[saildrive]

Which according to you guys is the best private bank for availing a home loan - easy process and also service; these reduced rates are not passed on unless there is a follow up and a certain fee paid to them. Do let me know your views.

[Dieselritzer]

Originally Posted by saildrive

Which according to you guys is the best private bank for availing a home loan - easy process and also service; these reduced rates are not passed on unless there is a follow up and a certain fee paid to them. Do let me know your views.

I have currently availed the HDFC bank home loan. Until last month I was paying them 8.45% interest. For this month, I had a long email fight with them where I was asking them for 7.35%. Initially they denied me the same stating my CIBIL was poor. They falsely quoted a much lower CIBIL score. It was only after a few sophisticated emails and CIBIL reports that they finally agreed. You have to grab the right interest rate from them, they themselves will not pass it on to you.

Now basically by discount rate is 8.85% to the bank repo rate. Any fluctuation in it will see a proportionate change in my home loan rate.

The whole process of availing the loan was extremely easy and quick. Also do check with SBI. Their interest rates are competitive, just that they are a bit more strict in documentation and slower than HDFC.

[sunilch]

Originally Posted by saildrive

Which according to you guys is the best private bank for availing a home loan - easy process and also service; these reduced rates are not passed on unless there is a follow up and a certain fee paid to them. Do let me know your views.

I have been a very satisfied customer of ICICI Home Finance (serviced through ICICI Bank branches) for the last 4 years now.

W.r.t getting lower rates passed on, it is same with all banks - it is you who has to take the initiative to get your rates reset mid-cycle or wait for your reset cycle to get over (details in one of my earlier posts).

I was tempted to go for SBI Max Gain as many of my office colleagues had the same for this OD facility that they provide. However, after doing a simple calculation in an excel sheet I understood that it is just an accounting trick and not very useful for someone like me I am happy that I did not go for it as the difference between regular rates and Max Gain rates is big as of today.

My advice is to go for the bank that has:

1) Lowest or one of the lowest rates currently so that you lock in the low rates at the start for the first cycle of your account.
2) The one that has a loan servicing branch nearest to your house. In the span of over a decade (typically) of holding the loan, you will need to visit them multiple times. It helps if they are close and that there is a face to talk to.

Currently BoB is offering the lowest rate of 6.85% which is too sweet a deal to ignore.

[Traveler]

I second BoB, they are really good. I have always taken car loans from them and the process is equally fast and painless as private banks. Just try them.

[digitalnirvana]

Originally Posted by sunilch

I was tempted to go for SBI Max Gain as many of my office colleagues had the same for this OD facility that they provide. However, after doing a simple calculation in an excel sheet I understood that it is just an accounting trick and not very useful for someone like me I am happy that I did not go for it as the difference between regular rates and Max Gain rates is big as of today.

Hi Sunil please could you explain this? I'd seen calculations on here which show that MaxGain is beneficial for people who can pay more than the EMI in lumpsump amounts as the interest is then substantially lower. Would be interested to know your point of view.

[hondafanboy]

Originally Posted by Dieselritzer

I have currently availed the HDFC bank home loan. Until last month I was paying them 8.45% interest. For this month, I had a long email fight with them where I was asking them for 7.35%. Initially they denied me the same stating my CIBIL was poor. They falsely quoted a much lower CIBIL score. It was only after a few sophisticated emails and CIBIL reports that they finally agreed.

If I may ask what was your CIBIL score and did you check it yourself? Just wondering what CIBIL score got you 7.35

I did this recently and they only reduced to 7.90 and had to pay 5k in fees.

[Dieselritzer]

Originally Posted by hondafanboy

If I may ask what was your CIBIL score and did you check it yourself? Just wondering what CIBIL score got you 7.35

I did this recently and they only reduced to 7.90 and had to pay 5k in fees.

Hi,
My CIBIL is 806. HDFC was offering me 7.95 while saying my CIBIL is 773. After a few long emails, an escalation on their website & a telephonic complaint got everything sorted.

[sunilch]

Originally Posted by digitalnirvana

Hi Sunil please could you explain this? I'd seen calculations on here which show that MaxGain is beneficial for people who can pay more than the EMI in lumpsump amounts as the interest is then substantially lower. Would be interested to know your point of view.

Hey digitalnirvana,

Max Gain feels like it operates the way you are thinking but in reality it operates a bit differently. They keep your extra payments into a linked account and then that account gets an interest which is at the same rate as your loan account. So you earn a bit on your surplus money that you have kept with them. This negates the interest that they will charge you on that amount in normal flow. So net-net, you are charged interest on a lesser amount as the surplus interest that you received on your extra funds lying with them is taken as principal payment in each month.

Now this is good for most of the borrowers. But when they give you this feature, they charge you a higher rate of interest than normal. 5 years back when I was scouting for loans, the difference was 10 bps and it was 5 bps when my friends had taken it much earlier. So this appeared to be very negligible difference. This is good if you want to have an emergency/backup funds as you can withdraw those surplus funds in time of need. Your interest outgo will increase when you withdraw funds and it will reduce when you deposit more.

In fact some of my friends keep all of their money in this account so as to get rid of the loan faster.

Coming to my case - 1) I know that it is best to pre-pay as much as you can in the initial years of your term. Say first 4 years of your 20 year loan. This is the best period to pre-pay so that you can reduce your total tenure by max while keeping your EMI the same. So I am personally inclined to pre-pay as much as I can. I don't do that anymore as now it is of no benefit to me but I did my best in my initial years.

2) I personally do not trust banks when it comes to giving benefit to customers. Banks pass on the benefits only when they face competition. Else you are on your own. So I personally had this intuition/hind-sight that the difference between regular rates and MaxGain rates will increase over time. And it did. Today the difference has increased to 35bps - which is a lot of money on a large loan amount. So in-effect this negates the benefit that MaxGan offers when compared to regular loans. I did some simple calculation assuming a difference of 50bps as the worst case scenario and 10 bps as the best case scenario and in both cases it was better for me to not to choose Max Gain and simply pre-pay some money every quarter. This calculation will be based on your loan amount and your tenure.

3) SBI - I have huge respect for the bank and the employees. But at the end this is a PSU and I have had some experiences with them earlier. The sheer volume that they handle is enough to keep me away from their branch at times.

So I chose a private bank near by home and giving the best rate at that time. It is easy to chase them and also take advantage of the competition in private sector, when needed.

4) I can deploy my surplus money more effectively now as I am not biased towards keeping it in Max Gain. I can either invest it somewhere, spend it where I need it or pre-pay it and forget it. This is all psychological but this is how it works for me. A larger balance lying in my MaxGain account will make my itch to do something big come back You see when I have already exhausted my surplus funds either by pre-paying the bank (no way to get it back) or by deploying it somewhere else - I do not have any itch to do something stupid - like buy that Hayabusa that will be my garage queen for 99% of the time

[longhorn]

Originally Posted by Dieselritzer

Hi,
After a few long emails, an escalation on their website & a telephonic complaint got everything sorted.

Are you saying that you got the loan rates reduced after loan disbursement without any fee being charged to you? If so that is an achievement.

I had my home loan with HDFC (now closed). What they essentially did was everytime the repo rate went down, they reduced the rate for new customers taking home loans in that month. For everyone else, you had to pay a fee to switch over to the lower rate. This is borderline fraud because when a take a floating rate loan, you expect the rates to move in both directions basis the repo rate. Unfortunately since they are a housing finance company and not a bank, your options are limited.

Your solution is to prepay as much as possible during the initial years. This will bring down your loan tenor drastically. Even for this they have put stumbling blocks like the prepayment should be at least equal to 3 months of EMI. During the first 5-6 years of the loan, prepay as much as possible. This is the mantra to foreclose your home loan ASAP.

If you can put up with the service, it is always better to get your home loan from a PSU. My two cents.

[Dieselritzer]

Longhorn, I took my loan in June 2019 and the interest rate with which I started was I think 8.73 or something like that. After the subsequent rate reduction by RBI, it came down to 8.45 but still was very high Vs the best rate they offered. I've negotiated a reduction from 8.45 to 7.35. They charged me some 7000INR as a one time rate transition fee and I am absolutely ok with it considering that in the long run I'll be saving some Ten lac rs.

Also, I have got a confirmation from them that if the rates drop/increase further, mine will also change accordingly taking the base of 7.35. If they make me pay the interest change fees again, I will simply move to SBI which in my opinion provides clean transactions. I know the hassle would be a lot to port bank but if need be I'll do it.

[vharihar]

I have a loan at 7.45 with ICICI and I'm 6 years into my tenure, and I'm considering switching to BoB for lower rates, if there's merit in doing so (and if I'm eligible). Questions:

1) Does BoB's offering of 6.85 apply to only fresh loans or even switchovers like me?

2) Even if it does apply to switchovers, does it make sense in my case given that I'm already 6 years into my tenure and have only 9 more years remaining?

[longhorn]

Originally Posted by Dieselritzer

They charged me some 7000INR as a one time rate transition fee and I am absolutely ok with it considering that in the long run I'll be saving some Ten lac rs.

Also, I have got a confirmation from them that if the rates drop/increase further, mine will also change accordingly taking the base of 7.35.

Here's what they are going to do.

Say for example your present rate is 8% (bank advertised rate) - Diff rate (0.65) =7.35 %

If the repo rate by 0.5% goes down say after 6 months -

For new customers who take a loan in that month
8.00 - (0.65+0.5) = 6.85%

For existing customers
8.00 - 0.65 = 7.35%

Now if an existing customer wants to switch over to the lower rate (8.00- (0.65+0.5) then they will charge you a fee every time for this switch based on your outstanding principal.

Effectively you will be stuck with the 7.35% rate every time the rate goes down, but they will promptly increase the rates if the repo rate moves up.

[Dieselritzer]

Hi,
If they do that, I will happily shift to SBI. A very close friend has his loan there and loan rate reductions or increase happen automatically without him having to do anything. This is the same that I have been promised by HDFC folks in writing on email. If tomorrow I observe that they are not adhering to it, I will take their case royally & port.

[sunilch]

Originally Posted by vharihar

I have a loan at 7.45 with ICICI and I'm 6 years into my tenure, and I'm considering switching to BoB for lower rates, if there's merit in doing so (and if I'm eligible). Questions:

1) Does BoB's offering of 6.85 apply to only fresh loans or even switchovers like me?

2) Even if it does apply to switchovers, does it make sense in my case given that I'm already 6 years into my tenure and have only 9 more years remaining?

Ask them for the charges involved in transfer. The charges are a mix of both - fixed + variable and then some taxes on top of these.

1) Calculate the amount you may have to pay for transfer
2) Calculate the difference in interest that you may pay to ICICI v/s BoB
3) Calculate the amount/fees you may have to pay ICICI to reset your rate to the new rates as of today before your cycle resets.
4) Calculate the difference in the EMI for the months left before your automatic reset cycle kicks in.
5) Calculate difference between 3 and 4.

Chose whatever is the minimum of 1, 2 and 5.

But there is another way - Get a sanction letter from BoB for the lowest rate possible and then show that to ICICI. They will reduce your rates to that new rate and you will be happy again

-Sunil

[Dieselritzer]

Hi,
I again spoke to my relationship manager at HDFC and this is what he explained to me. With the recent lower interest rate that I have negotiated, I have reduced the discount rate. Which means, my new discount rate is 8.85% which was lesser before. If I want to check if HDFC is charging me right or not, this is what I have to do.

Visit : https://www.hdfc.com/housing-loans/h...interest-rates
It mentions the current RPLR rate which as of today is 16.20%
From this, I have to deduct the discount rate: 8.85%
My effective rate of interest then comes as : 7.35%

Every time there is a change in RPLR rate, my interest rate will fluctuate accordingly without me having to give any inputs. Do note, in my earlier interest rate slab, the bank did pass on any reduction in RPLR rate without me doing anything. Just that I have negotiated a much higher discount rate vs earlier.

If you have a CIBIL more than 780 or so, I think it is considered to be a good score. I might be wrong but this is what I recollect during my latest interactions with the bank folks.

In todays market condition, Banks are starving for loan customers as the overall sentiments are bleak and people are avoiding any big liability. If your CIBIL is good, then you have all the right to get the best interest rate that the "Market" is offering. Your bank will most probably match it than to see a customer go away. Also, having a good relationship manager helps. In my case, my RM was guiding me on my communication with the bank team who was responsible for making the interest rate change & he was absolutely sure that I should not settle on anything lesser than 7.35%.

Originally Posted by longhorn

Here's what they are going to do.

Say for example your present rate is 8% (bank advertised rate) - Diff rate (0.65) =7.35 %

If the repo rate by 0.5% goes down say after 6 months -

For new customers who take a loan in that month
8.00 - (0.65+0.5) = 6.85%

For existing customers
8.00 - 0.65 = 7.35%

Now if an existing customer wants to switch over to the lower rate (8.00- (0.65+0.5) then they will charge you a fee every time for this switch based on your outstanding principal.

Effectively you will be stuck with the 7.35% rate every time the rate goes down, but they will promptly increase the rates if the repo rate moves up.