Best Bank For Home Loans in India 2024

Buying a home is one of the biggest financial decisions that a person makes in their lifetime. A home loan can help you make this dream a reality, but it is important to choose the right bank to get your loan from. There are many factors to consider when choosing a home loan, such as interest rates, processing fees, repayment tenure, and customer service.

In this blog, we will explore some of the top banks and financial institutions in India that offer home loans, comparing their features, interest rates, and benefits. Let’s dive into the details and help you make an informed decision.

Home Loan Fees and Charges

Here is a list of some of the most common home loan fees and charges

1. Application fee: This is a fee that is charged by the lender to cover the cost of processing your loan application.
2. Valuation fee: This is a fee that is paid to have a professional valuer assess the value of the property you are buying.
3. Lender mortgage insurance (LMI): This is a type of insurance that protects the lender in case you default on your loan. LMI is usually required if you are borrowing more than 80% of the value of the property.
4. Establishment fee: This is a fee that is charged by the lender to cover the cost of setting up your loan account.
5. Monthly account fee: This is a fee that is charged by some lenders on a monthly basis to cover the cost of administering your loan account.
6. Early repayment fee: This is a fee that is charged by some lenders if you repay your loan early.

State Bank of India (SBI)

State Bank of India (SBI), often referred to as the “Banker to Every Indian,” is India’s largest and most trusted bank. They offer a wide range of home loan products to cater to various needs.

Types of SBI Home Loan

HDFC Bank

HDFC Bank is one of the leading private sector banks in India and offers a wide range of home loan products. HDFC Bank is known for its excellent customer service and fast loan processing. HDFC Bank also offers a long repayment tenure of up to 30 years.

Also Read: How To Consolidate Debt With A Personal Loan

Types of HDFC Home Loan

ICICI Bank

Another well-known private sector bank in India that provides a variety of home loan programs is ICICI Bank. The minimal processing costs and reasonable interest rates offered by ICICI Bank are well recognized. Additionally, ICICI Bank provides a lengthy payback period of up to 30 years.

Types of ICICI Bank Home Loan

Kotak Mahindra Bank

Kotak Mahindra Bank also offers various special home loan products for specific groups of borrowers, such as doctors, engineers, and government employees. You can visit the Kotak Mahindra Bank website or contact a Kotak Mahindra Bank representative to learn more about the different types of home loans that they offer.

Types of Kotak Mahindra Home Loan

Punjab National Bank (PNB)

PNB home loans are available for a tenure of up to 30 years. Borrowers can avail up to 90% of the property value as a loan. PNB also offers a variety of repayment options to suit the borrower’s convenience.

Types of Punjab National Bank (PNB) Home Loan

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Bank of Baroda

Bank of Baroda, a government-owned bank, has a significant presence in the home loan market.

Types of Bank of Baroda (BOB) Home Loan

Union Bank of India

Union Bank of India is a trusted name in the banking sector, offering several home loan products with the following features:

Types of Union Bank of India Home Loan

IDFC First Bank

IDFC First Bank, although relatively new in the banking sector, is gaining popularity with innovative home loan products. Here’s a more detailed look:

Types of IDFC First Bank Home Loan

Federal Bank

Federal Bank is a well-established bank in South India and offers home loans with the following features:

Types of Federal Bank Home Loan

Bajaj Housing Finance

Bajaj Housing Finance is a dedicated home finance company with a strong presence in the market. Their home loan offerings include:

Types of Bajaj Housing Finance Home Loan

Axis Bank

Axis Bank, a popular choice for home loans in India, offers a range of features to cater to various needs:

Types of Axis Bank Home Loan

LIC Housing Finance Home Loan

LIC Housing Finance, a subsidiary of the Life Insurance Corporation of India, specializes in home loans. Here’s a more detailed look at their offerings:

Types of LIC Housing Finance Home Loan

Aditya Birla Home Loan

Aditya Birla Finance Limited offers home loans with the following features:

Types of Aditya Birla Home Loan

Citibank Home Loan

Citibank, an international bank with a significant presence in India, offers home loans with a range of features:

Types of Citibank Home Loan

Indiabulls Home Loan

Indiabulls Housing Finance is a dedicated housing finance company with a strong presence in the market. Their home loan offerings include:

Types of Indiabulls Home Loan

Karnataka Bank Home Loan

Karnataka Bank is a regional bank in South India and offers home loans with a range of features:

Types of Karnataka Bank Home Loan

Canara Bank Home Loan

Canara Bank, a trusted public sector bank in India, offers a variety of home loan products with the following features:

Types of Canara Bank Home Loan

DBS Home Loan

DBS Bank, an international bank with a growing presence in India, offers home loans with a range of features:

Types of DBS Home Loan

Bank of Maharashtra Home Loan

Bank of Maharashtra, a trusted public sector bank, offers a variety of home loan products with the following features:

Types of Bank of Maharashtra Home Loan

Also Read: Loan For Land Purchase In India: Ultimate Guide

Sundaram Home Finance Limited Home Loan

Sundaram Home Finance Limited is a dedicated housing finance company with a strong presence in the market. Their home loan offerings include:

Types of Sundaram Home Finance Limited Home Loan

Factors to Consider While Applying for a Home Loan

Here are some important factors to consider while applying for a home loan

1. Your credit score: Your credit score is one of the most important factors that lenders consider when approving a home loan. A good credit score shows that you are a responsible borrower and have a good track record of repaying your debts.

2. Your income: Lenders will also want to see that you have a steady income that is sufficient to cover your monthly mortgage payments.

3. Your debt-to-income ratio: Your debt-to-income ratio (DTI) is the percentage of your monthly income that goes towards paying your debts. Lenders typically prefer a DTI of 36% or lower.

4. Your down payment: The amount of your down payment will affect the amount of money you need to borrow and the size of your monthly mortgage payments. A larger down payment will lower your monthly payments and reduce the amount of interest you pay over the life of the loan.

5. The type of loan: There are many different types of home loans available, each with its own unique features and benefits. It is important to choose a loan that is right for your individual needs.

6. The interest rate: The interest rate is the percentage of the loan amount that you will pay in interest each year. A lower interest rate will result in lower monthly payments.

7. The loan term: The loan term is the length of time that you will have to repay the loan. A shorter loan term will result in higher monthly payments, but you will pay less interest over the life of the loan.

8. Fees: Lenders may charge a variety of fees, such as application fees, appraisal fees, and origination fees. It is important to compare the fees charged by different lenders before choosing a loan.

Eligibility for Home Loans in India

The eligibility criteria for home loans in India vary from lender to lender, but there are some general factors that are considered by most lenders. These include

1. Nationality: You must be an Indian citizen residing in India.
2. Age: Salaried individuals must be between the ages of 23 and 62 years, and self-employed professionals must be between the ages of 25 and 70 years. The upper age limit is considered as the age at the time of loan maturity.
3. Income: You must have a regular and stable income. The minimum income requirement varies depending on the lender, but it is typically between Rs. 20,000 and Rs. 30,000 per month for salaried individuals and Rs. 2 lakhs per annum for self-employed individuals.
4. Credit score: A good credit score is essential for getting a home loan. Most lenders prefer a credit score of 750 or above.
5. Loan-to-value ratio (LTV): The LTV is the percentage of the property value that the lender is willing to finance. Most lenders offer an LTV of up to 80% for home loans.
6. Employment: You must be employed on a full-time basis. If you are self-employed, you must have a business that is at least two years old.

Home Loan Documents Required

To get a home loan, you will need to provide the following documents

1. Loan Application Form:  Fill out the lender’s home loan application form.

2. Proof of Identity:

• Passport
• Driver’s license
• Aadhar card
• Voter ID
• PAN card

3. Proof of Residence:

• Utility bills (electricity, water, gas)
• Rental agreement or lease agreement
• Property tax receipts
• Aadhar card or Voter ID

4. Income Proof for Salaried Individuals:

• Salary slips for the last 3-6 months
• Form 16 or Income Tax Returns (ITR) for the last 2-3 years
• Employment certificate from the employer

5. Income Proof for Self-Employed Individuals:

• Business/Profession ITR for the last 2-3 years
• Profit and Loss Statement
• Bank statements for the last 6-12 months

6. Bank Statements: Bank statements for the last 6-12 months for all your bank accounts.

7. Property Documents:

• Sale agreement
• Sale deed
• Approved building plan
• NOC from the builder or the housing society

8. Down Payment Proof: Statements showing the source of your down payment funds.

9. Credit Report: The lender will obtain your credit report, but it’s a good idea to have a copy of it for your reference.

10. Photographs: Passport-sized photographs of all applicants.

11. Property Valuation Report: This is often arranged by the lender to assess the value of the property you intend to purchase.

12. Legal Documents:

• Property title deed
• Encumbrance certificate
• Chain of property documents to establish the title’s legitimacy

13. Guarantor’s Documents (if applicable):

• Proof of identity and residence
• Income proof

Additionally, some additional documents may be needed during the loan processing, so stay in contact with your lender throughout the process to provide any necessary updates.

Types of Home Loans in India

There are many different types of home loans available in India, each with its own set of features and benefits. Some of the most common types of home loans include

1. Home Loan: This is the most basic type of home loan and is used to purchase a ready-to-move-in property.
2. Home Construction Loan: This type of loan is used to finance the construction of a new home.
3. Home Extension/Improvement Loan: This type of loan is used to finance the extension or renovation of an existing home.
4. Plot Loan: This type of loan is used to purchase a plot of land on which to build a home in the future.
5. NRI Home Loan: This type of loan is specifically designed for non-resident Indians (NRIs) who want to purchase a property in India.
6. Balance Transfer Loan: This type of loan allows borrowers to transfer their existing home loan to another lender, typically to get a lower interest rate or better terms.
7. Top-up Loan: This type of loan allows borrowers to take an additional loan against their existing home loan, typically for home improvement or renovation purposes.

In addition to these general types of home loans, there are also a number of specialized home loan products available, such as

1. Pradhan Mantri Awas Yojana (PMAY) Loan: This government-sponsored scheme provides subsidized home loans to low- and middle-income borrowers.
2. Women’s Home Loan: This type of loan is specifically designed for women borrowers.
3. Senior Citizen Home Loan: This type of loan is specifically designed for senior citizen borrowers.
4. Home Loan for Self-Employed Borrowers: This type of loan is specifically designed for self-employed borrowers, who may have difficulty meeting the traditional eligibility criteria for home loans.

Tax Benefit on Home Loans in India 

The Indian government offers a number of tax benefits to individuals who take home loans. These benefits can help to reduce the overall cost of the loan and make it more affordable for borrowers.

The two main tax benefits on home loans in India are

1. Deduction on home loan interest (Section 24(b): Under this section, borrowers can claim a deduction of up to Rs. 2 lakh on the interest paid on their home loans each financial year. The deduction is available for both self-occupied and let-out properties.
2. Deduction on home loan principal (Section 80C): Under this section, borrowers can claim a deduction of up to Rs. 1.5 lakh on the principal repaid on their home loans each financial year. The deduction is available for both self-occupied and let-out properties.

In addition to these two main benefits, there are a few other tax benefits that borrowers may be eligible for, depending on their individual circumstances. 

For example, first-time home buyers can claim an additional deduction of up to Rs. 50,000 on the interest paid on their home loans in the first five years of the loan.

Here are some tips for claiming tax benefits on home loans in India

1. Ensure that you have all the necessary documentation, such as loan statements and interest certificates.
2. File your income tax returns on time.
3. If you are claiming a deduction for the first time, attach a copy of your loan agreement to your income tax return.
4. If you are claiming a deduction for the principal repaid on your home loan, attach a copy of your home loan statement to your income tax return.

End Note

Selecting the right bank for your home loan depends on your specific needs, financial situation, and preferences. It is essential to carefully assess your options, compare the offerings, and make an informed decision that aligns with your long-term financial goals.

Ultimately, the best bank for a home loan will be the one that provides the most favorable terms, excellent customer service, and a hassle-free experience to make your dream of homeownership a reality.