Punjab National Bank Home Loan Review

Company Profile

PNB is the second largest government-owned commercial bank in India. The bank's assets for financial year 2007 were about US$ 60 billion. PNB Housing Finance Ltd. is a subsidiary Company of Punjab National Bank which has been registered under Companies Act, 1956. It has 30 branches all over the country. Its function is to carry on the business of providing long term finance for construction/purchase/repairs/renovation etc. of any house/flat/commercial properties /loans against properties apart from providing project financing.

Analysis

Loan To Value Ratio – PNB Home Loan can be applied for a maximum of 80% of the property value subject to credit discretion and are accompanied by a specially-designed insurance cover. This feature is very much comparable to other products in the market; banks like ICICI and SBI offer loans up to 80% of the property value. Few banks are more lenient when it comes to loan to value ratio.

Tenure –

Interest Rate –

Under the Apna Ghar Yojana (long term finance for construction/purchase of any house/flat), for loan upto Rs. 20 lacs

For loan above Rs. 20 lacs

Under the Ghar Sudhar Yojana (long term finance for repairs/renovation of any house/flat), for loan upto Rs. 20 lacs, extended out for a period of upto 15 years, floating rate of interest is charged @ 9.25% and for loans above Rs. 20 lacs, extended out for the same period, floating rate of interest is charged @ 10%.

Prepayment Charges – On prepayment of the loan, in part or full, a loan seeker is charged an early redemption charge of 2% of the amount being prepaid. This feature is very much comparable to IDBI and HDFC Bank’s offering.

Processing Fees – A loan seeker will have to bear a processing and administrative fee of 1.5% of the Line of Credit facility applied for and such is payable at the time of submission of the application. This is higher when compared to IDBI Bank’s processing fees charged @ 0.5% or Rs. 11, 000 whichever is lower.

Also a commitment charge of 1% per annum on the undrawn amount of the Line of Credit facility sanctioned is payable commencing six months from the date of acceptance of offer.