{"id":8833,"date":"2022-12-06T13:29:52","date_gmt":"2022-12-06T13:29:52","guid":{"rendered":"https:\/\/www.homebazaar.com\/knowledge\/?p=8833"},"modified":"2025-01-13T10:02:54","modified_gmt":"2025-01-13T10:02:54","slug":"how-to-choose-a-bank-for-home-loan","status":"publish","type":"post","link":"https:\/\/www.homebazaar.com\/knowledge\/how-to-choose-a-bank-for-home-loan\/","title":{"rendered":"How To Choose A Bank For Home Loan In 2025?"},"content":{"rendered":"

\"Tips1. Get Convenient Interest Rates<\/b><\/h2>\n

If you are worried about how to choose a bank for home loan, this is the primary aspect. Rather than getting the lowest interest rates, compare a few loan offers and look for the best-suited plan. <\/span><\/p>\n

You must also decide if you want to go for fixed or floating interest rates as per your finances.\u00a0<\/span><\/p>\n

While Fixed Interest Rates give you security in an unstable market, floating interest rates can be a great option too, contrary to popular opinion.<\/span><\/p>\n

\"Understanding<\/p>\n

Remember that fixed interest is usually charged at a high rate by most banks (<\/span>at least 2 to 3% more than floating.)<\/span><\/p>\n

On the other hand, floating interest rates could go higher if the base lending rate is increased. But,<\/span> this increase is temporary and the resulting rate could still be lower than fixed rates, in most cases!\u00a0<\/span><\/p>\n

For example – If you\u2019re paying a fixed rate of 11%, but the floating rate is 8%, you still end up saving if the interest rates increase by 2.5%!<\/span><\/p>\n

2. Check If The Bank Is Linked To The RBI Repo Rate<\/b><\/h2>\n

\"Benefits<\/p>\n

Borrowers often complain that banks are slow to reduce interest rates even when the government has lowered them!\u00a0<\/span><\/p>\n

To protect your interests, the RBI has set an external benchmark called <\/span>RLLR – Repo linked lending rate.<\/b>\u00a0<\/span><\/p>\n

Banks that follow this system can quickly provide the rate cut benefits to you, when interest rates fall.\u00a0<\/span><\/p>\n

RRLR is quite different from MCLR – Marginal Cost Lending Rate.<\/b><\/p>\n

MCLR is an internal system set by the lending bank, and is the lowest rate that the bank can offer you.<\/span><\/p>\n

Difference Between RLLR & MCLR Home Loan<\/b><\/h2>\n\n\n\n\n\n\n\n\n
\n

RLLR\u00a0<\/strong><\/p>\n<\/td>\n

\n

MCLR\u00a0<\/strong><\/p>\n<\/td>\n<\/tr>\n

It is an external benchmark set by the RBI, hence more reliable.<\/span><\/td>\nIt is an internal benchmark set by the bank.<\/span><\/td>\n<\/tr>\n
It is based on the repo rate (the rate at which RBI lends to the banks)<\/span><\/td>\nIt is based on factors such as bank funding, operating costs, repo rate etc.<\/span><\/td>\n<\/tr>\n
Borrowers can track the repo rate themselves.<\/span><\/td>\nBorrowers have to rely on the bank to inform them about rate changes.<\/span><\/td>\n<\/tr>\n
Usually revised every 3 months<\/span><\/td>\nUsually revised in 6 months or a year.<\/span><\/td>\n<\/tr>\n
Change in rate cuts is transferred quickly<\/span><\/td>\nRate cut transmission is relatively slow<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

3. Look For banks That Don’t Charge Prepayment Fees<\/b><\/h2>\n

If you choose to pay off your home loan early, some banks may charge you a prepayment fee.<\/p>\n

However, no prepayment fee is levied on home loans with floating rate of interest.\u00a0<\/span><\/p>\n

Banks also cannot charge you this fee, if you are a salaried professional and choose to prepay the loan from your own funds.\u00a0<\/span><\/p>\n

Otherwise, banks may charge you prepayment fees that can even go up to 2%!<\/span><\/p>\n

This is why you must read the fine print to see if the bank is not charging you the prepayment fee.<\/span><\/p>\n

4. Choose Your Home Loan Tenure Carefully<\/b><\/h2>\n

\"SelectEvaluate your financial conditions and then choose a bank that is offering a loan tenure suitable for you.<\/span><\/p>\n

If you choose a long tenure, the EMI payments are lower but the total interest amount is higher.\u00a0<\/span><\/p>\n

For a shorter tenure, you would be paying higher EMIs with less interest on your total loan amount.<\/span><\/p>\n

Consider a case where you want to borrow a loan of 50 lakhs at 7% Fixed Rate of Interest.*<\/span><\/p>\n

\"Select* <\/b>The loan figures are a rough estimate and are calculated as per the<\/span> EMI Calculator.<\/span><\/a><\/p>\n

Pro-Tip –<\/b> Choose a long tenure to get lower EMIs. Then, when you acquire surplus funds in the future, you can prepay your loan and reduce the total interest outgo.<\/span><\/p>\n

5. Look For Banks With Lower Processing Fees<\/b><\/h2>\n

When you apply for a home loan, the bank charges you some amount for handling your application.\u00a0<\/span><\/p>\n

These charges vary for every bank and can be anywhere between 0.5 to 2% of your total loan. <\/span>It also depends on whether you are a salaried professional or self-employed.<\/span><\/p>\n

You also have to pay a service tax (GST) on the home loan processing fee.<\/span><\/p>\n

So, choose a bank that offers you low processing fees and you could save a significant amount!<\/p>\n

Banks With Low Home Loan Processing Fees<\/b><\/h2>\n\n\n\n\n\n\n\n\n\n
\n

Bank<\/b><\/p>\n<\/td>\n

Processing Fee in % (Min)<\/b><\/td>\nProcessing Fee Charge (Min)<\/b><\/td>\n\n

Rate of Interest (P.A.)<\/b><\/p>\n<\/td>\n<\/tr>\n

SBI Bank<\/span><\/td>\n0.1%<\/span><\/td>\nRs. 5,900<\/span><\/td>\n8.50%<\/span><\/td>\n<\/tr>\n
Bank of Baroda<\/span><\/td>\n0.25%<\/span><\/td>\n–<\/span><\/td>\n8.20%<\/span><\/td>\n<\/tr>\n
Bank of India<\/span><\/td>\n0.25%<\/span><\/td>\nRs. 5000<\/span><\/td>\n8.10%<\/span><\/td>\n<\/tr>\n
HDFC Bank\u00a0<\/span><\/td>\n0.5%<\/span><\/td>\nRs. 3,560<\/span><\/td>\n8.60%<\/span><\/td>\n<\/tr>\n
Central Bank of India<\/span><\/td>\n0.5%<\/span><\/td>\n–<\/span><\/td>\n7.99%<\/span><\/td>\n<\/tr>\n
Kotak Mahindra<\/span><\/td>\n0.5%<\/span><\/td>\n–<\/span><\/td>\n8.49%<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

You should also get all the details of the other types of charges levied by banks. <\/span>These include legal fees, loan conversion, loan stamp duty, & notice of intimation charges.\u00a0<\/span><\/p>\n

To know more about these, read <\/span>Home Loan Processing Fee & Other Charges<\/span><\/a><\/p>\n

6. Check If The Bank Has Good After Sales Service<\/b><\/h2>\n

Consider that you\u2019ve gotten the best loan offer suited to your needs. <\/strong><\/p>\n

But what about After-sales service?\u00a0<\/strong><\/p>\n

Remember that filling in the loan application and getting it approved is only the first step of the process!<\/span><\/p>\n

Since you have to deal with the bank for at least 10 to 15 years, it is very important to consider how its customer service is.\u00a0<\/span><\/p>\n

Check if the bank has a good turnaround time, quickly transmits rate cuts, and is well-known for its good customer service.<\/span><\/p>\n

7. Opt For Bank Offers & Schemes<\/b><\/h2>\n

\"Save<\/p>\n

Gone are the days when the only option you had was a home loan with a fixed interest rate and monthly EMIs. Banks offer many home loan repayment schemes today!<\/span><\/p>\n

You could take advantage of these offers, look at the pros & cons, and find out what suits your finances best.\u00a0<\/span><\/p>\n

A few options you can check out are –\u00a0<\/span><\/p>\n

\"best<\/h3>\n

1. Interest Saver Scheme<\/strong><\/h3>\n

Interest Saver Schemes allow you to link your loan account with a current account.\u00a0<\/span><\/p>\n

The bank considers the balance in this surplus account to reduce the interest component on your loan.\u00a0<\/span><\/p>\n

Eg – <\/span>Axis Bank Super Saver Home Loans<\/span><\/a>\u00a0<\/span><\/p>\n

2. Pre-EMI Offers<\/b><\/h3>\n

The bank offers a time period (2 to 5 years) during which you only pay the interest component on the home loan.\u00a0<\/span><\/p>\n

The EMIs then increase in the later years, once the pre-EMI period is over.<\/span><\/p>\n

Eg –<\/span> SBI Flexi Pay Scheme<\/span><\/a><\/p>\n

3. EMI Waivers<\/b><\/h3>\n

A few banks also waive off a couple of EMI payments (6-12 months) if you consistently pay off your EMI instalments for a number of years.<\/span><\/p>\n

Eg – <\/span>Axis Bank Fast Forward Home Loan<\/span><\/a><\/p>\n

8. Know That You Can Negotiate With Banks<\/b><\/h2>\n

\"Bank<\/p>\n

Keep in mind that a home loan is another product\/service being sold by the bank. <\/strong><\/p>\n

This means that you can negotiate for better terms!<\/strong><\/p>\n

You can negotiate for lower processing fees, better interest rates, and other documentation fee waivers, especially if you have a good credit score.\u00a0<\/span><\/p>\n

To know <\/span>which is the better bank for home loan<\/span>, read the <\/span>10 best banks for home loans in India.<\/span><\/a><\/p>\n

Finally, always consult your financial advisor and choose the best loan repayment plan that is suitable for your needs. <\/span><\/p>\n

The quicker you repay your home loan, the sooner you can truly call it a place of your own!<\/span><\/p>\n

FAQs<\/b><\/h2>\n\n\n\n\n\n\n\n
How can I get a 100% home loan?<\/b><\/p>\n

You cannot get a 100% loan, as per RBI rules. The maximum loan that banks can offer is 90%.<\/span><\/td>\n<\/tr>\n

Which documents do I need to apply for a home loan?<\/b><\/p>\n

1. Identity Proof<\/span><\/p>\n

2. Address Proof<\/span><\/p>\n

3. Bank Statement of last 6 months<\/span><\/p>\n

4. Form 16<\/span><\/p>\n

5. IT Returns for last 2 years<\/span><\/p>\n

6. Property details<\/span><\/p>\n

7. Filled Loan Application Form<\/span><\/p>\n

8. Passport size photos<\/span><\/td>\n<\/tr>\n

Which bank is better for a home loan, government or private?<\/b><\/p>\n

Government banks generally offer lower home loan interest rates than private banks<\/span><\/p>\n

But, you should look at the overall home loan offer when choosing the best bank for a home loan.\u00a0<\/span><\/td>\n<\/tr>\n

What are the best banks for home loans in India?<\/b><\/p>\n

SBI Bank, Axis Bank, Bank of Baroda, ICICI Bank, Bajaj Housing, & HDFC are some top banks for getting a home loan in India.<\/span><\/td>\n<\/tr>\n

How can I lower the interest rate on my home loan?<\/b><\/p>\n

1. Improve your credit score<\/span><\/p>\n

2. Opt for a short home loan tenure<\/span><\/p>\n

3. Look for Interest Saver Offers by banks<\/span><\/p>\n

4. Consider transferring your home loan<\/span><\/p>\n

5. Revise your EMI payments<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

1. Get Convenient Interest Rates If you are worried about how to choose a bank for home loan, this is the primary aspect. Rather than getting the lowest interest rates, compare a few loan offers and look for the best-suited plan. You must also decide if you want to go for fixed or floating interest […]<\/p>\n","protected":false},"author":8,"featured_media":18088,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[412,415,23,1,7],"tags":[1681,1683,1680,1682,195,1597,1678,1684,1598,1679],"class_list":["post-8833","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance-legal","category-guides-2","category-home-loan","category-pan-india","category-tips-advice","tag-best-banks-for-home-loan","tag-best-home-loan-provider","tag-choosing-a-bank-for-home-loan","tag-floating-vs-fixed-interest-rate","tag-home-loan","tag-home-loan-tips","tag-how-to-choose-bank-for-home-loan","tag-how-to-get-a-home-loan","tag-things-to-know-before-getting-a-home-loan","tag-which-is-the-better-bank-for-home-loan"],"_links":{"self":[{"href":"https:\/\/www.homebazaar.com\/knowledge\/wp-json\/wp\/v2\/posts\/8833","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.homebazaar.com\/knowledge\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.homebazaar.com\/knowledge\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.homebazaar.com\/knowledge\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.homebazaar.com\/knowledge\/wp-json\/wp\/v2\/comments?post=8833"}],"version-history":[{"count":15,"href":"https:\/\/www.homebazaar.com\/knowledge\/wp-json\/wp\/v2\/posts\/8833\/revisions"}],"predecessor-version":[{"id":18799,"href":"https:\/\/www.homebazaar.com\/knowledge\/wp-json\/wp\/v2\/posts\/8833\/revisions\/18799"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.homebazaar.com\/knowledge\/wp-json\/wp\/v2\/media\/18088"}],"wp:attachment":[{"href":"https:\/\/www.homebazaar.com\/knowledge\/wp-json\/wp\/v2\/media?parent=8833"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.homebazaar.com\/knowledge\/wp-json\/wp\/v2\/categories?post=8833"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.homebazaar.com\/knowledge\/wp-json\/wp\/v2\/tags?post=8833"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}