The Collateral World of Mortgaging Property
January 21, 2022
June 27, 2022
Read the given below list of banks that offer the best housing loans in India along with their interest rates and processing charges. This home loan bank list can guide you toward choosing the best bank for housing loans.
|Banks||Rate of Interest (p.a)||Processing Charges|
|Kotak Mahindra Bank||7.00% to 7.60%||0.50%|
|Union Bank of India||6.90%||NA|
|Bank of Baroda||6.90% to 8.25%||Contact the bank for information|
|Central Bank of India||6.85%||Rs. 20,000|
|Bank of India||6.90%||NA|
|State Bank of India||7.05% to 10.85%||0.35% onwards|
|Axis Bank||6.90%||Rs. 10,000|
|Canara Bank||7.05% to 9.30%||0.50% of the loan amount (minimum of Rs. 1,500, and a maximum of Rs. 10,000)|
|Punjab and Sind Bank||6.85%||Full Waiver|
|IDFC First Bank||6.50%||Rs. 5,000 to Rs. 5,000|
|Bandhan Bank||6.40% -13.50%||1% (Rs.5,000)|
|Yes Bank||8.95%||1% (Rs. 10,000)|
|Punjab National Bank||6.50%||0.35% (Max Rs. 15,000)|
|United Bank of India||8.00%||0.59% (Rs. 1,180 – Rs. 11,800)|
|UCO Bank||6.50%||0.15% (Rs. 1,500 – Rs. 15,000)|
|DBS Bank||7.30%||0.25% (Rs. 10,000)|
|IDBI Bank||6.75%||0.50% (Rs. 2,500 – Rs.5,000)|
|HSBC Bank||6.45%||1% (Rs. 10,000)|
|Tamilnad Mercantile Bank||8.25%||Rs. 15,000|
|Jammu and Kashmir Bank||7.20%||Rs. 500 to Rs. 10,000|
|South Indian Bank||7.85%||0.50% (Rs. 5,000 – Rs. 10,000)|
|Hudco Home Loan||9.45%||NA|
|Dhanlaxmi Bank||7.85%||Rs. 10,000|
|Karur Vysya Bank||7.20%||Rs. 5,000|
|Federal Bank||7.65%||Rs. 3,000 to Rs. 7,500|
|Standard Chartered Bank||7.99%||1%|
|Karnataka Bank||7.50%||Rs. 250|
|Indian Overseas Bank||7.05%||0.50% (Max Rs. 20,000)|
|Bank of Maharashtra||6.80%||Rs. 10,000|
You can also check the listed housing finance companies in India the given below table. This home loan bank list can help you in wisely selecting the best housing loan in India.
|Housing Finance Corporations (HFCs)||Rate of Interest (p.a)||Processing Charges|
|PNB Housing Finance||6.99%||Up to 0.50%|
|Sundaram Home Finance||6.95%||Rs.3,000 (for salaried)|
|HDFC LTD||7.55%*||0.5% or Rs.3,000 whichever is higher|
|GIC Housing Finance||7.45%||Rs. 2,500|
|Reliance Home Finance||9.75%||Rs. 3,000 – Rs. 6,500|
|India Shelter Finance||12.00%||2.00%|
|DHFL Housing Finance||8.75%||Rs. 2500|
|Saraswat Bank Home Loan||6.70%||NA|
|LIC Housing Finance||6.90%||Rs. 10,000 -Rs. 15,000|
To choose the best bank for a home loan in India, make sure to tick mark the checklist mentioned below:
Most banks offer competitive interest rates. Thus, it is better to check and compare the home loan from different banks and HFCs. Once you are firm with the comparison, you can proceed further.
Make sure to compare the processing fees of the best banks. It is because every bank has a different processing fee and some of them even have some hidden costs.
All the banks offer different tenures. The maximum repayment tenure available with banks and HFCs varies between 20 to 30 years. The tenure you choose decides the interest rate of your loan and monthly EMIs.
As an applicant, you should consider the loan amount carefully. Make sure the loan is as per your repayment capacity. Therefore, it is important to consider affordability before choosing the best bank for home loans.
You must consider the pros and cons of each and every bank and HFC while applying for the best home loan. Further, make sure to check the history of the bank, its interest rate, and financial stability over the past few years.
Most lenders offer different options for repayment. It is because flexible repayment helps the debtor in reducing the EMI burden. You can choose one of the most convenient popular repayment schemes mentioned below:
If your salary increases, you can pay a small principal amount apart from EMI. This will help you in clearing your long debt quickly and at an early stage. Making these pre-payments will help them in saving the interest component of the loan.
In this repayment option, the EMIs amount first decreases and then increases as the tenure year passes. In the initial years, it is low and with each passing year, the monthly EMI amount increases. This repayment option is known as the step-up repayment process. This is best suited for people who have recently started earning.
However, in the step-down repayment option, the EMIs are high during the initial years and decrease with each passing year. This step-down repayment option is best suitable for people who are close to retirement or earning good money currently.
In this kind of repayment option, you can pay lower EMI in the initial years. It is called the balloon repayment scheme because at the time of loan maturity you have to pay around 30% to 40% of the principal loan amount.
With these flexible repayment options, you can borrow the amount and repay it at your convenience. Thus, select the most suitable repayment option to get the best home loan.
The basic fee payable on rate conversion is 0.5% only on the outstanding principal amount. However, these rates depend on the bank’s discretion. Apart from the basic fee, there are a few other charges as well which have to be paid by the borrower.
If you prepay the home loan after the time of six months, you have the choice to prepay up to 25 percent of the principal amount. However, an amount above 25% is chargeable. Most banks charge up to 2% of the loan amount but this value varies for every bank. Further for floating interest rates, there are no prepayment charges.
The Indian banks offer several types of home loans. You can choose the best home loan depending on your requirement and convenience.
If you want to buy a completely furnished house then you must opt for a home loan for buying. The banks and HFCs offer a loan amount of up to 85% of the value of the house you are planning to buy.
When you apply for a loan for constructing a house, you have to provide the borrower with a construction plan. This construction plan includes every detail, cost, and other procedure required to build a home. Further, the bank reviews the application and decides whether to disburse the loan amount or not. For construction loans, the entire amount is not provided by the lender. The loan amount is disbursed in small amounts.
There are several people who want a home loan for purchasing the piece of land either with the prospect of construction in the future or as an investment. Several banks in India offer loans with a maximum of 85% of the land cost. The other 15% will be given by the down payment to the borrower.
This type of home loan is available in a few HFCs and banks. Here the applicant can take a loan for renovating or expanding their house. However, only a percentage of property value will be provided by the banks.
Before you choose the best bank for a home loan, it is important for you to know the interest rate and its type. It is because interest rate plays a crucial role when it comes to home loans.
The interest rate is decided by the banks and is dependent on the loan type, credit score, and the repo rate given by RBI (which are increasing to decrease the inflation rate). Therefore, a higher interest rate means the loss of the debtor. To prevent this loss, banks and HFCs often give the applicant the option of choosing from the following types of interest rates.
The main factor that affects the interest rate is the tenure of the home loan. If you choose a fixed interest rate, then you will have a constant interest rate throughout the tenure. However, you are allowed to change their fixed interest rate to a floating interest rate after a specific time has passed.
A fixed interest rate is beneficial as the EMIs remain the same. There will be no effect if the interest rate changes or fluctuates in the market. The only loss the debtor has to incur is if the interest rate decreases, you will not be able to avail of its benefit.
The floating interest rate keeps on changing as per the fluctuations in the market. It is dependent on the RBI guidelines on the repo rate. These rates are revisable at any time. It is advantageous to the debtor as the interest rate can reduce if the repo rates decrease. But a constant risk of increasing rates is present.
Calculating EMI for getting the best housing loan in India is not a complex task if you use the Urban Money calculator. This calculator is advanced and informs you about every information in detail regarding every month’s EMI. The EMI home loan calculator uses the following formula to provide you with accurate data:
EMI Amount = [P x R x (1+R)^N]/[(1+R)^N-1]
In this formula, P, R, and N are variables. Here,
P stands for Principal loan amount. This loan amount is the original loan amount given by the bank. Further, the interest is calculated on this principal amount.
R means the interest rate on which the bank provided you with the loan.
N is the tenure years or years of repayment you have taken to repay the loan amount. Since EMIs are payable each month, the tenure is calculated as months, not years.
For instance, Mr. Kumar took a home loan in India for Rs. 50,00,000 with a rate of interest of 12% p.a. And he selected ten years or 120 months as the tenure of repayment. Therefore, the estimated EMI will be:
P = 50,00,000
R = 12/100/12 or 0.1
N = 120 months (converting 10 years to months)
EMI Amount = [5000000 x 0.01 x (1+0.01)^120] / [(1+0.01)^120-1]
EMI Amount = Rs 71,735
Here, Mr. Kumar has to pay Rs 71,735 as monthly EMI to repay the loan of Rs. 50,00,000 in 10 years.
To avail of the best home loan in India, one must adhere to the below-mentioned eligibility criteria:
During taking the loan the minimum age of the applicant must be 21 years. The maximum age must not be more than 65 years.
As a home loan applicant, you must have a steady income if you are a salaried person or have profit returns of two previous financial years as a self-employed individual. A regular source of income ensures the lender about your credibility and reduces the risk of missing repayments.
If two people apply for a joint home loan, then the co-applicant must have a steady income that can increase the borrower’s income and increase the home loan eligibility. The co-applicant must have a share in the property, and they should be a direct family member of the primary applicant.
You must have a good CIBIL score to be eligible for any type of home loan. Most banks and HFCs consider 750 or more a good credit score.
You must have approval on the property and the builder against which you are taking the home loan. The approval criteria vary depending upon the type of property.
If you fulfill all these eligibility criteria then you can get a good deal from the best bank for a home loan in India.
The home loan amount is usually defined as the maximum amount bank or HFC can lend you. The scope for increased home loan eligibility depends on the following factors:
You can consider the following factors to avail the best home loans in India.