I'm planning to take home loan for Rs.25L. When I tried to do some research I noticed that people are giving preference to home loan from SBI against any other i.e. ICICI, HDFC, while all three are offering same interest rates. Only difference I found was processing fee is almost half for SBI. Is it the only reason people go for SBI or anything else is there?

I will appreciate quick help
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  • I think this processing fee is not the only factor why people prefer SBI. SBI is one of the biggest nationalized banks which offers large number of financial products. People have been familiar with this bank since many years so they have trust in SBI. When it comes to such huge borrowings like Home Loan people prefer to go to more reliable source.

    Peoplw also have a notion most of the times private banks are found more aggressive in terms of meeting their targets which is not the case in case of SBI.

    In terms of recovery or delays in payments private banks have strict policies & ways of recovery. SBI is not very hard on these fronts.

    Even though people say SBI delays payments or takes time in processing it is the trust which keeps customers happy. It is safest bank.
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  • Originally Posted by deepOne
    I'm planning to take home loan for Rs.25L. When I tried to do some research I noticed that people are giving preference to home loan from SBI against any other i.e. ICICI, HDFC, while all three are offering same interest rates. Only difference I found was processing fee is almost half for SBI. Is it the only reason people go for SBI or anything else is there?

    I will appreciate quick help

    Processing fee is a minor factor...since it is a few thousand rupees one time difference. What makes a big difference is the hidden cost which is not easily noticeable. for example in a floating interest rate option a bank like SBI will reduce rates for existing buyers and that too promptly (upon reduction of reference rate), whereas a bank like ICICI will firstly not reduce so easily...2ndly, even if it does reduce, the extent of reduction will be lower. On the contrary, in a scenario of increasing interest rates, ICICI will be the first one to increase.

    For your own sake, please do not go by the PRESENT rate of interest being offered being the same by various banks...once you are trapped by ICICI, you will have no control on what they do to your pocket subsequently...remember a housing loan is a relationship of long term like 15 to 25 years...a difference in rate of interest will make a huge difference to your pocket.

    Another point..when you want to pay your loan early, you will see a bank like ICICI will discourage you...they will take pre payment penalty..whereas a bank like SBI will do it for nil charges (however, this factor may soon change as the National Housing Bank is likely to make it zero charge in the future).

    3rdly, in an increasing interest rate scenario, a bank like ICICI would persuade you to increase your repayment period...apparently to give you comfort of maintaining the level of EMI...not really apprising you how much EXTRA interest they will make out of you by doing so...

    Bottom line is that one way or the other they will make more money out of you than what you think...whereas a public sector bank like SBI would be much fairer to you.

    I took loans in the past from ICICI as well as SBI...and the above is based on real life experience....after seeing how ICICI fleeces its customers...I took a vow never to go back to ICICI and never trust their words or slogans like "Hum Hain Naa" or "Khyal Aapka"...what a bull crap.

    Learn from others' mistakes...rather than commit one yourself. Decide what you want.

    best of luck!!!
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    1 Comments
    • patrika.sharma1 years ago
      Does SBI give home loan to contractual govt employees
  • Originally Posted by VedKapoor
    Processing fee is a minor factor...since it is a few thousand rupees one time difference. What makes a big difference is the hidden cost which is not easily noticeable. for example in a floating interest rate option a bank like SBI will reduce rates for existing buyers and that too promptly (upon reduction of reference rate), whereas a bank like ICICI will firstly not reduce so easily...2ndly, even if it does reduce, the extent of reduction will be lower. On the contrary, in a scenario of increasing interest rates, ICICI will be the first one to increase.

    For your own sake, please do not go by the PRESENT rate of interest being offered being the same by various banks...once you are trapped by ICICI, you will have no control on what they do to your pocket subsequently...remember a housing loan is a relationship of long term like 15 to 25 years...a difference in rate of interest will make a huge difference to your pocket.

    Another point..when you want to pay your loan early, you will see a bank like ICICI will discourage you...they will take pre payment penalty..whereas a bank like SBI will do it for nil charges (however, this factor may soon change as the National Housing Bank is likely to make it zero charge in the future).

    3rdly, in an increasing interest rate scenario, a bank like ICICI would persuade you to increase your repayment period...apparently to give you comfort of maintaining the level of EMI...not really apprising you how much EXTRA interest they will make out of you by doing so...

    Bottom line is that one way or the other they will make more money out of you than what you think...whereas a public sector bank like SBI would be much fairer to you.

    I took loans in the past from ICICI as well as SBI...and the above is based on real life experience....after seeing how ICICI fleeces its customers...I took a vow never to go back to ICICI and never trust their words or slogans like "Hum Hain Naa" or "Khyal Aapka"...what a bull crap.

    Learn from others' mistakes...rather than commit one yourself. Decide what you want.

    best of luck!!!


    Great explanation.

    Thread starter : Just look at the existing discussions, most of the points are discussed in details, all the pros and cons of Government banks, Private Banks and Housing Finance companies had been discussed. Just browse the old threads.
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  • Thanks a lot for reply. It was really helpful.
    Just one question does SBI has home loan agents?
    I haven't seen any so far.

    Originally Posted by VedKapoor
    Processing fee is a minor factor...since it is a few thousand rupees one time difference. What makes a big difference is the hidden cost which is not easily noticeable. for example in a floating interest rate option a bank like SBI will reduce rates for existing buyers and that too promptly (upon reduction of reference rate), whereas a bank like ICICI will firstly not reduce so easily...2ndly, even if it does reduce, the extent of reduction will be lower. On the contrary, in a scenario of increasing interest rates, ICICI will be the first one to increase.

    For your own sake, please do not go by the PRESENT rate of interest being offered being the same by various banks...once you are trapped by ICICI, you will have no control on what they do to your pocket subsequently...remember a housing loan is a relationship of long term like 15 to 25 years...a difference in rate of interest will make a huge difference to your pocket.

    Another point..when you want to pay your loan early, you will see a bank like ICICI will discourage you...they will take pre payment penalty..whereas a bank like SBI will do it for nil charges (however, this factor may soon change as the National Housing Bank is likely to make it zero charge in the future).

    3rdly, in an increasing interest rate scenario, a bank like ICICI would persuade you to increase your repayment period...apparently to give you comfort of maintaining the level of EMI...not really apprising you how much EXTRA interest they will make out of you by doing so...

    Bottom line is that one way or the other they will make more money out of you than what you think...whereas a public sector bank like SBI would be much fairer to you.

    I took loans in the past from ICICI as well as SBI...and the above is based on real life experience....after seeing how ICICI fleeces its customers...I took a vow never to go back to ICICI and never trust their words or slogans like "Hum Hain Naa" or "Khyal Aapka"...what a bull crap.

    Learn from others' mistakes...rather than commit one yourself. Decide what you want.

    best of luck!!!
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  • I really like SBI a lot. I think their deep pockets allow them to offer really good rates. I am still locked onto a 9% rate based on their teaser rates they came up with a year back. Their service is really bad. Very disorganised. They also ask for a lot of documentation on the property - but by doing this due diligence, they are also protecting your own money. So its good for you. HDFC and ICICI only want your money - they will overlook a lot of deficiency in documentation to let the loan transaction go through.
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  • Originally Posted by deepOne
    Thanks a lot for reply. It was really helpful.
    Just one question does SBI has home loan agents?
    I haven't seen any so far.

    To the best of my knowledge, SBI do not have agents. Approach them directly. Be aware that these days paper work /formalities with a bank, esp. a Govt bank may take longer than what a private bank or their agents may take...but this is one time pain...and the whole life gain. Take this initial effort/pain in your stride and rest assured for the rest of the tenure of loan wherein you get a fair deal.
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  • Guys,
    Nice discussions and theoretically I may agree that loans from any PSU bank and not necessarily SBI will be beneficial in longer run. Still I will not have courage to go for the same. They can make you go crazy with the babu attitude. They lack finesse and who has time to be consistently after them.
    I have my personal accounts in PSU banks including SBI. I hardly interact with them as they make a favor to me every time I visit them for anything. I simply have to visit them 7 times to get my net banking activated. every time they will either make a mistake or ask for some silly details or the concerned clerk on leave (never ending excuses). and the joke is they have still not activated transaction rights, I can simply see the account info. I have no more patience to go to them again.
    And this happens to a client who has 5 family accounts with them with substantial savings in each.
    I do not know in the end which one will be better.
    Regards,
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  • Besides the reasons already mentioned in this thread, people prefer SBI, other PSU banks and LIC/GIC over ICICI/HDFC etc. for the following reasons also:

    1. On one hand private banks like ICICI/HDFC/Axis will ask for income proof, salary slips, Form-16 etc. from the applicant and will not disburse the loan unless these documents are up to their satisfaction. On the other hand one can pay a certain percentage of loan value to PSU bank manager as BRIBE and loan is sanctioned and disbursed very quickly without any income proof. Many businessman who don't like to pay income tax honestly therefore prefer PSU banks.

    2. Many people who have no intention of paying back their loans on time or paying back at all prefer PSU banks. A foreclosure if it happens at a PSU bank will take minimum 5-6 years after default. Private banks are more efficient in pressing the issue once the default takes place. So most small builders in Delhi take loans from PSU banks for buying plots on which they plan to construct floors.
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  • I do not agree with the highlighted part, they are very strict with disbursal and do a thorough checkup.

    Originally Posted by stinaikar
    I really like SBI a lot. I think their deep pockets allow them to offer really good rates. I am still locked onto a 9% rate based on their teaser rates they came up with a year back. Their service is really bad. Very disorganised. They also ask for a lot of documentation on the property - but by doing this due diligence, they are also protecting your own money. So its good for you. HDFC and ICICI only want your money - they will overlook a lot of deficiency in documentation to let the loan transaction go through.
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  • I am dealing with PSU banks since last 12 years. i took my education loan from PNB and i open my 1st account in SBI. i do have accounts with HDFC and SBI. so far I have found PSUs are far better and far safe as compared to private banks. private banks will give you comfirt only when they want you to be the customer but once done they will be happy to snatch money from you. every where they have hidden charges. where as PSU might not be userfirendly in some cases but at the end of the day you will reap the benefits.
    there is one rule to deal with PSU is that try to deal with the residential branch not the commercial branch. like in delhi i got my SBI account opened and activated in 1 hour
    now a days PSUs have agents to do the initial Loan document processing.
    one of my friend got his car loan sanctioned in 1 week that too during diwali season.
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  • Originally Posted by rs2507
    I do not agree with the highlighted part, they are very strict with disbursal and do a thorough checkup.


    When I applied with SBI, they were so hellbent on demanding an occupancy certificate from the builder. When we asked the builder, he said he didn't have one. But SBI was pressuring me a lot to get that document - finally he gave us the certificate. During the same time, we had started negotiating with HDFC and ICICI in case the SBI loan didn't go through. The loan officers at the HDFC/ICICI branch said that they did not require occupancy certificate for disbursement.

    My guess is that the SBI officer was fishing for a bribe making it more difficult for me but when we eventually got them the occupancy certificate, I think that just shut them up. But in the process, I think we ended up with a complete set of documents.
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  • Yes all PSU banks have agents these days. Another point, India is now an emerging power and anyone wanting to be in business has to be competitive and developing some culture. All our government institutes including PSU's lack this. After all they are supposed to SERVE the customer, I mean we are their clients...still they have whims and fancies of their own. They want people to chase them...it is not going to continue for long.
    The same has happened in many sectors, education being one of them. Banks is the next one...either you change or perish and we should not be accepting any short comings from service sector.
    Regards,

    Originally Posted by manishag
    I am dealing with PSU banks since last 12 years. i took my education loan from PNB and i open my 1st account in SBI. i do have accounts with HDFC and SBI. so far I have found PSUs are far better and far safe as compared to private banks. private banks will give you comfirt only when they want you to be the customer but once done they will be happy to snatch money from you. every where they have hidden charges. where as PSU might not be userfirendly in some cases but at the end of the day you will reap the benefits.
    there is one rule to deal with PSU is that try to deal with the residential branch not the commercial branch. like in delhi i got my SBI account opened and activated in 1 hour
    now a days PSUs have agents to do the initial Loan document processing.
    one of my friend got his car loan sanctioned in 1 week that too during diwali season
    .
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  • Yes , in my experience too ... PSU banks though slow will give you peace of mind in long run due to following

    a) Interest rate reduction when the base rate changes ... faster in PSU than private
    b) non levy of arbitary charges
    c) Loan sanctioned on the basis of proper documentation .... stinaiker .. its good that SBI asked for OC ... if OC is there it means that the building is legal.... you dont want to put your hard earned money and suffer later
    d) max gain account.. SBI has unique feature of max gain by which you can put excess money in that account , get your interest reduced , you can withdraw when ever you want.

    stinaikarFew days of delay is better than years of pain
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  • Originally Posted by manugnair
    Yes , in my experience too ... PSU banks though slow will give you peace of mind in long run due to following

    a) Interest rate reduction when the base rate changes ... faster in PSU than private
    b) non levy of arbitary charges
    c) Loan sanctioned on the basis of proper documentation .... stinaiker .. its good that SBI asked for OC ... if OC is there it means that the building is legal.... you dont want to put your hard earned money and suffer later
    d) max gain account.. SBI has unique feature of max gain by which you can put excess money in that account , get your interest reduced , you can withdraw when ever you want.

    stinaikarFew days of delay is better than years of pain


    I too believe that SBI is way ahead of private banks and even most PSU banks. Not just for home loans but other purposes as well. The only drawback is that they are definitely slow and cause some pain for the customer in the start.
    This is something where I wish SBI people should work.
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  • for property PSU has strict check for the documents if you are a genuine buyer. like they ask for occupancy certificate. completion certificate for floor for disbursment. which ensures that builder is not playing foul. we have seen many cases where builder has cheated the customers. i can give one example of my society.
    I am staying in Delhi and society was constructed almost 20 years before. Builder stopped some payment of Contractor. in 2010 contrctor won the case in court and society has to pay around 25 lakhs to contractor.
    similarly one of my friend who is staying in Indiapuram his builder has not paid govt fee and now govt is after residents of the society even once they locked the society.
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