Mortgage finance forms a critical part of the financial journey of many people across the world. This is because a mortgage offers consumers the chance to own their own home. Instead of saving up for the property for years or even decades, a loan gives them the chance to purchase the property immediately and then repay the loan over a period of time. State Bank of India Mortgages provides customers with a healthy range of options. This review compares it to some of the best in the world.
A bank that has a good understanding of mortgages, is Bank of Ireland.
About State Bank of India
Founded almost 200 years ago in Calcutta, the bank was originally known as the Bank of Calcutta. The need for expansion and the various mergers made it crucial for the bank to change its name. It was one of the first banks to establish a point of operations in the rural parts of India. This was to promote better access to banking products for those who live in different conditions to city dwellers. This is known as a bank of accessibility.
We also did a full review on National Australia Bank.
Key Tips to Manage Mortgages Effectively
Although a mortgage provides customers with the funds to purchase their property, it can also be a difficult loan type to manage. Not only because the installments on home loan finance are quite high, but also because the term of the loan is far longer than many other types of loans. This makes it tricky to commit to for the entire period.
Save Up A Few Months’ Worth Of Instalments
When it comes to loan repayments, it’s important that they are honored for a number of reasons. Sometimes life happens and the new business venture doesn’t work out, or an emergency happens and customers run out of funds. The best way to ensure the mortgage is covered is by saving money in order to have a few months to play with. This gives customers access to that grace period until their finances stabilize again.
Keep The Loan Amount As Low As Possible
Before rushing in to take out the maximum loan amount, it’s important to rather focus on affordability. Even if the affordability is in line with the bank’s guidelines, customers would need to consider whether they need to give up anything on their budget. This could include memberships to clubs they enjoy, classes, entertainment, and more. The adjustment might be a little tough to manage.
Choose A Loan Package That Offers A Great Rate
Customers are often encouraged to look around for the best deal. Interest rates are quite competitive, and for a bank to get the deal these rates are often open for negotiations. But the rate is not the only part of the deal that needs attention. The repayment and installments play an important role as well, and even with a lower interest rate can work out slightly more expensive. The reason? Service fees and other little add-ons that push up the installments.
State Bank of India Mortgages Product Offerings
SBI Flexipay Home Loan
This loan type offers higher loan eligibility with a flexible repayment option.
- Customers have access to up to 1.2 times higher loan eligibility than normal. The loan amounts must be Rs 20 Lacs or higher.
- Certain eligibility criteria apply.
- Furthermore, customers have the option to pay only the interest during the moratorium. This reduces the impact of the installment. Also, the moratorium ranges between 36 to 60 months.
- Finally, customers also have a longer repayment period of 35 to 30 years.
This home loan also functions as an overdraft, which makes it a customer-friendly product.
- Customers earn an optimal yield on their savings by reducing the interest burden on their mortgage, at no extra cost.
- The loan type requires customers to have a transactional account, as it works the same as an overdraft.
- Finally, customers can park their surplus funds or savings in the account.
Home Loans to Non-Resident Indians and Persons of Indian Origin
These loans provide a multitude of customers with access to finance. However, the applicant should have a regular source of income.
- The minimum employment tenure in India or abroad should be no less than 2 years.
- Customers may borrow a minimum of Rs 3 lacs with no maximum.
- Finally, other terms and conditions will apply.
This loan type is specific to purchase a plot for the construction of a dwelling unit. Furthermore, the construction of the house will commence within 5 years from the date of the conclusion of the loan.
- Customers may apply for another loan to complete the construction of the property, under certain conditions.
- There is a maximum loan amount of Rs 10 crores and the repayment period is up to 15 years.
- Finally, other terms and conditions will apply.
With this loan type, customers will have access to a pre-approved limit that allows them to negotiate the best price with a seller or developer. Furthermore, the assessment itself is done on the income details of the applicant.
- Customers are required to pay a non-refundable processing fee for this facility.
- Also, the pre-approval is valid for a period of 4 months and if the property documents are submitted within this period, the processing fee won’t be levied again.
- Finally, the minimum loan amount is Rs 10 lacs.
SBI Tribal Plus
This loan type is applicable to hilly or tribal areas where the traditional mortgages aren’t applicable.
- The loan type is for the purchase or construction of a dwelling, however, will not include the land.
- Furthermore, customers may purchase existing properties no older than 10 years.
- There is no minimum loan amount, however, a maximum loan amount of Rs 10 lacs applies.
- The maximum loan period is 15 years.
- Finally, the loan can also be used to repair, renovate, or extend an existing house or flat.
SBI Privilege Home Loan and SBI Shaurya Home Loan
The SBI Privilege Home Loans are specifically designed for employees of Central or State Governments. The SBI Shaurya Home Loans are designed for Defense Personnel.
- This loan type is more affordable for those entering their retirement term, the installment is capped at 50% of the current net monthly income.
- Customers also enjoy extended repayment up to the age of 75 years. The maximum loan term remains at 30 years.
- Customers enjoy a full waiver of the processing fee, however, other charges may still remain applicable.
- Furthermore, applications will also enjoy lower interest rates.
- Finally, there is an option for customers from other banks to switch over their outstanding balance on the mortgage.
SBI Bridge Loan
This is a short-term loan to meet the shortfall in funds by mortgaging an existing unencumbered property.
- There are specific criteria the applicant needs to satisfy.
- Furthermore, the loan type will be given by way of a term loan.
- The LTV amounts are up to 65% if the market value is up to Rs 1 crore and 60% if the market value is above Rs 1 crore. This is to a maximum of 90% of the cost of the new property.
- A maximum loan tenor of 2 years apply.
Home Loans to Non-Salaried Segment Differential Offerings
These loan types are suitable for those who don’t have formal employment, however, generate an income of their own. Furthermore, this includes professionals, self-employed, and business persons.
- Businesses or firms should be in existence for at least 3 years, with the last 2 years profit making years.
- The loan amounts range between Rs 50,000 to Rs 50 crore.
- Furthermore, customers may have to provide liquid collateral.
- Finally, the maximum repayment period is 30 years. The interest during the moratorium period should be serviced.
SBI Top-Up Home Loan
This loan type is available to all home loans with a satisfactory track record of at least one year. Furthermore, it requires that a valid mortgage was created in favor of the bank.
- The minimum loan amount is Rs 2 lacs and the maximum Rs 5 crores.
- There is a processing fee on the loan.
- For loan amounts under Rs 75 lacs, the permissible loan percentage is 80% of the present market value of the property less the present balance outstanding in the home loan account.
- For loan amounts over Rs 75 lacs, the permissible loan percentage is 75% of the present market value of the property less the present balance outstanding in the home loan account.
SBI Reverse Mortgage Loan
This loan is specifically designed for the welfare of senior citizens in India.
- Seniors often have additional expenses, however, don’t always have the funds to meet obligations such as medical expenses, repairs, or renovations.
- There is no compulsion for the borrower to repay the loan during their lifetime, or till such time they choose to remain in the house.
- Furthermore, customers may prepay the loan at any time without the burden of a pre-payment penalty.
- A processing fee on the application applies.
- Finally, customers enjoy very competitive interest rates.
SBI Hamara Gar
This loan type is designed for those who wish to purchase in the affordable housing areas. This loan type is in the way of a term loan with a fixed interest rate option for 2 years. However, a prepayment penalty applies.
Female customers who desire a tailored package will find this loan type suitable. Furthermore, they enjoy reduced interest rates.
- A woman should be the sole application or one of the co-applicants.
- Also, the woman should be the sole owner or one of the co-owners of the property proposed to be financed.
Loan for Earnest Money Deposit
This loan type is designed to suit the needs of those who wish to book properties being sold by Government Housing Agencies, Urban Development Authorities, and Housing Boards.
- This loan is easily available with minimum documentation.
- There are no administrative charges or application fees.
- Certain eligibility criteria apply.
- Finally, the maximum loan amount is Rs 100,000 and should not exceed 90% of the application money. Or it cannot be more than 10 times the net monthly income of the client.
State Bank of India has some fantastic savings options to help save up for that deposit or down payment.
Critical Reviews Rating State Bank of India Mortgages – 10 of 10
If there is a loan category in the mortgage division, then this bank has it covered. There are a number of things we like about the product range, such as the diverse crowd it reaches. This is truly a reflection of a bank in the heart of community development. Home loans or mortgages now reach a far wider customer base, which allows each person to own their own place to call home.
There is simply no reason for us to rate these products down, as customers have full access to all the property conditions and terms, as well as pricing before ever setting a foot in the branch. Well done to State Bank of India for a sublime product range which deserves a perfect score.
A full review on the mortgages offered by Wells Fargo is also available for comparison.