Are you a salaried class or a self-employed professional, looking for a bank that gives you quick approval of your housing loan with minimum waiting period & documentation? Or searching for a bank that charges the lowest interest rate and processing fees on the home loan?

Today, in this article, we will try to cover the best banks in India for Home Loan, especially for the Salaried Class people and also all the process & steps before approval of Home Loan in India. I will also cover the pre-requisite requirements for the quick approval of Home Loan from any Banks.

Before, selecting the best bank for the Home Loan, we need to know what is your requirement from a bank as a customer and what a bank needs from you as a banker. If you can understand the Bank’s requirements from you, then I think your loan will approve much faster than others with a minimum waiting period.

First, let’s have some idea about the banks’ requirements from you

Eligibility criteria for Home Loan in India

There are many criteria a bank looks before sanctioning a Home Loan, but the main criteria before approving a Housing Loan or any other Loan is the borrower’s creditworthiness and his repaying capacity. Your loan repayment records and your income generation source or capacity are the main selection criteria of any loan.

If you are a salaried person, then Banks will prefer you more than a businessman or self-employed professionals, again if you are working in a PSU or Central/State Govt., then banks will prefer you more than those who work in private sectors. Because these are the perception, how safe you are so that banks can sanction you a housing loan. These are called Risk-Assessment which banks have to analyze before sanctioning you a Home Loan.

I am not going details about the bank’s Risk-Assessment process, here are some main eligibility criteria for a home loan in India. Different banks have different eligibility criteria for Home Loan, I am not here discussing only the basic eligibility criteria, but what banks look before sanctioning housing loan in India

1. Minimum Take Home Salary: Minimum Gross salary will be Rs.25000.00 in most of the banks. As per Housing Loan appraisal, minimum Take Home Salary after meeting all the deduction will be 50 percent for Self-Employed and 40% for the salaried class. Some banks may relax these norms as per their guidelines.
2. Age of the borrower: The minimum age for getting Housing Loan or any other loan is 18 years, though banks mainly look for how many remaining years for the occupation you have left with. Banks generally consider 60 years for the salaried person and 65 years for businessman, these are also varied from bank to bank, some banks may sanction housing loan up to 65 years, some banks may extend it up to 70 years for the businessman or self-employed persons. But for salaried person, I will recommend you to complete your housing loan tenure before the retirement.
3. CIBIL Score: CIBIL score of 750 or higher is considered a good score for sanctioning housing loans from the banks. If you are an older customer of the bank, then the bank may consider a lower CIBIL score, but these depend on your relationship with the bank.
4. Nature of Employment: Nature of employment means permanent or temporary, Private or Govt, etc. If you are working in any PSU or State or Central Govt department, then banks will give you a high preference than those who are working in any private company, i.e nature, and stability of your current job is one of the factors every bank looks from the applicants.
5. Location of property: The location of your property or marketability of your property is one of the main criteria before sanctioning any loan. If your property is in a good location like in Metro cities or in a place where all the important offices are in nearby areas, then your property has higher chances of resold. Because if someone fails to repay the home loan properly, then how quickly a bank can sell the property is one of the foremost criteria.
6. Age of the Property: Age of the property means the property is new construction or a few years old. Older property has less value due to depreciation.
7. Undisputed Land Records: The Land record must be free from any disputes, all types of taxes should be up to date, the title of the property should be clear, etc.
8. The reputation of the Builders: If you are purchasing any flat, then reputation or previous track record of the builder is an important factor. For bigger residential projects, most of the bank is tied up with construction companies or builder for quick disbursal of the loan with the minimum documentation process.

What you should look from a Bank before taking Housing Loan?

As a customer what should you look from a bank to avail your Home Loan? A housing loan is not a shorter-duration loan like MSME or other Retail Loans, it is generally a longer duration loan which ranges from 15 years to 30 years. Although you may consider housing loans for a shorter duration, if your income permits, but I will not recommend that. Always try to analyze all the aspects like your affordability of EMI, Tenure of Loan, your Household expenses, your future monetary obligations, etc before approaching a bank or NBFC for Housing Loan.

Now, let’s see what are the topmost factors you should consider before availing the Home Loan

1.  Interest Rate: The interest rate is the topmost factor you should consider before availing the loan. Now every bank (not Housing Finance Companies or NBFC) provides Housing Loan interest rate linked with Repo Rate (RLLR)  as their external benchmark rate. The Repo Rate decides by RBI every quarter. Therefore, the effective rate of Housing Loan also changes every quarter. The RLLR is Repo Rate + Margin charged by the individual banks.
2. Processing Fees: Processing fees of Private Banks are generally higher than the PSU banks, some banks also offer zero processing fees during some certain time like Festival Season. Always try to look for these kinds of opportunities to save some money.
3. Selection of Banks: If you have a salary account in any bank, then your Housing may get approved faster than any other bank. Though this will not be a big issue nowadays, because every bank now takes ECS mandate from you to deduction of Loan EMI regularly.
4. Repaying Capacity: Always try to analyze your repaying capacity or affordability of Home Loan EMI, so that you can maintain a balance between your expenses and savings for the future. Make a clear budget of inflow and outflow of income, if possible try to increase the loan tenure, so that you minimize the EMI burden at the initial phase of the loan.
5. Pre-closure or Foreclosure Charges: Some banks and NBFC (Non-banking Finance Companies) may charge for pre-closure or foreclosure of the loan before the actual tenure. Always read the loan documents carefully or ask the bank officials about that. Also, ask your bank whether you can deposit lumpsum amount over your fixed EMI, some banks or NBFC do not allow such credit in Loan Account.
6. Other Charges: All banks will insist you for full personal insurance coverage for housing loans during the loan tenure and for some banks like SBI or HDFC, it is mandatory. Some banks have their own insurance products and some are tied up with some other third-party Insurance Companies. Compare the insurance premium with different banks and try to negotiate it with your banks. The insurance premium is one time and it varies between 1 to 2% of the loan depending upon the age and remaining period of loan installments. Some banks have the option of including the insurance premium above the total sanctioned loan amount and the EMI will be fixed accordingly. Again private banks have many hidden charges like if you fail to pay the EMI on the due date, then private banks may charge additional interest up to 24 percent per annum.

How much of Loan quantum Salaried People Eligible to get?

The appraisal process of Loan eligibility calculation is different for different banks and also depends upon several other factors. I am not going to discuss the details here. Some of the eligibility factors are 

1. 4 or 5 times of Gross Annual salary as per last submitted IT return or Form 16 from the employer for continuity of service.
2. Minimum 40% of take-home salary after allowing all the deduction including present home loan EMI. Some banks may allow up to 30% of take-home salary.
3. Age of the property, for new construction higher limit, can be sanctioned.
4. Age of the borrower and family obligations.
5. Co-applicant with annual income.

Housing Loans from Banks or Housing Finance Companies (HFC)

In India, many Housing Finance Companies (HFC) also provide Home Loan to their customers, you may also find the loan approval process from Housing Finance Companies is much quicker with less documentation formalities than commercial banks. Now, you might think that what you should opt for Housing Loan? – Banks or HFC.

Housing Finance Companies (HFC) are specialized Non-Banking Finance Companies (NBFC), regulated by National Housing Bank (NHB), whereas commercial banks regulated by RBI. There is not so much difference between the loan sanctioned by the banks or HFCs. Both banks and HFCs have their own advantages and disadvantages in the sanctioning, disbursal and repayment process. You need to analyze what is more suitable for you. Benefits of Pradhan Mantri Awas Yojana (PMAY) Scheme available to both banks and HFC approved Housing Loan.

Let’s see what are the main difference of Home Loan offers  by the Banks and HFCs to its customers

Now, let us compare what the main advantages of Home Loan, offered by Banks and HFCs

Key Advantages of Home Loan from Banks

1. Attractive Interest Rate: The interest rate of Housing Loan is comparatively lower than the HFCs. Some banks also offer interest rate concession, if you have a high credit score, sometimes salaried class employees from State or Central Govt.  also get some interest rate concession. Banks charge interest on daily reducing balance.
2. Lending Rate: Lending Rate of Housing loan linked with Repo Rate which is regulated by RBI. Therefore, the changes of Interest Rate takes place much faster in account levels, than the BPLR linked interest rate.
3. Prepayment Charges: Prepayment charges is Nil.
4. Location of Loan: Loan can be sanctioned anywhere in India, no matter whether you are staying in Rural or Metro areas because you will find bank branches in any type of location.
5. Lumpsum or Part payment: If you have unused surplus balance in your savings account, you can always credit the same to your housing loan account above your regular EMI. This will bring down your overall liability by reducing the principal amount and future interest charges on your loan account.

Key Advantages of Home Loan from Housing Finance Companies

1. Low Credit Score: Loan can be approved if you have a low Credit Score, i.e you might also get a loan if your CIBIL Score less than 750.
2. Easy Documentation Process: The documentation process is not very much rigid as compared to Banks, therefore loan disbursal will much quicker than banks. Some HFC also offers instant online sanction if you have a good Credit Score.
3. Flexible Repayment Option: You can change your repayment period as per your requirement.

Now, what should you opt for? If you have a good credit score and a secured job, then I will recommend always select banks for your Home Loan, otherwise, you can opt for Housing Loan from HFCs. Although, you can always transfer the Loan balance from Bank to HFC or vise versa.

 

Best Banks for Home Loan in India for Salaried Class

 

Many companies in India have corporate tie-ups with different banks, mostly with the Private Banks in India, and in few cases with PSU Banks. It is not necessary that you must need a salary account for getting a housing loan because an ECS mandate can automatically deduct the EMI from the Account. But all banks will insist on the salary account.

It is a very difficult task for everyone to visit every bank branch to enquire about Home Loan requirements and information. Sometimes, we do not have any other option, because of the unavailability of different bank branches, especially in rural and semi-urban areas.

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Here I will try to cover the different parameters of the top 10 popular and best banks in India for Home Loan for salaried class. Also, I try to point out the Pros and Cons of different commercial banks in India so that you can have some idea before selecting the right bank for your housing loan.

Here’ I have only covered the top 10 most popular commercial banks in India, not the Housing Finance Companies (HFCs) for the Home Loan.

Here are the top 10 best Banks for Home Loan in India for Salaried People

First, check out the table for quick references

Best Banks in India for Home Loan for Salaried  People

1.# State Bank of India Home Loan

State Bank of India is the largest lender in India and one of the safest and best banks in India for Home Loan. Though its a PSU bank, the outlook of the bank has been changing and they are competing with Private Banks in India. The bank has a separate Loan Processing Centre for quick disbursal of all types of retail loans.

As a leading bank in India, SBI has a huge customer base of salary account holders in India, both from Private as well as Government Deptts. If you are a customer of SBI and maintaining a salary account, then SBI is not a bad bank for Housing Loan.

Pros:

• The largest number of Branch locations and approved projects for selection. The loan can be availed at the rural location also.
• Interest rate and processing fees comparatively low.
• Easy housing loan balance transfer procedure than other PSU banks in India.
• Faster sanction and processing of Home Loan for salaried persons.
• The attractive interest rate for the salaried person with a good credit rating or CIBIL score.

Cons:

• The documentation procedure is complex and time-consuming. Bank may ask you for unncessary documents.
• SBI customer base is huge, therefore may get a delay in processing loans in some branches, especially in rural and semi-urban areas.
• May get a delay in loan for non-salary account holders.
• Bank Officials ask you to purchase several SBI subsidiary products like SBI Life, Mutual Fund, etc.

 

2.# Bank of Baroda Home Loan

Bank of Baroda is one of the leading banks in India with almost 10000 branches spread across the country. Although the bank has the most number of branches in Southern and Northern parts of India. Bank of Baroda’s customer service is one of the best in India and has a comparatively much faster loan processing team amongst all PSU Banks. The Interest Rate and charges are almost similar to other PSU Banks.

Pros:

• Faster processing and approval rate amongst the PSU Banks.
• Low-interest rate and Processing Fees.
• Concession on the interest rate for the salaried class and those who have a good credit rating or CIBIL Score.
• Home Loan can be available for Rural and Semi-urban customers.
• Easy Housing Loan balance transfer from other banks.

Cons:

• The documentation process is a bit lengthy and time-consuming.
• Low branch presence in eastern parts of India.

3.# HDFC Bank Home Loan

HDFC Bank is the largest private sector lender in India and the number one bank in terms of customer satisfaction. The bank does not have any loan product, they just process and market their parent company HDFC Ltd’s loan products. Their interest rate of Home Loan starts from 8% p.a. for salaried class. If you are a salary account holder of HDFC Bank and your Company has a special tie-up with the bank, then you might check out the Pros and Cons of Home Loan from HDFC Bank. 

Pros:

• Smooth and hassle-free documentation process.
• Quick sanction and disbursal process for salary account holders.
• A huge number of approved real-estate projects tied up with HDFC Bank.
• Evenly distributed branches, even in semi-urban areas HDFC Bank branch available.
• The concessional interest rate for salaried customers.
• No Prepayment charges.
• Easy balance transfer from another bank.

Cons:

• High processing fees and other Non-interest bearing charges.
• Branch staff may ask you to purchase their other products like Health Insurance, Life Insurance, Mutual Fund, etc.
• High insurance premium for property insurance.

4.# Canara Bank Home Loan

Canara Bank is one of the best financially strong banks in India and located in every part of India especially in the Southern states. Canara Bank also provides attractive interest rates to its home loan customers. If you are a salaried person, you can definitely approach Canara Bank for Home Loan.

If you are a salaried individual, then you need a confirmed service of a minimum of 3 years for Home Loan approval in Canara Bank.

Pros:

• Financially very strong bank.
• Branch presence in every part of India.
• The concessional interest rate for low-risk customers like salaried people.
• Speedy processing of home loan customers in urban locations.
• Tied up with many real-estate projects especially in Southern states.

Cons:

• Complex and lengthy Documentation process like other PSU banks.
• Less number of branches in Eastern or Northern parts of India.
• Branch Officials may ask for unnecessary documents that further delay the disbursal period.
• The loan may get delayed for non-salary account holders.

5.# ICICI Bank Home Loan

ICICI Bank is the second-largest private sector lender in India and has branches in more or less all the Urban and Semi-Urban areas in India. The bank has a Corporate tie-up with several companies for disbursal of their employee’s salaries. If you are a salary account holder of ICICI Bank, then you may consider approaching them for Home Loan.

Let’s see what are the Pros and Cons of ICICI Bank Housing Loan

Pros: 

• Speedy Process and disbursal of Home Loan applications for eligible customers.
• Instant Home Loan sanction for salary account holders.
• Online Home Loan Application and tracking features.
• Discounted Processing Fees for Pre-Approved Home Loan Customers.
• Concession in the Interest rate for Low-Risk customers.
• No Prepayment charges.
• A large number of tie-up residential projects for quick approval of Flats.

Cons:

• High Processing Fees and several other hidden non-interest charges.
• Branch Officials always try to sell their other third-party products.
• High property insurance fees.
• The approval chance is very low if you have a CIBIL score of less than 750.
• Loan Processing may get delayed for non-salary account holders.

6.# Punjab National Bank Home Loan

Punjab National Bank is the second-largest PSU bank in India and has huge branch networks at the Northern Parts of India, though after merging with the United Bank of India in 2020, then have a very good branch presence in the Eastern States also. Many State and Central Govt. employees in Eastern India have salary accounts with the United Bank of India and PNB has exclusive Home Loan Schemes for Government Employees. 

PNB has one of the lowest housing loan interest rates amongst all Private and PSU banks. If you have a CIBIL score of more than 750, then you will get a housing loan with only 7.95% interest pa.

Pros:

• One of the lowest interest rates amongst all banks in India.
• Low processing fees and no hidden charges.
• The loan can be sanctioned in Rural areas also as PNB has strong branch networks in rural areas.
• Concession of Interest rate and Processing Fees for Woman Customers and who have CIBIL score more than 750.
• Good branch presence in Northern and Eastern States of India.
• Exclusive Home Loan products for Government employees.

Cons:

• Complex and lengthy Documentation process like other PSU banks.
• Branch Officials may ask for unnecessary documents that further delay the disbursal period.
• The loan may get delayed for non-salary account holders.

7.# Axis Bank Home Loan

Axis Bank is one of the top private lenders in India and has huge numbers of salaried customers in India. So many Private and Public Limited Companies like LIC has corporate tie-ups with Axis Bank. The bank also has very evenly distributed branch networks in every part of India.

Like other Private banks, Axis Bank has also instant online Home Loan approval for salary account holders.

Pros: 

• Instant online Home Loan approval for salary account holders.
• Quick documentation and disbursal process.
• Large number approved tie-up projects for Flats.
• Good branch network in Semi-urban areas.
• Easy balance transfer or Home Loan take-over from another bank.

Cons:

• Comparatively high-interest rate and Processing Fees.
• Many Hidden Charges like other Private Banks.
• The loan may not be sanctioned for a low CIBIL Score.
• The loan may get delayed for non-salary account holders.
• High property insurance fees.
• Branch officials always try to sell third party products.

8.# Kotak Mahindra Bank Home Loan

Kotak Mahindra Bank one of the best Digital Bank in India and has very good asset quality amongst the Private Banks. The bank has a quick and hassle-free door-step documentation process. The bank has tied-up with several corporate customers for salary disbursement. The bank may deduct prepayment charges which are 25000 or 25% of the loan balance if the loan closed before the lock-in period of 6 months.

Pros:

• Easy hassle-free Door-Step documentation process in some selected cities.
• Zero Processing fees for online application.
• The attractive interest rate for salaried customers.
• Concession of the Interest rate for Woman Customers.
• Easy balance transfer or Home Loan take-over from another bank.
• A large number of tie-up residential projects for quick approval of Flats.

Cons:

• Mainly operates in Metro and Urban areas, with no branch network in Semi-urban places.
• High Prepayment Charges. 
• High processing fees and other Non-interest bearing charges.
• The approval chance is very low if you have a CIBIL score of less than 750.
• Branch staff may ask you to purchase their other products like Health Insurance, Life Insurance, Mutual Fund, etc.
• Loan Processing may get delayed for non-salary account holders.

 

9.# Union Bank of India Home Loan

One of the popular PSU bank in India and have very good branch networks in Southern states of India. The bank has recently merged with Andhra Bank and Corporation Bank. The loan approval and sanction process are more or less the same as other PSU banks in India.

Pros:

• Concession in Processing Fees and interest rate for Low-Risk customers who have CIBIL score more than 750.
• Home Loan can be available for Rural and Semi-urban customers.
• Tied up with many real-estate projects especially in Southern states.
• Low-interest rates for salaried customers.

10.# Bank of India Star Home Loan

Bank of India is one of the popular PSU banks in India and has branch networks in all parts of India. BOI Star Home Loan Schemes offers the lowest interest rate amongst all PSU and Private Banks in India.

If are a salaried customer of this bank or from any other bank, you can definitely check out this bank.

Pros:

• Lowest Interest rate and processing fees amongst all Indian Banks.
• No hidden charges.
• Special concession for woman customers and for those who have CIBIL personal score more than 760.
• Free personal accidental Insurance cover for Home Loan customers.
• Home Loan can be available for Rural and Semi-urban customers.

Cons:

• Complex documentation process like other PSU banks.
• Branch Officials may ask for unnecessary documents that further delay the disbursal period.
• The loan may get delayed for non-salary account holders.

Conclusion:

Currently, these are the popular and best banks in India for Home Loan, especially for salaried customers. My recommendation, always try to maintain a good CIBIL score to get maximum benefits from wherever you are maintaining your salary accounts. If you have a CIBIL score of more than 800, no bank will deny you from getting a Home Loan.

From the above article, I just try to point out the pros and cons of different banks in India. If you have any other recommendations, don’t hesitate to leave your comments below.

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