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.
Frequently Asked Questions (FAQ) and Its Answers About SBI Housing Loan
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. What is in-principle approval for Bank Loan?
In-principle approval, also known as Approval In-Principle (AIP) for Bank Loan is an agreement that made by concerned bank against a proposal received from its customer generally without scrutinizing statutory or legal compliances.
3. And how long is this in-principle approval valid?
In-principle approval is valid for 3 months to give you sufficient time to choose a flat / house of your choice.
4. 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.
5. 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.
6. What security do I have to furnish for SBI Home Loan?
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.
7. What are the processing fees charged by the bank on SBI Home Loan?
The following processing fee is applicable on SBI Home Loans: Processing Fee 0.35% of Loan Amount subject to a minimum of Rs 2000/- plus applicable taxes and Maximum of Rs 10,000/- plus applicable taxes
In addition to the processing fee, actual charges towards valuation fee, advocates fee for property search and title investigation report and stamp duty as applicable. Compare this with 1.5% to 2% charged by the others.
8. 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.
9. Can I prepay the loan at any stage? 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.
10. 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.
11. 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.
12. 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.
13. 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.
14. What are the purpose for which home loan can be availed?
The loan will be sanctioned for the purpose of purchase / construction / extension / repairs / renovation of new / second-hand residential house / flat / plot of land and furnishings (hereinafter referred to as the 'project').
15. How to charge Premium of Home Loan Insurance cover if opted?
The premium for the optional Home Loan Life Insurance cover (if availed) will be added to the loan amount.
16. What is Loan to Value Ratio (LTV)?
For loan amount upto Rs. 20 Lakhs, maximum permissible LTV ratio is 90% of the assessed value of the property. For loan amount greater than Rs. 20 Lakhs and upto Rs. 75 Lakhs, maximum permissible LTV ratio is 80%. A maximum permissible LTV ratio of 75% is applicable on a loan amount above Rs. 75 Lakhs.
17. What is the Rate of Interest for SBI Home Loan? Whether is it floating or fixed?
Currently, SBI Home Loan featuring only Floating Rate of Interest. No Fixed Rate of Interest. Interest on the loan will be charged at prevailing floating rate of interest on a daily reducing balance at monthly rests. The rate of interest is subject to revision from time to time due to (i) changes in Base Rate or (ii) revision even without change in Base Rate the Bank has the option to reduce or increase the EMI or extend the repayment period or both consequent upon revision in interest rate.
18. What is Fixed Rate of Interest? (Currently not available with SBI)
Interest on the loan will be charged at the prevailing fixed rate of interest on daily reducing balance at monthly rests, subject to interest rate reset at the end of every two years on the basis of fixed interest rates prevailing then. State Bank of India (SBI) may at its discretion stipulate the periodicity of computation of interest. Further, SBI may at its sole discretion alter the rate of interest suitably and prospectively in the event of major volatility in interest rates during the period of the agreement. Thenceforth the rate of interest varied as aforesaid shall be applicable to the Loan. SBI shall be the sole judge to determine whether such condition exists or not. If the Borrower is not agreeable to the revised interest rate so fixed, the Borrower can request SBI, within 15 days of receipt of the notice intimating change in interest rates from SBI, to terminate the loan and the Borrower shall repay the Loan and any other amount due to SBI in full and final settlement in accordance with the provisions of the Agreement relating to pre-closure.
19. How to calculate SBI's Home Loan interest?
Interest on the amount of the loan will be applied at the prevailing rate per annum on daily reducing balance with monthly rests.
20. Will SBI send Intimation of change in Interest Rate?
The borrower shall be deemed to have notice of changes in the rate of interest whenever there are changes in Base Rate or increase in interest rates where there is no change in Base Rate are either displayed on the Notice Board of the Branch or published in news papers or made through entries of the interest rate charged in the passbook / statement of account furnished to the borrower and the borrower is liable to pay such revised rate of interest.
21. Is there any penal interest if default occurs? How SBI levy Penal interest?
In the event of a default in payment or any irregularity in the account, the Bank reserves the right to levy a higher rate of interest as it deems fit. Enhanced rate of interest @2% p.a on the irregular amount for the period of irregularity, over and above the applicable rate will be charged if the Equated Monthly Installment (EMI) remains unpaid for a period of 30 days from the due date, for any reason, including a bounced cheque.
22. How SBI Resolves Bounced cheque / ECS or SI dishonours for Home Loan Repayment?
A penalty of Rs 250/- will be charged for every bounced cheque / ECS or SI dishonours. The rate may vary from time to time.
23. How Repayment processed for SBI Home Loan?
The loan is to be repaid in Equated Monthly Installments over the tenure of the loan. The repayment installment commences from a date specified in the sanction letter. The liability to the bank will be extinguished only when the outstanding in the loan account becomes Nil, on payment of residual amount, if any.
24. What is SBI Home Loan Tenor?
Maximum 30 years (or) up to the age of 70 years (the age by which the loan should be fully repaid) of the borrower, whichever is early.
25. Is there any Pre-closure Charges?
No pre-payment / Pre-closure penalty will be levied on Home Loans irrespective of the period for which the account has run or source of funds.
26. What is Primary Security for Home Loans?
The loan will be secured by Equitable / Registered mortgage / extension of mortgage of the land and building / flat for which the loan is to be sanctioned.
27. What is Collateral Security for Home Loans?
Liquid securities of adequate value in the form of Life Insurance policies, Government Promissory Notes, shares / debentures, gold ornaments or such other tangible security as may be deemed appropriate, may be pledged by the customer in lieu of mortgage of the residential property financed by the Bank.
28. What is Interim Security Pending Mortgage?
Wherever creation of mortgage is likely to be delayed for any valid reason, suitable security including third party guarantee, as considered necessary, may be taken for the interim period.
29. What are the restrictions of Utilisation of the Home loan amount?
The amount of the loan shall be utilized strictly for the purpose detailed in the borrower's application form and in the manner prescribed. The construction of the house / flat or the modification / extension proposed by the borrower in the existing house / flat should be strictly according to the plan approved by the Local Authorities / Town Planning and Development authorities. Any modification desired in the plan as originally approved, can be undertaken only after express sanction for it has been obtained from the appropriate authority.
30. Is there any Insurance requirement for house / flat?
The house/flat shall be insured comprehensively for the market value covering fire, flood, Earthquake etc. in the joint names of the Bank and the borrower. Cost of the same shall be borne by the borrower.
31. How SBI do the Inspection? Is ther any Charges for Inspection?
The Bank will have the right to inspect, at all reasonable times, the borrower's property by an officer of the Bank or a qualified auditor or a technical expert as decided by the Bank and the cost thereof shall be borne by the customer.
32. When will SBI charge Processing fee?
Collected at the time of Documentation. There will be concession or waiving offer during Special Home Loan Campaigns.
33. What are the Other Fee / Charges to be collected on Home Loans?
- Collected for payment to empaneled Advocate / Valuer for their Legal Opinion, Search Report and Valuation.
- Collected for Payment to State Govt. as Stamp Duty (% of project cost) and Registration Charges (% of project cost).
Notes on SBI Home Loan Fees and Charges:
- Fees paid to Bank's empaneled advocate and valuer for their professional services will not be refunded even if the loan is not sanctioned for any reason.
- State Bank of India retains the right to alter any charges or fees from time to time or to introduce any new charges or fees, as it may deem appropriate, with due intimation to customer.
- Fees and Charges are subject to change from time to time at the sole discretion of SBI.
34. What is the Disbursement method of Home Loans?
The loan will be disbursed only on the following conditions:
- All the security documents prescribed have been executed by borrower/co-applicant (s)/ guarantor/s
- A valid mortgage (equitable or registered if equitable mortgage is not possible) has been created in favour of the Bank as per the laws of the State.
- Wherever creation of mortgage is likely to be delayed for any valid reason, suitable security including third party guarantee, has been taken for the interim period.
- The loan will be disbursed in stages where a loan for construction is desired or purchase is through payment to seller in installments.
- All necessary statutory compliance are in place.
SBI may disburse the quantum of loan in lump-sum or in installments at its own discretion depending on the level of construction of the House / Flat as acceptable to SBI.
SBI will disburse loan amount directly to the builder / seller / society as the case may be and as requested / specified / directed by the customer to SBI at the time of each disbursement. SBI shall not be responsible / liable in any manner whatsoever for any delay by the customer in providing such request/ specification/ direction to SBI and the customer shall not claim any costs, charges and expenses in any relation to any non-disbursal by SBI due to any such delay by the customer.
The Bank reserves the right to collect any tax if levied by the State / Central Government and / or other Authorities in respect of this transaction.
35. How do you consider Default Home Loan repayment?
In the event of default i.e. if the amount due is not paid by due date, the customer will be sent reminders from time to time for payment of any outstanding on his loan account, by post, fax, telephone, email, SMS messaging and/or through third parties appointed for collection purpose to remind, follow-up and collect dues. Any third party so appointed, shall adhere to the Indian Banks Association's (IBA) code of conduct on debt collection.
36. How to get-in touch with SBI Home Loan Customer Service?
For any service related issue, customer can get in touch with SBI by:
- Calling Customer Help Line Numbers.
- Contact Customer Grievance Cell at our Local Head Offices.
- Write to Grievance Cell at our Local Head Offices.
(Details on Help line Numbers and Grievance Cell available on www.sbi.co.in)
In case a customer is not satisfied with the handling of grievance by the Local Head Office, a communication may be sent (enclosing the message sent earlier to Local Head Office) to the:Deputy General Manager (Customer Service) Customer Service Dept, State Bank of India State Bank Bhawan, 4th floor Madame Cama Road, Mumbai-400 021
Telephone: (022) 22029456 , 22029451 22740432, 22740431, 22740433
Fax: (022) 22742431.
37. What is SBI's Disclosure policy on Home Loan and its Customers' data?
State Bank of India is authorized to disclose from time to time any information relating to the loan to any credit bureau (Existing or Future) approved by Government of India and Reserve Bank of India without any notice to the borrower. State Bank of India is also authorized to make inquiries with the Credit Information Bureau of India (CIBIL) and get the applicants Credit Information Report.