4. Chellam has analysed the role of commercial banks in providing housing
finance and also analysed problems being faced by the beneficiaries in getting
housing loan from SBI in Sivagangai District. (Chellam, 2009)
5. Rani has articulated that a home loans is a long term commitment of 15-20
years, several factors like expertise, quality of service commitment and

27
 transparency right through the loan procedure the line print etc. The main
objective of the bank is to promote and establish the housing finance
corporation and scheduled commercial banks. After review of earlier studies on
housing finance it is found that very few studies
considered this aspect of finance and other studies are mostly on problems of
borrowers and macro level analysis of performance of financial institutions and
banks. It reveals the need of research on housing loan policy of a bank and its
comparative analysis with that of other banks. So, the same issue has been
analysed in this paper. (Rani, 2012)
6. Patel had explained that housing finance has been an integral part of banks
priority sector lending. Every nationalized bank is expected to allocate a
specific percentage of deposits for housing finance every year, i.e., to provide
housing finance to weaker sections of society from 1975 under the twenty-
point programme. For providing planned and systematic housing finance to
customers many banks have established their own housing finance subsidiaries.
(Patel, 1996)
7. Devlin studied the choice criteria followed by consumers in choosing the
financial institution and the importance of demographic factors and customers
maturity in affecting choice decision. Using judgemental survey, questionnaire
was administered to respondents that generated 4200 responses from
individuals who had chosen a home loan institution. From all the criteria that
were selected in the study from previous literature, it was found that
professional advice is the most cited choice criteria. It was also found that
females choose a mortgage primarily from an institution where they already
have an account. Individuals from lower social class and low household
income, Asian ethnicity, location whereas those from higher social class and
high household income choose on the basis of previous mortgage. Individuals
from non- white ethnicity choose mortgage institution on the basis of image
and reputation of the provider. They also consider service quality while
choosing. Individuals with low education choose on the basis of cash back
being a part of the product features, attractive interest rate and availability of
discounts. It was seen that individuals with high financial maturity choose on

28
 the basis of previous mortgage, interest rates and those with low financial
maturity choose on the basis of professional advice. (Devlin, 2002)
8. Arunodayam and Thangavel reviewed the problems of Housing policies,
performance of selected housing finance institutions and banks, identified the
role and method of supplying credit through housing finance companies. The
study was conducted in the city of Chennai on a sample of 300 home loan
borrowers of HDFC, LIC housing finance ltd, ICICI bank ltd. It was observed
that average number of family members opting for home loan is 4. Higher
educated people, respondents with middle and higher income avail more loans.
The average loan amount availed by respondents is Rs. 4.6 lakhs and
it is seen that spouse income also supports the household. Further, it is
observed that selected institutions account for 67 percent of the home finance
loans. It is also observed that majority of the respondents are not happy with the
interest rate charged by housing finance institutions in spite of the tax benefits
offered by the government. Majority of respondents support fixed rate of
interest and feel steady repayment is not a burden. (Thangavel, 2007)
9. Kaur R conducted the study to analyse the level of customer satisfaction in
regard to services provided by HDFC (private sector) and GIC housing finance
(public sector) institutions. The data was collected through questionnaire
administered to 100 respondents selected conveniently, 50 from each
institution. It was observed maximum amount of loan was disbursed by HDFC
and maximum loan taken by businessmen followed by government employees.
It was then analysed that the respondents from GIC HF had borne high cost for
availing loan. Most of the agriculturists followed by private employees have
borne high cost for availing loan. Most of the respondents from GIC HF,
agriculturists feel that high rate of interest is charged. Most of HDFC
respondents, government employees are satisfied with the loan provided.
Respondents from GIC HF, most agriculturists and individuals having income
from 2 to 3.5 lakh were of the opinion that they have to fulfil more formalities.
Respondents from HDFC, most businessmen and respondents having income up
to 3.5 lakhs were of the opinion that they faced delay in processing of loan. (R,
2013)

29
10. Nazrine N in her study ‘A study on awareness4and satisfaction of borrowers of
housing finance in tiruchirappalli’ the objectives were to describe housing
finance scenario in India, To examine the loan seeking behaviour of the
borrowers of the housing finance. Major focus of her project was on
Tiruchirappalli district of Tamil Nadu Data collection was done through
interview schedule, sampling procedure – 500 borrowers of taluk. Statistical
tools used were chi- square test, ANOVA, simple correlation. The results of the
study have brought out the borrower satisfaction and awareness. (Nazrine,
2017)
11. Reddy Sukumar in his study ‘A study on housing finance in Chittoor district,
Andhra Pradesh and the objectives were to review the growth of housing
finance in India, to examine the loan appraisal practices of Housing Financial
Institutions. Two sets of detailed structures schedules were prepared to collect
the opinions from the borrowers as well as the officials concerned. Statistical
tools used were averages, percentages, ANOVA, T-test, chi-square. It is clearly
understood that majority of sample borrowers are satisfied with their lending
agency. (Sukumar, 2016)
12. Berstain David examined in his study taken from 2001 to 2008 that in this
period there is increase use of home loans as compared to private mortgage
insurance (PMI). He has divided his study into four sections. Section I describes
why people are going more for home loans than PMI, the main reason for this
that now home loans market provides piggy bank loans for those people who
don’t have 20% of down payment. Section II tells the factors responsible for
the growth of home loans and the risks on shifting toward home equity market
without any PMI coverage. PMI can protect lenders from most losses’
environment. Section III tells the measures in changes of type of loans. For this
he has taken the data from the 2001 and 2020 AHS a joint project by HUD and
census. Section IV describe the financial status of single-lien and multiple-lien
households and for this he has taken the survey of consumer finance and show
that financial position is more weaker in multiple loans than the single loans.
(Berstain, 2009)
13. Vandell Kerry D analysis the sharp rises and then suddenly drops down home

30
 prices from the period 1998-2008. Changes in prices are for the reasons pas
such economic fundamentals, the problem was not subprime lending, but the
Fed’s dramatic reductions, then increases in interest rates during the early mid-
2000, the housing-boom was concentrated in those markets with significant
increase. Finally, given a model of the factors affecting results for 200 -2005,
we predict that 2006 results will continue to show an increase in the percentage
of loans that are higher priced when final numbers are released in September
2000. (Vandell, 2008)
14. Marwaha J.S in his article “Affordable housing loans and options, a critical
review of Housing Development Programmes in India” (1990) has critically
examined issues and options with regard to the provision of housing and
affordability thereof, particularly for the economically weaker sections and
low-income groups of population in India, taking cognizance of the various
policies and programmes in the five-year plans of the country. Although housing
policy of the government is to provide housing for the poor, yet the major
beneficiaries of the various housing programmes seem to be middle and higher
income groups, mainly due to non-affordability of the poor. Further, the problem
of housing is not only quantitative. About 80% of the rural houses have no
basic amenities such as drinking water, bath and latrines, facilities of disposal of
garbage and other wastes etc. (Marwaha, 1990)
15. Mahadeva M. and Thara Bai, in their paper entitled “Housing Finance: can
commercial banks meet people’s Housing Finance needs” (2001), have made
an attempt to review
the overall policy environment for commercial banks to earmark and provide
direct housing finance to individual households and indirect term loans to
public housing agencies. Attempt is also made to throw light on the sub-targets
fixed to spread the benefit of housing allocation to the needy and neglected
sections of the society. The rural areas have continued to suffer without
adequate investment in housing activities, while urban and semi urban areas
have continued to garner the housing allocation of commercial banks on a large
scale. The present investment criteria of commercial banks are illogical under the
circumstances of high level of housing deprivation coupled with huge

31
 dilapidated housing stock. Hence, it is necessary to hike the
allocations1exclusively for rural areas and to evolve a need-based resource
distribution system. Further, the loan cost gap needs to be minimized and funds
be lent at lower rates of interest to stimulate housing activities among low- and
middle-income groups. (Bai, 2001)
16. Akbar Khan J., in his article entitled “Karnataka’s Housing: Role Model for other
Indian States” (2000), telling the success story of Karnataka in resolving the
“Ghar or Makaan” Problem, considers it to be a role model to other states.
Through the housing sector in the country has been witnessing an annual
growth of 30%, Indian continues to face an acute shortage of housing units, as
the demand far exceeds supply. To deal with this problem, government has
been encouraging individual home ownership by providing various fiscal
incentives in its Budgets. The Government of Karnataka, through its various
housing schemes and programmes such as Ashraya, Ambedkar, Navagrama
Ashraya, etc., has achieved a remarkable progress in providing houses to SCs,
STs and other poor sections of the community. The government, through its
district administration and by involving rural and urban local bodies, has been
able to implement its housing schemes, successfully. The participation of
HUDCO by way of landing loans is also worth noting. The Karnataka Housing
Board (KHB), which was set up in 1962 to cater to the housing requirements of
all classes of urban society, has also been reformed and strengthened by the
government in order to accelerate its housing activities such as layout
formation, group housing schemes, creation of model township, etc. (J, 2001)
17. Chithra and Selina Muthurani in their study entitled “Customer Perception
towards home loan in HDFC Bank-Chennai” studied the satisfaction level of
customers about home loan of HDFC bank and the difficulties faced by the
customers at the time of availing home loan in HDFC bank. Customers were
selected on simple random

32
sampling method. The study found that most of the respondents preferred
HDFC bank for its service and low interest rates and people select the HDFC
bank by advertisements, Friends and relatives. The study also reveals that most
of the customers feel that the interest rate of HDFC is comparatively less than
other banks and HDFC bank also provides better services to its customers. The
study concluded that customers of HDFC bank are satisfied with the repayment
period of the bank. If new services and activities are introduced, it will help very
much the organization to increase its business. (Muthurani, 2016)

33
 4. Data Analysis, Interpretation and Presentation

4.1 Data Analysis and Interpretation

Data Analysis is the process of systematically applying statistical or logical techniques

to describe and illustrate, condense recap and evaluate data. Data analysis is the
process of inspecting, cleansing, transforming, and modelling data with the goal of
discovering useful information, informing conclusions, and supporting decision-
making. Data analysis has multiple facets and approaches, encompassing diverse
techniques under a variety of names, and is used in different business, science, and
social science domains.

Data interpretation refers to the implementation of the methods and techniques used to
review the data so as to arrive at an informed conclusion. The interpretation of data
assigns a meaning to the information analyzed determines its signification and
implications.

The data interpretation is very important and it is to be done properly. Data is usually
arrived from multiple sources and hence there are chances that it may have been
entered haphazardly. Data analysis tends to be extremely subjective, as the nature and
goal of interpretation will differ from business to business. The two most common
categories for data implementation are “quantitative analysis” and “qualitative
analysis” that are implemented based on individual nature of data.

34
4.1 Table on Gender

Opinion Responses Percentage

Male 16 28.1%
Female 41 71.9%
Others 0 0

Gender

Source: Primary Data

Interpretation

From the above pie chart, it is observed that 16(28.1%) are male and 41(71.9%) are female.

35
 Table on Age

Opinion Responses Percentage

20- 35 41 71.9%
35- 50 9 15.8%
Above 50 7 12.3%

Age

Source: Primary Data

Interpretation

From the above pie chart, it is observed that 41(71.9%) respondents age between
20- 35, 9(15.8%) respondent age between 35- 50 and 7(12.3%) respondents age
between above 50.

36
 Table on interest rate on a home loan significantly affects ability to save money.

Opinion Responses Percentage

Strongly Agree 17 29.8%
Agree 29 50.9%
Neutral 10 17.5%
Disagree 1 1.8%
Strongly Disagree 0 0

Graph on interest rate on a home loan significantly affects ability to save

money.

Source: Primary Data

Interpretation

From the above pie chart, it is observed that 17(29.8%) and 29(50.9) respondents
respectively strongly agree and agree that interest rate on a home loan significantly
affects ability to save money, while 10(17.5%) respondents have neutral perspective
were 1(1.8%) respondent deny the statement that interest rate on a home loan
significantly affects ability to save money.

37
Table on it is financially advantageous to choose a home loan with a lower
interest rate.

Opinion Responses Percentage

Strongly Agree 17 29.8%
Agree 32 56.1%
Neutral 7 12.3%
Disagree 1 1.8%
Strongly Disagree 0 0

Graph on it is financially advantageous to choose a home loan with

a lower interest rate.

Source: Primary Data

Interpretation

From the above pie chart, it is observed that 17(29.8%) and 32(56.1%) respondents
respectively strongly agree and agree that, it is financially advantageous to choose a
home loan with a lower interest rate while 7(12.3%) respondents have neutral
perspective were 1(1.8%) respondent deny the statement that it is financially
advantageous to choose a home loan with a lower interest rate.

38
 Table on paying off a home loan early can lead to greater long-term savings.

Opinion Responses Percentage

Strongly Agree 14 24.6%
Agree 30 52.6%
Neutral 8 14%
Disagree 5 8.8%
Strongly Disagree 0 0

Graph on paying off a home loan early can lead to greater long-term
savings.

Source : Primary Data

Interpretation

From the above pie chart, it is observed that 14(24.6%) and 30(52.6%) respondents
respectively strongly agree and agree that, paying off a home loan early can lead to
greater long-term savings while 8(14%) respondents have neutral perspective were
5(8.8%) respondents deny the statement that paying off a home loan early can lead to
greater long-term savings.

39
 Table on adjustable-rate home loans a better option for saving money
comparedto fixed-rate home loans.
Opinion Responses Percentage
Strongly Agree 10 17.5%
Agree 32 56.1%
Neutral 11 19.3%
Disagree 4 7%
Strongly Disagree 0 0

Graph on adjustable-rate home loans a better option for saving

money comparedto fixed-rate home loans.

Source : Primary Data

Interpretation

From the above pie chart, it is observed that 10(17.5%) and 32(56.1%) respondents
respectively strongly agree and agree that, adjustable-rate home loans a better option
for saving money compared to fixed-rate home loans while 11(19.3%) respondents
have neutral perspective were 4(7%) respondents deny the statement that adjustable-
rate home loans a better option for saving money compared to fixed-rate home loans.

40
Graph on longer-term home loan results in more savings over time compared to
a shorter-term loan.
Opinion Responses Percentage
Strongly Agree 7 12.3%
Agree 21 36.8%
Neutral 9 15.8%
Disagree 18 31.6%
Strongly Disagree 2 3.5%

Graph on longer-term home loan results in more savings over

time comparedto a shorter-term loan.

Source: Primary Data

Interpretation

From the above pie chart, it is observed that 7(12.3%) and 21(36.8%) respondents
respectively strongly agree and agree that, on longer-term home loan results in more
savings over time compared to a shorter-term loan while 9(15.8%) respondents have
neutral perspective were 18(31.6%) and 2(3.5%) respondents disagree and strongly
disagree that the longer-term home loan results in more savings over time compared to
a shorter-term loan.

41
Table on home loan interest is tax-deductible in our country, making it a valuable
tool for saving on taxes.
Opinion Responses Percentage
Strongly Agree 6 10.5%
Agree 31 54.4%
Neutral 14 24.6%
Disagree 6 10.5%
Strongly Disagree 0 0

Graph on home loan interest is tax-deductible in our country,

making it a valuable tool for saving on taxes.

Source: Primary Data

Interpretation

From the above pie chart, it is observed that 6(10.5%) and 31(54.4%) respondents
respectively strongly agree and agree that, home loan interest is tax-deductible in our
country, making it a valuable tool while 14(24.6%) respondents have neutral
perspective were 6(10.5%) respondents deny the statement that home loan interest is
tax-deductible in our country, making it a valuable tool.

42
Table on changes in housing finance interest rate significantly impacts the
financial stability.
Opinion Responses Percentage
Strongly Agree 13 22.8%
Agree 32 56.1%
Neutral 9 15.8%
Disagree 3 5.3%
Strongly Disagree 0 0

Graph on changes in housing finance interest rate significantly

impacts the financial stability.

Source: Primary Data

Interpretation

From the above pie chart, it is observed that 13(22.8%) and 32(56.1%) respondents
respectively strongly agree and agree that, changes in housing finance interest rate
significantly impacts the financial stability while 9(15.8%) respondents have neutral
perspective were 3(5.3%) respondents deny the statement that changes in housing
finance interest rate significantly impacts the financial stability.

43
 Table on high number of formalities are a significant barrier to
homeownership.
Opinion Responses Percentage
Strongly Agree 11 19.3%
Agree 33 57.9%
Neutral 9 15.8%
Disagree 4 7%
Strongly Disagree 0 0

Graph on high number of formalities are a significant barrier to

homeownership.

Source: Primary Data

Interpretation

From the above pie chart, it is observed that 11(19.3%) and 33(57.9%) respondents
respectively strongly agree and agree that, high number of formalities are a significant
barrier to homeownership while 9(15.8%) respondents have neutral perspective were
4(7%) respondents deny the statement that high number of formalities are a significant
barrier to homeownership.

44
Table on formalities create unnecessary hurdles for individuals and families
who aspire to own a home.
Opinion Responses Percentage
Strongly Agree 10 17.5%
Agree 32 56.1%
Neutral 10 17.5%
Disagree 5 8.8%
Strongly Disagree 0 0

Graph on formalities create unnecessary hurdles for individuals

and families who aspire to own a home.

Source: Primary Data

Interpretations

From the above pie chart, it is observed that 10(17.5%) and 32(56.1%) respondents
respectively strongly agree and agree that, formalities create unnecessary hurdles for
individuals and families who aspire to own a home while 10(17.5%) respondents have
neutral perspective were 5(8.8%) respondents deny the statement that formalities
create unnecessary hurdles for individuals and families who aspire to own a home.

45
Table on difficulties are obtaining housing finance or homeownership due to the
extensive formalities involved.
Opinion Responses Percentage
Strongly Agree 9 15.8%
Agree 32 59.6%
Neutral 9 15.8%
Disagree 4 7%
Strongly Disagree 1 1.8%

Graph on difficulties are obtaining housing finance or

homeownership due to the extensive formalities involved

Source: Primary Data

Interpretations

From the above pie chart, it is observed that 9(15.8%) and 32(59.6%) respondents
respectively strongly agree and agree that, difficulties are obtaining housing finance or
homeownership due to the extensive formalities involved while 9(15.8%) respondents
have neutral perspective were 4(7%) and 1(1.8%) respondents disagree and strongly
disagree that difficulties are obtaining housing finance or homeownership due to the
extensive formalities involved.

46
Table on formalities related to housing finance could make it more accessible
for to achieve homeownership.
Opinion Responses Percentage
Strongly Agree 11 19.3%
Agree 31 54.4%
Neutral 12 21.1%
Disagree 3 5.3%
Strongly Disagree 0 0

Graph on formalities related to housing finance could make it

more accessible for to achieve
homeownership

Source: Primary Data

Interpretation

From the above pie chart, it is observed that 11(19.3%) and 31(54.4%) respondents
respectively strongly agree and agree that, formalities related to housing finance could
make it more accessible for to achieve homeownership while 12(21.1%) respondents
have neutral perspective were 3(5.3%) respondents deny the statement that formalities
related to housing finance could make it more accessible for to achieve
homeownership.

47
 Table on policymakers prioritize efforts to streamline and simplify
housing finance formalities to reduce homeownership barriers for these
communities.

Opinion Responses Percentage

Strongly Agree 7 12.3%
Agree 41 71.9%
Neutral 7 12.5%
Disagree 2 3.5%
Strongly Disagree 0 0

Graph on policymakers prioritize efforts to streamline and simplify

housing finance formalities to reduce homeownership barriers for
these communities.

Source: Primary Data

Interpretation

From the above pie chart, it is observed that 7(12.3%) and 41(71.9%) respondents
respectively strongly agree and agree that, policymakers prioritize efforts to streamline
and simplify housing finance formalities to reduce homeownership barriers for these
communities while 7(12.3%) respondents have neutral perspective were 2(3.5%)
respondents deny the statement that policymakers prioritize efforts to streamline and

48
simplify housing finance formalities to reduce homeownership barriers for these
communities.

Table on individuals or families refrained from pursuing homeownership due

tothe perception that formalities were too complicated or time-consuming.

Opinion Responses Percentage

Strongly Agree 5 8.8%
Agree 30 52.6%
Neutral 17 29.8%
Disagree 5 8.8%
Strongly Disagree 0 0

Graph on individuals or families refrained from pursuing

homeownership due tothe perception that formalities were too
complicated or time-consuming.

Source: Primary Data

Interpretation

From the above pie chart, it is observed that 5(8.8%) and 30(52.6%) respondents
respectively strongly agree and agree that, individuals or families refrained from

49
pursuing homeownership due to the perception that formalities were too complicated
or time-consuming while 17(29.8%) respondents have neutral perspective were
5(8.8%) respondents deny the statement that individuals or families refrained from
pursuing homeownership due to the perception that formalities were too complicated
or time-consuming.

Number of formalities in housing finance disproportionately affecting other

demographic groups

Opinion Responses Percentage

Strongly Agree 8 14%
Agree 31 54.4%
Neutral 14 24.6%
Disagree 3 5.3%
Strongly Disagree 1 1.8%

4.16 Graph on number of formalities in housing finance disproportionately

affecting other demographic groups.

Source: Primary Data

Interpretation

50
From the above pie chart, it is observed that 8(14%) and 31(54.4%) respondents
respectively strongly agree and agree that, number of formalities in housing finance
disproportionately affects other demographic groups while 14(24.6%) respondents
have neutral perspective were 3(5.3%) and 1(1.8%) respondents disagree and strongly
disagree that number of formalities in housing finance disproportionately affects other
demographic groups.
4.2 Hypothesis Testing

The techniques of analysis of variance are an extension of the test used to test the
equality of several means. In this section results are presented in suitable hypothesis
with relevant interpretation of analysis of variance. Analysis of variance (ANOVA) is
an analysis tool used in statistics that splits an observed aggregate variability found
inside a data set into two parts: systematic factors and random factors. The systematic
factors have a statistical influence on the given data set, while the random factors do
no. Analysts use the ANOVA test to determine the influence that independent variables
have on the dependent variable in a regression study. ANOVA is also called the Fisher
analysis of variance, and it is the extension of the t-test and z-test.

The results are presented in suitable hypothesis with relevant interpretations. The
results of ANOVA table describe Sources of Variation (sov), Sum of Squares (SS),
Degree of Freedom (df), Mean Squares (MS), F value (f), P-value (p), F- Statistics (F
crit) on the factor studied.

A] Hypothesis Testing: ANOVA Single

Factor Hypothesis 1

H0 There is no correlation between higher interest rate and

savings. H1- There is a correlation between higher interest

rate and savings.

Table 4.17 ANOVA on correlation between higher interest rate and

savings. Summary

Groups Count Sum Average Variance

51
 Column 1 57 101 1.77193 0.536341
Column 2 57 101 1.77193 0.536341
Column 3 57 111 1.947368 0.550752
Column 4 57 119 2.087719 0.510025
Column 5 57 123 2.157895 0.778195
Column 6 57 114 2 0.607143
Column 7 57 104 1.824561 0.468672

ANOVA

Source of
Variation SS df MS F P-value F crit
Between 8.13533 6 1.35589 2.38026 0.02855 2.1217
Groups 8 4 2 15
Within Groups 223.298 392 0.569638
2

Total 231.433 398

6
Source: Primary Data

In the above table, P value is less than the significant value of 0.05. It is concluded
that there is a correlation between higher interest rate and savings.

Hypothesis 2

H0 There is no significant relationship between the number of formalities and barriers to

homeownership.

H2- There is a significant relationship between the number of formalities and barriers to
homeownership.

4.18 ANOVA on significant relationship between the number of formalities and

barriers to homeownership

Summary

Groups Count Sum Average Variance

Column 1 57 95 1.666667 0.547619
Column 2 57 108 1.894737 0.738722
Column 3 57 114 2 0.892857
Column 4 57 116 2.035088 0.85589
Column 5 57 117 2.052632 0.87218
Column 6 57 121 2.122807 0.502506
Column 7 57 96 1.684211 0.434211

52
ANOVA

Source of SS df MS F P-value F crit

Variation
Between 11.3283 6 1.88805 2.72840 0.01312 2.12171
Groups 2 3 9 8 5
Within Groups 271.263 392 0.69199
2 8

Total 282.591 398

5
Source: Primary Data

In the above table, P value is less than the significant value of 0.05. It is concluded
that there is a significant relationship between the number of formalities and barriers to
homeownership.

53
 5 . Conclusion

1.) Our study has reaffirmed that housing affordability is a significant challenge in
many regions, with a growing number of households struggling to find
affordable and suitable housing. The burden of housing costs can lead to
financial stress and can negatively impact overall well-being.
2.) Our research has revealed that there is indeed a significant negative correlation
between higher interest rates and the ability of individuals to save for
homeownership. Higher interest rates on mortgages and loans can place a
substantial burden on prospective homebuyers, making it more challenging for
them to accumulate the necessary savings for a down payment.
3.) We observed that economic factors, such as fluctuations in interest rates,
inflation, and overall economic stability, play a crucial role in influencing
savings patterns and, subsequently, homeownership opportunities. It is essential
for policymakers to consider these economic dynamics when crafting housing
finance policies.
4.) We found compelling evidence supporting the hypothesis that there is a
significant relationship between the number of formalities and barriers to
homeownership. Excessive bureaucratic processes, paperwork, and red tape
can deter potential homebuyers from entering the market.
5.) It is evident that simplifying and streamlining the formalities related to
homeownership can have a positive impact on homeownership rates. Reducing
administrative burdens and paperwork can make the process more accessible
and affordable for a broader range of individuals.
6.) Our research suggests that housing finance policies should not only focus on
interest rates but also address the bureaucratic hurdles associated with
homeownership. Policymakers should work to make the homebuying process
more transparent, efficient, and less cumbersome.
7.) We noted that the impact of formalities on homeownership barriers can vary
across different cultural and regional contexts. Tailored policies and
approaches may be necessary to address these variations effectively.
8.) Lending institutions also play a role in mitigating or exacerbating.

54
 Suggestion
1. To investigate whether the correlation between higher interest rates and
savings and the relationship between formalities and barriers to
homeownership vary across different regions, such as urban, suburban, and
rural areas.
2. To examine how economic cycles, including periods of recession or
economic growth, impact the identified correlations and relationships.
Explore whether these factors have a different effect during economic
downturns.
3. To analyze how demographic factors, such as age, income, and household
size, influence the relationship between interest rates and savings, as well as
the impact of formalities on barriers to homeownership.
4. To investigate the impact of government housing policies, subsidies, and
tax incentives on mitigating or exacerbating the effects of higher interest
rates on savings and formalities on barriers to homeownership.
5. To explore how cultural factors and perceptions of homeownership
influence the correlation between interest rates and savings and the
significance of formalities as barriers to homeownership.
6. To assess how the diversity of mortgage products and terms offered by
financial institutions affect the ability of individuals to manage interest rates
and navigate through formalities when purchasing a home.
7. To analyze whether the stability of the housing market, including factors
like housing supply, demand, and price fluctuations, interacts with interest
rates and formalities to influence homeownership.
8. To investigate the impact of financial education and literacy programs on the
ability of individuals to understand and overcome barriers related to interest
rates and formalities in housing finance.
9. To examine whether the choice between renting and owning a home is
influenced by the correlations between interest rates and savings and the
significance of formalities.
10. To research the long-term implications of the identified correlations and
relationships, including their effects on individuals' overall financial well-.

55
 Reference

1. [Link]
2. [Link]
3. [Link]
n_Evol ution_and_Performance_in_India
4. [Link]
5. [Link]
HOUSING- LOAN

56
 Appendices

Questionnaire

1. Gender
 Male
 Female
 Others
2. Age
 20- 35
 35-50
 50 Above
3. Do you believe that the interest rate on a home loan significantly affects your
ability to save money?
 Strongly Agree
 Agree
 Neutral
 Disagree
 Strongly Disagree
4. Is it generally more financially advantageous to choose a home loan with a
lower interest rate?
 Strongly Agree
 Agree
 Neutral
 Disagree
 Strongly Disagree
5. Do you think paying off a home loan early can lead to greater long-term savings?
 Strongly Agree
 Agree
 Neutral
 Disagree
 Strongly Disagree
6. Are adjustable-rate home loans a better option for saving money compared to

57
 fixed-rate home loans?
 Strongly Agree
 Agree
 Neutral
 Disagree
 Strongly Disagree
7. Do you agree that taking a longer-term home loan (e.g., 30 years) results in
more savings over time compared to a shorter-term loan (e.g., 15 years)?
 Strongly Agree
 Agree
 Neutral
 Disagree
 Strongly Disagree
8. Do you believe that home loan interest is tax-deductible in our country,
making it a valuable tool for saving on taxes?
 Strongly Agree
 Agree
 Neutral
 Disagree
 Strongly Disagree
9. Do you think that changes in housing finance interest rate significantly
impacts the financial stability?
 Strongly Agree
 Agree
 Neutral
 Disagree
 Strongly Disagree
10. Do you believe that a high number of formalities are a significant barrier to
homeownership for low-income?
 Strongly Agree
 Agree
 Neutral

58
  Disagree
 Strongly Disagree
11. In your opinion, do these formalities create unnecessary hurdles for
individuals and families from low-income who aspire to own a home?

 Strongly Agree
 Agree
 Neutral
 Disagree
 Strongly Disagree
12. Have you or someone you know personally experienced difficulties in
obtaininghousing finance or homeownership due to the extensive formalities
involved?
 Strongly Agree
 Agree
 Neutral
 Disagree
 Strongly Disagree
13. Do you think simplifying or reducing the formalities related to housing
finance could make it more accessible for low-income to achieve
homeownership?
 Strongly Agree
 Agree
 Neutral
 Disagree
 Strongly Disagree
14. In your view, should policymakers prioritize efforts to streamline and simplify
housingfinance formalities to reduce homeownership barriers for these
communities?
 Strongly Agree
 Agree
 Neutral
 Disagree

59
  Strongly Disagree
15. Have you encountered instances where individuals or families refrained from
pursuing homeownership due to the perception that formalities were too
complicated or time- consuming?
 Strongly Agree
 Agree
 Neutral
 Disagree
 Strongly Disagree

60
 16. Do you believe that the current number of formalities in housing finance
disproportionately affects low-income compared to other demographic groups?
 Strongly Agree
 Agree
 Neutral
 Disagree
 Strongly Disagree
Abbreviations

HUDCO- Housing and Urban Development

Corporations. HDFC- Housing Development

Financial Corporation NHB- National Housing Bank

LIC- Life Insurance Corporation

GIC- General Insurance

Corporation HFCs- Housing

Finance Companies LIG- Low

Income Group

SCB- Slum Clearance Board

NHP- National Housing

Policy

NCMP- National Common Minimum

Program SC/ ST- Schedule Cast/ Schedule

Tribes

ROI- Rate of Interest

HFIs- Housing Finance

Institutions ITR- Income Tax

61
Return

C.A- Chartered

Accountant AS- Annual

Statement

CS- Company Secretary

NRIs- Non Resident Indian

PIOs- Person of Indian

Origin KYC- Know Your

Customer

VISA- Visitors International Stay

Admission CDS- Continuous Discharge

Certificate NRE- Non Resident External

NRO- Non Resident

Ordinary A/C- Account

P&L- Profit and Loss

ULC- Urban Landing Ceiling

PAN- Permanent Account

Number

EMIs- Equated Monthly

Installments CSR- Corporate

Social Responsibility

MBA- Masters in Business

Administration GDP- Gross Domestic

62
Product

ICICI- Industrial Credit and Investment

Corporation ANOVA- Analysis of Variance

PMI- Purchase Manager Index

HUD- Housing Urban

Development AHS- Allied Health

Science

PMI- Private Mortgage Insurance

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1. Bai, M. M. (2001).
2. Bandyoupadhy. (2011).

3. Berstain.

(2009). 4. Chellam.
(2009). 5. Devlin.
(2002). 6. J, A. K.
(2001). 7. Manoj.
(2010).
8. Marwaha. (1990).
9. Muthurani, C. a. (2016).
10. Nazrine.
(2017). 11. Patel.
(1996). 12. R, K.
(2013). 13. Rani.
(2012).
14. Subburaj. (2010).
15. Sukumar, R. (2016).
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63