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HOME LOANS 2021

All you need to know about Best Banks List to get Home Loan in 2021

Home loans not only help people become homeowners at a relatively young age, but they also help obtain ownership of secured assets, which is especially helpful in emergencies like the coronavirus pandemic. However, the profitability of your home loan depends on the bank you choose to obtain your home loan. More importantly, the bank that offers the lowest interest rate may not be the best bank for you, considering the other fees lenders charge for providing the loan. Choosing the best bank to obtain a home loan is very personal and the borrower must consider several factors. To make it easier for borrowers, here is the list of best banks to get a home loan in 2021.

Since interest charges will always be the biggest influence in driving a borrower’s decision, we’ve listed the banks that offer you the best deals at the most affordable rates right now. However, in making the list, we also determined the banks’ ability to repay the loans, taking into account the additional fees.

State Bank of India (SBI)

India’s largest mortgage lender, the government-run State Bank of India (SBI), has helped more than 30 lakh families with the purchase of their homes so far. Established in 1955, the lender also has more than 24,000 branches in India and abroad.

SBI home loan interest rate

Rate of interest on home loans Best rate* Highest rate*
For salaried individuals 6.7% 7.05%
For self-employed individuals 7% 7.40%

Rate applicability from May 1, 2021

Longest tenure: 30 years

Processing fee: 0.40% of the loan amount, subject to a minimum of Rs 10,000 and a maximum of Rs 30,000 with GST. For projects where the bank is interconnected with the originator, the rate will be 0.40% subject to a maximum of Rs 10,000 plus tax.
Affordability scale: High
Advantages: The government-run bank is always among the first to lower interest rates, in case the RBI lowers the repo rate. It also makes sense to trust one of the best-performing Indian banks for your lending needs. The bank’s increased financial health also gives borrowers a reason to commit to the SBI.
Disadvantages: The number of documents that applicants must provide is high, as the bank uses strict due diligence to confirm the creditworthiness of the borrower. The best interest rate is also offered to borrowers with credit scores of 750 or higher.

Sometimes public lenders can be weak in conveying important information that can be useful to mortgage borrowers. This means that you will have to follow the news about changes in home loan policies and claim benefits from time to time.

HDFC

Founded in 1977, HDFC has helped more than 80 people buy their homes to date. It is important to note that HDFC, a Mumbai-based housing finance company (HFC), should not be jumbled with the HDFC Bank, even though the two are part of the same HDFC group.

HDFC home loan interest rate

Rate of interest on home loans Best rate* Highest rate*
For salaried individuals 6.75% 7.40%
For self-employed individuals 6.75% 7.85%

*Rate applicability valid from March 4, 2021
Maximum tenure: 30 years
Processing fee: up to 0.50% of the loan amount or Rs 3,000, whichever is greater.
Affordability scale: high
Advantages: HDFC is also among the first HFCs to reduce rates after the Reserve Bank of India announced the rate reduction. As part of a highly successful group, HFC also has significant scope to deliver benefits to its customers.
Disadvantages: The HDFC rates are accessible to borrowers with a credit score of at least 750. You will not be able to get these rates if the scores are lower.

ICICI Bank
ICICI Bank, the second-largest private lender in the country by market capitalization, was promoted in 1994 by ICICI Limited and was a wholly-owned subsidiary of ICICI Limited. Currently, ICICI Bank has a network of 5,288 branches across India.

ICICI Bank home loan interest rate

Interest rate on home loans Best rate* Highest rate*
For salaried individuals 6.75% 7.95%
For self-employed individuals 6.95% 8.05%

*Rate applicability from March 5, 2021
Maximum tenure: 30 years
Processing fees: 0.50% of the home loan amount.
Affordability scale: High
Advantages: ICICI Bank is one of the most customer-friendly banks and quickly offers rate conversion benefits. The ease of doing business on its various online platforms is also remarkably easy, unlike other banks.
Disadvantages: Since the bank offers a wide range of banking products and financial services to corporate and individual clients through a variety of delivery channels and through group companies, you may expect a lot of spam calls.

Bank of Baroda

Vadodara-based Bank of Baroda has become India’s third-largest bank after SBI, following its merger with Dena Bank and Vijaya Bank in April 2019. Founded by the Maharaja of Baroda in 1908, the Bank, along with 13 other major commercial banks in India, was nationalized on July 19, 1969, by the government and currently, it has more than 10,000 branches in both India and abroad.

Bank of Baroda home loan interest rate

Interest rates on home loans Best rate Highest rate
For salaried individuals 6.75%* 9%
For self-employed individuals 7% 9%

*Effective from March 15, 2021.
Maximum tenure: 30 years
Processing fees: None currently
Affordability scale: High
Advantages: The process of obtaining a loan is very simple on the online platform.

The downside: People with low credit scores will find the cost of borrowing higher and therefore must focus on getting credit from HFCs or NBFCs. As mentioned above, it takes a long time for public lenders to convey important information to borrowers.

Punjab National Bank

India’s second-largest public sector bank, the Punjab National Bank (PNB), also currently offers affordable interest rates for home loans. The New Delhi-based state bank was established in 1894 and has more than 80 million customers and 6,937 branches in 764 cities.

Punjab National Bank home loan interest rate

Interest rates on home loans Best rate Highest rate
For salaried individuals 6.80% 7.40%
For self-employed individuals 6.80% 7.40%

Maximum tenure: 30 years
Affordability scale: High
Processing fee: None from January 1, 2021, to March 31, 2021. It is 0.35% of the loan amount, with the minimum and maximum of Rs 2,500 and Rs 15,000.
Advantages: The temporary waiver of processing fees reduces the borrower’s overhead. People with good credit scores are always rewarded by the bank.
Disadvantages: The bank’s image has suffered major setbacks in the recent past amid a huge toxic loan boom and its alleged involvement in fraud cases. Additionally, borrowers may find the services less convenient for clients than most private lenders.

LIC Housing Finance

A subsidiary of LIC, the company has approved more than 3.35 lakh home loans. The company, a subsidiary of LIC, has so far approved more than 3.35 Lakh home loans.

LIC Housing Finance home loan interest rate

Interest rates on home loans Best rate Highest rate
For salaried individuals 6.66% 7.80%
For self-employed individuals 7% 7.90%

Maximum tenure: 30 years
Processing fees: 0.25% of loan money, with the upper limit, capped at Rs. 10,000.
Affordability scale: Average
Advantages: LIC HFL offers 90% of the property value as a home loan.
Disadvantages: Interest rates are not low as few of the Indian leading banks.

Canara Bank

Canara Bank was established in July 1906 in Mangalore, Karnataka, and was nationalized in 1969. It is a more than a century-old bank, based in Bengaluru and operating in more than 10,391 branches throughout India. In 2020, Canara Bank became the fourth largest state bank by assets after the merger with Syndicate Bank, thinking of a turnover of more than Rs 16 trillion.

Canara Bank home loan interest rate

Interest rates on home loans Best rate Highest rate
For salaried individuals 6.90% 8.90%
For self-employed individuals 6.90% 8.90%

Maximum tenure: 30 years
Affordability scale: Average
Processing fee: 0.50% of the loan amount with a minimum and maximum limit of Rs 1,500 and Rs 10,000 respectively.
Advantages: You can pay off your loan until you are 75 years old. This means that people who buy their houses in the Middle Ages will find this bank more convenient.
Disadvantages: to get a larger loan, you must make a contribution of up to 25% of the property’s value. Unlike most banks, Canara Bank also charges mortgage loan processing fees.

Union Bank

This Mumbai-based public lender currently offers the cheapest home purchase loans on the market. As a public limited company, the bank has a network of more than 9,500 local branches.

Union Bank home loan interest rate

Interest rates on home loans Best rate Highest rate
For salaried individuals 6.70% 7.15%
For self-employed individuals 6.90% 7.35%

Maximum tenure: 30 years
Processing fee: 0.50% of the total loan amount with a maximum of Rs 15,000.
Affordability scale: high
Advantages: Currently the best bank to apply for a home loan, this state lender will offer you a loan if you are 18 years old, unlike most banks that provide home purchase loans to people over 21 years old. There is also no limit to the amount of loan you can borrow here.
Disadvantages: Although Union Bank rates are currently the lowest, the transmission of downward changes is rarely fast.

HDFC Bank

Those who commit to a bank and find it more comfortable rather than an HFC can apply for a home loan at HDFC Bank, HFC’s baking subsidiary, HDFC. Founded in 1994, the bank has a nationwide network of 5,430 branches.

HDFC Bank home loan interest rate

Interest rates on home loans Best rate Highest rate
For salaried individuals 6.80% 7.85%
For self-employed individuals 6.80% 7.85%

Maximum tenure: 30 years
Processing fee: up to 0.50% of the loan amount or Rs 3,000, whichever is greater.
Affordability scale: medium
Advantages: The bank is relatively quick to transfer the benefits of a lower interest rate policy.
Disadvantages: The approval process for your loan can be longer, considering that the bank will require a large number of documents and perform many verifications to avoid bad loans. This was critical to keeping the bank’s financial health in check, even during the worst periods of the financial crisis.

Axis Bank

A pioneer in the private sector, Axis Bank was established in 1993 and currently operates around 4,500 branches in India and abroad.

Axis home loan interest rate

Interest rates on home loans Best rate Highest rate
For salaried individuals 6.90% 8.40%
For self-employed individuals 7% 8.55%

Maximum tenure: 30 years

Processing fee: up to 1% of the loan amount, with a minimum amount of Rs 10,000.
Affordability scale: medium
Advantages: The bank is a pioneer in rewarding credit-worthy people and was one of the first to offer them low interest rates.
While most banks have offered a waiver of processing fees in light of the holiday season and the coronavirus pandemic as of October 2020, Axis Bank continues to charge these fees. Also, this bank’s processing fee is relatively higher than what other banks charge.


Important acts to follow while deciding a bank for your home loan

Banks are quicker to pass on the benefits of lower interest rates to customers, compared to non-interest-bearing compounds (NBFCs) and hydrofluorocarbons (HFCs).

Salaries can get a better deal from the bank if their credit score is good. Banks will be willing to negotiate a better deal if you are a bankable customer.

Banks are not averse to negotiating even if it doesn’t seem like it. They are also in the market, selling products like all other companies.

Each bank is different and offers different benefits. Select a bank based on your individual requirements.

Why does buying a property make sense right now?

With the second wave of the coronavirus pandemic negatively impacting the economy, the Reserve Bank of India (RBI) decided, on August 6, 2021, to keep the buyback rate unchanged amid increasing pressure on the regulator for banks to provide liquidity support to the economy. With home loan interest rates already at an all-time low, 2021 may be the best time to buy a property with borrowed equity. This is especially true if you also take into account the discounts offered by developers and the reduction in stamp fees announced by various state governments.

More importantly, property prices are also currently on a downward trajectory and are likely to move higher as India’s economic situation begins to improve.

Price Growth: City-Wise Break-Up

City Average price on June 30, 2021

(in Rs per sq ft)

Ahmedabad 3,251
Bangalore 5,495
Chennai 5,308
Hyderabad 5,790
Kolkata 4,251
MMR 9,475
NCR 4,337
Pune 5,083
National average 6,234

Things to keep in mind

Amid rising delinquency rates, almost all banks now offer the best interest rates only to applicants with good credit scores. As mentioned above, a credit score of more than 700 is considered a good credit score.
Changes in the repurchase rate will not be immediately reflected in the mortgage loan EMI payments. Banks reset rates at specific intervals.
Note that banks cannot impose a penalty on the prepayment of mortgage loans tied to a variable interest rate.

 

Also, read- Karan Johar’s Mumbai house lavish and yet simple-Aquireacres 

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