Bank Loan - SBI Home Loan FAQ |

Bank Loan - SBI Home Loan FAQ

Due to our busy life style, most of the people particularly youngsters wanted their housing loan to be sanctioned within a couple of days or within a week time. If you think you are one among them, it is better to approach other new generation banks who sanction their home loan in a short while and later you have to be prepared for loosing your hard earned money paid as different type of penalties, hidden charges, special fees etc. On the other hand, little patience rewards you the best home loan across the banking system in India which is SBI Home loan. This article shows Frequently Asked Questions (FAQ) about SBI Home Loan.

Bank Loan - SBI Home Loan FAQ

Frequently Asked Questions and Its Answers About SBI Housing Loan
Frequently Asked Question Answers

1. Can I get an in-principle approval and actually avail of the loan later?

Before you choose the house you want to buy, bank will give you an in-principle approval based on your income and capacity to repay. This makes the entire process of identifying and buying a house easier and more flexible. You won't be under pressure to identify a house as you know how much funds the bank would make available to you.

2. And how long is this approval valid?

In-principle approval is valid for 3 months to give you sufficient time to choose a flat/house of your choice.

3. How long does it take to get my loan sanctioned?

Your loan can get sanctioned in a matter of days provided you have all the documents in place.

4. Can I apply jointly with my spouse? Will both our salaries be taken into consideration for calculating the loan amount?

Yes, your salaries can be clubbed for the purpose of calculation of the loan amount. This can be done either when the property is jointly held with the spouse or the spouse stands as a guarantor. Thus, bank ensures a great deal of flexibility in the entire exercise of financing your house.

5. What security do I have to furnish?

SBI requires a mortgage of the property for which the loan is being taken. Where mortgage can't be provided, other tangible security would need to be provided. The title of the property should be clear, for which a certificate would be required from the Bank's approved advocate, safeguarding your interests as well as Bank's interests. Additional security may be required where the house is under construction. This may be for an interim period, by way of tangible security or guarantees from sound and solvent individuals.

6. What are the processing fees charged by the bank?

A very nominal processing fee of 0.50% (Max. Rs. 10,000/-) is charged by the Bank. Compare this with 1.5% to 2% charged by the others.

7. What is EMI?

EMI stands for Equated Monthly Instalments. This instalment comprises both principal and interest components. Use SBI EMI calculator to find out your monthly payments based on the loan amount, the rate of interest and the repayment period. Choose the combination that best meets your financial resources and requirements.

8. Can I prepay the loan? Are there any penalties?

Yes, you can prepay the loan at any stage. However closure of loan before completion of half of the loan tenure will attract a penalty of 2%. You can also credit more than your EMI amount into your loan account and bring down your interest burden as and when funds are available with you.  If the loan is pre-closed from own resources other than borrowings, for which proof is submitted to the satisfaction of the Bank, pre-closure charges shall not be levied irrespective of the period for which the loan account has run.

9. If I have funds, is it still worthwhile to avail of a bank loan for buying a house?

It is generally advantageous to take a Housing loan as it would enable you to get tax exemptions. However, please consult your accountant / income tax adviser to know benefits / disadvantages in your specific case.

10. What are the tax benefits of taking an SBI Housing Loan?

Under the Indian Income Tax Act of 1961, resident Indians are eligible for certain tax benefits on principal and interest components of a loan. Under Section 24(1), interest repayment of Rs. 1,50,000/- per annum qualifies for tax saving under the new Finance Act. An added benefit under Section 80(c) on repayment of principal amount to the extent of Rs. 1,00,000/- is also available on the same loan subject to compliance with conditions stipulated in the IT Act. Tax exemption is the sole discretion of Govt. and may vary year after year. For the current tax benefits, consult your accountant / income tax adviser.

11. How does SBI housing loan compare with those offered by other institutions?

There is total transparency with regard to the rate of interest and the fees charged by State Bank of India.

  • SBI Home loan offers housing loans with the lowest equated monthly instalments, i.e. you pay substantially less in repayments as compared to others.
  • SBI Home loan has no upper limit. The loan amount is determined by repaying capacity and the value of property to be financed.
  • SBI Home loan offers loans for the longest tenors (up to 20 years) with the flexibility provided to reduce the tenor by prepaying the loan without any penalty.
  • SBI Home loan provides finance for both new and old houses / flats and for construction of houses. Cost of furnishing the house can also be included in the project cost.
  • With an SBI housing loan you can choose between fixed rates of interest and floating interest rates.
  • SBI Home loan levies interest based on daily reducing balance, unlike the annual reducing balance method used by several other financiers / banks.

12. How do I benefit if the interest is calculated on a daily reducing balance?

On an annual reducing balance method, you will continue to pay interest on amounts you repay during the coming one year as the interest for the year is determined on the basis of the balance outstanding at the beginning of the year.  In the case of the daily reducing balance, which is the methodology SBI employ, your interest is calculated only on the outstanding loan amount, which reduces every time you pay off your EMI or make any prepayments. This in essence lowers your effective rate of interest significantly.

Download Bank Loan EMI Calculator in XLS File Format Here.


There are 3 Comments

i am working in private school, i am itr one. i want to have my on school building which my husband is suggest me loan of 2500000/-

I r.nagi reddy,is working as locopilot,sc.railway at Vijayawada division .and drawing my salary at sbh,station branch.i have taken my housing loan at canfin bank .now I want to switch my loan amount rs16,50,000 to ur branch.and how much emi should I pay at ur branch.pls give me details.