I am trying to evaluate and choose between the following home loans for 70 Lac Amount.
HDFC Ltd Special Offer Rate – 8.5% Interest with processing fee 6800 (50% discount) -> EMI for 15 Yr = 68932
SBI MAX Gain – 8.7 % Interest with 11800 processing fee. -> EMI for 15 yr= 69755
Using the EMI Calculator i calculated that the total interest paid for 15yr term is as below: HDFC – 54,07,718 and SBI Max Gain – 55,55,875 . Difference = 1,48,157
- SBI Employee tells me theirs is a daily reducing balance against HDFC which is monthly reducing. So apparently the SBI loan will charge less interest which i am not able to understand. Is this true?
- Based on the total interest i calculated, is it still correct to assume that HDFC has lesser total interest compared to SBI Max gain. Is there a real monetary advantage here by choosing SBI Daily reducing Loan?
- A lot of individuals mentioned HDFC Loans to have hidden charges but i am not really able to find such instances or types. Is this true or just a gimmick by SBI Marketing ?
- Is there a real advantage for a daily reducing balance if i keep paying my EMI on a regular basis on a fixed day of the month.
- Do i need to choose a specific date for EMI in case of monthly reducing balance loan.
Thanks in advance
Basu, I would like to post my opinion on this as one of the home loan taker.
Please compare SBI regular home loan with HDFC home loan for interest rates.
Maxgain is a special product where you can park your excess money which will help reduce interest outgo. This is where daily balance comes in. If you park say 1lac on a day of a month, then your interest will calculated on the outstanding minus 1lac from that day onwards.
If you don’t have plans to parkextra Money, then go for regular HomeLoan where interest rate is slightly lower. Generally banks are better option bcoz Ur interest rate changes will be automatically reset every year compared to HDFC. Also prepayment is very simple, just a normal transfer into your loan account and you have prepaid some amount.
Do not fall for 50% discount in processing charge, that should not be a determining factor.
I already asked the same question to him in one of our email conversations. Also, thanks for sharing your views.