HDFC Bank Home Loans Review

Company Profile

Housing Development Finance Corporation Limited, more popularly known as HDFC Bank Ltd, was established in the year 1994, as a part of the liberalization of the Indian Banking Industry by the Reserve Bank of India (RBI). Today, the bank boasts of as many as 1,412 branches and over 3,275 ATMs across India.

At present, HDFC Bank comprises of an authorized capital of Rs. 550 crore, of this the paid-up amount is Rs. 424.6 crore. In terms of equity share, the HDFC Group holds 19.4%. Foreign Institutional Investors (FIIs) have around 28% of the equity and about 17.6% is held by the ADS Depository.

HDFC Bank’s portfolio of products and services is inclusive of Personal Banking like savings account, fixed deposit, loans, credit card, investments, insurance, etc.; NRI Banking like Rupee Saving/Fixed/Current account(s), foreign currency deposits, portfolio investment schemes, etc. and Wholesale Banking.

Analysis

Loan To Value Ratio – HDFC Home Loan can be applied for a maximum of 85% of the property value subject to credit discretion and are accompanied by a specially-designed insurance cover by HDFC Standard Life Insurance Company Ltd.

This feature is very much comparable to other products in the market; banks like Axis and IDBI too offer loans up to 85% of the property value. Few banks are more lenient when it comes to loan to value ratio.

Through its Home Improvement Loan scheme, it facilitates internal and external repairs and other structural improvements. HDFC finances up to 85% of the cost of renovation (100% for existing customers) subject to market value of the property.

Through its Home Extension Loan, it facilitates the extension of an existing dwelling unit. All the terms are the same as applicable to Home Loan.

Tenure – HDFC Bank Home Loans are available for a maximum tenure of up to 15 years.

Interest Rate – Fixed rate of interest is charged @ 8.25%.

Prepayment Charges – An individual can prepay only upto 25% of the principal amount borrowed. Incase he/she exceeds this limit of 25%, or he/she transfers their loan to another bank, he/she is charged an early redemption of 2% of the amount being prepaid. This feature of charging 2% as prepayment is very much comparable to banks like IDBI, PNB.

Processing Fees – HDFC Bank charges 0.5% or Rs. 10,000 whichever is lower. This is at par with IDBI Bank’s offering which is one of the lowest in the market at 11,000 or 0.5%, whichever is lower.