Public Bank vs Private Bank: Home Loan Application

A home loan has a lengthy process and contains numerous conditions. That is why here we assess five major points in the home loan with low interest rate process of public and private banks.
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a) Interest rate Updation: Private banks are slow to move their interest rate even for existing customers as per the changes in repo rate by RBI. Whereas, in the case of public banks with the change in repo rate interest rate for new as well as existing customers is normally moved.
b) Prepayment Charges: Private banks charges an additional percentage fee on outstanding loan amount when you prepay your existing loan. Public banks do not have any prepayment charges.
c) Prepayment Limit: Private banks also tend to set the limit on the amount of prepayment which can be done at one time. They would for example have. 25% of outstanding loan as a limit for one-time prepayment. Public banks do not have such conditions.
d) Prepayment Period: Private banks have a lock-in of 6 months to 1 year before which prepayment cannot be made. In the case of public banks such conditions are not there.

e) Processing Fee: Since private banks have to pay Direct Selling Agents their processing fee is much higher than public banks who do not have any such obligation.


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