Which is the best bank for Home Loan ?

Taking a Home loan is a big task in itself and one of the biggest financial decisions. Home loan is the longest debt in our life. At times 10-20 yrs, which makes demands a long term commitment. Each month you have to pay your EMI, sometimes you have to prepay some part of home loan, sometimes you need some documents and visit the bank. There are numerous things to be done during taking the home loan and after taking the home loan, hence you should be very clear that which is the best bank for Home Loan. Without much confusion, its very clear that everyone wants to go with the bank which makes your life easy at the time of taking home loan and even after that. So the biggest question on everyone’s mind is “Which is the best bank for Home loan?”

Best Home Loan Bank in India

First thing first, you have to be very very clear that there cant be a single bank or loan institution which is perfect for everything and you will never face an issue with them. Also there is no “best bank for Home Loan” which has always worked for everyone till date. But overall we can always pick some banks which have been better than others on different parameters. You can say that on a high level “Bank A” is better than “Bank B” and this is based on many loan takers experience over the years. So now in this article we will try to understand difference between different banks and how they differ with each other. We will also see a survey result done with the vast community of this blog and which bank they choose collectively as best bank for home loan.

Public Companies vs Pvt Companies

While researching on this topic , the first thing which came to my mind was “all banks are same, everyone has bad experience will all kind of banks, whether PSU or private”. But we have to understand that while some people can have bad experience with some banks, there are positive experience too and we have to see things from a very high level and not judge a bank just based on handful of bad experiences. The first confusion which comes to any loan taker mind is “PSU bank or private bank?” and based on the experience here is the conclusion.

PSU Banks are good post-loan but not friendly at the time of taking the loan

Private banks are very fast and friendly at the time of disbursing the home loan, they will treat you like a king up-till the loan is disbursed, but once every formality is complete and your home loan is sanctioned, you are a trash to them! As they are extremely agressive in marketing of home loans, a lot of people fall for it, Private companies presentation and they way they approach you is good but  only till you are not a home loan customer. A lot of times private companies make things easy for you and also bend some rules for home loans. the number of documents they need also is less compared to a PSU bank.

On the other hand, PSU banks are not that great at the start of home loan , their rules are very strict and stringent and they still operate  in the “sarkari” style, however once you loan process is complete and things start, there after life is much easier compared to private banks. The overall handling is much professional and as per the process. In short they don’t suck your blood every now and then as private companies do.

Private banks are first to raise the interest rates

On the interest rates increase and reduction side, its seen that private companies are first to raise the interest rates after the rate increase from RBI side, but private banks hide somewhere when there is a time for reducing the interest rates. However PSU banks are more transparent on this front and much less annoying than Private banks. Also private banks arbitraly increase the pre-payment charges (  like from 2% to 3%) the conversion fees is also charged heavily if you want to move down to a lower interest rates.

Also the changes of fraud at employees level in Private bank is much higher than PSU Banks. I cant say that PSU banks are not into the bad game, but its much much higher in Private banks because of sales pressure and targets. There has been cases of forced selling of home insurance and also cross selling of ULIP’s and other financial products along with the home loan

Which is the best bank for Home loan in India?

Now there are millions of people who have taken home loan and there are various parameters on which a bank can be ranked like Processing time for home loan, Transparency in whole process, Attitude towards customer, Interest rates and pre-payment charges, online tracking of your home loan after disbursement. But there is no ranking of banks on all these parameters. However still you can rank a bank overall as good or bad in total. I ran a survey on this blog and got around 1504 participants to vote for best bank for home loan and based on that we can judge which banks are more preferable and more trusted. Here are the results.

Best Bank for Home Loan in India (Survey Results)

Best Bank for Home Loan in India - SBI , HDFC or LIC

A good place to look for all the home loan related data (Click here)

Top 5 banks for Home Loan at the moment

If you see the survey above , you can clearly see that the top 5 banks for home loan are SBI , HDFC , LIC housing, Axis Bank and ICICI Bank and these 5 banks comprise of 83% votes . While a big reason for this can be that these are big banks having a wide reach and has more customers and hence the results are little biased. But at least you can see that out of 1504 people on this blog, 83% of them have a home loan from these 5 big banks , in which SBI tops the list.

1. SBI Bank

Based on the survey and overall reading’s done over net and comments section of this blog. SBI bank seems to be the best bank for Home Loan. While SBI Bank still carries the hangover of Sarkari culture and they are strict in the overall process , which means you will have to run all over the bank and many times to get things done, but once the whole process is complete , may be you will have a smooth experience overall. Things will be easy post home loan process if you need anythings from bank compared to other banks. For those who want to know why SBI is preferred , follow this thread

2. HDFC Bank

Overall HDFC bank seems to be have mixed review. Some people had great experience and some had very bad experience. HDFC Bank is overall recognised as the bank for home loan itself. But overall the experience was very very mixed.

3. LIC Housing Finance

LIC housing finance seem to be a decent option after SBI. While they are not that great as SBI , still they seem to be a good choice after HDFC and ICICI bank . LIC Housing Finance has lesser documentation requirements, but one has to run around for smaller details.  LIC seem to offer better rates and also giving option to fix the interest rate for 5 years. One thing which many people do not know is that LIC reduces the interest rates for home loan for its customers having any insurance/investment policy with LIC by at least 0.25% , but only if Sum assured of all policies collectively is more than 15,00,000 and all policies should be under the name of loan applicant.

4. ICICI Bank

ICICI Bank seems to be very very fast and too friendly at the time of loan processing, but once the loan is done, the life seems to be hell for most of the people . They are not very supportive most of the times and one gets too frustrated with their attitude. Overall their interest rates are also very high.

5. Axis Bank

Axis Bank is another good option as big bank . One good thing about Axis bank is that they have NIL charges for any pre-payment . Its a big surprise that Axis bank was more preferred than ICICI bank overall in the survey. While Axis Bank has few good options, there was one recent case from axis bank which I had highlighted on this blog on how they forced sell a life insurance policy along with home loan, While this was a negative thing from Axis Bank,  we have to understand that good and bad experience are part of all the banks.

So what is the final answer ?

While there are positive and negative experiences from different banks, the clear answer coming out of different comments from readers and survey is that if one has to choose just one name, SBI bank is the best bank for home loan. We have seen most of the votes going to SBI Bank and all the pointers are suggesting that its a right choice.

Which bank do you have home loan with and what was your experience overall from start till the end. Can you share it in for others benefit?

587 CommentsAdd Comment

  1. DIPAK

    Dear all.

    My home loan amount is Rs.38 lacs.
    Taken in january-2013 from TATA CAPITAL HOUSING FINANCE LTD. Tenure-20 years.
    at floating interest rate. At that time it was 10.75%. Right now its 10.90 %. (as on 31-8-2015).
    Repaid around 1.5 lac (Principal) till date.
    Remaining amount around-36.5 lacs.

    SBI is offering at 9.75% and Processing fees- 0.25% of loan amount (Around Rs.9000)
    HDFC is offering at around 9.9 to 10.40 % Processing fees-0.5% of loan amount(around Rs.18000)

    Should I transfer my home loan to any other bank?
    Please give your suggestions in detail.

  2. Madhav

    Hi Manish – I am planning to switch from my existing bank (@10.05%) to SBI (9.75% with Max gain account). I read about lot of good features about max gain account and am inclining to switch soon. But, SBI has lot of initial charges including 0.5% stamp duty, which is coming nearly 18,000/- rs. So, is it worth switching to SBI with the pain of initial amount

  3. Dev

    LIC Housing is Bad. They have hidden charges.
    They offer you lower fixed rate (9.5 in my case) for 3 or 5 yrs and then it will be floating. They won’t inform you when that fixed rate period is over and the ROI is changed to 12 or 12.5% automatically. Then you have to pay 0.5% (10,000 for 20 lac loan) of your loan amount to reduce ROI to 10.5 something. Cheaters!

  4. Rahul

    Hi Sir,
    I wanted to make a query regarding home loans,
    I live with my parents and grand father in one half portion of the house and my uncle, with his family, in the other half of the house,
    The house is owned by my grand father who is 86 years old and has old age health issues,
    In future, the house will go to my father and uncle equally.
    At present, my uncle wants to shift to another city and is not intending to come back.
    As a result of this my grand father don’t want that after him, the house should be sold off (emotional attachment) to settle the issues between 2 brothers, on the other hand I don’t want to leave the house because of its location being very convenient to my parents and grand father (hospitals, markets, commercial area are at walking distance),
    I have decided that I buy half portion of the house from my grand father, that money can be used by my uncle to buy a property in his city, in this way problem can be sorted out amicably and all 3 parties-me, grand father and uncle will be happy.
    PROBLEM is banks are saying “NO” to give home loan in this situation.
    Sir, kindly advice me what should be my step to get any bank to finance me in this situation.
    The house worth a lot and it will take me a long time to earn that much amount of money, and when I will. the price of the house will again rise.
    Thanks
    Rahul

  5. harikumar

    sir,
    I am plan to take 10 lakhs loan for buy a house . kindly suggest which bank is better for me and who is the market leader i n homeloan

  6. kavitha

    Dear sir, how are you please tell about LIC Home loan procedure and i will apply bank loan for Rupees 4 lakhs. so how much amount i have to pay monthly. because this is my first time applying home loan .. please reply me sir

    • Dev

      Agree with Vandana. They have hidden charges.
      They offer you lower fixed rate (9.5 in my case) for 3 or 5 yrs and then it will be floating. They won’t inform you when that fixed rate period is over and the ROI is changed to 12 or 12.5% automatically. Then you have to pay 0.5% (10,000 for 20 lac loan) of your loan amount to reduce it to 10.5 something.

  7. RAKESH SARMA

    Sir one question from mee.. That which is the best bank for housing loan about 15th lakhs for middle class family SBI or LIC

  8. Prabu

    I have small doubt…once we are starting EMI,first we have to complete our interest for first few months.then only start our Main Loan amount for reducing coming months, correct? In this scenario applicable for all Banks? because after 3 years am going to close my loan means i have to pay all amount,its not useful for whom they are going to close loan with in 3 to 5 years.
    For example DHFL housing loan first 6 month they charged only interest then only start our main balance reducing.

  9. Nishant

    Dear Manish,

    Need your help on below mentioned situation.

    Father was allotted a flat by Welfare Housing Organization on 10th Oct 2012. Father is 79 Years old & retired from Army. Applied in Bank for Loan. Bank refused loan @ 79 years of Age whereas earning is not a concern. Father was applicant & Daughter is co-applicant. WHO was requested to add a co applicant. WHO issued a Tripartite agreement & No Objection certificate to take loan with MARRIED daughter. On the basis of TPT & NOC from WHO, bank approved loan. Conveyance deed was executed on 13th April 2015 with Father & Daughter. EMI is being paid by Daughter.
    Legally property is 50:50 of both the Join Registrants. Now, Father wants to Sell his 50% of his part to Daughter. Gift Deed is not an approved solution by WHO. Will is not a workable Alternative. In Rajasthan re-registration with in tenure of 2 years, 2% charged on Conveyance deed.
    WHO will release NOC when bank will issue NOC or we clear the Home Loan. NO Possibility to clear Home loan due to liquidity constraints. Now, option available is to take NOC from bank. Bank is asking to clear the loan first, then only NOC can issued.

    Please suggest.

    • Hi Nishant

      Your cases is a bit complex and I think we are not the right people to comment on it.

      My suggestion would be hire someone who is professional in this area and consult them

      Manish

  10. SUMAN POTUGARI

    I AM PLANNING TO GET HOME LOAN FROM DHFL VYSYA .THEY SAID 8.83% RATE OF INTEREST BECAUSE ON THE LADY’ S NAME … THE LAND IS UNDER MY MOTHER NAME AND SHE IS MY CO APPLICANT,,HOW FAR IT IS SAFE FOR ME PLEASE COMPARE WITH SBI HOME LOAN ….I DON’T KNOW WHICH IS GOOD AND …FRAUD,PLEASE TELL ME YOUR SUGGESTIONS.

  11. ishan

    Hello,
    Can you please send me that excel sheet for calculation of daily reducing balance and monthly reducing balance about which you were talking in 2012. I red about it on some of the starting comments. My email id is : [email protected] / [email protected]. Please send on both mail id’s.
    Actually I am going to take a home loan for around 25 Lack. This loan will be a combined one as I am not eligible for 25 Lack loan alone, me and my wife (going to be in a year) will take it in which she will be applicant and I will be so-applicant. Sonfused between SBI, SBI Max Gain, HDFC and IDBI. Your suggestions are most welcomed. Please reply ASAP
    Thank You

  12. ritzshaan

    i had a very good experience with hdfc ltd till now ,
    from 2009 to 2015 i have taken 3 home loans in total , cleared in 2 years from the commencement of loan period ,
    i found there overall service very good as they used to inform me about all the rate changes, how i can save more by conversions , all statements were delivered at my home without any hassle , no problem with part payments and full closure, documentation was at ease , a month back i have closed the 3rd home loan .
    now i am going for my 4th loan with idbi as hdfc ltd dont give loan for commercial property to nri ,
    hope this move will be as fruitful as the past ones :)

    rgds manish nagpal

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