A home loan will help you buy your dream home. Banks and financial institutions in the country offer housing loans up to Rs 10 crore at a range of interest rates.
If you have your heart set on a flat or property, you can avail a loan from any of the banks and financial institutions. However, before you take the plunge, you must compare all the loan options available in the market.
Different banks and institutions offer different housing loan interest rates. The tenure options also vary from bank to bank. Find the right match for your needs and budget. You can compare features of the loan products offered by different banks, calculate the estimated EMI that you would be eligible to pay. Use the EMI calculator tool to compare the loan products available.
Once you have zeroed in on the bank and the loan product, you can directly apply for a loan with a few easy steps. Go to the bank’s website and apply for a loan. Fill in the details, upload necessary documents and you are good to go.
Home Loan Comparison – All Banks in India
Banks and financial institutions in India offer a range of home loans. Some banks also have customised home loans for specific needs such as buying a plot, buying an under construction property or even renovation of existing flat.
Here is a home loan comparison of some of the top banks in India:
- State Bank of India: SBI has a range of home loan products for prospective home buyers. There is a Bridge Home Loan that is a short-term option where the loan is given for one or two years. The rate of interest is slightly higher than the regular home loan and falls in the range of 10 per cent to 12 per cent. Apart from that SBI has loan options for under-construction properties and government employees. The interest rates are competitive.
- HDFC Bank: HDFC Bank home loan products are available at competitive interest rates. The rates are especially attractive for those buying a new flat or property. One of the major advantages of HDFC home loan is that there is no prepayment or foreclosure charge. So you can pay off your debt ahead of your loan tenure and you will not be charged a fine. You can borrow anywhere between Rs5 lakh to Rs 10 crore. The rate of interest falls in the range of 8.5 per cent and 9 per cent.
- ICICI Bank: ICICI bank home loan is also available to prospective homebuyers. The bank charges a floating rate of interest. You can borrow anywhere between Rs5 lakh and Rs10 crore. The bank offers both short term and long term loans that can be repaid in three to 30 years.
- Axis Bank:Axis Bank home loans are available to both salaried and non-salaried applicants. The bank offers a 0.5 per cent concession in interest rate for salaried applicants. Axis Bank also does not charge any prepayment and foreclosure charges.
- Kotak Mahindra:Kotak Mahindra home loans come with a host of benefits. The bank does not charge any processing fee. It also doesn’t charge prepayment or foreclosure charges. Kotak also offers credit-linked subsidy scheme under Pradhan Mantri Awas Yojana. You can borrow anywhere between Rs10 lakh and Rs10 crore.
- DBS Bank: The bank offers easy loans up to Rs5 crore. The rate of interest ranges from 8 to 14 per cent. It also has schemes for under-construction projects where the borrower has to pay only pre-EMI before getting the possession of the flat.
Things to consider while applying for Home Loan
Home loan is a major financial commitment. It is therefore imperative that you take all factors into consideration before finally applying for a housing loan. Here is a list of things you must take care of while applying for a home loan:
- Eligibility criteria: When applying for a home loan with a bank, make sure you are eligible for the loan. Check the eligibility criteria of the bank before applying to avoid rejection. A rejection of your home loan application will have a negative impact on your credit score.
- Interest Rate: Many people believe in the misconception that the interest rate charged by the bank is non-negotiable and binding. However, that’s not the case. You can negotiate with the bank and ask for a lower interest rate. If you have a good credit score, you should take it in your stride and ask for a discount in the interest rate.
- Don’t rush: Do not hurry in getting a bank loan. Take your time in comparing the home loan offers from different banks. Home loan comparison in the beginning will take a long way and help find a bank that caters to your needs.
- Hidden costs: When you approach a bank for home loan, ask for all the hidden costs such as processing fees, application fees, prepayment charges, foreclosure charges and other charges.
- Fixed vs floating interest rate: Choose your interest rate type carefully. Floating interest rate may seem like a better option as the interest rate is slightly lower than fixed rate. However, be careful in choosing an interest rate. Floating interest rate comes with a considerable amount of risk.
Things to avoid while applying for Home Loan
As you apply for a home loan, there are a host of things you should take care of to avoid rejection of your loan application. It is equally important to know what to avoid while applying for a home loan.
- Poor credit score: If you have a poor credit score, do not apply for a home loan. Low credit score could lead to rejection of your application. If your loan application is rejected, it will have a further negative impact on your credit score. It is advisable that you take some time to improve your credit score and apply for home loan later.
- Property titles: When you apply for a home loan with a bank, the bank investigates the property/ flat, as well as the builder. The project has to be approved by the bank before the loan can be passed. Make sure that the builder has all papers in order and that there are no disputes related to property title.
- Multiple rejections: When you apply for a home loan, make sure not to apply at too many banks. The banks will enquire about your credit history. Each enquiry is lodged in your credit history and if multiple banks reject your loan application, it will be difficult for you to get a loan in the future.
- Unstable income: Banks are wary of lending funds to people who have unstable income. An unstable income poses questions about the repayment capacity of the borrower.
- Age: Banks have strict age limits for borrowers. You should check the bank’s eligibility criteria before applying for a loan. Usually banks offer loans to people between the age group of 21 and 65 years. The closer you are to retirement, the less likely it is for the bank to approve your application.
What should I do to make sure my home loan application is accepted?
Stick to the eligibility criteria. When you are applying for a home loan, the eligibility criteria is your bible. Make sure you check out all the boxes on the eligibility criteria.
The next step is to make sure you have a good credit score. You can use many tools available online to find out your credit score. If it is around 750 or more, your chances of getting a home loan passed is higher. To get a good credit score you must pay all your EMIs and credit card bills on time.
Wait a few months to correct your credit score, if it is poor, before applying for a new loan. Compare all home loans available at banks and financial institutions. Choose your home loan carefully. You may choose a loan with a public sector bank as the interest rates are slightly lower than private sector banks.
Make sure you have a steady income while applying for a home loan. This will improve your chances considerably.
Can I take a home loan with a co-borrower? What is the benefit?
Yes. You can make your parents or spouse co-borrowers in your home loan. as long as the co-borrower is a family member the bank will allow it. You can have a maximum of seven co-borrowers.
The advantage of having a co-borrower is that you can apply for a higher amount of loan. The other advantage is that if you have a poor credit score and are having difficulty getting a loan, getting a co-borrower along can get your application to be approved.
Can I extend the loan amount after my loan is approved?
Yes. Most banks offer a top up loan that allows borrowers to borrow an additional amount as a top up to an existing loan.
Technically, once your loan amount is approved, you cannot get an extension on the loan amount. You may be allowed to tweak your tenure but not the loan amount.
However, if you are in need of more funds, you can get a top up loan on an existing one. The repayment schedule of the top up loan is consolidated with the existing loan. Top up loans are not very easy to come by. It depends on how well you have managed your existing loan.
If you have made timely payments towards your existing loan and your principal amount has reduced over time, you will be eligible for a top up. The top up loan comes with a tax benefit as the interest of a top up loan is eligible for tax deductions under section 24 of the Incomee Tax Act.
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