Today, the process of buying the right home begins with choosing the right kind of home loan which should add to ease and not a reason to stress. But it does involve a good mix of modalities. There are certain factors to keep in mind before applying for a home loan.
Home – Four letters which contain all our dreams and hopes. The extra mile we walk is to ensure that all of us have a safe place to go to at the end of a hard day at work. Today during these festive months, when homes are the focus, let’s have an in-depth conversation with Mr. Anil Kaul, Managing Director of TATA Capital Housing Finance Limited (TCHFL).
Lavanya Iyengar of ET edge, was in conversation with Anil Kaul, to discuss the various modalities involved whilst availing a home loan and the professional and personal journey of the man behind the chair of power.
(Transcribed and edited)
Lavanya Iyengar: What are the key factors to consider when choosing a home loan
Mr. Anil Kaul: A home is always aspirational, and we should be prudent when selecting the right vendor and also amount – The best amount is the one you can pay without disturbing your financial applecart.
The first and most important point that should be considered is how much one can pay as in installments. i.e.: If your income is ₹100, you should first calculate expenses which you know happen on a generic basis every month, maybe the total to Rs 25. Then decide as to whether you can afford to pay ₹30 or ₹40 or ₹60.00 as an installment. It is very important that you should not take any loan which creates unnecessary stress in your day-to-day life.
A home loan is one of the largest financial transactions that one does in a lifetime. One should be very careful in deciding how much one should borrow based on one’s ability to repay, keeping in mind the expected growth in one’s income over future years and adjusting for additional expenses which come up during various stages in a consumer’s life.
The second important factor to know is the loan eligibility from a specific institution. It helps to calculate the money you have to put from your own pocket as a contribution. This has a huge impact on your financial planning and goals.
The third factor that needs to be kept in mind is that you should deal with a brand which you trust, because this is a financial decision /transaction which is going to stay with you for 20 years. Your property documents are going to be with the institution, and you need to be serviced for 20 years. You should choose an institution which has a track record of offering Omni channel service 24 /7/ 365 and being fair and transparent in its dealings.
Lavanya Iyengar: What are the current challenges home financing companies in India are facing, and what is the solution?
Mr. Anil Kaul: The biggest challenge faced by HFCs today is access to long terms funds at the right price. The right mix in capital structure is necessary to ensure sustainably profitable growth for any HFCs. It will be pertinent to know that policymakers have been continuously working towards ensuring that adequate capital is made available to HFCs. We also see a sustained interest from various market players wanting to provide liquidity to HFCs.
The second requirement is to ensure top-grade credit rating for your company. We all know that firms which have AAA ratings across rating agencies have much better access to capital from all sources, both domestic and international.
The third differentiator is brand. The brand communicates to the customer a company’s value systems and promises on how it will engage with them in an ethical, transparent and equitable manner.
We, at TCHFL, believe that our brand is the biggest differentiator for us in the marketplace.
Lavanya Iyengar: The home finance industry is expected to expand due to rising incomes and urbanisation. How does TCHFL intend to reach out to new customers?
Mr. Anil Kaul: We are basing our growth on the structural factors in India, which are very positive for housing demand.
A younger population pool i.e.- 65-66% of our population is less than 35 years, with large aspirations of a better lifestyle. This population is working, and aspiring and is a large demand pool.
The second catalyst is trends in urbanization: Urbanization, better infrastructure and connectivity will be the next contributor to the massive housing growth expected by HFCs across the country.
The 3rd accelerator has been on account of regulatory and policy interventions like RERA, PMAY, smart city schemes, and tax benefits both to individuals and developers.
The 4th factor has been the increasing disposable income over the last 2 decades and a greater societal acceptance of taking debt towards buying a house.
We, at TCHFL, believe that there is a strong and well-demonstrated demand which exists for the housing sector in the country. To meet this growing demand, we have increased our reach and strategically brought in many more channel partners and added branches. We are planning to go to about 200 branches by next year– which will give us the opportunity to offer our mortgage solutions to new customers.
We are making appropriate investments in technology and manpower too, to offer a full suite of mortgage products, to meet this demand.
Lavanya Iyengar: What role has technology played in enhancing your services, and how have your customers benefit?
Mr. Anil Kaul: All investments in the digital transformation journey have been driven by a single objective that it should benefit the customers. The same is reflected in our Sales and Service architecture also. Over the last two years, almost 95- 96% of our channel partners have been onboarded digitally. All our initiatives are being driven by just one objective, that the customer must be at the center of what we do, and it should benefit them.
Lavanya Iyengar: What is your advice to business leaders on how to prepare for a tough and competitive business environment?
Mr. Anil Kaul: Some of the life lessons would be:
1st. Any leadership role, whichever level -CEO or frontline, needs you to be ethical in all situations.
2nd Lead by example always.
3rd Having clarity of thought and be predisposed towards execution.
4th One should have the humility to acknowledge one’s mistakes