Home Loan

Home Loan - Fixed or Floating ?

Floating is better in case fixed interest rate is high. Also fixed interest is never fixed, it can always be revised every 5 years or so by the bank.

Public Sector or Private Sector Bank?
Not sure why but people now a days prefer public sector banks. Private sector banks will send loan recovery agents if you fail to pay emi even for a month or so (I don't know about it exactly.). Public sector banks doesn't have these kind of issues.

As per general discussions that I have come across so far, people tend to prefer LIC Housing Finance  (it is a mix of both govt & private).

Private sector banks will be faster in processing loans but will have extra overhead later on. How ? Private sector banks react late to any interest rate reduced by RBI but reacts immediately for increase in the interest rate by RBI. For a month or quarter, you end up paying more. In a long run, it can be huge as the interest rate is never fixed. So, you will be always paying more in private sector.

SBI takes around 3 months or so for processing loan, neither buyer nor seller will wait so long after executing sale agreement unless it is property under construction.


Currently, LIC HF is charging 0.5 % of the loan amount as processing fee where as it is 5K (fixed) in ICICI bank. On a loan of 30 Lacs, you need to pay close to 15K to LIC Housing Finance for processing where as in ICICI you just have to pay around 5K.

I think I will go for LIC Housing Finance. Even though I may be paying little more for the processing but I want peace of mind. Govt can exercise control over it if required and nobody has yet complained to me about them.



How much will they fund you?
Banks will generally fund you 85% or 80% of the cost of property+registration. It doesn't include processing fee etc. The processing fee can range from NIL to 2% of total loan amount.

For resale properties, ICICI bank will fund you only 80 %. This is what an executive has told me.

Requirements

Documents required for LIC Housing Finance (for both applicant and co-applicant)
- photograph (2 nos)
- Latest 3 months salary slip
- Latest 6 months bank account statement where you have salary account
- pan card (copy)
- company id (copy) - in case bank has special offer for company
- form 16 & IT Saral
- qualification certificate  (professionals have several advantages...)
- annual ctc
- present address proof
- agreement with vendor