Case Study Housing Loan
Sample Case Study
A. Title: THE SKY IS THE LIMIT! – Part I
B. Situation:
Santhanam (aged 60), a Divisional Engineer with South Eastern Railway is due for retirement in September. He estimates his overall retirement benefits to be around Rs 20-25 lacs, with a potential pension of Rs 15,000 per month. Since he would have to surrender his railway quarters immediately on retirement, he is planning to set up his own household.
Over the last 3 months, he has extensively scouted for good properties in his hometown of Coimbatore. Eventually, he, in consultation with his family have chosen a built up property ( apartments) in a relatively decent residential area in the city.
The builders rate for the apartment, inclusive of parking and preferential location charges, excluding registration is Rs 45 lacs of which the builder demands a minimum of 20% in cash and the balance through payment in instruments. Santhanam has worked out that while the builder’s cash component can be met with his personal funds, he would require a loan of minimum Rs 30 lacs.
For this he approaches his long time banker, Sarvodaya Bank at the Erode branch, where he is currently posted. The Branch Manager, Mr Anwar, who is old acquaintance and distantly related to Santhanam is well disposed at a personal level, but is also keen that no norms are flouted, especially because, just a month ago, there was a circular from the Zonal office that no deviations in Housing Loan guidelines would be permitted.
C. The Loan Request – Customer Interview
As a conscientious bank officer, Mr Anwar, diligently proceeds to elicit the following information from Mr Santhanam
Expected monthly income of Mr Santhanam post retirement – Rs 15,000/-
Current monthly income of his married son ( who is staying with him) – Rs 40,000/-
He has an NSC certificate for Rs 1 lac maturing after 2 years, which he has earmarked for his daughter’s marriage expenses
He also has a Whole Life Policy with a surrender value Rs 1 lac
He
A. Title: THE SKY IS THE LIMIT! – Part I
B. Situation:
Santhanam (aged 60), a Divisional Engineer with South Eastern Railway is due for retirement in September. He estimates his overall retirement benefits to be around Rs 20-25 lacs, with a potential pension of Rs 15,000 per month. Since he would have to surrender his railway quarters immediately on retirement, he is planning to set up his own household.
Over the last 3 months, he has extensively scouted for good properties in his hometown of Coimbatore. Eventually, he, in consultation with his family have chosen a built up property ( apartments) in a relatively decent residential area in the city.
The builders rate for the apartment, inclusive of parking and preferential location charges, excluding registration is Rs 45 lacs of which the builder demands a minimum of 20% in cash and the balance through payment in instruments. Santhanam has worked out that while the builder’s cash component can be met with his personal funds, he would require a loan of minimum Rs 30 lacs.
For this he approaches his long time banker, Sarvodaya Bank at the Erode branch, where he is currently posted. The Branch Manager, Mr Anwar, who is old acquaintance and distantly related to Santhanam is well disposed at a personal level, but is also keen that no norms are flouted, especially because, just a month ago, there was a circular from the Zonal office that no deviations in Housing Loan guidelines would be permitted.
C. The Loan Request – Customer Interview
As a conscientious bank officer, Mr Anwar, diligently proceeds to elicit the following information from Mr Santhanam
Expected monthly income of Mr Santhanam post retirement – Rs 15,000/-
Current monthly income of his married son ( who is staying with him) – Rs 40,000/-
He has an NSC certificate for Rs 1 lac maturing after 2 years, which he has earmarked for his daughter’s marriage expenses
He also has a Whole Life Policy with a surrender value Rs 1 lac
He