SBI Home Loan is most preferred among the borrowers. This is based on a study done by me during last 6 months. On my blog, i receive maximum queries on SBI Home Loan. Though i always take neutral approach and suggest options like SBI, ICICI Bank or Axis Bank to potential borrowers. I personally interacted with many borrowers to understand why they prefer SBI Home Loan. Through this post, i would like to share the experience of blog reader’s on SBI Home Loan. Towards the end of the post, i have highlighted few cons/problems faced by my blog readers so that potential borrowers can make an informed decision. I always suggest borrowers to discuss the requirement with a couple of Home Loan providers. Depending on the requirement, a borrower may finalize the Home Loan provider only after comparison between 2-3 Home Loan Providers.
Why do borrowers prefer SBI Home Loan?
1. Trust: State Bank of India is India’s largest PSU bank or Govt Bank as the people call. In India, somehow human psychology is that Govt banks are more trustworthy and if something go wrong then Govt will rescue the bank. In short, Govt bank will not fail. Even if the Govt Bank fails, Govt will rescue the bank. The best example is recent capital infusion by Govt of India in PSU banks to revive their financial health. According to recent The Brand Trust Report, 2015, State Bank of India or SBI is India’s must trusted Brand in Banking sector. Besides SBI, ICICI Bank is the only bank which feature in India’s top 50 trusted brands. The trust factor is the most crucial factor why borrowers prefer SBI Home Loan. Large queues in SBI branches are proof that it is the most trusted bank.
2. Lowest Interest Rate: You can take it for granted and in writing that SBI Home Loan Interest Rate will always be lowest among all the banks. One of the reason is a scale of operation i.e. economies of scale. Secondly, SBI has access to cheap funds as the CASA ratio is one of the best among all the banks. Lastly, SBI is the largest home loan provider in terms of Home Loan Book value. In fact, SBI is the market leader in defining the direction of Mortgage industry. If SBI Home Loan interest rates are cut then all other home loan providers follow the suit. The best example is REPO Rate cut by RBI in January this year. It was SBI which cut the base rate first and then others followed the suit.
3. Hidden Charges: It’s a general perception among borrowers that SBI Home Loan is most transparent among all. In short, there are No Hidden Charges if you avail SBI Home Loan. I personally disagree, but you cannot do much about customer perception. One of the reasons for this positive perception is TRUST factor. In fact, i observed that SBI charge highest processing fees and other misc charges among top 3 Home Loan providers. The main reason is the negative word of mouth publicity against small players and other large private banks. Processing fees is subjective and can be negotiated.
4. Legal Verification: I personally agree that legal verification process of SBI is one of the best. SBI Home Loan is approved only after strict and thorough due diligence. The selfish motive of a bank is to keep NPA’s under control. If the project is approved by SBI then be assured that the probability of any legal issue in the project is minimum. At the same time, i always suggest my readers to go for Title Search Report even if the project is approved by SBI. The reason being the project due diligence is done but what about due diligence of your property/flat.
5. SBI MaxGain Home Loan: Though is not pushed aggressively by SBI but in my opinion MaxGain is one of the best Home Loan products. It can help you save substantial interest outflow if MaxGain account is used intelligently. Though other banks also provide similar product but in my opinion SBI Home Loan with MaxGain feature has its own advantage. Reason being, SBI Home Loan with Maxgain feature is available at the same interest rate as normal SBI Home Loan. In other banks, the interest rate for similar Home Loan product is slightly higher than regular Home Loan Interest Rate.
6. Branch Network: SBI has the largest network of bank branches i.e. 13000 branches. A common perception is that borrower can operate SBI Home Loan from any of these 13000 branches i.e. convenience to operate SBI Home Loan account from anywhere but it is not true. Though, through online home loan account interface you can perform most of the basic functions. A borrower who is not comfortable with an online account may find it difficult to operate the SBI Home Loan account. All key requests are accepted only in home branch.
7. Personal Relation: Last but not the least, though this point may sound illogical in big cities but it is true for small towns and cities. Almost every household has an account in State Bank of India in small cities/towns. The branch manager or bank employee of a bank know all the customers personally. Reason being they join their service in same branch/city and retire in the same city as a Branch Manager. In short, borrower avail SBI Home Loan purely based on the personal relation with the Bank Manager or Employee of an SBI branch. By the way, my parents also availed SBI Home Loan as they knew branch manager. Unfortunately, SBI branch manager sold SBI RiNn Raksha policy (HLPP) to my parents.
I can highlight many more points which are other possible reasons for borrower’s preference towards SBI Home Loan. In my opinion, above mentioned 7 points cover most common reasons. Please check out following section for another side of the story based on the experience of reader’s of my blog.
Before You Decide…
1. Delay in Home Loan Processing: The experience of my blog readers and clients suggest that SBI Home Loan processing is bit slow. Normally, it takes 2-3 weeks time to process Home Loan but SBI may take up to 4 weeks provided all the documents and property papers are in place. You may include relevant clauses in your agreement with the seller for a possible delay in SBI Home Loan processing.
2. Home Loan Eligibility: Another common feedback is related to stringent Home Loan Eligibility. Though the intentions are noble as SBI don’t want borrowers to default on EMI payment. Normally EMI across loans including Home Loan should not exceed 50% of net take home salary. Private Banks or HFC’s relax this % up to 60% thus increase Home Loan Eligibility. It is subjective but in my opinion strict Home Loan Eligibility will help reduce NPA’s of the bank. Buyer looking for higher home loan eligibility may skip SBI Home Loan.
3. Mis-selling of HLPP: Most of the borrowers of SBI are from lower or lower medium class. These borrowers are not financially aware, therefore, are victims of mis-selling. Normally, Home Loan Protection Plan is bundled with SBI Home Loan. Though any financial bundling is illegal. HLPP in SBI is known as SBI Life – RiNn Raksha i.e. Group Credit Life Insurance Plan. You can always refuse to avail this insurance plan. Branch Manager or Bank Employee may threat to cancel you SBI Home Loan. One of blog readers shared his experience of bullying by SBI branch manager. Trust me nothing will happen. Even if you refuse to buy HLPP / RiNN Raksha, no one can stop your SBI Home Loan provided all the documents and property originals are in place. You can simply refuse the HLPP and defy the bullying/mis-selling.
4. Staff Behavior: This point is contrary to point shared by my readers as one of the reasons to opt for SBI Home Loan. Many borrowers don’t find SBI staff friendly and supportive. This feedback is predominantly from borrowers in metros and big cities or crowded SBI branches. I do understand, but SBI needs to undertake staff optimization exercise. Some branches/counters are overcrowded while others are comparatively free.
Hope you liked the post. It is always advisable to approach 2-3 banks before you apply for Home Loan. Depending on your requirement you may finalize the Home Loan provider. I hope above-mentioned feedback or inputs from readers of this blog will help you in right decision making.
Copyright © Nitin Bhatia. All Rights Reserved.
Hi Nitin, I have a query here ..When you apply for home loan online in sbi website, we can an option to choose from a branch of your residence or from the location of property. If my residence is different to property location how do sbi assess this property properly ? Also if it is a construction linked plan who payments will be disbursed ?
Home Loan is approved by centralized processing center therefore you can select any option. Home Loan will be disbursed to builder.
Hi Nitin Sir, Thanks for sharing nice post.
If I want to transfer my existing loan to SBI, All legal verification will be happening again from SBI side?
That’s correct.
Thanks Nitin.
I would like to transfer my existing loan from LICHFL to SBI after 2 years of Fixed rate. At that time, SBI would be asking the documents for legal verification. In this case, Who is the responsible person to provide all the needed documents to SBI? Is this Builder Or LICHFL Or Flat Owner?
If it is Flat Owner(Myself), What are all the documents which I need to provide for the Successful legal verification done, So that I would readily keeping those in my hand. Thanks for your time!
It will be owner’s responsibility.
Thanks Sir!!
Hello Nitin Sir,
I am planning to Buy a Preowned Flat with an area of 1200 SFT, which is already purchased by Mr X, As i am staying in that Flat since 2 years and i am the first person who came into that flat post construction. Current area value of that flat is 25-26 lakh however flat owner coating for 28 lakh with fully furnished and with amenities. i have 10 lakh in hand and rest of the amount i would like to go for Home loan. Kindly suggest me which Bank home loan is better now and in future so that i can go for that bank, my current take home is 50k. If you need any further details i will provide in next post.
You may check with SBI or ICICI Bank.
Hi Nitin.
I agree we have trust in SBI , and transparency etc. But legal verification is not that much strict. My builder Bribed SBI agent / manager . and got approval for all his flats. This is happening widely. So it is individual responsibliity to verify the docs. He gave 50K for each flat and he collected the same from each buyer, saying he is arranging SBI loan.
Personally i disagree as project is approved by Risk Assessment team of the bank. A branch manager or agent cannot influence this process. It seems he charged extra from buyers in context of SBI Home Loan approval.
Hi Nitinji,
I live in delhi and purchased a flat in rajasthan. I approached sbi in delhi near my home but though the manager was polite but told me that they cannot finance a property a rajasthan (u can call it NCR). so is that means I have to go to a branch in Rajasthan for getting the loan.
It is not necessary. A loan for property in Rajasthan can be processed from your nearest branch in Delhi. Being a PSU bank, they don’t want to take extra load :)
You may approach any private bank like ICICI Bank or Axis Bank.
Hi Nitin,
I am confused between SBI and HDFC for home loan. SBI is charging stamp duty + property insurance which comes around 45,000 whereas HDFC is asking about 6k. Both have same interest rate. But I have read your posts and looks like private banks has hidden charges.
Can you please suggest which one would be better?
You should opt out of Home Loan insurance from SBI and then you may ahead with SBI Home Loan.
Hi Nitinji,
Thanks for posting this nice article. I would like to share my observation, as SBI legal verification process is strict as a result lot of developers are not ready to sell flats who are planning take loans from SBI. They directly told customers that we have a tie up with x,y,z banks so you can process loan from there. Actually they might have missing some legal documents.
I agree but borrowing from SBI is safest bet :)
Hello SIr,
I want to take plot loan of 18 lakh from a developer but the project is approved only by IndiaBulls and LIC. and I dnot want to take it from there as the reviews online are bad . Please suggest any other reliable bank which will be the best for plot loan. And is it true that its a guideline from RBI and NHB that we have to construct within 2 years else it will be converted to non-home loan and interest will be increased accordingly. But when talking to banks they tell that its just a udertaking we have to sign but bank dnot change interest rate but wont give this statement on paper.
What you suggest?
Thanks,
Sunil
You may opt for only land or plot loan under which there is no condition to start construction within 2 years. You may approach SBI.
Hello Sir
I have opted for maxgain home loan account, post registration, net banking access was enabled for OD account. I tested by depositing and withdrawing amount from maxgain account and it works.
But every month end the available balance will become zero and the deposited amount in available balance shows only after the EMI comes through.
Problem is If i have money in maxgain account available balance, it reflects only after emi is paid. EMI is on 15th so between month end and 15th available balance shows zero. Is this normal behaviour of maxgain account ? what is wrong ? I searched internet and no answers around this problem is suggested.
Yes i enquired the bank and they said it is normal behaviour. I opted for maxgain account because I can withdraw money when in need, but now it looks like my parked available balance can be withdrawn post 15th of every month only … Kindly help…
Thanks,
Rashmi
Please don’t go by what is shown. You try to withdraw the funds from your maxgain current account when available balance is shown as 0. If funds are available for withdrawal then need not to worry.
I have applied Home loan with 2nd applicant. Me is the 1st applicant (primary) and my brother is 2nd applicant. i want to know full Interest on home loan deduction under sec 24(b) can be claimed in name of 1st applicant only??
Yes provided you are paying 100% EMI or if you are sole owner of the property
I want to avail home loan of Rs.10Lakhs for buying flat, In the Home loan application form , there are several type of home loan scheme in SBI. I want to choose “Floating rate of interest” with minimum cost.
Can you tell me sir, which one should choose preferably and most economic one,
1) Normal Housing Loan Scheme,
2) SBI Flexi Housing Loan,
3) SBI Realty Housing Loan,
4) SBI MaxGain Housing Loan,
5) SBI NRI Housing Loan,
6) Plus Scheme.
It depends on your requirement. You may understand all products from SBI Home Loan Manager and then decide.
is there any minimum land size for opting home loan?
i am planning to buy a 2 floor house which is built on a plot of 500sqft, is that eligible for homeloan?
Yes
Hi,
I’ve been reading ur posts and found them quite informative and suggesting my friends and relatives too. Really appreciate ur effort a lot.
Actually this doubt is regarding sbi max gain home loan.
Suppose I deposit some amount as prepayment in regular home loan so that my principal decreases and interest also reduces.
Same amount is deposited as surplus which will reduce my book Balance and hence my interest calculated on it will come down.
Now my doubt is are both the situations similar or there is some catch.
As I read that interest is calculated at the end of the month and not in the starting in max gain. Also is there a permanent prepayment facility in max gain or not.
Thanks in advance.
Regards
From interest calculation perspective, both the situations are same. You can prepay in MaxGain account. Interest for all Home Loan products is calculated on specific date depending on EMI date.
Hi Nithin,
Thanks for all the informative articles on your website ! This helps a lot !
Meanwhile I got my SBI Maxgain Home Loan sanctioned a year back, and have got transnational rights to it as well. I have the following questions.
1) Is there a Seperate Loan Account which is Linked to Maxgain OD account ? I have seen few people mentioning it in various places online. I don’t see a linked loan account though. Kindly let me know if you know anything about this.
2) I parked some surplus in the OD account, but every month end I see some amount going down in the available balance. Is this normal ?
Thanks,
Sorry Kindly Ignore question 2. Saw that you have already answered that question. thanks again !
1. You need to open a current account with SBI which will be linked to your Maxgain Home Loan account.
Thanks Nithin,
The reason I asked this is because, few people have mentioned that they are directly doing neft transfer to loan accounts for prepayments, instead of visiting the branch. In case of Maxgain, the neft transfer is considered as surplus deposit. So I was wondering if there was a seperate loan account linked to maxgain account.
Regards,
Rashmi
I understand :)
My SBI Home Loan Rs.10,00,000 has been sactioned on 24/11/2015. SBI branch were also taken required Interim security of Rs.3,00,000 . The applicant is already an existing savings account holder.
But now my Home SBI Branch is also asking me to issue them 6 number of signed blank cheques(without mentioning date and amount) as security.
Why asking for it? Home loan is priority sector loan in india. Any business of blank cheques is illigal and giving blank cheques is scary to us. Bank manager forced me to tell that it’s part of documentation.
The general rule of a banker is always issue a cheque with a date and amount wriiten.
Then how can a bank ask for undated and unamounted signed blank cheques. Is this part of any banking rules to take blank undated cheques from customers?
Is this acceptance of blank cheques by banks has the consent of RBI?
Please solve this issue as soon as possible.
Thank you sir in advance.
Normally banks ask for 4 cheques as a security, 3 cheques equivalent to EMI amount in case of EMI default and 1 cheque of upto total Home Loan value in case of home loan default. Few banks may ask for blank cheque but you can always refuse and insist on putting a amount. The amount can be upto fixed value. These cheques are undated because if you put a date then it is valid only for 3 months.
Hello sir,
I am going to buy a property with home loan from India bulls housing finance. Can I register sale deed of my property at circle rate? whereas agreement is already done at full price and loan is sactioned from ibfl.
If Indiabulls housing finance is ok then you can register the sale deed at circle rate.
How is the legal verification process of HDFC? I plan to go for HDFC only because of higher loan eligibility. Point to be noted, there are few flats in the project that I am looking to purchase, that are financed by SBI home loan
Seems to be ok if the project is approved by SBI.
I have applied an NRI Home Loan in SBI-Jajpur Town Branch in Odisha on 25.05.2015, however, all the ORIGINAL documents were submitted by 30.07.2015. And after that all the legal procedures/formalities have already been completed. The Deputy Manager asked me to have Rinn Raksha Insurance against outstanding (Balance) Loan. But I insisted that I do not want this. He told me this is a MUST ??!! compulsory !!!!! To my shock & surprise he informed me that …. “If you will not have “Rinn Raksha” insurance we will not sanction your Home Loan” ???!!! Since then i.e. from 30.07.2015 they are holding my file. When I ask them about the progress of the Home Loan, they say …….. ” Wait we will send you SMS in your Mobile” ?!!!!!!! when this will be ready??!!! What a joke!!! SBI is the WORST Bank in the whole planet !!!
Personally, I have not yet interacted with SBI for any financial transactions so far. But basis experiences of my friends regarding SBI Home Loans, I agree to some points mentioned by you — awful service, pathetic customer support, lazy and slow processing, lesser loan eligibility, and mostly cumbersome and time-wasting processes.
I personally have taken my home loan from HDFC – primarily because it has been conservative in its approach and secure. HDFC, in my opinion, takes every care to ensure that the property that they approve is clear and is out of litigation (of course barring certain instances). They are slow to respond in interest rate adjustments but they are quite transparent. There are absolutely no hidden charges – I can vouch for that. The staff is not exactly very friendly but overall the support is quite good. I personally feel that you should share your experiences on HDFC, though it is my personal favourite.
I already shared my experience with HDFC. Please check following link
https://www.nitinbhatia.in/home-loan/home-loan-experience-with-hdfc-ltd/
Hi Nithin,
For a under-construction property, SBI has partially disbursed 22 Lakh out of the total approved amount of 33 Lakh. This was 2 years back. I am paying full EMI for 33 Lakh SBI is taking EMI component for 22 Lakh and EMI component for reminder of 11 Lakh is remitted back in the loan account which I cannot transact.
My question is now that the registration is nearing, I want to utilise the remainder of approved amount ie 11 Lakh along with the 1.75 Lakh of money remitted back for EMI component of 11 Lakh accumulated for last 2 years.
Bank official says, I cannot withdraw that amount even after full disbursement.. Then how is that money coming back to me.?
I could not understand what is EMI component for 22L and same for 11L as you mentioned in 1st para.
Out of the Rs.34,000 I Pay as EMI for my full approved Loan of 33 L, Bank takes Rs.19,250 and the remaining Rs.9625 they are parking every month in my SBI max gain home loan account. This amount now has accumulated for the last 2 years. My question is . Is this money withdrawable after full disbursement of the loan. The Bank official says that this is not withdraw able.
You can withdraw money from maxgain current account linked to your home loan provided bank has not put any lien on the same.
Dear Nitin,
in my case home loan of 30L is sanctioned and I have 12L with me which I will pay directly to builder. If i ask the bank to disburse 30-12 =18L then the EMI will be calculated on sanctioned amount 30L or disbursed amount 18L? Do i need to make some application/request to bank?
Thanks
Full EMI will be fixed based on bank disbursement. You may submit written request with bank to reduce Home Loan amount from 30L to 18L.
Hello Nitin,
thanks for your reply. Is it true that for 20:80 scheme during construction phase whatever would be the interest occurred will be paid by builder and not by buyer? The buyer only pay the EMI after he gets possession. If its true then for 10.70.10.10 scheme also is it applicable?
It depends on the terms and conditions between the buyer and the builder. There is no such standard rule that builder will pay the interest.
Hello Nitin,
The first disbursement of approx. 20L from bank to builder will take place in next week. I am having saving of 12L with me. I am thinking of let this disbursement happens then immediately I will transfer the 12L to loan account (inorder to save interest), so the interest will only be levied on 20L-12L= 8L. Is it ok to do so? for SBI Max gain loan and property is underconstruction?
Thanks
It is ok
Maxgain loan was approved 3 months ago for under construction property. I requested to deduct EMI on monthly basis. However for 1st month it was not deducted and followed up to deduct emi. Though emi was not deducted, interest was deducted at month end. Next month EMI was deducted on 18th but interest was also deducted at month end. I am not sure whether there was any interest deducted as part of EMI payment. If interest is deducting every month separately then what is the point of paying emi? Instead of that I would prefer to prepay that amount as per by convenience.
Is it because of the under construction property and loan has not been disbursed fully?
You may clarify from SBI and ask for amortization schedule. It will clarify your doubts on principal and interest component.
this just shows inflow and outflow. You are paying EMI to the max gain account and the interest is deducted on monthly basis. In fact you can also transfer more amount also and it will show inflow to the account.It is just the way SBI wants to deduct money
The insurance mentioned on SBI website is property insurance whereas in my post, i am referring to Home Loan insurance (HLPP). Both are different. Property insurance is must.
Dear Sir,
I had transferred Home Loan from LICHFL to SBI on 08.03.2016 and SBI offerred me ROI @ 9.5% on Base Rate.
Now, w.e.f. 01.04.2016, SBI Has introduced MCLR Rate and as a result Home Loan ROI further reduced to 9.4% and it may decrease more.
I had talked to SBI officials in this regard. They informed me that have to give a letter/underatking for shifting from Base Rate to MCLR Rate.
Now My question is that
1. Will there be any Conversion fee?
2. Will shifting to MCLR Rate from Base rate will be beneficial in future considering 10 yrs Tenure of Home Loan amount of Rs 20.00 lakh?
Please educate us regarding MCLR Rate also.
With regards
1. No
2. Please note that interest rate under MCLR will be more volatile compared to base rate. If you are ok with volatility then you may shift. Though for next few years, interest rates will remain low. Please check my following post for more details.
https://www.nitinbhatia.in/home-loan/marginal-cost-of-funds-based-lending-rate/
Thank you sir for your valuable advice.
Hi Nitin,
Recently i applied for loan in pnb. everything got processed. Actually i did it through an DSA. now he is giving us, DD copy and sanction letter. But the seller also has to clear his loan, which is not a big amount. He will do it by the token money we gave him. The problem is that bank will take interest of the DD. We haven’t did the registry yet. what to do in this siruation. and how much time will hdfc take to give noc to seller and orginal paper
NOC will take 2-3 weeks time from date of closure.
Would it be good idea to apply online for SBI Takeover home loan, or better to approach directly?
Regards
Approach directly
Hi Nitin,
I have a SBI MaxGain Home Loan running from last 5 years. Now I am planning to rebuild my home, right from scratch. For this I am planning to use the extra capital that I have parked in my home loan account, meaning I would like to continue my old home loan itself, without bothering to finish the current loan and take a new one. Is it possible? If not, what are the options available?
As your house is mortgaged therefore you cannot re-construct the mortgaged property without SBI’s approval.
Can we increase floor in mortgaged single-floor house ?
You can but subject to permission from bank and local development authority. Normally permission is not granted by the banks.
nitin sir
i am central govt employee(defence ministry) with inhand income of 40k (55k gross) with 7years service remaining
i want to buy a 2bhk house(not flat) in 30L in Pune but right now i am having only 10L in my SBI salary acct and the seller wants full money
so in this case, plz explain the loan process
Please check following post
https://www.nitinbhatia.in/home-loan/home-loan-process/
Which other banks offer MaxGain equivalent product?
Other schemes similar to maxgain are Citibank (Home Credit), Standard
Chartered Bank (Home Saver), HSBC Bank (Smart Home) and IDBI Bank (Home
Loan Interest Saver)
Hi Nitin!
Good Day!
I recently got the sanctioned letter from SBI Home Loan (9.35% ROI) of 25lacs for 30yrs tenure.
In the process of Documentation, the disbursement amount mentioned in the document as (Rs.2553498) which includes the SBI Life Insurance.
When i check with the RACPC Documentation person, he mentioned that insurance is optional(also it is mentioned in the document as well that it is recommended but optional).
I am clearly mentioned that i do not opt for it and given a written letter to the manager of RACPC. ( do i require to take the photocopy of it for the future reference?)
Also, he added that Insurance is optional but you need to opt for Property Insurance / Home Insurance that is mandatory.
My question here is
‘Is it really MANDATORY to avail the Property / Home Insurance with SBI’? also they did not mentioned about HLPP( i have no clue whether they will include the same before the disbursement of loan amount).
Will they stop disbursement if i am not willing to avail the Property / Home Insurance?
Requesting your guidance on my query(ies).
Regards,
Manojkumaar G
I am assuming you took ack of application from SBI else there is no proof that you submitted application for excluding home loan insurance premium from home loan.
1. Property Insurance is mandatory for home loan but it is not mandatory to avail from SBI. They will issue long term policy. You submit a request that you will avail property insurance of your choice and will submit a policy copy with SBI.
2. No. The concern of the bank is that property should be insured. You can avail any policy of your choice and submit a copy of the same with SBI.
Thanks for your valuable input Nitin!
Could you please mention some of the property insurance provider which suits for me.? i mean for which i should not my pay hard earned amount for the long term policy with SBI..
The different policies have different features and benefits. It depends on your requirement. For example, if you stay near defense area then you should opt for terrorism cover. You may compare couple of Home Insurance Plans fulfilling your requirement & then decide. Personally, i have opted for ICICI Lombard Home Insurance Plan (It is not a recommendation from my end).
Hi Nitin,
very Good Day!!!
I have availed loan from LICHFL 2 years before and interest rate was 10.10 fixed for 2 years.
I got completed 2 years last month and now LICHFL is charging 11.45%.
So I am planning to transfer loan to SBI who is offering 9.30 % floating interest rate.
As I asked for documents and had word with LICHFL about Loan transfer from LIC to another bank, LICHFL offering me with 1000/- rs processing fees they will reduce interest rate to 9.85 but not less than that.
Now SBI is offering 0 processing fees but with charges of search report, Legal documentation which is about 11K.
Need your advice about switching my Loan to SBI will be beneficial or should i continue with existing i.e. LICHFL.
Thanks in advance.
Regards,
Anil
Prima facie it seems to be financially beneficial but i suggest you to do a proper calculation to arrive any any conclusion.
Hi Nitin,
I want to take home loan and I contacted SBI and ICICI for the same. SBI said they will take 1 month to process it whereas ICICI is committing less than 1 week. I want to know how is the legal verification quality of ICICI? As they are processing fast, does it mean their quality subdued?
I know ROI of ICICI is more but that is fine with me. I want a little quicker loan but with carefully verified.
Also please suggest me a good lawyer in Bangalore if you can for consulting the purchase of flat.
Many thanks in advance.
Regards
Deepak
1 month by SBI is too conservative and 1 week by ICICI Bank is too optimistic. For sure SBI will take more time compared to ICICI Bank but expect a approval within 3 weeks. No one can beat SBI in legal verification. I will go ahead with SBI even if they take 1 month.
To avoid conflict of interest, i do not provide any references.
Hello Sir,
I want to know whether property insurance is mandatory to be taken if we are taking a home loan? Are there any guidelines on it issued by RBI or it’s just a cross selling product that we have to take with home loan?
Please check my following post
https://www.nitinbhatia.in/personal-finance/bundling-of-financial-products-is-illegal/
Nitin Sir,
I would also like to know why is it important to pay mortgage charges? I have applied for loan in SBI. Although processing fee is waived off, I am being charged 0.20% as mortgage charges, and another 2000/- as documentation charges. Can I seek for or ask for any concession in mortgage charges too?
Waiver of processing fees is just a marketing gimmick. At the end of the day, bank will charge X amount under one head or another.
Thank you Nitin sir..
But what I am being told by the bank personal is that 0.20% mortgage charges is as per Maharashtra Stamp Act. I checked online but was not able to find it out. Is it that mortgage charges are to be born by customer only? If I am not mistaken some banks do fund for mortgage charges also. Right sir…!!?
You clarify is it MODT charges? It seems to be. If yes, it is correctly charged. MODT is paid by the borrower.
Bank may fund mortgage charges. It is subjective.
Hi Nitin.
I took a Maxgain loan with SBI, and i depostited some amount of the same in the OD account in the current financial year.
After that in the EMI, the interest component got reduced, and the principal component increased which was helping me in reducing the OD balance.
Now, at the end of financial year, is it possible for me to claim the increased principal under section 80 C
Thanks.
Sudip
No. Amount lying in OD is not paid to bank therefore it does not qualify for tax deduction u/s 80C.
Hi Nitin,
I have gone through all the below posts and happy that you are responding for every query, Appreciate for that and hope you will answer my concern.
I had a home loan with LIC HFL with outstanding 20 lakhs. Earlier my ROI was 11.75 and after giving the multiple rewriting i have reduced to 10.2 and again to 9% now.
In parallel, I applied for SBI loan transfer in Oct 2016 and it was approved in the same month. As i need to travel out of India I haven’t submitted any documents and loan proces is still in progress only.
Now from Jan 2017, I understood that SBI has slashed the ROI to 8.6%. Since the loan approved before Jan 2017 and I am yet to complete the process is that new ROI will be applicable for me as well?
Also Could you suggest me to continue with 9 % ROI with LIC or to transfer to SBI?
Thanks,
Naresh
You have not mentioned whether you received any sanction letter from SBI or not. I doubt your home loan is approved by SBI.
Reg 2nd query, i will prefer to stay with LICHFL and re-evaluate my decision after 6 months.
HI Nitin,
I have received an email from SBI stating that “With reference to your request for Housing Loan we are happy to inform you that your loan has been sanctioned for Rs. 25,90,000/- ready for documentation process.”
After that I didnt proceed with documentation due to my travel.
If I wait for another 6 months the the sanctioned loan will lapse and need to again need to start from scratch.
However as per your suggestion i will wait and if LIC interest rate increases I will then look for the change.
Thanks for your time :)
Hi Nitin,
I have sbi maxgain connected to base rate and current interest rate is 9.3(9.25 base rate+0.05 spread). I was asked to lower interest rate to 8.8% with 1yr reset by paying around 20k for Rs. 43lac loan. I enquired about Citibank Home credit and they are asking 4k for 8.8% with 3 month reset. So I am confused if I should go with citibank or not. Can you please advise on this?
You have not mentioned MCLR of citibank and spread offered.
MCLR of citibank is 8.1 + 0.7 spread and SBI’s MCLR is 8 + 0.8 spread
I will prefer Citibank.
Hi Nitin,
I tuk loan for 28 lakh, 15 lakh is dembuirsement to builder started from feb 2017 . feb my pre emi is starting.Can you tell me that all this tax exemption 80c, 80EE,24 will start after my actual emi start ? is my understanding is correct or not? or can i do tax exemption for this in 2016 to 2017 bracket itself also .PLease tell me .
You cannot claim any tax deduction till the construction is completed.
Hi Nitin,
We are planning to take a home loan of 60 lakhs(at floating rate) for a resale property in Hyderabad. We have evaluated the various options and zeroed in on SBI and ICICI bank. The total fixed charge(excluding home insurance) of taking loan from SBI is 36000(MODT+legal charges) and from ICICI is 18000(processing+legal charges). The interest rate offered are SBI 8.6(switch cost 0.03%) and ICICI 8.65%(switch cost nil). We planning to repay the loan within 5 years though we would be availing the loan for tenure of 20 years. Please advise which bank we should go ahead with.
In my opinion, ICICI bank is better option.
Hi Nitin,
I am buying a house for which I have given the 20% down payment. Building is under construction and is expected to complete by end of this year. Loan amount is approximately 29L and the loan processing is underway. Now that I have to pay my rent for the next few months until I get my possession, is it possible for the bank to disburse half the amount once apporved and the rest on possession, so it reduces my EMI burden. In the agreement, it is mentioned as per slabs according to which I have to pay 90% of the amount as per the present construction status, once disbursed. Please help.
As i understand payment plan is CLP i.e. construction linked therefore it is not possible to tweak the disbursement.
Good read. Your blogs are really motivating for youths.
As of today (14/MAY/2017) i am comparing BOB and SBI Home loan interest rate. My finding:
SBI:
8.35% – 8.70%
Floating rate linked to 1 Year MCLR – 8.00%
Lowest EMI per lakh for Max Tenure : Rs. 758 for 30 Years
Processing Fee Upto 0.35%
BOB:
8.35% – 9.35%
Floating rate linked to 1 Year MCLR – 8.35%
Lowest EMI per lakh for Max Tenure : Rs. 758 for 30 Years
Processing Fee Upto 0.50%
I am not sure how the MCLR (8.00 VS 8.35%) will effect my interest rate in long run.
Query: I am 27 year old with CBIL score 820, currently paying 10.2 fixed interest rate LICHFL. I want to transfer my loan remaining amount 2000000 with floating rate for 20 years. I have decided to go with SBI (May be BOB ), can you please help me with your experience that i am on right path.