Do not lock into a Fixed rate loan

In an falling interest rate scenario you would be better of taking a Floating rate loan as the interest rate will get reset to a lower rate periodically. Even if you must take a fixed rate loan due to an attractive interest rate offer, take it from a bank that has no prepayment penalty. Most lenders charges upto 2% of the loan amount as a prepayment penalty for a FULL repayment of the loan. ( others permit part payment of the loan with no penalty).

Further, please check with the bank as to how frequently they pass on the benefit of falling interest rates to old customers. Some public sector banks do so only once in 12 months while some private sector lenders do it as frequently as a quater. Though the current itnerst rate quote maybe lower, over the life of the loan, you will save more in the case of a lender who resets your floating rate more frequently.

If you think that rates will increase at any point of time in the future, you can always use our refinance module to prepay the old loan and lock into a fixed rate loan. Please check with this website frequently to decide when to refinance an earlier loan.

The issue of Stamp Duty on Registered Mortgage Deed

Normally the lenders will ask you to create a registered mortgage deed on the property which they will retain with them as a security against your loan. As this is a legal document, the prevalent stamp duty needs to be paid to the State Govt. In the state of Maharastra, this duty is about Rs. 5000 for a loan below Rs 5 lacs and about Rs. 35000 for a loan above Rs 20 lacs. Some lenders like HDFC do not ask for the Registered Mortgage Deed but only take the original Title Papers of the property as a security. Thus customers of HDFC do not pay the stamp duty to the respective State Governments.

Some States have taken this matter to court as they are losing revenue. Some of the lower courts have ruled in favour of the State Governments and asked HDFC to make good the Stamp Duty for all past customers along with interest. The matter is now pending with the Supreme Court. We feel that the ruling will again go in favour of the States. We are not sure if HDFC would be asked to pay up a large amount along with interest, which may ultimately be passed on the the existing customers. Any new customers going to such lenders must be aware of the risk of a legal ruling that may result in a future cash payment along with interest.

Flexible Loan Repayments

If you are a salaried employee, banks look at your current salaries while deciding how much they can lend you. The fact is that your salary can only increase as time goes by and your ability to repay larger loan amounts will only get better. Some banks now offer a flexible repayment plan that allows you to pay larger portions of the loan in the later years. Your initial monthly payments are kept low. IDBI Bank, HSBC and Citibank offer Flexi repayment option loans. To read more about this click below.

Standard Chartered  has launched the Home Saver Account . Along with the Home Loan, your will get a FREE savings bank account into which you may deposit your monthly salary. The EMI for the loan will be automatically reduced from your account. The excess balance in your savings account will earn interest that will be adjusted against your future EMI payments. The bank claims that the effective interest rate gets reduced by upto 45% because of this scheme.

Citibank offer loans with no guarantors. Most banks require that you present a guarantor who will back you up if you default on your loan repayment. It can often be embarrassing to ask friends to stand guarantor as most banks do not accept relatives as guarantors.

Citibank gives home loans upto 90% of the property value, the highest from any bank ( only Tata Hsg Fin. matched this offer)

Citibank offers a flexi-savings account to reduce your cost of borrowing. The bank will automatically open a Saving Account from which you can give standing instructions to deduct the EMI payments for the loan. You can then prepay the loan at any point in time and be given instant credit for the same, in case you get a large lump-sum annual bonus from your employer. Should you require money in an emergency at any point you can avail of a over draft on this savings account at an interest rate that is the same as that on your Home loan. This works out much cheaper than taking an over draft on a normal savings account

Dewan Housing Finance and LIC Housing Finance Ltd. offers consumer loans to their existing Home Loan customers at a discount to market rates. The customer has to be a housing loan borrower for the period not less than 6 month with a good repayment record

FREE DOUBLE PROTECTION PLAN in the form of Personal Accident Risk Cover and Property Insurance

GIC Housing Fin. gives a free personal accident cover along with the loan. Oriental Bank of Commerce has started to offer a free property insurance cover of the value of property and a free accident cover of upto Rs. 5 lacs.

GICHFL gives Consumer loans for purchase of home equipment at the same interest rate as the home loan to customers at rates of interest that are the lower than other consumer loans. The total loan amount including the housing loan can be upto 90% of the value of the home. The tenure of the consumer loan is restricted to 5 years.

HDFC offer Flexible (Customised) Repayment Schemes, keeping in mind the fact that each individual has a unique problem requiring unique solutions, HDFC has developed various repayment options like Step Up Repayment Facility, Flexible Loan Instalment and Balloon Payment Scheme

Pari Passu/ Second Mortgage Arrangements: HDFC has a tie-up with a large number of Public Sector Organizations and banks which enables us to offer loans to your employees with the flexibility of their spouse also availing a loan from his/her own employer

Safe Document Storage Facilities: HDFC has state of art storage facilities, which are theft and fire proof, at various locations where loan and property documents are stored. In this way valuable documents are stored safely over the period of the loan and are released almost immediately after a customer repays his loan

A customer, after availing of a loan can approach HDFC anytime thereafter to increase the Equated Monthly Instalment which will help him repay the loan faster.

Home Conversion Loan offered to its existing customers who are interested in moving to a new house. Through this scheme customers can apply to have their existing loan transferred towards the purchase of the new home. Customers may also apply for an additional loan amount for the purchase of the new house. This gives the customer the option of selling their existing house, if they wish to, without having to repay their old loan

The fixed rate loan can be converted to floating without any penalty charges. However, you will be charged 2% if you refinance the loan from another company

Hudco will waive the last 2 EMI payments on the loan if the customer has a perfect repayment record with no bounced cheques. The loan amount initially taken must exceed Rs. 5 lacs and no prepayments where to have been made during the tenure of the loan. This is not available for the Floating rate loan.

There is a discounted start-up fee for Government employees. The Administrating fees stand reduced from 0.7% to 0.5% only.

Free triple insurance - property cover, earthquake cover and personal accident cover. given free along with the loan ( not available for the Floating rate loan)

You can prepay the entire loan in any year without any prepayment penalty. Each prepayment has to be atleast 10% of the outstanding loan. Howvere, the floating rate loan has a 1% prepayment penalty.

HSBC offers flexible interest rate loans that can be reset every year depending on the prevailing interest rates at that point. The new interest rate will be applicable for the rolling one year

Guarantor is required only for loans more than Rs. 10 lacs. Else no guarantor

You can prepay upto 25% of the outstanding loan in any year without paying a penalty. For amounts over that, 2% penalty levied.

ICICI launches a 30 year tenure home loan, the longest available

ICICI also launches a variable rate loan with a monthly rest basis versus the regular fixed rate loan that is on an annual rest basis

No guarantors are required for loans upto 20 years in most cases

No pre payment fees for any part payment as long as the loan is not fully retired, else 2% charge on pre paid amount. You can repay upto 33% of the outstanding loan in any year without paying penalty.

Free accident death cover for the owner

Special 100% funding for select properties

Higher eligibility for self-employed professionals through segment-specific schemes

LIC Hsg Finance Ltd. will lower quoted interest rate by 0.5% for loans covered by a life insurance cover that is taken from LIC. The life cover must be taken for a minimum period that covers the tenure of the Home Loan

SBI offers Home Loans with no start-up costs. Most banks charge as high as 2% as processing and administrative fees

Prepayment is 2% if the entire loan is pre paid else it is 0%. Avoid this penalty by prepaying upto 99% of your loan if need be

Tata Hsg Finance offers Home Loans upto 90% of the value of the property and 100% in some new projects. The company has been taken over by IDBI

Prepayment penalty of 0% for upto 4 prepayments in each year. The entire loan can be retired without incurring any penalty.

Free accident and proeprty insurance. The premium payable for a Tata AIG Single Premium Life Cover can also be included in the loan amount sanctioned.

IDBI Bank offers balance transfer scheme.

If you have taken a Fixed rate loan at a high rate of interest a few years back, then you can enter into an arrangement with IDBI bank to transfer the loan to them at the current lower rate of interest. You will also get free gifts to compensate you for the difference as the old and new EMI. The original EMI cheques will be used by IDBI to recover the loan amount from you over the remaining tenure of the loan. You will not get the benefits of any further fall in interest rates in this product.

* Disclaimer:

The data on interest rates as well as loan product availability presented here are updated regularly. Please recheck the rates with the respective companies before finally deciding to take a loan from one of them. We do not guarantee any of the rates offered but merely provides you with important tools to compare and locate a loan of your choice.