A housing loan is a sum of money borrowed by a person, typically from banks and Non-banking financial companies. Loans are available for a period of 10-30 years based on the size of the debt, age of the borrower, etc. The borrowers must pay back the loan balance with interest in EMIs.
Various lenders, such as SBI, HDFC, ICICI, PNB, Bajaj finserv, etc., offer different types of loan schemes for their customers.
In this writeup, we are going to compare the home loan schemes of the two most popular lenders HDFC and SBI.
How does HDFC Home Loan compare with SBI Home Loan?
It is necessary to make a thorough analysis of HDFC and SBI Home Loan on all terms and conditions to understand their distinctions and make an educated decision. Bear in mind that the scheme of each bank has pros and cons that must be weighed before the best offer is selected.
The primary outcomes of the two banks’ comparison are:
- HDFC Home Loan’s lowest interest rate is 6.90 per cent, which is lower than SBI’s lowest interest rate at 6.95 per cent, so HDFC provides a cheaper loan alternative.
- For the other home loan charges like processing fees, SBI charges a smaller amount for processing fees of 0.20 per cent of the loan amount whereas HDFC charges a processing fee of 0.25 per cent of the loan amount.
- Compared to SBI, HDFC Home Loan has a maximum processing fee of ₹ 10,000, whereas the processing fees charged by the SBI can go as high as ₹17,400. Thus, by going with HDFC, consumers looking for a higher loan sum will benefit from low processing fees.
- With its home loan rates benchmarked to RLLR (Repo linked lending rate), SBI is a Public Sector Bank. HDFC is an HFC (Housing Finance Company), and its home loan interest rates are benchmarked to PLR (Prime Lending Rate).
- An average customer rating of HDFC is 4.4. In contrast, SBI has an average customer rating of 4.1, which indicates that HDFC has a strong emphasis on customer care, a convenient procedure for home loans and quick turnaround time.
- All of these banks offer women’s discount programmes, so this consideration would therefore not be relevant in determining whether you should take a home loan from HDFC or SBI.
- One of SBI ‘s innovative features is its overdraft service, which helps borrowers to minimise their interest performance by only paying interest on the amount of loan used. This scheme makes it an acceptable choice for self-employed and business people who have a fluctuating fund need.
- HDFC offers better service than SBI in terms of banking solutions, post-sales service, etc.
What is the eligibility criteria?
The home loan eligibility is determined by the age and salary of the prospective borrower. The applicant’s age can differ from 18-70 years. Furthermore, the applicant’s minimum wage, along with a decent credit score of 650 and above, should be equivalent to ₹ 25,000.
State Bank of India
Both whether salaried, technical/self-employed business people, may opt for the loan. To qualify for the SBI repo rate related home loan, borrowers need a minimum annual income of ₹ 6 lakh. The loan is available to both new or existing home loan borrowers.
What are the documents required?
- Duly signed application for a home loan and three self-attested photographs.
- Proof of Identity: PAN, Passport, Voter ID card or driving license.
- Proof of Residence: Latest copies of utility bills such as telephone, power, water bill, gas bill, or Aadhar card copy.
- Property documents: Permit for the construction; allotment letter; stamped agreement for sale; registered agreement for sale (only Maharashtra); share certificate (only Maharashtra); maintenance and power bill of the property; property tax receipt; conveyance deed in case of the new property; bank account statements of the payments paid for the property to the seller.
- Loan A/C statement of last year if there is any previous loan from any other lender
- Bank account statements of all bank account kept by the borrower for the past six months.
- Last three months salary slip; copies of form 16 for the previous two years; a copy of the previous two financial years IT returns accepted by the Department of Income Tax.
- Self-employed income proof: Address proof of business; last three years IT returns; balance sheet for the previous three years; details of the business licence; TDS or Form 16 A.
- Self-employed practitioners such as CA or surgeons, among others, are also expected to present the certification certificate.
Conclusion: Compared to SBI who has a minimum EMI of ₹ 662 for 30 years, HDFC has a lower Home Loan EMI of ₹ 659 on a home loan for 30 years. The average HDFC customer rating is currently at 4.4/5.0, making it a decent choice for a home loan. The minimum SBI Home Loan interest starts from 6.95 %, and HDFC Home Loan begins at 6.90%. Prima Facie, HDFC looks a better option, however, which lender suits your requirement can be decided better by you.