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.

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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.

Call us- +91 8010400500


Call us- +91 8010400500

Call us- +91 8010400500

Call us- +91 8010400500

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