Best bank for home loan

[Trichromatic]

What are the factors you look for? Are there any hidden terms when a bank offers lower rate than others?

[Mariyam]

16 hours ago, Trichromatic said:

What are the factors you look for? Are there any hidden terms when a bank offers lower rate than others?

General rule of thumb, do your borrowing from PSUs and your investing with private banks.

 

Some pointers that come to mind (assuming home cost >1cr)

• Private banks will give you upto 85% of the amount. PSUs will give you 75% and give you 10% as a private loan. The problem with the latter is the 10% you can't use to claim IT benefits.
• Check if the property has been pre-approved by the bank. If that is the case, SBI ( or any PSU) will expedite the process and give extremely competitive interest rates.
• Repo rate changes can make the banks hike up interest rates. You need to pay a lumpsum to get it back to the earlier level. Again, the amount can be negotiated with SBI.
• If you have a good CIBIL score, you can negotiate on the the interest rate when you start off.
• Ensure that your loan is External benchmark linked(EBLR) which is directly linked with repo-rate and not MCLR based. HDFC after merger is providing only EBLR based loans. EBLR loans are Repo rate(Current rate ~ 6.9%) + Spread(~ 1.85%) = 8.75%. Your spread remains constant throughout your tenure and is mainly based on CIBIL but also on other factors like employment. Spread can be reduced by paying a fee if there a scope for reduction. SBI gives you the option of EBLR or MCLR.
• Add in the cost of life insurance that the bank is going to thrust on you. Additional 4-5% on the total loan amount.

[Teengunalagaan]

4 hours ago, Mariyam said:

General rule of thumb, do your borrowing from PSUs and your investing with private banks.

 

Some pointers that come to mind (assuming home cost >1cr)

• Private banks will give you upto 85% of the amount. PSUs will give you 75% and give you 10% as a private loan. The problem with the latter is the 10% you can't use to claim IT benefits.
• Check if the property has been pre-approved by the bank. If that is the case, SBI ( or any PSU) will expedite the process and give extremely competitive interest rates.
• Repo rate changes can make the banks hike up interest rates. You need to pay a lumpsum to get it back to the earlier level. Again, the amount can be negotiated with SBI.
• If you have a good CIBIL score, you can negotiate on the the interest rate when you start off.
• Ensure that your loan is External benchmark linked(EBLR) which is directly linked with repo-rate and not MCLR based. HDFC after merger is providing only EBLR based loans. EBLR loans are Repo rate(Current rate ~ 6.9%) + Spread(~ 1.85%) = 8.75%. Your spread remains constant throughout your tenure and is mainly based on CIBIL but also on other factors like employment. Spread can be reduced by paying a fee if there a scope for reduction. SBI gives you the option of EBLR or MCLR.
• Add in the cost of life insurance that the bank is going to thrust on you. Additional 4-5% on the total loan amount.

Isn't the current repo rate 6% ?

 

On the insurance, bank will try to push you, but you can deny it. Not only term insurance, but also property insurance I think. One can buy it separately.

[velu]

get loan from any Punjab based bank  , you may not need to repay

 

aak inhouse sbi  guy @Lord

[singhvivek141]

On 4/21/2025 at 8:27 PM, Trichromatic said:

What are the factors you look for? Are there any hidden terms when a bank offers lower rate than others?

 

Mostly PSU's are upfront. They do tell about hidden fees and any other costs included. Only caveat is they're slow in processing and will use lot of ifs and buts while giving the loan.

 

Pvt. Banks are flexible, and usually have a higher range of loan eligibility. However there are multiple hidden costs which the bank person will "forget" to tell you unless you're not aware of.

 

My point, if you are falling short of loan eligibility, go for Pvt sector...and then later xfer it to some PSU who are offering better costs.

[Trichromatic]

ICICI bank is offering 8.5% interest rate.

[kepler37b]

@Trichromatic...I might sound like a party pooper, but there is no value in buying in any sort of  real estate in Indian cities. Do not let your hard earned money be enjoyed by bankers/builders and property dallas. Please re-consider. 

 

Of course, if the missus is hell-bent on "apnaa ghar.." nothing much can be done. 

Edited April 27, 2025 by kepler37b

[Trichromatic]

5 hours ago, kepler37b said:

@Trichromatic...I might sound like a party pooper, but there is no value in buying in any sort of  real estate in Indian cities. Do not let your hard earned money be enjoyed by bankers/builders and property dallas. Please re-consider. 

 

Of course, if the missus is hell-bent on "apnaa ghar.." nothing much can be done. 

 

It's been personal goal for long time. One place to live is fine. I don't see value in rented place.

[diga]

2 hours ago, Trichromatic said:

 

It's been personal goal for long time. One place to live is fine. I don't see value in rented place.

yep.. that is the primary reason for buying a property though mine wont appreciate with inflation

[Mariyam]

1 hour ago, diga said:

yep.. that is the primary reason for buying a property though mine wont appreciate with inflation

In Mumbai++, Delhi/NCR, Bangalore, Hyderabad, Pune and Ahmedabad, the YoY property (>1cr) appreciation rate has been greater than the stated inflation rate for the last 20 years.

[diga]

49 minutes ago, Mariyam said:

In Mumbai++, Delhi/NCR, Bangalore, Hyderabad, Pune and Ahmedabad, the YoY property (>1cr) appreciation rate has been greater than the stated inflation rate for the last 20 years.

Dont want to digress from the OP's questions, but being far away from Metro lines has probably dented the price rise. 

 

PSU banks do have that personal connect with Manager & loan officer which one doesnt get in private banks.. its mostly tele-banking 

Edited April 27, 2025 by diga

[Trichromatic]

On 4/22/2025 at 1:03 PM, Mariyam said:

General rule of thumb, do your borrowing from PSUs and your investing with private banks.

 

Some pointers that come to mind (assuming home cost >1cr)

• Private banks will give you upto 85% of the amount. PSUs will give you 75% and give you 10% as a private loan. The problem with the latter is the 10% you can't use to claim IT benefits.
• Check if the property has been pre-approved by the bank. If that is the case, SBI ( or any PSU) will expedite the process and give extremely competitive interest rates.
• Repo rate changes can make the banks hike up interest rates. You need to pay a lumpsum to get it back to the earlier level. Again, the amount can be negotiated with SBI.
• If you have a good CIBIL score, you can negotiate on the the interest rate when you start off.
• Ensure that your loan is External benchmark linked(EBLR) which is directly linked with repo-rate and not MCLR based. HDFC after merger is providing only EBLR based loans. EBLR loans are Repo rate(Current rate ~ 6.9%) + Spread(~ 1.85%) = 8.75%. Your spread remains constant throughout your tenure and is mainly based on CIBIL but also on other factors like employment. Spread can be reduced by paying a fee if there a scope for reduction. SBI gives you the option of EBLR or MCLR.
• Add in the cost of life insurance that the bank is going to thrust on you. Additional 4-5% on the total loan amount.

 

I am planning to pay 40% on my own and get 60% as loan. Project is pre-approved by many banks (not sure about SBI).

 

 

[crictime]

On 4/27/2025 at 7:26 PM, Mariyam said:

In Mumbai++, Delhi/NCR, Bangalore, Hyderabad, Pune and Ahmedabad, the YoY property (>1cr) appreciation rate has been greater than the stated inflation rate for the last 20 years.

Dont know about other cities but in Mumbai the property rates appreciate very well if purchased at right places as you rightly pointed out. Somewhere between 2000 to 2010 was real boom in prices and then it has been quite a slow rise.  There are good development projects by Godrej, Lodha, Shapoorji,  Supreme etc., the completion of which sees a good uptick in the property price invested during launch phase. And if you get someone who does not asks you to delay depositing the rent cheque then its much more nice return.

 

I am not sure why the taxes on property purchase, stamp duty and registration charges amount to what they are. Feels like donation. And whats worse is as the slab increases, the charges increase. 

 

[jf1gp_1]

On 4/27/2025 at 3:29 PM, Trichromatic said:

 

It's been personal goal for long time. One place to live is fine. I don't see value in rented place.

You need to own property. Don't worry about bank, check where you get lowest interest rate. Floating or fixed is what you need to decide. I strongly advice getting a lawyer when buying a property. 

[coffee_rules]

I have seen so many videos advising people to not:

 

Own a home

Own a car

 

But to buy it on lease. For car, it makes sense as we buy a brand new car, it loses values as soon as you drive out of the showroom. I buy used cars, so don't pay as much and use it until it completely breaks down. But Middle-class is obsessed with owning a home, which becomes a liability for life as EMIs or mortgages are no high. Have to have some more idea on leasing vs owning,

[crictime]

23 minutes ago, coffee_rules said:

I have seen so many videos advising people to not:

 

Own a home

Own a car

 

But to buy it on lease. For car, it makes sense as we buy a brand new car, it loses values as soon as you drive out of the showroom. I buy used cars, so don't pay as much and use it until it completely breaks down. But Middle-class is obsessed with owning a home, which becomes a liability for life as EMIs or mortgages are no high. Have to have some more idea on leasing vs owning,

Just curious to know as to why you consider a home as liability. People in Mumbai are making money by buying 2 or more real estates. Live in one and renting other properties for monthly recurring income. There are  many who own more than 3. Also, these properties are passed to the next generation. Where is the liability in this.

[Trichromatic]

34 minutes ago, coffee_rules said:

I have seen so many videos advising people to not:

 

Own a home

Own a car

 

But to buy it on lease. For car, it makes sense as we buy a brand new car, it loses values as soon as you drive out of the showroom. I buy used cars, so don't pay as much and use it until it completely breaks down. But Middle-class is obsessed with owning a home, which becomes a liability for life as EMIs or mortgages are no high. Have to have some more idea on leasing vs owning,

 

Owning a home is better than renting for sure if it's affordable.

 

I moved to a rental flat last year and owner asked me to vacate after 5 months saying that they want to move in. I was not ready to shift again and absolutely hated it.

 

[coffee_rules]

1 hour ago, Trichromatic said:

 

Owning a home is better than renting for sure if it's affordable.

 

I moved to a rental flat last year and owner asked me to vacate after 5 months saying that they want to move in. I was not ready to shift again and absolutely hated it.

 

Not renting, renting on a fixed lease , say 5 years

[crictime]

1 hour ago, Trichromatic said:

 

Owning a home is better than renting for sure if it's affordable.

 

I moved to a rental flat last year and owner asked me to vacate after 5 months saying that they want to move in. I was not ready to shift again and absolutely hated it.

 

 

With regards to your initial query, the repo rate was reduced 3 days back. So all banks will offer a reduced interest rate.