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Which is the best bank for Home Loan ?

 by Manish Chauhan · 397 comments 

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Taking a Home loan is a big task in itself and one of the biggest financial decisions. Home loanis the longest debt in our life. At times 10-20 yrs, which makes demands a long term

commitment. Each month you have to pay your EMI, sometimes you have to prepay some part

of home loan, sometimes you need some documents and visit the bank. Thereare numerous things to be done during taking the home loan and after taking the home loan,

hence you should be very clear that which is the best bank for Home Loan. Without much

confusion, its very clear that everyone wants to go with the bank which makes your life easy at

the time of taking home loan and even after that. So the biggest question on everyone’s mind is

“Which is the best bank for Home loan?”  

First thing first, you have to be very very clear that there cant be a single bank or loan institution

which is perfect for everything and you will never face an issue with them. Also there is no “best bank for Home Loan” which has always worked for everyone till date. But overall we canalways pick some banks which have been better than others on different parameters. You can say

that on a high level “Bank A” is better than “Bank B” and this is based on many loan takers

experience over the years. So now in this article we will try to understand difference betweendifferent banks and how they differ with each other. We will also see a survey result done with

the vast community of this blog and which bank they choose collectively as best bank for home

loan.

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Public Companies vs Pvt Companies

While researching on this topic , the first thing which came to my mind was “all banks are same,

everyone has bad experience will all kind of banks, whether PSU or private”. But we have tounderstand that while some people can have bad experience with some banks, there are positive

experience too and we have to see things from a very high level and not judge a bank just basedon handful of bad experiences. The first confusion which comes to any loan taker mind is “PSU bank or private bank?” and based on the experience here is the conclusion.

PSU Banks are good post-loan but not friendly at the time of taking the loan 

Private banks are very fast and friendly at the time of disbursing the home loan, they will treat

you like a king up-till the loan is disbursed, but once every formality is complete and your homeloan is sanctioned, you are a trash to them! As they are extremely agressive in marketing of 

home loans, a lot of people fall for it, Private companies presentation and they way they

approach you is good but only till you are not a home loan customer. A lot of times private

companies make things easy for you and also bend some rules for home loans. the number of documents they need also is less compared to a PSU bank.

On the other hand, PSU banks are not that great at the start of home loan , their rules are very

strict and stringent and they still operate in the “sarkari” style, however once you loan process is

complete and things start, there after life is much easier compared to private banks. The overallhandling is much professional and as per the process. In short they don’t suck your blood everynow and then as private companies do.

Private banks are first to raise the interest rates  

On the interest rates increase and reduction side, its seen that private companies are first to raisethe interest rates after the rate increase from RBI side, but private banks hide somewhere when

there is a time for reducing the interest rates. However PSU banks are more transparent on this

front and much less annoying than Private banks. Also private banks arbitraly increase the pre-

 payment charges ( like from 2% to 3%) the conversion fees is also charged heavily if you wantto move down to a lower interest rates.

Also the changes of fraud at employees level in Private bank is much higher than PSU Banks. I

cant say that PSU banks are not into the bad game, but its much much higher in Private banks

 because of sales pressure and targets. There has been cases of forced selling of home insurance

and also cross selling of ULIP’s and other financial products along with the home loan 

Which is the best bank for Home loan in India?

 Now there are millions of people who have taken home loan and there are various parameters onwhich a bank can be ranked like Processing time for home loan, Transparency in whole process,

Attitude towards customer, Interest rates and pre-payment charges, online tracking of your home

loan after disbursement. But there is no ranking of banks on all these parameters. However stillyou can rank a bank overall as good or bad in total. I ran a survey on this blog and got around

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1504 participants to vote for best bank for home loan and based on that we can judge which

 banks are more preferable and more trusted. Here are the results.

Best Bank for Home Loan in India (Survey Results)

A good place to look for all the home loan related data (Click here) 

Top 5 banks for Home Loan at the moment

If you see the survey above , you can clearly see that the top 5 banks for home loan are SBI ,

HDFC , LIC housing, Axis Bank and ICICI Bank and these 5 banks comprise of 83% votes .

While a big reason for this can be that these are big banks having a wide reach and has morecustomers and hence the results are little biased. But at least you can see that out of 1504 people

on this blog, 83% of them have a home loan from these 5 big banks , in which SBI tops the list.

1. SBI Bank  

Based on the survey and overall reading’s done over net and comments section of this blog. SBI

 bank seems to be the best bank for Home Loan. While SBI Bank still carries the hangover of 

Sarkari culture and they are strict in the overall process , which means you will have to run all

over the bank and many times to get things done, but once the whole process is complete , may

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 be you will have a smooth experience overall. Things will be easy post home loan process if you

need anythings from bank compared to other banks. For those who want to know why SBI is

 preferred , follow this thread 

2. HDFC Bank  

Overall HDFC bank seems to be have mixed review. Some people had great experience and

some had very bad experience. HDFC Bank is overall recognised as the bank for home loan

itself. But overall the experience was very very mixed.

3. LIC Housing Finance 

LIC housing finance seem to be a decent option after SBI. While they are not that great as SBI ,

still they seem to be a good choice after HDFC and ICICI bank . LIC Housing Finance has lesser 

documentation requirements, but one has to run around for smaller details. LIC seem to offer  better rates and also giving option to fix the interest rate for 5 years. One thing which many

 people do not know is that LIC reduces the interest rates for home loan for its customers havingany insurance/investment policy with LIC by at least 0.25% , but only if Sum assured of all policies collectively is more than 15,00,000 and all policies should be under the name of loan

applicant.

4. ICICI Bank  

ICICI Bank seems to be very very fast and too friendly at the time of loan processing, but once

the loan is done, the life seems to be hell for most of the people . They are not very supportive

most of the times and one gets too frustrated with their attitude. Overall their interest rates are

also very high.

5. Axis Bank  

Axis Bank is another good option as big bank . One good thing about Axis bank is that they have

 NIL charges for any pre-payment . Its a big surprise that Axis bank was more preferred than

ICICI bank overall in the survey. While Axis Bank has few good options, there was one recentcase from axis bank which I had highlighted on this blog on how they forced sell a life insurance

 policy along with home loan, While this was a negative thing from Axis Bank, we have to

understand that good and bad experience are part of all the banks.