All banks are same, everyone has bad experience will all kind of banks, whether PSU or private, you can check with your friends , all have issues with banks and none of them is perfect or good bank but you have no option but to use them and choose the best amongst the worst !
PSU banks will make you run around for home loan. There paper work is treacherous and sometimes you will totally get disillusioned and get out but once the loan is approved, hassles will be less and their interest rates are also comparatively less. Best thing about PSU Banks is their interest rates never go as fast as in private sector banks like ICICI Bank or HDFC Bank.
Also private bank can raise the prepayment charges any time and it depends on their whims and fancies. In tough times when people start losing jobs and banks start charging higher interest, they will raise the prepayment charges without anybody knowledge.
Buying a house on loan is probably the biggest investment one ever makes. So, it’s important to know the factors or conditions that can create roadblocks.
Deepak Parekh, chairman of Housing Development Finance Corporation (HDFC), has recently asked home buyers to be cautious of schemes where the developers offer to pay interest on a loan for a specified period.
With inventories piling up, developers have been trying to lure customers by paying the interest or the equated monthly installments (EMI) on a home loan taken by a borrower for a period of three to four years. However, since the home loan is in the name of the customer, the latter will suffer if the developer defaults.
“Customers need to be cautious of too-good-to-be-true type of products. Borrowers must not be blinkered into believing that there are no risks when developers offer to pay interest on a borrower’s loan for a specified period. Borrowers have to be cautious because in the event of a developer delaying payment, the credit bureau’s reports will reflect this in the borrower’s records, thereby impacting his or her creditworthiness,” is what the evolving scenario is.
Parekh, who had criticized teaser loans in the past, asked financing companies to stay away from innovative and aggressive loans, including teaser rates. SBI is leader in introducing teaser rates and starts the competition in the market.
According to Deepak Parekh, real estate prices can only come down if there is a greater supply.
1. So what is a teaser home loan?
Teaser home loans are generally introduced into the lending system to serve a specific function, much like the super sopper we see doing the rounds on a wet cricket ground! They are there to sop up excess liquidity that is threatening to lull the lending market into a state of inactivity. These loans are historically resorted to when the economic environment needs a catalyst to maintain momentum in the lending market.
2. How do I choose the best loan?
1. Compare total loan cost with the current parameters. At the outset, the current teaser home loan schemes differ in the range of 0.25-0.3 per cent at teaser rates. One needs to factor in other costs like processing fee, service charges etc, to determine total loan cost at prevailing teaser rates. Only when the floating rates kick in, can one evaluate how much more interest outgo it will work out to.
2. The ongoing controversy over the so-called “teaser” loans in the home loan segment has many dimensions. The term ‘teaser loan’ is derived from the practice, adopted by some leading banks, of charging attractive, customer friendly, fixed interest rates for the first three years and thereafter setting the interest rates on more conventional floating rate basis. The pioneer and market leader in this segment, State Bank of India charges eight per cent for the first year and nine per cent for the next two years. Home loans are typically of a much longer duration and borrowers, tempted by the attractive interest rates during the initial years, are less likely to take into account either the interest rate risks or their repaying capacities during the rest of the loan period.
3. Some of the strongest criticism against the SBI’s home loan scheme has come from the HDFC, which, along with other banks and institutions, was forced to follow suit. While the SBI and other public sector banks have access to cheap resources and can afford to charge the lower lending rates for the initial years, others are not placed well enough to compete with them in this game.
3. Top 5 banks for Home Loan
Top 5 banks for home loan are SBI, HDFC, LIC housing, Axis Bank and ICICI Bank
Almost 50% of the home loan market is captured by SBI. Although paper work is rigorous, people prefer SBI because of less chances of fraud compared to private sector banks. I am not saying that there is no issues with the bank but the numbers are less.
2 . HDFC:
The bank is known as home loan banker. Tough in compliance, rigor on regulations but at the same time very aggressive home loan provider. People have good experience with this bank but paper work is as rigorous as public sector bank so this bank is less prone to fraud.
3. LIC Housing Finance:
Another popular home loan junction who is no less than ICICI Bank and SBI is LIC Housing Finance which is a subsidiary of insurance giant LIC. Documentations are less painful. Better rates, you can fix the interest rates for 5 years. Reduced rate of interest is charged for LIC Policy holders.
4. ICICI Bank:
ICICI Bank is very aggressive in home loan market and they process your papers in no time. But once your loan is sanctioned, it’s all over for you. The friendliness goes offline or maybe they are friendly to their brand ambassadors Bachhans and khans. Maximum number of complaints against this bank. Interest rates are also very high.
5. Axis Bank
They have NIL charges for any pre-payment. Axis bank is better than ICICI Bank in many senses. As of now very aggressive on home loan front and seems to be catching with the biggies.
The rates are also good and can be negotiated.
The Most popular and the most preferred:
The most preferred is still the SBI because of low interest rates, no hidden charges, PSU backing, and large customer base.
Do share your grievances if any, we will definitely bring it to the notice of the concerned bank and will highlight the same in different forums.