Are you thinking of getting a home loan but are confused about which bank is better for home loan private or government? Don’t worry, this is a very genuine yet common concern most home loan takers have. I was one such muddled home loan taker too. But I learnt that obtaining loans from a public sector bank versus a private bank has significant differences. As it is, the current generation favours private banks like the older generations preferred public banks. Private banks make it simpler to apply for a loan and to have it approved. The advantage of an online application process is also provided by private banks.
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You should consider various aspects before borrowing money from either of them for a home loan. I have enlisted every aspect in the table below. Go through each aspect to decide for yourself which sector bank suits you the best for a home loan.
| Aspects | Private Banks | Public Banks |
Bank processing fees |
They either take a lump sum amount based on the loan amount or take a percentage of the total amount. Since most private sector banks depend on direct selling agents to get customers, these fees are kept as high as 1%. |
These do not typically use DSAs and thus their fees are kept low from 0.25% onwards. If you want to save money, this is the better option. |
Paperwork, efficiency and turnaround time |
They have better management and a faster processing time. This is also due to their DSAs having a strict sales target each month. |
Efficiency and turnaround time are seriously low in these banks mostly. You’ll have a slower processing time, but it shall be a steady pace. |
Interest rates fluctuation |
Interest rates are increased as soon as the RBI decrees an increase in the REPO rate, but private banks don’t decrease interest rates in the same speed for current loan customers. |
Their interest rate change is much more transparent. Their policies are for all customers and so if the rate goes down, it applies to all existing customers immediately. |
Prepayment charges |
In their case you have to read their terms and conditions of service very carefully since you need to pay them a fee if you prepay the loan. They do this to offset the loss of interest money. The prepayment charge is mostly 2% of the remaining loan amount during prepayment. |
There are no prepayment charges here. |
Prepayment period |
Typically, you can’t prepay before 180 days or 6 months. This is to the banks’ advantage since EMIs are placed in a way to give them maximum interest during the initial stages, and before you can make prepayments. |
Government banks don’t have this clause. |
Prepayment penalty amount |
Typically, you can’t prepay more than 25% of your outstanding loans in a year. |
There is no such clause here. |
Charges for dealing in branch office |
If you deal in the branch office of a private bank, you’ll be charged for all the transactions you do here. Most banks will charge Rs. 100 plus tax after a certain number of visits. |
There are no such policies here. |
Banks in the public and private sectors each have advantages and disadvantages. Everything relies on your goals.
So, decide
which bank is better for home loan private or government as per your goals.
Read More: How to Get Home Loan from Bank? How to transfer a home loan from one bank to another?Your Feedback Matters! How was this Answer?
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Which Bank is Better for Home Loan Private or Government?
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2023-02-19T12:32:49+00:00 2023-02-19T12:33:51+00:00Comment
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