Everyone dreams of owning a house which they can call their own. But buying a house in this sky high property market is not a piece of cake. Property price is shooting up continuously and being a middle class buying your own house is a far fetched desire. Unless you have a huge load of cash stuffed somewhere in your basement, to own a property, home loans prove to be a big saviour.
Things to consider before taking a home loan
➢Take a loan if you think you are capable of repaying it. Do not borrow an amount higher than what you can actually pay.
➢Keep the repayment tenures short. Long tenures look tempting because of reduced EMIs but progressively it shoots up your total amount. In some cases, you end up paying more interest than your principal amount. It is best to repay in the initial years to save more on the interest amount for the balance years.
➢If you are taking a huge loan, it is in everyone’s interest to take an insurance cover as well. Hope not if anything unfortunate happens to you, the unpaid loan won’t weigh down your family.
➢Be updated with any new developments in home loan sector such as increasing decreasing interest rates, processing fees, prepayment rules etc.
Do a thorough research about different home loan schemes offered in the market. It is essential to choose the right one to save money. Some factors to be kept in mind are:
➢ Check the percentage of loan offered by the bank. If you are not able to pay a large sum as down payment, go for the bank offering lesser margin.
➢Look for lesser EMI, processing fee and lower prepayment charges.
➢Consider loan process and time involved. Choose quick disbursal and lesser paper work.
➢Look for special concession schemes e.g. some banks offer reduced interest rates for women or senior citizen applicants.
Top Home Loan Providers
SBI Home Loans
●Processing fee: ranging from 0% to 0.35%+ST depending on the project proposal.
●Margin/LTV Ratio: 10% up to ₹ 30 lacs, 20% between ₹ 30 to 75 lacs and 25% for above ₹ 75 lacs.
●Eligibility: 18 years to 70 years, maximum age till the loan can be repaid.
●Repayment: 30 years or till when the applicant is 70 years old.
●Home loan interest rate: 9.30% for women and 9.35% for others, irrespective of loan amount.
●Zero prepayment or partial prepayment charges.
HDFC Home Loans
●Processing fee: Up to 0.50% of the loan amount or ₹ 11,500 whichever is less.
●Repayment tenure: 1 to 30 years or maximum age of 60 years for salaried applicant.
●Home loan interest rate: 9.40% for women and 9.45% for others.
●No prepayment allowed in first six months. 1.5% of the original loan amount for 6 months to 5 years, 0.75% of the original loan amount for 5 to 10 years. No foreclosure fee for above 10 years.
●Loan amount: ₹ 5 lacs to ₹ 10 crores.
LIC Housing Finance
●Processing fee: ₹ 1,000 to ₹ 15, 0000.
●Repayment tenure: Maximum term – for salaried- 30 years, for self-employed- 20 years.
●Margin: 85% of the total value of the property.
●Home loan interest rate: 9.60% to 9.90% (floating).
●Prepayment charges: nil for floating rate of interests.
ICICI Bank Home Loans
●Processing fee: 0.50% to 1% of the loan amount or ₹ 1500-2000 + tax.
●Repayment tenure: up to 20 years.
●Margin/LTV Ratio: 10% up to ₹ 30 lacs, 20% between ₹ 30 to 75 lacs and 30% for above ₹ 75 lacs.
● Home loan interest rate: 9.45% to 9.70% (floating and fixed floating).
●Prepayment charges: nil for floating interest rate and 2% of the outstanding loan amount for fixed rates.
Other services are Axis Bank Home Loans, Punjab National Bank Home Loans, Housing Urban Development Corporation-Niwas scheme etc.
Where the pre loan services of a private bank are much satisfactory than public sector unit banks, it is generally seen that post loan services of a nationalised bank are more acceptable. Before borrowing a loan private bank representatives treat you like a king because they have to meet their targets but after sanctioning your loan they don’t care much which is generally the opposite case in public sector banks. So choose wisely!!