Insight on Home Loan
In this world, everyone dreams of their own dream house and to achieve this their actions act as a driving force through this process to own their house. A major hurdle one faces in this is the home loan. Many people are unable to decide from where to pick a home loan, either from bank or from NBFC (Non-Banking Financial companies). HFC are special NBFC which only deals with real estate loan.
Here are few pointers which you can refer to before attaining your home loan:
- As we all know banks are regulated through RBI (Reserve Bank of India) whereas HFCs & NBFCs are regulated by NHB (National Housing Bank) with a motive to cater home loan to all segments of people and it’s a subsidiary of RBI.
- One of the important aspects is how your property is evaluated for loan: Banks as directed by RBI excludes the cost of documentation, registration and stamp duty while calculating the total cost. Whereas, HFCs/NBFCs added the same costs to the home value.
For instance if you buy a property worth Rs. 50 lakhs and pay Rs. 3.5 lakhs of the home value as stamp duty and registration cost then bank would sanction maximum loan of 80% of 50 lakhs which amounts to be Rs. 40 lakhs while in the case of NBFCs & HFCs they would sanction again 80% of the total value which comes to be (50+3.5) lakhs which amounts to be Rs. 42.8 lakhs.
- Rate of Interest – There is not much difference between the rates offered by Banks & NBFCs & HFCs. More or less the rate difference is between 0.15 to 0.25%. Below is a small list related to Rate of Interest & tenure.
|Banks/ NBFC||Interest Rate||Tenure Range|
|ICICI Bank||9.45% – 9.70% Floating||3 to 30 Years|
|Dena Bank||9.70% – 9.95% Floating||1 to 20 Years|
|Axis Bank||9.60% – 11.75% Floating||1 to 30 Years|
|Indiabulls||9.95% – 10.40% Floating||1 to 30 Years|
|Aditya Birla||9.6% Floating||1 to 30 Years|
|PNBHFL||9.50% – 9.75% Floating||1 to 30 Years|
|SBI||9.40% Floating||1 to 30 Years|
|Yes Bank||10.25% – 10.75% Floating||1 to 25 Years|
|LIC HFL||9.60% – 9.90% Floating||5 to 30 Years|
|Bank of Baroda||9.65% – 10.65% Floating||30 Years|
|IDBI Bank||9.60% Floating||30 Years|
|Canara Bank||9.65% – 9.75% Floating||30 Years|
|DHFL||9.75% – 10.00% Floating||1 to 30 Years|
|Reliance Home||9.95% Floating||3 to 35 Years|
|Tata HL||9.45% – 9.55% Floating||10 to 30 Years|
Source – https://www.bankbazaar.com/home-loan.html
- Insure your property – Every home loan contract requires the borrower to insure his/her mortgaged property against fire & other natural calamities. But unfortunately not many borrowers take this clause seriously, which could prove to be costly mistake. For such cases the insurance company comes into play ; the family is protected from paying the EMI and the house is not taken away by the lender.
- Repayment Plan – Your total home loan EMI should not exceed 40% of your total monthly income. Do not over stretch yourself, If you earn more, you can always pre-pay your loan with additional disposable funds as most banks do not have pre-payment penalties now a days
As an important reminder, one should not rush into any home loan decision just based on any one factor. They should always get quotes from 2 -3 banks or NBFCs/ HFCs and think over accordingly.
Disclaimer: All the content & data mentioned in this Blog are merely representative in nature based on rough estimates and are subject to change.