10 Best Bank for Home Loan in India 2019

Home Loan is financial assistance provided by bank or NFBC to fulfill your dream of buying your own home. If you are planning to avail home loan, you will find this post interesting. In this post, I will share information about 10 Best Bank for Home Loan in India.

Firstly, I will share factors that I have considered to select Best Bank for Home Loan in India.

Also Read – Second Home Loan Tax Implication and Benefit

Factors for selection of Best Bank for Home Loan

Interest Rate – First important factor for consideration while availing home loan is Interest rate. You should opt for the bank offering lowest rate of interest. A small difference in interest rate makes a huge difference in interest payment.

Processing Fees – The second important factor is processing fee. The fees are of two types some bank charges fixed fees, while other charges percentage of the loan value as processing fee. You should consider bank offering lowest processing fees.

Loan to Value Ratio – Loan to Value Ratio is another important factor. This ratio indicates how much finance bank is ready to offer against your property value. The ratio varies from 75% to 90%.

Principal Component in EMI – The principal component in EMI plays a crucial role in deciding best home loan providers. Most of the public-sector banks keep principal component as 45% of the EMI. In some banks interest component is bigger than the principal amount. You should select a bank with a higher principal component in EMI.

Prepayment Charges – Another important factor for consideration is prepayment charges. Some bank imposes prepayment charges if prepayment is made during loan starting year.

Loan Processing Time – It is difficult to find out loan processing time. However, from end user feedback you to avail this information. Some Banks provide this information on bank’s website.

Quick sanction and Disbursal Process – You should also consider bank based on disbursal process. Check and confirm the turnaround time of the shortlisted banks for disbursal. I recommend opting for bank which is transparent, quick and approachable.

Customer Support – Another important factor to consider is customer support facility offered by the bank. Customer support plays crucial role after disbursal of home loan.

Online Facility – The bank should provide online facility where customer can see loan balance, rate change, annual statement etc.

Special Scheme/Offers – You can give priority to a bank or financial institution for a special scheme or offers provided by them. However, it is recommended to study the offer carefully before opting.

Also Read – NRI Home Loan – Document and Checklist

 In nutshell, I recommend considering following points while selecting best bank for Home Loan.

  • Interest Rate
  • Processing Fees
  • Loan to Value Ratio
  • Principal Component in EMI
  • Prepayment Charges
  • Loan Processing Time
  • Quick sanction and Disbursal Process
  • Customer Support
  • Online Facility
  • Special Scheme/Offers

10 Best Bank for Home Loan in India

#1 HDFC Home Loan

HDFC Home Loan is first in the list of best bank for home loan in India. HDFC is very stringent in document verification. The interest offered by HDFC bank is competitive. HDFC provide loan for new house purchase, house construction, home improvement and home extension. Key Features of HDFC Home Loan are given below.

  • HDFC offers fixed, floating and TruFixed types of home loan.
  • HDFC offers Step Up Repayment Facility (SURF). In this facility repayment is scheduled as per expected growth in your income.
  • HDFC also provide facility of Flexible Loan Instalment Plan (FLIP). In FLIP EMI is higher during the initial years and it decreases in proportion to income.
  • You will also get Accelerated Repayment Scheme where you can increase the EMI as per your convenience to repay loan faster.
  • TruFixed Loan where interest rate is fixed for first two years.
Interest Rate8.75 – 9.25% up to 30 Lakh
Processing Fee0.50% of Loan amount or Rs.3000 whichever is higher
Maximum Tenure30 Years
Pre-Closure ChargesNIL if paid from own sources
LTV90% of Property Cost up to 30 Lakh

80% of Property Cost from 30 Lakh to 75 Lakh

75% of Property Cost above 75 Lakh

Prepayment ChargesNIL

Transparency in charges, good customer support service and multiple repayment options are few positive points about HDFC Home Loan.

#2 State Bank of India Home Loan

State Bank of India is next in the list of best bank for home loan. SBI offers home loan for house purchase, reconstruction, home renovation as well as top up loan. SBI interest rate is lower compared to other banks. However, you need to go through tedious documentation procedure. SBI has very strict guideline in terms of documentation and verification of property papers. Key features offered by SBI are given below.

  • SBI offers unique scheme called as SBI MAXGAIN. Under SBI MAXGAIN loan will be given as overdraft.
  • SBI provide loan at daily reducing balance. This means your interest outgo will be less.
  • SBI also offers Flexipay Home loan. EMI in this loan will be increasing with loan year.
  • SBI allows you to apply for subsidy under PMAY scheme
Interest Rate8.65 – 8.75% up to 30 Lakh
Processing Fee0.35% of Loan amount or Minimum Rs.2000 + GST
Maximum Tenure30 Years
Pre-Closure ChargesNIL
LTV90% for loan amount up to 20 Lakh

80% for loan amount above 20 Lakh

Prepayment ChargesNIL

SBI offers lowest interest rate with daily reducing balance. Approval process under SBI home loan is slow.

#3 ICICI Home Loan

ICICI Home Loan is known for simplify documentation, speed in approval and competitive interest rate. ICICI bank offers loan up to 5 Cr. They offers loan for purchase of new house, reconstruction and top up. Key features of ICICI Bank Home Loan are given below.

  • You can apply for home loan using tablet or smartphone and get faster approval.
  • ICICI Bank offers online calculator facility this facility will help you in knowing your eligibility.
  • ICICI Bank also provide balance transfer facility.
  • ICICI Bank allows you to apply for subsidy under PMAY.
  • Customer Care offered by ICICI bank is very good.
Interest Rate8.20 – 11.35% up to 30 Lakh
Processing Fee0.5%-1% of the loan amount
Maximum Tenure30 Years
Pre-Closure ChargesNIL
LTV90% for loan value less than Rs. 20 lakhs

80% for loan value more than 20 lakhs

75% for loans above Rs. 75 lakhs

Prepayment Charges NIL (Min prepayment should be equal to one EMI)

Quick processing of home loan, door step services are positive side of ICICI Home Loan. However, you need to pay higher processing fee and interest rate.

#4 Axis Bank Home Loan

Axis Bank Home Loan is next in the list of Best Home Loan. Axis Bank offers home loan for purchase, construction as well as top up loan. Minimum amount offered by this bank is 3 Lakh. Key Features associated with Axis Bank Home Loan are given below.

  • Minimum Loan amount 3 Lakh.
  • Fast forward home loan facility where you can increase EMI and also stop paying EMI for few months.
  • No Prepayment charges and attractive interest rate.
Interest Rate8.90 – 9.10%
Processing Fee1% of the loan amount (Minimum Rs.10,000)
Maximum Tenure30 Years
Pre-Closure ChargesNIL for floating rate & 2% for fixed-rate loans
LTV90% for loan value less than Rs. 20 lakhs

80% for loan value more than 20 lakhs

75% for loans above Rs. 75 lakhs

Prepayment Charges 2% for fixed-rate loans

Interest rate of Axis bank is competitive. However, you need to pay higher processing fee and other charges to avail this loan.

#5 LIC Housing Finance Home Loan

LIC Housing Finance Home Loan is next in the list. LIC Housing Loan offers loan for purchase of new house, reconstruction, renovation and top up loan. The interest rate under LICHF is calculated  on monthly reducing basis. You will not get fixed interest rate loan in LIC housing finance.

Interest Rate8.70 – 9.05%
Processing Fee0.5% of the loan amount (Minimum Rs.10,000)
Maximum Tenure30 Years
Pre-Closure ChargesNIL
LTV85% for loan value up to Rs. 20 lakhs

80% for loan above 20 lakh and up to 75 lakhs

75% for loans above Rs. 75 lakhs

Prepayment ChargesNIL

LIC Housing Finance offer home loan at competitive interest rate. However, entire process is manual and it takes lot of time.

#6 Indiabulls Home Loan

Indiabulls is housing finance company. Indiabulls offers loan for house purchase, construction, home improvement, top up and extension loan. Indiabulls offers unique loan called as “Fixed and Floating Rate Loans”. The interest rate is calculated with monthly reducing balance. Key features of Indiabulls Home Loan are given below.

  • Indiabulls Home Loan provides eHome Loan facility, where you can apply for home loan online.
  • Complete process for eHome Loan is online. No physical visit is required at branch.
  • Fixed Floating Rate – Dual rate loan is another unique feature of Indiabulls Home Loan.
Interest Rate8.80 – 11%
Processing Fee0.5-1% for loan amount 30 lakh Rs.10,000 for other loans
Maximum Tenure30 Years
Pre-Closure ChargesNIL
LTV90% for loan value less than Rs. 30 lakhs

80% for loan value of more than 30 lakhs

Prepayment ChargesNIL

Indiabulls is beneficial for people who don’t want to spend their time in visiting branch for loan. Slow processing for application and higher processing fee are disadvantage of Indiabulls Home Loan.

#7 PNB Housing Finance

PNB Housing Finance provide extensive range of home loan products such as Home Purchase Loan, Construction Loans, Home Extension Loan, Home Improvement Loan and Plot Loans.

Interest Rate8.99 – 11.5%
Processing Fee0.35% for loan amount
Maximum Tenure30 Years
Pre-Closure ChargesNIL for floating rate loans
LTV90% for loan value less than Rs. 30 lakhs

80% for loan value of more than 30 lakhs.

Prepayment ChargesNIL

#8 Dewan Housing Finance Limited

Dewan Housing Finance is housing finance company offering wide range of home loan including home improvement and renovation. DHFL approval time and disbursal time for home loan is very fast. The property verification process of DHFL is relaxed.

Interest Rate9 – 11%
Processing FeeVary from Rs.5000 to Rs.20000
Maximum Tenure30 Years
Pre-Closure ChargesNIL
LTV90% for loan value less than Rs. 20 lakhs

80% for loan value of more than 20 lakhs.

Prepayment ChargesPart repayment not allowed for 6 months

#9 Bank of Baroda Home Loan

Bank of Baroda offers home loan at very competitive rates. Bank of Baroda offers various types of home loan such as home improvement loan, home suvidha personal loan, Baroda Top up loan etc. Interest rate and other features associated with BOB home loan are given below.

Interest Rate8.65 – 11.25%
Processing FeeFixed rate of Rs.7500
Maximum Tenure30 Years
Pre-Closure ChargesNIL
LTV90% for loan value less than Rs. 30 lakhs

80% for loan value of more than 30 lakhs

Prepayment ChargesNIL

#10 Aditya Birla Capital Home Loan

Aditya Birla Capital Home Loan is next in the list of best home loan list. Aditya Birla Capital Home Loan is popular for faster processing and lower interest rates. They also offers door step service for the people. Interest rate and other features of Aditya Birla Capital Home Loan are given below.

Interest Rate9 – 12.5%
Processing FeeRs.5000 to Rs.10000
Maximum Tenure30 Years
Pre-Closure ChargesNIL for floating rate loans
LTV90% for loan value less than Rs. 30 lakhs

80% for loan value between 30 lakhs – 75 lakhs

75% for loan value above Rs. 75 lakhs

Prepayment ChargesNIL

Frequently Asked Questions about Home Loan

Why new customer is offered with lower interest rate compare to existing?

I have taken home loan from the bank before 3 years.  At present bank is charging me 11.5% interest rate. However, a bank is offering a new home loan with much lower interest rate 9.40% to new the customer. Why existing customer like me are charged with higher interest rate? This is a very common question. Answer of this question is quite simple. Bank is offering a home loan based on current applicable interest rate. The interest rate is variable and depends on multiple factors.

First, let us understand how bank decides home loan lending rate. As per new system introduced in April 2016 by RBI, all banks are using MCLR for a lending fund. MCLR is Marginal Cost of Funds based Lending Rate.

The calculation of MCLR depends on multiple factors like –

  • Marginal cost of funds
  • Operational Cost of banks
  • Cost incurred in managing CRR with RBI
  • Spread or Margin

As multiple variable factors are involved while calculating interest rate you will find a difference in Interest rate offered by various banks.

Home loan Interest rate = MCLR + Spread

So, if a bank has MCLR of 9.15% and spread of 0.25% the bank will offer home loan @9.4%.

The bank is offering lower interest rate to the new customer because MCLR or spread is changed or reduced.

Why Bank take conversation fees to reduce home loan interest?

You can reduce your home loan interest rate by paying conversation fees to the bank. By paying this fees you can convert your existing adjustable rate to current adjustable rate. Bank will take conversation fees to fulfill gap of change in the spread.

You should avail this offer only if you have large outstanding loan balance or long tenure left for the repayment of a home loan.

Why reduction in outstanding is very low during the starting period of home loan?

If you carefully observe your home loan statement you will be surprised to note that reduction in outstanding will be very low during the starting period. This is because interest component will be very high at the initial stage. Interest amount will be calculated on the whole amount during the initial stage. In first five years, only a few percentage of EMI will go towards paying the principal.  So, your principal will reduce at a lower rate.

Why you should make prepayment of Home Loan?

You should make maximum prepayment at the initial stage. The prepayment at initial stage helps to reduce the amount payable towards interest. A reduction in the amount paid towards interest means saving of money.

Over to you

Have you taken a Home loan from the bank or institution mentioned above?

Do share your experience in the comment section given below.

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