{"id":178,"date":"2020-04-18T15:27:42","date_gmt":"2020-04-18T15:27:42","guid":{"rendered":"https:\/\/www.loanfasttrack.com\/blog\/?p=178"},"modified":"2020-04-18T15:27:42","modified_gmt":"2020-04-18T15:27:42","slug":"difference-in-applying-home-loan-with-public-bank-private-bank","status":"publish","type":"post","link":"https:\/\/www.loanfasttrack.com\/blog\/blog\/finance\/difference-in-applying-home-loan-with-public-bank-private-bank\/","title":{"rendered":"Difference In Applying Home Loan With Public Bank & Private Bank"},"content":{"rendered":"\n
\"Home<\/figure>\n\n\n\n

A home loan segment of the bank tops the highest business in the\nloan industry. Everyone goes for a home loan atleast once in his lifetime.\nSince it is the huge and lifetime investments of the borrower\u2019s hard earn\nmoney, selecting the best bank for home loan becomes equally important. The\nborrower compares series of factors before applying for a home loan. There\nis both banks viz public sector as well as private sector set to provide home\nloan. Although both are governed by the guidelines of RBI, yet there are many\ndifferences in both approach for loan processing, fee structure, interest\nrates, and various other. <\/p>\n\n\n\n

Home Loan Application In Private\nBanks.-<\/strong><\/p>\n\n\n\n

The popularity of private banks has increased since\nrecent past due to aggressive sales mechanism, marketing\ntechniques, employment of Direct Selling Agents & Connectors-as\ncommission agents. The following points provide insight to the advantages of\napplying home loan with the private bank. <\/p>\n\n\n\n

1) Private banks are step ahead in providing door to door\npersonalized services to the borrower. Be it the direct bank employees or its\noutsourcing commission agents all advances doorstep services\nwith no extra cost<\/strong>. <\/p>\n\n\n\n

2) The appointment of selling agents gives an additional\nedge to banks with reference to paperwork, efficiency, and turn-around\ntime i.e. the loan processing time frame. The loans are sanctioned\nand disbursed speedily<\/strong>.<\/p>\n\n\n\n

3) There exist a scope for negotiating on the\nprocessing fees and rate of interest<\/strong>. The margins of the private banks\nare usually high in compared to the public sector banks. Banks agrees to\nnegotiate only after studying the financial creditability and employment\ncredentials of the borrower to be sure he poses less risk with respect to loan\nrepayments.<\/p>\n\n\n\n

4) Private banks excel in funding<\/strong>.\nThey provide maximum funding on the property, at times even provides 100%\non the agreement value of the property in resale home loans.<\/p>\n\n\n\n

5) Private banks offer the facility of online\napplication process<\/strong> for home loan and also provides\nease in approval, thus making it suitable for the NRIs to approach for\nhome loan. <\/p>\n\n\n\n

6) Now a day\u2019s majority of the private banks have\ntheir own banking app<\/strong> making it easier for the borrower to track\nhis loan status, outstanding loan amount, generate interest certificate, raise\npartial disbursement request, etc.<\/p>\n\n\n\n

However on the unfavourable\nfront it is seen that private banks usually<\/strong>, <\/p>\n\n\n\n

1) Charge high processing fees<\/strong> – may be for\nproviding fast and prompt services and to pay the commission cut to their sales\nagents.<\/p>\n\n\n\n

2) Immediately increases the interest rates on\nincrease in REPO rate<\/strong> by RBI, but takes longer to decrease the\nsame on decrease in REPO rates by RBI. <\/p>\n\n\n\n

3) Offers no after sales services<\/strong>. The\ndisbursement branch and banking branch of the private banks is\ndifferent. So once the loan is disbursed the borrower has to turn to branch\nbanking officials for any further correspondence. The outsourcing agents are of\nleast help then after. <\/p>\n\n\n\n

4) Do not allow prepayment<\/strong> of the loan\nwithout any additional charges<\/strong>. This is mainly because they\nlooses their interest income on prepayments and therefore charge additional for\nloan closure.<\/p>\n\n\n\n

5) Have a specified limit<\/strong> up to\nwhich the borrower can prepay<\/strong> the home loan in a single\ntime. <\/p>\n\n\n\n

6) Have a lock-in period<\/strong> of 6\nmonths or 1 year before which the borrower cannot repay the home loan.<\/p>\n\n\n\n

Home Loan Application In Public\nBank<\/strong><\/p>\n\n\n\n

While the young blood chooses to go with private banks, the\nolder generation looks forward to public sector banks for their home loan\napplication. They have their own reasons to do so. Let’s find out the reasons\nwhy they believe in public banks.<\/p>\n\n\n\n

1) Public sector banks are not that aggressive in\nentertaining DSAs and hence their processing fees generally low<\/strong>.<\/p>\n\n\n\n

2) They have no specific limit conditions for<\/strong> home\nloan prepayments<\/strong> and thus the borrower can reduce his\ndebt anytime with his extra money by making repayments. They also do not\ncharge for pre-payment<\/strong>.<\/p>\n\n\n\n

3) Some public banks provide principle\nsanction within 48 hours<\/strong>, only on the basis of the\nborrower’s income documents; the official sanction letter may take\n7days. <\/p>\n\n\n\n

4) They do not have lengthy process of personal\ndiscussions<\/strong>.<\/p>\n\n\n\n

5) The interest rate policies are more explicit &\ntranspicuous in public sector banks. With the decrease in the repo rates\nthe benefit of decreased interest rates are uniformly\ntransferred to both- existing as well as to the new borrower<\/strong> with\nno much delays.<\/p>\n\n\n\n

Unfavourable front for the\npublic sector banks: – <\/strong><\/p>\n\n\n\n

1) They provide less funding <\/strong>in\ncomparison to private banks. Public banks fund only 80% on the agreement value.<\/p>\n\n\n\n

2) They do not offer personalized door to door\nservices<\/strong>. In most of the public banks the borrower has to personally\nvisit the bank throughout the loan process. <\/p>\n\n\n\n

3) They are less aggressive and target oriented and\npossesses slow moving approach which often causes delays<\/strong>.<\/p>\n\n\n\n

Conclusion<\/strong>: <\/p>\n\n\n\n

It’s obvious that the borrower try to buy a product whose\ncost is as low as possible in both short and long term. So, it is important\nthat he makes a wise decision considering the above facts. If he is\nlooking to save money by choosing rates over the better customer services, well\nthen approaching the public sector banks is definitely suitable. However if getting\ntimely services and response without delays in loan process, is the priority of\nthe borrower, private banks are highly favourable to opt for. <\/p>\n","protected":false},"excerpt":{"rendered":"

A home loan segment of the bank tops the highest business in the loan industry. Everyone goes for a home loan atleast once in his lifetime. Since it is the huge and lifetime investments of the borrower\u2019s hard earn money, selecting the best bank for home loan becomes equally important. The borrower compares series of …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[33],"tags":[],"class_list":["post-178","post","type-post","status-publish","format-standard","hentry","category-finance"],"_links":{"self":[{"href":"https:\/\/www.loanfasttrack.com\/blog\/wp-json\/wp\/v2\/posts\/178","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.loanfasttrack.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.loanfasttrack.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.loanfasttrack.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.loanfasttrack.com\/blog\/wp-json\/wp\/v2\/comments?post=178"}],"version-history":[{"count":1,"href":"https:\/\/www.loanfasttrack.com\/blog\/wp-json\/wp\/v2\/posts\/178\/revisions"}],"predecessor-version":[{"id":180,"href":"https:\/\/www.loanfasttrack.com\/blog\/wp-json\/wp\/v2\/posts\/178\/revisions\/180"}],"wp:attachment":[{"href":"https:\/\/www.loanfasttrack.com\/blog\/wp-json\/wp\/v2\/media?parent=178"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.loanfasttrack.com\/blog\/wp-json\/wp\/v2\/categories?post=178"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.loanfasttrack.com\/blog\/wp-json\/wp\/v2\/tags?post=178"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}