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Which Bank is Better for a Home Loan? HDFC or Axis Bank?

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Highlights

  • HDFC vs Axis Bank - Which should you pick to buy a home?
  • You can decide reading the comparison of the two made here in terms of interest rates, eligibility, processing fee, etc

HDFC Limited and Axis Bank are two fierce competitors or say two popular choices for people wanting to take home loans. Both provide home loans to a large number of salaried and self-employed individuals wanting to buy, construct, renovate and extend their housing units. Both these lenders offer higher loan amounts and have attractive repayment options. And when you hear these two offer different interest rates for different professionals, you will only want to read more about them. To help you choose between the two, we have put out the home loan details of both HDFC Limited and Axis Bank. Choose the lender that serves your purpose better.

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Compare HDFC Limited & Axis Bank Here

Loan AspectsHDFC LimitedAxis Bank
Loan QuantumUpto 75%-90% of the property costUpto 75%-90% of the property cost
Interest Rate6.95% - 8.00%7.75% - 8.55%
Variable Rates for Salaried and Self-employedAvailableAvailable
Repayment Tenure20 Years in all repayment options including Telescopic Repayment Option where it is 30 yearsUpto 30 Years
Processing Fees0.50%-1.50% of the loan amount plus applicable taxesUpto 1% of the loan amount plus applicable taxes
Prepayment ChargesNIL-2% of the prepaid amount plus applicable taxesNo prepayment charges

HDFC Home Loan

HDFC offers home loans to salaried and self-employed at varying interest rates according to the loan amount. While setting the interest rates, it also takes into account the credit risk which is greatly determined by the credit score and credit history of an individual. The interest rate changes based on the changes made by HDFC in its Retail Prime Lending Rate (RPLR), which presently stands at 16.55%. The rate is arrived after subtracting a certain percentage from the RPLR. How does this loan fare for both salaried and self-employed? Let’s check out.

Interest Rates for Salaried  & Self-employed Professionals

Loan Amount (In INR)Interest Rates (In Per Annum)
Upto 30 Lakh8.00% - 8.50%
Above 30 Lakh - 75 Lakh8.25% - 8.75%
Above 75 Lakh8.30% - 8.80%

Interest Rates for Self-employed Non-professionals

Loan Amount (In INR)Interest Rates (In Per Annum)
Upto 30 Lakh8.15% - 8.65%
Above 30 Lakh - 75 Lakh8.30% - 8.80%
Above 75 Lakh8.35% - 8.85%

How Much Time Can You Get to Pay HDFC Home Loan?

You can get as much as 30 years to repay the loan via EMIs. 

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Repayment Options for HDFC Home Loan

HDFC Home Loan comes with five repayment options – Step Up Repayment Facility (SURF), Flexible Loan Installments Plan (FLIP), Tranche based EMI, Accelerated Repayment Scheme and Telescopic Repayment Option. While all these are available for salaried, self-employed can get the last three options only. Also, barring Telescopic Repayment Option where the loan tenure can be as high 30 years, all have a maximum repayment period of 20 years. So, how do these options help you repay the loan smartly? Let’s read about them below. 

SURF– Here, the repayment schedule is designed in line with the expected growth in your earnings. With this repayment option, you can get a higher loan amount and pay lower EMIs in the initial years. Afterward, the repayment gets faster in line with the assumed increase in your income. 

FLIP – It’s a customized repayment solution to meet your repayment capacity. The EMI will be higher in the initial years and decreases in proportion to the income

Tranche Based EMI – Generally, in an under-construction property, you’re required to pay only interest on the loan amount drawn till the final loan disbursement and pay EMIs later. However, if you want to make principal repayment immediately, you can look to tranche the loan and pay EMIs on the cumulative disbursal amount. 

Accelerated Repayment Scheme – With this scheme, you can increase the EMI every year in proportion to the growth in your income. What this does is help you repay the loan faster.

Telescopic Repayment Option – As told earlier that the maximum repayment can be as high as 30 years, the loan eligibility enhances and the EMIs get lower. 

How Much Home Loan Can You Get from HDFC?

The loan disbursal depends on your age, income, repayment capacity, and the cost of the property. A greater income will convince HDFC Limited to disburse you a greater loan amount. Regardless of your income and repayment capacity, the loan amount can’t exceed the cut off the lender has decided based on the cost of the property. The table below shows the loan disbursal according to the cost of the property.

Loan Amount (In INR)Maximum Finance Available
Upto 30 Lakh90% of the cost of the property
Above 30 Lakh - 75 Lakh80% of the cost of the property
Above 75 Lakh75% of the cost of the property

Processing Fees

Both salaried and self-employed professionals need to pay the processing fee at upto 0.50% of the loan amount or INR 3,000, whichever is more, plus the applicable taxes. The processing fee for self-employed non-professionals can account for a maximum of 1.50% of the loan amount or INR 4,500, whichever is more, plus applicable taxes. 

Prepayment Charges 

No prepayment charges shall be levied for individual borrowers in both salaried and self-employed segments. Doesn’t matter whether you prepay in parts or in full, there will be no charges applicable. For non-individual borrowers (Sole Proprietorship Concern, Company or HUF), the loan prepaid in the first 6 months from the date of first disbursement will come with a charge of 2% plus applicable taxes and statutory levies. There shall be no charges for non-individual borrowers prepaying upto 25% of the outstanding principal every year existing between the time of more than 6 months to upto 3 years. However, the lender wants borrowers to make prepayments from their own sources. If the prepayment amount exceeds 25% in any financial year, it will attract charges at 2% of the amount prepaid over the 25% threshold. There shall be no charges for prepaying after 3 years.

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Documents Required to Obtain HDFC Home Loans

Identity & Address Proof – Anyone from PAN Card/Passport/Voter ID/Driving License

Income Proof 

Salaried

Salary slips of the last 3 months, Last 6 months’ bank statements showing the credit of salary, Latest Form -16 and Income Tax Return (ITR) (For Salaried)

Self-employed

ITR along with income computation for the last 3 assessment years, Balance Sheet and Profit & Loss Account Statements for the last 3 years (Both individual and the business entity), Last 6 months’ current  account statement of the business entity and savings account of the individual

Property Related Documents

These documents can differ based on the type of property you are looking to buy

New Homes

  • Allotment Letter/Buyer Agreement Copy
  • Payment receipt made to the property developer

Resale Homes

  • Title deeds including the previous chain of the property documents
  • Initial payment receipt (s) made to the seller
  • Agreement to sell copy (If already executed)

Construction of Home on the Plot

  • Title Deeds of the Plot
  • Proof of no property encumbrances
  • Construction estimate made by a Civil Engineer or an architect
  • Copy of the plans having got the approval of local authorities

Other Documents 

Salaried

  • Own Contribution Proof
  • Appointment Letter/ Employment Contract in case the present employment is below one year
  • Last 6 Months’ bank statements showing the repayment of ongoing loans
  • Passport size photograph of all applicants/co-applicants
  • Duly filled and signed application form
  • Processing fee cheque in favour of HDFC Ltd.

Self-employed

  • Own Contribution Proof
  • Business Proof
  • Latest Form 26 AS
  • For Companies – Names of Directors and Shareholders with their shareholding as certified by a chartered accountant or company secretary
  • Memorandum and Articles of Association of the Company 
  • Partnership Deed for a Partnership Firm
  • Loan details of individuals and the business entity
  • Passport size photographs of applicants/co-applicants
  • Processing Fee cheque in favour of HDFC Ltd.

Axis Bank Home Loan

Axis Bank is also a dominant player in the home finance space by providing upto 90% of the property cost. The thing that is unique about Axis Bank is the interest rate remains the same irrespective of the loan amount. But the rates differ in terms of the profession you’ve. For salaried, the bank keeps the rate of 8.55%-9.20% per annum. Self-employed will get the loan at 8.65%-9.40% per annum. Axis Bank Home Loan Interest Rates are benchmarked to the Repo-linked Lending Rate. The rates you see are before the 75 basis point cut made by the Reserve Bank of India (RBI) on March 27, 2020. The 0.75% cut in the repo rate, will reduce the home loan rate to 7.80%-8.45% and 7.90%-8.65% in April 2020. 

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How Much Time Does Axis Bank Give You to Repay the Home Loan?

Both salaried and self-employed can get as much as 30 years to repay the home via EMIs. 

What is that 12 EMI Waiver Offer All About?

To grab the attention of borrowers, Axis Bank has introduced a new home loan product Shubh Aarambh wherein the EMI will be waived off after 4 years, 8 years and 12 years of the loan journey. This loan offer comes with a maximum repayment tenure of 20 years and doesn’t give you the liberty to switch the balance to some other lender. 

How Much Loan Does Axis Bank Provide You to Buy, Construct, Renovate or Extend a Property?

While disbursing the loan amount, Axis Bank ensures the EMI is not more than 40% of your take-home salary. The loan amount disbursed won’t exceed 90% of the property cost. The below table will show you the maximum you can get.

Loan Amount (In INR)Maximum Finance Available
Upto 30 Lakh90% of the cost of the property
Above 30 Lakh - 75 Lakh80% of the cost of the property
Above 75 Lakh75% of the cost of the property

Processing Fees

The bank levies a processing fee at upto 1% of the loan amount, subject to a minimum of INR 10,000.

Prepayment Charges 

There shall be no prepayment charges applicable when you prepay the loan in full or parts

Documents One Must Submit While Applying for Axis Bank Home Loan

Documents RequiredSalariedSelf-employed
Identity ProofValid Passport/Voter's ID/Driving License/PAN Card/Aadhar Card with PhotographValid Passport/Voter's ID/Driving License/PAN Card/Aadhar Card with Photograph
Income ProofLatest 3 months salary slips/Certificate for fixed salary/Latest Form 16
Last 6 months Bank Statement/Passbook of the Salary Account
IT returns for the last 2 years and computation of income for the last 2 years certified by a CA
Last 6 months Bank Statement for operative account both personal and business
Residence ProofLatest Electricity Bill/Utility Bill/Piped Gas Bill/Telephone Bill/Passport/Registered Lease Agreement with a utility bill in the name of landlordLatest Electricity Bill/Utility Bill/Piped Gas Bill/Telephone Bill/Passport/Registered Lease Agreement with a utility bill in the name of landlord

Additionally, submit the property documents like Agreement to Sale, Flat Allotment Letter, Payment Receipts Made to Seller/Property Developer, etc.

Conclusion

Both Axis Bank and HDFC Limited follow the same formula when it comes to ascertaining the loan amount. But, in terms of interest rates, HDFC is a better option as its highest rate is below 9%. Whereas, Axis Bank Home Loan Interest rates are way past 9%. Even after the rate cut, which is imminent after the RBI cuts repo rate by 0.75%, HDFC Home Loan rates will be lower than that of Axis Bank. HDFC being the pioneer in mortgage financing may just be a better option for you.

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Personal Loan Interest Rates July 2020
Fullerton India14.00% - 33.00%
HDFC Bank10.75% - 21.45%
ICICI Bank10.99% - 18.49%
IndusInd Bank11.25%
Kotak Bank10.99% - 20.99%
RBL17.50% - 24.00%
Standard Chartered Bank11.50% - 18.00%
Tata Capital10.99% - 18.00%
Home Loan Interest Rates July 2020
Axis Bank7.75% - 8.55%
Bank of Baroda6.85% - 7.85%
Citibank8.20%
HDFC6.95% - 8.00%
ICICI Bank7.45% - 8.55%
Indiabulls Housing Finance Limited8.80% - 11.05%
Kotak Bank7.40% - 9.70%
LIC Housing7.40% - 8.85%
Piramal Capital & Housing Finance9.00% - 9.10%
PNB Housing Finance8.60% - 9.45%
Reliance Home Finance8.75% - 14.00%
State Bank of India/SBI6.95% - 7.60%
Tata Capital9.20% - 9.35%