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Is it Good to Break an FD for Home Loan?

Highlights

  • Shall you break your fixed deposit to buy a home?
  • Experts say No as it is one of the safe investments around, you can, however, take a loan against fixed deposit to pay the down payment to the seller

No, you must not break your fixed deposit to get a home loan. As you know FD is a long term investment and there are zero market risks. You can borrow a home loan to purchase, construct, renovate and extend a housing unit. The loan will be given at about 75%-90% of the property value. You need to pay the remaining 10%-25% from your end to the seller of the property. In case you fall short of the deal amount, you can take a loan against fixed deposit to arrange the remaining amount. The loan against fixed deposits come with the following advantages.

Zero processing fee: One of the benefits that you will get from the loan is no processing fee. Yes, you don’t have to pay any kind of fees for the loan amount. However, if someone takes an unsecured loan to pay the remaining amount, he/she has to pay a processing fee at 1%-2% of the loan amount.

Affordable interest rate: The loan interest rate is low and it can be 2%-3% above the FD interest rate.

Desirable amount: You can borrow a maximum loan amount up to 90% of your FD value from the lender. The loan amount can be minimum INR 50,000.


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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%
HDFC7.55% - 8.45%
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/SBI7.35% - 8.00%
Tata Capital9.20% - 9.35%