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Pre Home Loan Experience with HDFC, ICICI, LIC, SBI & AXIS !!!

As i promised in my last blog that i will share my Pre Home Loan experience with BIG 5 i.e. HDFC, SBI, LIC, ICICI & Axis…. I will keep it short & Sweet and will just share the Pros and Cons of each Institution based on my personal experience along with small write up on same…..Lets start with Big Daddy i.e. HDFC

1. HDFC Ltd: Biggest mis-conception among all Home Loan seekers is that HDFC Bank Ltd and HDFC Ltd are same but as i clarified in my earlier blogs also and just to clarify again that they are 2 different institutions & they don’t have any connection with each other….HDFC Bank is governed by RBI and HDFC Ltd is Housing Finance Corporation governed NHB (National Housing Bank)….They are listed separately in Stock Exchange. I will explain my experience in detail in my next blog but right now i am just listing down Pros and Cons based on my interaction with HDFC

Pros:

(a) Oldest Home Loan Lender in India with experience of more than 30 years

(b) Dedicated Network of Branches for Home Loan Servicing across India

(d) Online Access of Home Loan Account

(e) Loan Amount = 80% of Sale Agreement Value rather Registration Value (It is biggest plus)

Cons:

(a) Very Very Poor Service by DSA & Branch (Will discuss in detail in my next blog)

(b) Hidden Charges for Loan Processing like 0.1% of loan amount as stamp duty for MOD

(c) Call Centre is good for nothing becoz agents dont know anything about Loan Account they simply refer you to the Branch Manager from where loan is processed

(d) DSA’s don’t entertain you after collecting Processing fees cheque and No one picks up phone in Branch…In nutshell u land in No man’s Land after paying processing Fees

(e) Very Rude and not so Friendly Staff

(f) Very very inflexible in Loan Disbursement

(g) No response on mail queries or complaints

2. SBI Bank: SBI is simply not keen to give loans and it is visible from their approach towards customer…I called their Home Loan Manager of MG Road Branch through reference but he never sent any details despite numerous calling than i collected list of documents required by bank from my friend and visited Marathalli Branch…The Loan Manager of branch was amazed to see complete set of documents in 1st visit itself. He shared mob no of 1 Lawyer who is on panel of SBI for legal verification and she was in Malleshwaram (It is around 20 kms from Marathalli)….I called Lawyer and fixed appointment for next day and i took off from office and visited her office. After reaching she told that she is busy today and i should come next day…Next day again i took off from office and visited then she told that she is middle of some imp case discussion and i shud come next day…then i decided that enough is enough and i dropped idea of taking loan from SBI

Pros:

(a) Public Trust as it is Govt Bank

(b) No Pre-Payment Charges

There is no other visible advantage

Cons:

(a) Biggest disadvantage is you need to do lot of running around as getting loan from SBI is very very painful task

(b) Loan amount = 80% of Registration Value

(d) Loan Account can be operated only from Home Branch

(e) Lack of Professional Approach

3. ICICI Bank: ICICI is struggling with perception problem that they levy unnecessary charges and Home Loan is costliest

Pros:

(a) Dedicated Team for Home Loan Servicing

(b) Largest Branch Network

Cons:

(a) Negative People Perception and bad word of mouth

(b) Staff does not have proper information on Loan Products

(d) Prepayment Charges @ 2%

4. AXIS Bank: I approached their Call center and someone called me after 7 days…He promised me that he will send details through mail but not received any mail till date… Then i approached Home Lone desk at Marathalli Branch and executive was not able to answer even basic queries on Home Loan…She took my mobile no. & assured that her boss will call to clarify queries…After few days i received call from her boss and again he was clueless on most of queries…Then someone called from their main office Bangalore and he was also not able to provide any clue so i decided to drop Axis from my list

Pros:

(a) No prepayment Penalty

(b) Lowest Processing Fees of just 5000 Rs

Cons:

(a) Staff does not have proper information on Loan Products

(b) No dedicated set up for Home Loan

5. LIC: I approached LIC’s office on Varthur Main Road and i found staff to be good and very knowledgeable. LIC give carrot of discounted rate for 1st 3 months i.e. when i approached them, at that time Rate of Interest was 10.5% and LIC was offering interest rate of 9.85% for 1st 3 months(If i remember correctly). Infact after few days of visiting their office, i got follow up call. Only reason why i decided against LIC was that LIC does not have strong legal check in place (Based on feedback received from my friends)

Pros:

(a) Government Backed organization

(b) Knowledgeable staff

Cons:

(a) Younger member in Home Loan Providers

(b) Don’t mislead by lower interest for initial period

Conclusion: In short none of the lender is clear winner in this segment…You can finalize based on ur personal requirement & preferences. if u dont want any pre-payment penalty clause then its better to go with AXIS and in case u want to borrow from experienced lender then its better to go with HDFC or ICICI, which has its own advantages. In case someone would like to go ahead with Govt Backed lender then SBI and LIC are options available.

None of the lender is perfect in their approach and it is more to do with people u r interacting rather lender as such…The customer experience vary even between 2 branches of same lender in same area…If u have any query/clarification, pls feel free to contact me.

In my next blog, i will share my Home Loan experience with HDFC Ltd in detail.

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Category: Home Loan

Tag: AXIS, Best Home Loan, HDFC, Home Loan, Home Loan Provider, ICICI, LIC, Nitin Bhatia, SBI

Sumeet

Sir, I wanted to know the difference between Axis Bank’s (loan agreement) versus LICHFL’s (credit facility agreement). Are they same? Is there a catch somewhere? During buying or selling process, is there an advantage of one over the other method?
- Aman
  
  For a Flat on khata B Property,whether banks are easily providing loans
  - http://www.nitinbhatia.in/ Nitin Bhatia
    
    Dear Aman,
    
    You can easily get loans for flat with Khata B. Only thing is Bank will take one declaration from you mentioning “Currently the Khata A is not available for the property you are buying and as & when u will receive the same, you will submit the original Khata A with Bank”
    
    All the Best
    Nitin Bhatia
    - kapse
      
      Hi Nitin,
      
      Which bank is giving such option? I mean loan for B khata house construction?
      - http://www.nitinbhatia.in/ Nitin Bhatia
        
        Hi, Banks or HFC’s are providing loan for Flats with Khata B but not for Revenue Sites i.e. for house construction.
Nitin Bhatia

Hi, Credit Facility agreement is different from Home Loan agreement…Just to give e.g. Availing Credit facility is as good as opting for personal loan means bank is extending a credit/facility for general purpose. If i am availing credit it shud not be necessarily for Home purchase, i can use for general purpose like marriage etc. The catch is rate of interest on credit facility will be high & secondly u will not get tax benefits under Home Loan if it is not mentioned in Loan agreement that loan is provided for Home Purchase purpose only i.e. its a Home Loan Agreement…Home Loans can be used only for Home Purchase, u can’t pull out single rupee for any other purpose…I request u to speak to LIC home finance agent and clarify the same before signing agreement…LIC Home Loans are known as Griha Vikas, Griha Shobha, Griha Prakash…If u can let me know which loan u r availing then i can share more details..Also compare Processing fees, Interest rates and Pre-Closure charges before finalizing between two.
Sumeet

Thank you. I had another question – LICHFL has been rather aggressive vis-a-vis Axis and that to me is a complete surprise! LICHFL has a plan ‘Freedom Floating’ at 11.65% which includes a spread of 2.75%. They have been pushing this plan compared to pure floating plan of 10.40% as the Freedom Floating has a ‘better spread’. Also, LICHFL says that as it is a Government company, their operating expenses are much lower than private banks.

Axis on the other hand had said 10.75% but today called to say that they can offer 10.85%.

The loan requirement is 1.50 Cr for 15 years.

What is your recommendation? Should I go for LICHFL and if yes, is a pure 10.40% better than ‘higher spread’ of ‘Freedom Floating’ 11.65%?

Thanks again.
Nitin Bhatia

Just to clarify LICHFL is not a Govt Company, it is promoted by LIC which is Govt. Company so holding of any Govt Company doesn’t mean it is Govt Company but yes backing of Govt Company is big boost

Secondly, my suggestion is don’t go by current spread being offered becoz tomorrow if LIC will increase RPLR or BPLR by 50 basis point then automatically ur interest rate will increase by 0.50%.

As i mentioned in my another article, it is advisable to avail Loan from banks rather than HFC’s (Housing Finance Companies)…Axis, SBI and ICICI are banks directly governed by RBI and their Base rate is directly linked to RBI’s Monetary policy so when RBI will reduce rates, banks are forced to reduce their rates but in case of HFC’s they are free to set their RPLR and BPLR depending on cost of Fund raising…When RBI will reduce rate they are not obliged to reduce rate..

Also i would like to clarify that Cost of Funds for HFC is high bcoz they raise fund on their own…U can check the deposits scheme available on LIC HFL site whereas banks have access to cheap funds becoz of CASA (Current Account Savings Account)..

Lastly the discounted rates of LIC are applicable only for 3-6 months..Kindly cross check on this part…Since ur loan amount is big, u can negotiate with Axis or any other bank on lower interest and processing fees.

My suggestion to u, u can ask both LIC and Axis bank to provide movement of following
1. Axis: For last 3 years monthly movement of Base Rate and Mark up on that
2. LIC: For last 3 years monthly movement of RPLR or BPLR and Spread on on that

These charts will help u in decision making as u can find out which institution is more transparent in fixing interest rates for existing customer..As home loan is long term commitment so it imp to know how these ppl treat existing customers.
Salil_priyadarshi

Hi Nitin,

It is very good article on loan. Please help on my case. I have loan requirement of 24 Lacs. HDFC promised me to issue some amount as a repair renovation (finishing loan amount). Initially i was thinking of taking loan from LIC but now due to higher interest rate i have dropped this option.

HDFC offering me loan on interest rate 10.50 however there are few negative points -
1 > Grace period of only 5 days.
2 > Minimum requirement of prepayment amount – Minimum prepayment amount should be double the EMI amount. It means if my EMI is 24000 /- then i need to pay 72000 /- (48000 – Prepayment + 24000 – EMI).
3 > they will be charging 18 % interest on the missed EMI amount.
4 > 2 % fees on the Outstanding amount in case of takeover.
5 > They will not allow to carry loan agreement with me. Need to sign loan agreement on the bank premises.
6 > They promised me to issue the repair renovation amount on the same interest amount.

Should i think on the option of Axis bank ?

——————————————————————————————————————-

Hi,

It seems they are lending you Home Improvement loan. Just to add HDFC is passing wrong info to you. You can prepay any amount anytime without any penalty. The interest rate is 10.75% for less than 30 lacs. if u are constructing your own house then HDFC is right that u need to pay 2% for loan closure. Pls cross check & cross verify the same. Interest rate vary for different customers.

Secondly u have every right to take photocopy of agreement with u.

Thirdly on missed EMI interest rate is very high so its OK and they are right, interest for missed EMI is 18%

Lastly i cud not understand what do u mean by grace period, pls explain.

Thanks
Nitin Bhatia
N4vneet

Hi Nitin

Which bank i should go for 30 Lakh home loan ? ICICI or Axis ?
- http://www.nitinbhatia.in/ Nitin Bhatia
  
  Out of 2, i will recommend Axis
http://www.nitinbhatia.in/ Nitin Bhatia

I doubt you will get Home Loan without Khata in place but u can check with Axis Bank or HDFC. if they refuse then you may check with Saraswat cooperative bank / Federal Bank / Tata Housing Finance.
K Mohanasundaram

Hello Mr Nitin,

I’m planning to take 20Lakh loan from Bank for buying a fully constructed individual house. Which bank I should approach to get a hassle free repayment and faster loan processing. Also please suggest me whether to go for BANKs or HFCs. Even if I approach HDFC Bank Ltd, they will be able to process my loan or they will redirect me to HDFC Ltd?
- http://www.nitinbhatia.in/ Nitin Bhatia
  
  Hi,
  
  Unfortunately Home Loan process is but tedious in India. It may take between 10-14 days for loan processing. For repayment, you may opt for ECS facility..Its available with all banks and HFC’s
  I will recommend Banks over HFC’s. HDFC Bank Ltd will redirect you to HDFC Ltd only.
Soniyaparikh

hello Mr nitin…

I m planning to take loan from bank ICICI or AXIS..i got senction letter from both the banks.

ICICI bank offers me 1% cash back scheem.. first 1% cash back will be only after 3 yrs or EMI payment..then after every year end (first cash back will get after 3 yrs EMI)

AXIS bank offers me 1 yr EMI free (If i pay 15 yrs non stop EMI’s) (Cant close my loan before 15yrs and cant reduce my EMI amt and Cant move with Fixed rate)

Interest Rate is 10.25% 25lakh for 20 yrs for both the banks

if i take loan from ICICI say for fixed 2 yrs
and i can renew it before end of 2 yrs then in that case can they
impose more interest rate apart from available fixed rate in market?need ur helpsoniya
- Ashish
  
  I have heard that ICICI will be good with for 1-2 yrs and then they will start imposing more charges and interest.
  Axis has normal offer but has to be with axis bank for next 15 yrs.with same EMI sanctioned.
  
  Nitin Ji, Plz reply
  
  Ashish
  - http://www.nitinbhatia.in/ Nitin Bhatia
    
    Dear Friends,
    
    Both ICICI and Axis have own pros and cons. Just to add that ICICI bank does not give Home Loan there is a separate HFC called ICICI Home Finance similar to HDFC which process Home Loan.
    
    ICICI has very poor reputation in market in terms of being unfair to customers whereas Axis is quite decent. ICICI is front loading the benefits whereas Axis is rewarding towards the end. Not only for ICICI but for all HFC including HDFC, interest rates will be higher then normal after 3-4 years becoz of tweaking in Spread or discount over RPLR/BPLR. Its better to go with banks
    
    Though both the schemes look attractive but actual benefits are not much & are only to the tune of maximum 0.5% in interest rate for both ICICI and Axis. These schemes are just to lure the customer without much financial benefit to customer.
    
    If u have to select from either of 2 then considering average loan tenure is just 5-6 years then it is better to go with scheme which is passing benefits towards the beginning of loan i.e. ICICI. Also i request you to check with ICICI, the discount/spread being offered over RPLR/BPLR and will this discount/spread remain fixed during loan tenure.
    
    On personal front i will not opt for either of scheme, rather i will prefer SBI becoz SBI is offering loan @ 10% interest (25 Lacs for 20 years)
    
    Hope i answered your query
    
    Thanks & BRNitin Bhatia
    - Vishal Sonkar
      
      Hi Nitin,
      
      Currently i am planning to take loan of 16 lakhs. I have shortlisted ICICI and AXIS. ICICI base rate is 9.75 % with markup of .50% and AXIS base rate is 10% with markup of .25%. In your above comment you said ICICI follow BPLR system like other HFC do. But that doesn’t seems to be the case as its offering base rate system which will get affected when RBI will change rate. So i am confused a bit. Can you please clear what ICICI actually follow and which one to prefer on the basis of base rate and markup.
      - http://www.nitinbhatia.in/ Nitin Bhatia
        
        It seems you are availing loan from some bank acquired by ICICI. ICICI process home loan through its HFC arm i.e. ICICI HFC. I will recommend Axis Bank.
        
        Vishal Sonkar
        
        Yes they said its ICICI HFC which will process my loan. And that’s where i am confused. If its HFC then in their website why its written i-base rate 9.75%.
        What was attracting me to ICICI is that they agreed to reduce processing fee to Rs 5000 but Axis will charge Rs 8000.
        Also since i am planning to end my loan in 10 years therefore i won’t be able to take profit of Lat 12 EMI waiver plan but will be able to avail profit of ICICI 1% cashback scheme.
        Do you still think i should prefer AXIS.
        Obviously i dont want to get into BPLR system but if ICICI is following base rate then ICICI suits me more i guess. Is there any way to find the actual truth behind this ICICI HFC base rate thing ?
        
        http://www.nitinbhatia.in/ Nitin Bhatia
        
        I have replied on ur mail
Raghu

Hi Nitin

I had taken HDFC Home Loan Floating Interest for Rs.15lacs last month. They say there is no pre=payment charges.
But they say there is a new rule from Dec’2012 becuase of which i have to pay additional fee of Rs.5000/- and stamp duty of 0.5% of loan amount again before first disbursement of loan.
My loan was sanctioned last month and i had already paid 0.5% processing fee + service tax.
Is it true??
- http://www.nitinbhatia.in/ Nitin Bhatia
  
  There is no such rule but they may charge 0.1% of Loan Amount to register Mortgage document i.e. 1500 Rs…Besides this there is no other fees.
Pankaj

Hi Nitin,

Thanks for your wonderful advices, the blogs are really helpful for the people like me who are going for their first home loan.
I am purchasing a property in Bangalore which is approved by SBI, ICICI and Blue Homes. I always wanted to avail the home loan for my first house from SBI..but due to time constraints and personal reasons i have to change my mind, hence i am now planning to go via ICICI.
I am located in Chennai and am going for a joint home loan along with my wife who is travelling to onsite on 1st March for 6 months. Since she will be unavailable for the next 6 months in India, i want to loan to be processed at a faster rate. Later on after 1 year my plan is to switch over the loan account to Central Bank of India.
Kindly suggest if the option selected by me is correct or not. Also i would like to know the minimum tenure for switching over the loan account from one bank to another.

Regards,
Pankaj
- http://www.nitinbhatia.in/ Nitin Bhatia
  
  If its floating home loan then you can switch your home loan without any pre-closure fees. There is no minimum tenure to switch home loan. You can switch your home loan any time.
  
  Based on your requirement, your approach is right but i will recommend you to switch to SBI rather CBI.
  - Pankaj
    
    Thanks Nitin
    I initially wanted to go for a fixed-floating option, in which the home loan will remain fixed for 1 yr and will become floating after 1 year. Once it becomes floating there will be no prepayment charges etc as per the guidelines for floating home loans.
    Let me know if this is a good approach, opted for this as i will get 1 yr time without increase in home loan interest rates for switching the account to another bank as per my preference.
    Also, please let me know if you are aware of any pre-closure loan charges from ICICI or other banks.
    
    Regards,
    Pankaj
    - http://www.nitinbhatia.in/ Nitin Bhatia
      
      Interest rates are coming down. Availing Fixed interest loan even for 1 year is not a good approach. You shud opt for floating home loan.
      
      There is no pre-payment charge in ICICI or any other bank on floating home loans.
ajay saroj

Hi nitin ji,
I have booked a flat in noida extension, but as u known Shi is not funding the loan, therefore I approached to lichfl and got sanction 22 lakh @10.25 fix for 2 years then floting, but they are not disbursing for my project right now. In my project at present axis, and Hdfc are financing , kindly suggest me out of these two banks which which bank should I choose or I must wait till the lichfl start funding
- Vishal
  
  HI Ajay,
  
  Without any doubt you should opt for AXIS.
  
  Axis follow base rate system while HDFC follow BPLR system.
  
  Which means in future when RBI will be reducing rate, AXIS is definitely going its rates further but HDFC is not bound to do so.
  
  Also do not go for fixed at the moment as home loan rates are going to decrease in coming days.
- http://www.nitinbhatia.in/ Nitin Bhatia
  
  Between Axis and HDFC, i recommend Axis bank. Secondly as ur loan is already sanctioned so LIC must have posted Home Loan query in ur CIBIL database. kindly inform the same to Axis Bank in advance so that you don’t face any issue in loan approval.
sagar

Hi Nitin, thanks in advance for all your help in taking wise decissions. I am planning to go for a home loan of 35L. At present HDFC is offering 10.4% (16.65% base – 6.25% margin)with processing fee INR 11,250. I work in a reputed MNC which had tie up with ICICI and so ICICI is offering 10.15% (9.75% base + 0.4% fixed margin) with processing fee INR 3371. Which one should I opt? what is this base or BPLR?
- Vishal
  
  Don’t ever go for bplr…if you will search you will get to know that when Reserve Bank will reduce its rate then HDFC is not bound to reduce it’s rate as it follow BPLR system whereas ICICI since follow base rate system is bound to reduce its rate. Better SBI Max gain but if you want to select between ICICI and HDFC. Then it should be ICICI.
  - http://www.nitinbhatia.in/ Nitin Bhatia
    
    I agree
- http://www.nitinbhatia.in/ Nitin Bhatia
  
  Hi Sagar,
  
  You may go for ICICI out of 2 lenders shortlisted by u. To understand difference between Base Rate and BPLR, you may check my following post on same
  
  http://www.nitinbhatia.in/home-loan/floating-home-loan-bplr-vs-base-rate/
  
  Thanks & BR
  Nitin
Arun

hai…
i want to change my housing loan from LICHFL to HDFC…kindly explain the procedure for this.. also any preclosure charges applicable or not ? mine is floating interest for 20 years period…loan amount 23 lacs…
- http://www.nitinbhatia.in/ Nitin Bhatia
  
  Pre-closure charges will be applicable as sourcing is not from own funds…You take letter from LIC mentioning all original documents submitted by you with LIC and the approach HDFC, they will guide you on further transfer process.
Arun

Hi Nitin !

First THANKS for the service to home buyers thru ur blog.

I
have first joined an MNC 10 months back as Software Engineer and have
Annual Income of Rs 5.4L. After next three months it may increase by 1L
and subsequent years also. I have not taken any earlier loans and not
married and no earning parents.

I have got an opportunity to buy a
independent house under construction for a low cost of around 32L (Low
Cost for me bcoz completing construction may take 7L or so as a lot is
constructed and buyers is moving to states).

I don’t want to loose this opp. but i have NO SAVINGS with me.

My salary account is in HDFC and i have account from by college days in SBI.

I know a guy in LIC but i don’t have LIC account.

I want to get an amount of 40L if possible to buy house any finish the work and pay using the rent and my salary.

Otherwise atleast 32L to not loose opp. In either case i need 100% Loan.

Is there any possibility to avail such 100% loan ? Can u suggest me some ideas and some banks ?

Thanks,

Arun
- http://www.nitinbhatia.in/ Nitin Bhatia
  
  To be honest, its not possible..You can get only 80% of sale value as Home Loan…Another option is to avail personal loan but interest rate will be very high. secondly, just be cautious that your total EMI’s should not exceed 45% of your take home salary else your loan eligibility will reduce.
http://www.facebook.com/akshaylovesyoulot Akshay Kumar

Is axis bank providing loan amount for B khata people in banglore if yes pls reply me with few deatils .
- http://www.nitinbhatia.in/ Nitin Bhatia
  
  Yes, All banks and HFC provide loan for B Khata properties in bangalore.
Joseph

What is MODT charge that the lender ( Bank giving home loan) charges while registration of property?
Please help me unedrstand