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Home loan/Housing Loan is a lump sum amount of money borrowed from any financial or banking institutions to buy a home. The home loan consists of two types of interest rates named as fixed and floating interest rates. The customer repays the loan in form of EMIs for the desired tenure. There is a significant gap between the income of a person and the desire to own a house. This is among the prominent reasons behind the unmatched growth in home loan business in recent years. The effect has been so much so that prospective home buyers now have multiple options to seek a home loan from banks as well as NBFCs. I have put together a few best home loans in India herein and Pearl reviewed them for you.

Key Highlights

1. Low Interest Rate

Buying a home is a long-term decision, which makes it important to look for the interest component as the longer the home loan tenure will be, the expensive your home loan will become. Many banks and financial institutions offer reasonable and attractive interest rates, to make home loan affordable.

2. Deduction for Interest Paid on Housing Loan

If you are paying EMI for the home loan, it has two components – Interest Payment and Principal Repayment. The interest of the EMI paid for the year can be claimed as a deduction of up to a maximum of INR 2 Lacs under Section 24 of the Income Tax Act, 1961.

3. Deduction on Principal repayment

The Principal portion of the EMI paid for the year is allowed as deduction under section 80C of the Income Tax Act, 1961. The maximum amount that can be claimed is up to INR 1.5 Lacs. But to claim this deduction, the house property should not be sold within 5 years of possession.

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4. Additional benefit who avail loan from 1st April 2019 to 31st March 2020

Stamp Duty of the house does not exceed INR 45 Lacs, for persons who are first time home buyers (persons who are not holding any house property), additional benefit of Interest of INR 1.5 Lacs, over an above INR 2 Lacs as highlighted in Point-2 above.

5. Capital Appreciation

We all are aware of the fact that property prices rise over time, which leads to capital appreciation and becomes one of the major reasons to invest in a property. Not only construction costs, rents over a period of time seem to keep up with inflation as well; making home one of the best investments for the long term.

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Types of Home Loans

1. Home Purchase Loans

As evident by the name, this type of home loan can be availed when buying a new home.

2. Land Purchase Loans/Plot Loans

The land purchase loan may be availed in order to complete the purchase of a plot of land for construction or as an investment. Land purchase loans are just like home loans, the only difference being that this loan is used to purchase a vacant plot. The term, the interest rate and procedure for both home loan and land purchase loan are similar.

3. Home Construction Loans

This type of home loan can be availed for the construction of a house. Such a loan is granted only if you already own a plot of land and plan to start construction of your house on it.

4. Home Improvement Loans

Home improvement loans are increasingly becoming popular as its interest rates are similar to home loans interest rates. These loans can be availed when you are planning to renovate or make repairs to your current home.

5. Home Conversion Loans

If you already own a house with an existing home loan and are planning to purchase a new house, you can opt for a home conversion loan.

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6. Home Extension Loans

With time you might feel the need to add more space to your house for varied reasons, such as a growing family. People opt for this home loan type when they are planning to increase/extend the existing home.

The above types, helps us decide us the purpose for which we would require the money, accordingly the decision will impact our Interest Rate component in EMIs.

Home Loan Interest Rates & Other Relevant details

Bank Interest Starts @ Processing Fee Amount Range Tenure
SBI 8.35% 0.35% max INR 10,000 INR 15 Lacs to INR 10 Crores Up to 30 Years
HDFC 8.55% Up to 0.50% of Loan Amount Up to INR 10 Crores Up to 30 Years
ICICI 8.70% 0.5% – 1.00% of loan amount (Min. of INR. 1,500) Depends on Credit Profile Up to 30 Years
LIC Housing Finance 8.80% As Applicable Starts from INR 1 Lac Up to 30 Years
Kotak Bank 8.90% Max INR 10,000 Depends on Credit Profile Up to 20 Years
Canara Bank 8.50% 0.50% of the loan amount (Min. INR 1,500; Max. INR 10,000) Depends on Credit Profile Up to 30 Years

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Best home loans in India

1. SBI Regular Home Loan

SBI Regular Home Loan can be availed for multiple purposes including the purchase of ready built property, under construction property or pre-owned homes, construction of a house, the extension of the house, repair and renovation

Description Particulars
Borrower Type Resident Indians
Loan Amount As per the applicant’s credit profile
Interest Rate Women – 8.40% to 9.15% Others – 8.60% to 9.25%
Loan Tenure Up to 30 Years
Processing Fee 0.35% of the loan amount (Min. of INR 2,000 & Max. of INR 10,000)
Pre-Payment charges Nil for Floating Rates
Age Limit 18 to 70 Years
What we likeWhat we don’t like
Low chargesSlow service quality
All purpose loan

2. SBI NRI Home Loan

SBI NRI Home Loan allows Non-Resident Indians (NRIs) get financial support when investing in properties.

Description Particulars
Borrower Type Non-Resident Indians (NRIs) or Persons of Indian Origin (PIOs)
Loan Amount As per the applicant’s credit profile
Interest Rate Varies from case to case basis
Loan Tenure Up to 30 Years
Processing Fee 0.35% of the loan amount (Min. of INR 2,000 & Max. of INR 10,000)
Pre-Payment charges Nil for Floating Rates
Age Limit 18 to 60 Years
What we likeWhat we don’t like
Low chargesInterest rate Varies
Zero prepayment chargesPoor service quality

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3. HDFC Home Loan

HDFC Home Loan is for individuals who need funds to buy a new house or a plot for house construction.

Description Particulars
Borrower Type Salaried & Self-Employed Individuals
Loan Amount Up to 90% of the Property Value
Interest Rate Women – 8.55% Onwards Others – 8.60% Onwards
Loan Tenure Up to 30 Years
Processing Fee Up to 0.50% of the loan amount or INR 3,000 (whichever is higher) + GST
Pre-Payment charges Nil for Floating Rates
Age Limit 18 to 65 Years
What we likeWhat we don’t like
Good service qualityVery little interest rate concession for women
Zero Pre payment chargesHigher processing charges

4. HDFC Home Loan for NRI/PIO

  • The loan scheme is for NRIs & PIOs to:
    1. purchase a flat, row house, bungalow from private developers in approved projects in India
    2. purchase properties from Development Authorities such as DDA, MHADA etc.
    3. construct on a freehold/leasehold plot or on a plot allotted by a Development Authority in India
    4. purchase properties in an existing Co-operative Housing Society or Apartment Owners’ Association or Development Authorities settlements or privately built up homes
  • HDFC NRI Home loan is offered at attractive interest rates
  • The loan scheme allows customers to avail Home Loan Advisory Services in the country where they presently live
  • HDFC offers Property Search Advisory Services, which is the legal and technical counselling to help customers make an informed home buying decision
  • HDFC offers valuable insights on developer projects, location, documentation and offerings
  • The loan is also available for customers employed in the Merchant Navy
What we likeWhat we don’t like
Consulting all over the worldHigh processing charges
Attractive interest rates

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5. ICICI Bank 30 year home loan

Description Particulars
Borrower Type Individuals working for select group of companies
Loan Amount Depends on Credit Profile
Interest Rate Attractive floating and fixed interest rates options
Loan Tenure Up to 30 Years
Processing Fee 0.5% – 1.00% of loan amount (Min. of INR. 1,500)
Pre-Payment charges Not Available
Age Limit Not Available
What we likeWhat we don’t like
Quick servicesOnly certain type of people are eligible
No age limitHigh processing charges

6. ICICI Bank Home Loan for NRI : – Not Available

7. LIC Housing Finance Ltd Home Loan for Resident Indians

  1. This LIC home loan is available to Resident Indians who are salaried or self-employed and are earning a stable employment income
  2. The LIC Housing Finance Ltd will provide the loan applicant with the maximum amount possible on the basis of the applicants’ income. The applicant may increase their income eligibility by applying for the home loan along with a co-applicant who can be his or her spouse or parents.
  3. The maximum amount of the loan is 75% to 85% of the property value. The property is the same property for which the loan applicant is seeking a loan.
  4. The loan applicant has to repay the loan in equated monthly instalments (EMI). The Bank calculates EMIs on the basis of the applicants’ income and spending capacity.
  5. Interest rates on this loan are calculated on a monthly reducing balance according to the interest rates that prevailing at the time that the loan application is approved by LIC Housing Finance Ltd.
  6. LIC Housing Finance Ltd does not ask for a guarantor for this loan.
  7. Borrowers may switch over to this loan from their current home loan lender. They may do so on the following conditions –
    • The new loan tenure under the LIC Housing Finance home loan will be for a maximum of 30 years for salaried professionals and 20 years for self-employed professionals.
    • Borrowers who switch over to the LIC Housing Finance Ltd may need to pay additional fees.
What we likeWhat we don’t like
Switch over facility availableOnly certain category of people are eligible for loan
No guarantor is requiredLoan only 75%-85% of the property value will be sanctioned

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8. LIC Housing Finance Ltd Home Loan for Non-Resident Indians

  1. These LIC home loans are available for Non-Resident Indians. The applicant should be salaried or self-employed with stable employment income
  2. The LIC Housing Finance Ltd will provide the loan applicant with the maximum amount possible on the basis of the applicants’ income. The applicant may increase their income eligibility by applying for the home loan along with a co-applicant who can be his or her spouse or parents.
  3. The loan amount is set at a maximum of 75% to 85% of the property value. The property is the same property for which the loan applicant is seeking a loan.
  4. Likewise, a home loan for Indian resident, loan applicant has to repay the loan in EMIs.
  5. LIC Housing Finance Ltd home loan Interest rates are calculated on a monthly reducing balance according to the interest rates that prevailing at the time the loan application is approved by LIC Housing Finance Ltd.
  6. LIC Housing Finance Ltd does not ask for a guarantor for this loan.
  7. For loan applicants who are professionally qualified the maximum repayment tenure is 20 years. For all others, the maximum repayment tenure is 15 years.
What we likeWhat we don’t like
Professionals have an added advantageLoan only upto 15 years is given
No guarantor required Loan only 75%-85% of the property value will be sanctioned

9. Kotak Mahindra Bank home loan

Parameters Salaried Self-Employed
Age 21-65 Years 21-65 Years
Income Must have been earning reasonably higher Must have been earning reasonably higher
Job/Professional Status Must have worked for at least 2-3 years Must be in the same line of business for a minimum of 2-3 years
  1. A salaried or self-employed professional with regular income can apply for a Kotak Home Loan. To be eligible for Kotak Home Loan an applicant must be minimum 21 years of age and maximum 65 years of age. However, a non-salaried professional who earns more than the minimum income required is also eligible for the Kotak Mahindra Limited Home Loan.
  2. The Kotak Mahindra bank decides the amount that an individual can borrow, based on the repayment capacity of the borrower. The repayment capacity is calculated based on the borrower’s income, age, educational qualifications, no. of dependents, spouse’s income, assets, liabilities, savings history, occupation, business profile, the running time of the existing business and the net take home amount.

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What we likeWhat we don’t like
Good service qualityHigher credit score required
Immediate disbursementInterest rates are usually on a higher side

10. Kotak Mahindra Bank Home Loan for NRI

  1. An applicant residing in US/UK and other foreign countries, except Gulf wishing to apply for a loan repayment period of up to 5 years should have a minimum gross income of USD 30000. However, for tenure of 5-15 years, the applicant should have a minimum gross income of USD 42000.
  2. An individual applying for a Kotak NRI Home loan with the bank has to abide by the provisions of Foreign Exchange Management (Borrowing and lending in Rupees) Regulation, 2000
  3. Finalization of the eligible loan amount will depend solely up on the principal borrower’s earning capacity.
  4. NRE/NRO/FCNR/NRNR/NRSR accounts, or also through rentals received out of the applicant’s property.
  5. Minimum educational qualification in the form a graduate degree is required.
  6. If the loan is sought individually, a personal guarantee by a third party is required.
What we likeWhat we don’t like
Higher amount of loan when compared to other banksNot available to people in the gulf
Lot of compliance to follow

11. Canara Home Loan

  1. Anyone who wants to either Purchase a completed flat or built house or Construction of house / flat.
  2. Purchase plot and thereafter construction of a house. However, no standalone purchase of site is covered under this loan scheme
  3. Those who are having an existing property and now wants to undertake repairs or renovation, up gradation, creation of additional amenities.
  4. Those who are already having a house/flat with or without loan and now wants to buy a second house/flat.
  5. Any existing borrower who wants to transfer their home loan from other lenders.
  6. Eligibility
Categories Eligibility Criteria
Age 21-60 Years
Residence Status Salaried with Minimum 3 Years confirmed service
Work Experience Minimum 2 years with valid work permit
Nationality Indian
Co-Applicants Spouse and Co-relatives
NRI Status Minimum 3 Years

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Loan amount
  1. High quantum of loan amount as 4 times the gross salary to salaried individuals and 4 times the gross annual income for self-employed professionals.
  2. In exceptional cases the quantum on loan could be further increased subject to bank’s discretion and repayment capacity of the borrower.
  3. The maximum loan amount for repair and renovations is INR 15 Lacs.
  4. Acceptable security will be the Mortgage of House / Flat
  5. Repayment could be done in Equated monthly instalment for a term up to 30 years or the borrower age of 70 years, whichever is earlier.
  6. Processing fee of 0.10% of the loan amount or maximum INR 10,000.
  7. Nil prepayment charges for loans either closed from own funds or transferred to any other lender.
What we likeWhat we don’t like
Low chargesWork experience criteria is strict
Higher amount of loan is available

12. Canara NRI Home Loan

  1. Anyone who wants to either Purchase a completed flat or built house or Construction of house / flat.
  2. Purchase plot and thereafter construction of a house. However, no standalone purchase of site is covered under this loan scheme.
  3. Those who are having an existing property and now wants to undertake repairs or renovation, up gradation, creation of additional amenities.
  4. Those who are already having a House/flat with or without loan and now wants to buy a second house/flat.
  5. Any existing borrower who wants to transfer their home loan from other lenders.
Eligibility
  1. NRI home loan is offered to Non-resident Indians with valid Indian passport & PIO (Person of Indian Origin) holding foreign passport.
  2. The Minimum age of borrower should be 21 years and maximum of 60 years.
  3. Residents Spouses or blood relatives of NRIs can be Joint applicants in the loan
  4. The borrower should have regular source of and minimum of 2 years of employment abroad on valid work permit or job contract.
  5. The Applicant should be holding NRI status for last 3 consecutive years.
  6. Non-resident customers can assign Power of Attorney to any resident individual in the bank’s specified format and stamped as per prevailing law.
  7. Equitable mortgage is required by deposit of the title deeds or registered mortgage as applicable.
  8. Maximum repayment tenure could be 30 years or attainment of 60 years of the borrower whichever is earlier.
  9. NRI customer can repay the loan in form of EMIs through permissible Remittances from abroad done using normal banking channels, or transfer of funds from NRE / FCNR account or local remittance from close relatives on behalf of the borrower.

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Loan Amount
  1. Maximum loan amount available is 4 times the gross annual income with Net Take Home of 40% post deducting the proposed EMI.
  2. For the cases where the applicant is applying for loans for repair and renovation a margin of 25% will apply.
  3. Rate of Interest offered for NRI home loans starts from 8.85% onwards.

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What we likeWhat we don’t like
Resident joint holders are allowedHigher margin expected
Attractive rate of interest

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