For Home Loan you want a bank which makes your life easy at the time of taking home loan and after that. At time of deciding home loan bank, the epic question is “Which is the best bank for Home loan: A Private Bank or PSU / Government bank?
I will give you step by step comparison between “6 Key Points” based on which you can Choose: Should you go for a Private Bank or PSU/ Government bank.
1. Rates & Charges
There is traditional mindsets that PSU / Government banks are cheaper and they rarely increases their RATE OF INTEREST, Their charges are lesser then private banks. BUT THAT IS NOT TRUE. Charges of private bankers and Government banks are almost same.
As far as RATE OF INTEREST is concerned there is presumption that Government banks rarely increases their Rate of Interest
But fact is stranger than fiction. Fact is as long as you are on floating RATE OF INTEREST, bank has freedom to increase their RATE OF INTEREST as and when profitability demands. We have transferred home loan of few of Government banks clients from 12.5% & even 12.75%
2. Eligibility / Longer Tenure
If you are salaried person, your income can be verified by documents and account transfers. Both PSU / Government and private banks has almost same method of considering loan eligibility for salaried. Both of these banks gives you EMI of 50-60% of your gross income. But some private banks & financial institution can go up to 75% EMI of your income. So you can specifically choose, which institution is giving maximum loan on your income.
If you are business owner, Government bank will offer you loan based on your Net income on documents. May be you have higher EMI paying capacity, so you want more loan to buy your dream home. Private bank can offer loan based on your Gross Profit, Your Repayment Track Record, Liquid income or Average account balance
3. Time
It depends on your priorities. If time is not important for you and you are willing to make 5 – 10 visit to reply silly details or listen excuse, “Sahab chutti pay hai. We don’t know when he will come back. You can check next week or month”. If you are ok when you are given “new pending documents” list many times, then you can go for Government bank
4. Documentation
Government banks demand more documents. Your bio data, education proof. ID, Address, Bank statement, Salary slip or ITR of Guarantor & what not.
Private Banks goes with common sense. If you are earning this much income, then you must be deserving for this. Yes if you are young and has less experience, even private bank may ask for your education proof to ascertain your future stability
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5. Prepayment charges
As per RBI guidelines there are no prepayment charges in floating rate of interest from government banks, private banks rr housing finance companies. Fixed rate of interest is not preferred now a days. In fixed rate of interest all banks are taking foreclosure charges.
6. Service
You must have great courage to go for the PSU Bank. They can make you go crazy with the “BABU” attitude. For everything you must consistently follow them. For your interest payment certificate, your principal payment certificate for tax benefit & what not.
They will make a mistake or ask for silly details or concerned person on leave which is never ending excuses. You may have to visit them 7 times to get you net banking activated.
Conclusion
Whatever I said till now, lines are blurring fast. A common sense approach is, Choose a bank choose a bank which fit your need. Check the Interest rates. Check initial expense. Check comfort of service. Flexibility of loan deal. Does it matches your expectation level?
If you have experienced services of Private or Government Banks for home loan or any other service, please comment here and let other know about your experience. Your comment can help others identify gem of deal, or make them beware of trap. So if you feel to say anything on any of above points with your personal experience. Feel free to write it here
Your comment can help home seeker choose right bank. THEY WILL THANK YOU FOR THIS!!