SBI Home Loan Review

Company Profile

The evolution of State Bank of India can be traced back to the first decade of the nineteenth century with the establishment of the Bank of Calcutta which came into being on 2^nd June, 1809. Three years hence, this bank was redesigned as the Bank of Bengal. This was the first ever joint-stock bank of British India established under the sponsorship of Government of Bengal.

One of the benchmarks in SBI’s success is the implementation of independent India’s first five year plan in the year 1951 which aimed at serving the Indian economy and rural masses in general. With the commercial bank’s inadequacy in handling the economic revival taking shape in the rural sector, the All India Rural Credit Survey Committee recommended the formation of a state-partnered and state-sponsored bank. Their recommendation took shape in the form of State Bank of India which came into existence on 1^st July, 1955.

Instead of serving as mere repositories of the community's savings and lending to creditworthy parties, the State Bank of India has catered to the needs of the customers, by banking purposefully. SBI offers a basket of finance-based products & services including Personal Banking, Agricultural/Rural Banking, NRI Banking, SME Banking, Corporate Banking, etc. Currently, SBI boasts of more than 12,000 branches all across India and caters to the needs of varied segments of consumers.

Analysis

Loan To Value Ratio – SBI 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 PNB offer loans up to 80% of the property value. Few banks are more lenient when it comes to loan to value ratio.

Tenure – SBI’s Home Loans are available for a maximum tenure of up to 25 years or upto the age of 70 years, of the loan seeker, whichever is earlier.

Interest Rate –

SBI EASY HOME LOAN (JULY 2010)
(Base Rate =7.50% p.a.)

SBI ADVANTAGE HOME LOAN (JULY 2010)

SBI has a variety of schemes under personal finance.

• SBI Hi-Five Loan (For Loan Amount upto 5 Lakhs)

Revised Processing Fee inclusive of service tax w.e.f. 9th November, 2009 is as follows –

• SBI Easy Home Loan (For Loan Amount upto 50 Lakhs)

Processing Fee inclusive of service tax w.e.f. 9^th November, 2009 is as follows –

Interest rates for both, SBI Easy Home Loan as well as SBI Advantage Home Loan are mentioned in the first half of this review.

• SBI Advantage Home Loan (For Loan Amount above 50 Lakhs)

Processing Fee inclusive of service tax w.e.f. 9^th November, 2009 is as follows –

Apart from the afore-mentioned option of loans offered by SBI; they have categorically structured their Home Loans as under –

SBI Max Gain Loan is granted as an Overdraft facility with the added flexibility for you to operate your Home Loan Account like your S/B or Current Account.

SBI Freedom is a revolutionary product designed for customers who are on the look out for a source of finance for a property they want to invest in without mortgaging the same.

SBI Realty is a unique product if you are on the lookout for a loan to purchase a plot of land for house construction. The loan is available for a maximum amount of Rs.1 crore and with a comfortable repayment period of upto 15 years.

SBI Flexi is Home Loan with an option to choose a combination of floating interest rate and fixed interest rate, in a pre determined ratio. The minimum loan amount equals Rs.5 Lakhs.

For NRI Home Loans, the minimum loan amount should equal Rs. 3 lakhs whereas, the maximum permissible limit would be determined by EMI/NMI ratio criteria as applicable to regular Home Loans scheme for Resident Indian customers, which is

• 40% for Net Annual Income (NAI) upto Rs.2 Lakhs,
• 50% for NAI above Rs.2 Lakhs and upto Rs.5 Lakhs, and
• 55% for NAI above Rs.5 Lakhs

SBI Optima is an innovative and value added product extended to existing Home Loan borrowers with a satisfactory repayment record of 3 years and whose loan is the Standard Asset, with a view to reinforce the customer loyalty and to maintain long term relationship with the borrowers.

SBI Tribal Plus is a Special Scheme designed for Hilly/Tribal areas for extending financial assistance to individuals.

Gram Niwas scheme seeks to provide home loans to farming and poorest of the poor in rural areas for the purpose of purchase or construction of a house, repairs and renovation, purchase of plot for the purpose of construction of a house/shed etc.

Sahyog Niwas scheme has been instituted to finance the self help groups with a good track of payment record for 2 years, for lending to members for housing in rural areas.

SBI Happy Home Loans scheme enables the genuine needy buyers to buy dwelling units by freezing interest rate at 8% p.a. for a period of one year from the date of disbursement on new Home Loans including SBI Special Home Loans scheme.

At present SBI is the only Bank in the country supporting the cause of Green Housing by offering a 5% concession in margin, 0.25% concession in interest rate and waiver of processing fees, on the existing home loan products to customers who go in for Green Projects.

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, PNB and HDFC Bank’s offering.

Processing Fees –

The revised processing fee structure (including service tax) from 9th November, 2009 is as under: