Which Bank is Better for a Home Loan? HDFC or Axis Bank?
Last Updated : Sept. 9, 2020, 12:35 p.m.
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.
Compare HDFC Limited & Axis Bank Here
| Loan Aspects | HDFC Limited | Axis Bank |
|---|---|---|
| Loan Quantum | Upto 75%-90% of the property cost | Upto 75%-90% of the property cost |
| Interest Rate | 8.50% - 9.40% | 8.75% - 9.15% |
| Variable Rates for Salaried and Self-employed | Available | Available |
| Repayment Tenure | 20 Years in all repayment options including Telescopic Repayment Option where it is 30 years | Upto 30 Years |
| Processing Fees | 0.50%-1.50% of the loan amount plus applicable taxes | Upto 1% of the loan amount plus applicable taxes |
| Prepayment Charges | NIL-2% of the prepaid amount plus applicable taxes | No 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 are based on the changes made by HDFC in its Retail Prime Lending Rate (RPLR), which presently stands at 16.20%. 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 Rate (In Per Annum) |
|---|---|
| Upto 30 Lakh | 6.95% - 7.50% |
| Above 30 Lakh-75 Lakh | 7.20% - 7.75% |
| Above 75 Lakh | 7.30% - 7.85% |
Interest Rates for Self-employed Non-professionals
| Loan Amount (In INR) | Interest Rate (In Per Annum) |
|---|---|
| Upto 30 Lakh | 7.10% - 7.65% |
| Above 30 Lakh-75 Lakh | 7.35% - 7.90% |
| Above 75 Lakh | 7.45% - 8.00% |
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.
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 Lakh | 90% of the cost of the property |
| Above 30 Lakh - 75 Lakh | 80% of the cost of the property |
| Above 75 Lakh | 75% 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.
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 7.75%-8.40% per annum. Self-employed will get the loan at 7.95%-8.55% per annum. Axis Bank Home Loan Interest Rates are benchmarked to the Repo-linked Lending Rate.
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 Lakh | 90% of the cost of the property |
| Above 30 Lakh - 75 Lakh | 80% of the cost of the property |
| Above 75 Lakh | 75% 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 Required | Salaried | Self-employed |
|---|---|---|
| Identity Proof | Valid Passport/Voter's ID/Driving License/PAN Card/Aadhar Card with Photograph | Valid Passport/Voter's ID/Driving License/PAN Card/Aadhar Card with Photograph |
| Income Proof | Latest 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 Proof | Latest Electricity Bill/Utility Bill/Piped Gas Bill/Telephone Bill/Passport/Registered Lease Agreement with a utility bill in the name of landlord | Latest 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 8%. Whereas, Axis Bank Home Loan Interest rates are can go upto 8.55%. Now, you have got sufficient information to decide which of the two is better.