In recent years, applying for a home loan has become much smoother, especially with private banks going digital. Most now offer online portals and standard document checklists, making the process faster—often completing disbursals within 15 days. In contrast, public sector banks like SBI and Bank of Baroda still rely on physical paperwork and can take 30–60 days, particularly for properties that need extensive legal checks.
Also read: Turning housing loan interest into cost of acquisition during property sale
“If your apartment is in a pre-approved project, private banks will move quickly. But if it’s a standalone property or in the outskirts, PSU banks will take their time with legal checks,” says Jagadeesh Mohan, founder of Emisaver.com and a former PhonePe executive.
From choosing the right bank to negotiating interest rates and using hidden hacks like overdraft-linked loans, this Mint guide unpacks everything you need to know to save time, money, and stress on your path to homeownership.
Paperwork 101
Banks ask for different sets of documents depending on the property type.
If you’re buying directly from a builder, you’ll need to submit the agreement to sell, cost sheet, builder NOC, demand letters, and payment receipts, said Umang Gupta, co-founder of Refresh, a home loan porting platform.
“The builder should ideally be able to provide these in one go, including property-related documents like encumbrance certificate (EC), occupancy certificate (OC), and khata if applicable.”
Resale properties require more documentation. Banks will ask for the complete chain of agreements—proof of ownership through all past transactions—as well as a society NOC in the bank’s format, share certificate, and utility bills.
“Banks also ask for the seller’s Aadhaar, PAN, cancelled cheque, and bank proof of the payment made,” adds Gupta. If the property value exceeds ₹50 lakh, a 1% TDS challan is also required.
Lovina Parmar, Mumbai based working professional who took a ₹30 lakh home loan from HDFC Ltd. in September 2023, recalls, “The process was seamless, mainly because I had all my documents in order. The agent helped guide me through, and HDFC’s portal was easy to use. I didn’t need to follow up. It just happened.”
She also emphasised the importance of proper names and addresses being aligned across documents, especially in resale deals or joint ownership scenarios.
Smart shortcuts
Speed in home loan processing often boils down to document readiness and clarity.
Mohan advises, “Always ask for a complete checklist of required documents on day one. Staff will often ask for documents in parts, based on what they remember. That delays everything.”
Experienced borrowers often expedite the process simply by being better prepared. “They’ll send all the required documents at one go, neatly labeled and scanned. That speeds up underwriting and verification,” he adds.
One smart move, says Gupta, is to get your loan pre-sanctioned before locking in a property. This involves checking your eligibility and the tentative loan amount with your bank—or platforms like Refresh—in advance. “It prevents last-minute surprises and gives you confidence while negotiating the property deal,” he says.
Lovina, as a first-timer, benefitted from her agent’s hand holding, but she also did her part. “I compared interest rates, checked for hidden fees, and ensured all paperwork had matching details. Because I had a good CIBIL score, I was able to negotiate my interest rate down from 8.75% to 8.5% before disbursement.”
Also read: The home you want to buy already has a loan on it. What should you do?
While the interest rate is the most visible figure, it’s not the only cost involved. “People forget about processing fees, valuation charges, and admin costs. A 1% processing fee on a ₹1 crore loan is ₹1 lakh upfront. That sounds like a lot, but over 20 years, you’ll pay ₹1 crore in interest anyway. So don’t obsess over it,” Mohan says.
Instead, he suggests focusing on tenure and structure. “Choose an EMI that’s less than 50% of your monthly take-home. It shouldn’t pinch, because you’ll be paying for it for decades.”
Additionally, making early repayments or even occasional lump sum payments can drastically reduce your total interest burden. “If you can, make one extra EMI every year or opt for a step-up EMI plan,” he suggests. These methods may seem simple, but over a 20-year loan, they add up to serious savings.
He’s also a big advocate of overdraft-linked loans like SBI’s MaxGain.
“If you’ve got emergency funds lying in FDs or liquid funds, move them into your loan account. It brings down your effective interest and lets you withdraw anytime. With this hack, we’ve helped people reduce their interest rate to below 7% without making extra payments.”
What is MaxGain?
SBI MaxGain is a home loan with an overdraft (OD) feature. Instead of a standard loan account, you get an OD account linked to your loan, where you can deposit or withdraw money anytime. While you continue to pay regular EMIs, the interest is calculated only on the net balance, your outstanding loan minus the surplus parked in the OD account.
For example, if your loan is ₹50 lakhs at 8.5%, but you park ₹5 lakhs in the MaxGain account, the bank charges interest only on ₹45 lakhs. Your EMI remains the same, but your interest outgo reduces, and you repay the loan faster.
This isn’t a prepayment, so the money remains accessible. You can withdraw it anytime, making it ideal for emergency funds or savings that are temporarily idle.
Mohan says, “This is my favorite hack. You don’t need to pay anything extra every month. Just use your emergency or idle savings smartly, and your loan tenure can drop by 4–5 years, and your effective interest rate falls significantly.”
Red flags to spot
The most important terms in a home loan agreement are often hidden in plain sight, loan tenure, rate of interest, and the mechanism by which that rate changes.
Mohan breaks it down, “Your interest rate is typically made up of three parts, the RBI’s repo rate, a markup set by the bank, and a risk premium that’s tied to your credit score.”
One of the biggest risks borrowers face is not tracking their interest rate regularly.
“Banks can change your interest rate as per their policy, even mid-loan. Many borrowers end up paying more simply because they never checked their rate again,” warns Gupta.
He advises checking your rate every 6–12 months, especially if banks are offering lower rates to new customers. If your rate is higher, refresh your loan—essentially refinance it at a lower rate.
Another hidden catch is how banks handle rising interest rates. Mohan cautions.
“Most banks keep your EMI amount fixed and just increase the tenure. That’s easier on your monthly cash flow but dangerous in the long run. Borrowers don’t realise how much longer they’re paying interest.”
Most banks no longer charge prepayment or foreclosure penalties, especially for floating rate loans. “This is clearly mentioned in your agreement. Still, read that section carefully,” he notes.
Also read: Mint Explainer: How RBI’s latest rate cut, change in stance impact borrowers, depositors
PSU vs private?
Choosing a lender isn’t just about the interest rate.
Mohan emphasizes, “There’s no such thing as a universally good or bad bank. Each one plays in a different segment. For example, Bank of India offers up to 90% funding. ICICI, Bank of Baroda, and Federal Bank offer MaxGain-style overdraft loans. And, the Federal Bank is great for refinancing if your property value has appreciated.”
According to him, the right bank for you depends on your property type, whether it’s a plot, under-construction flat, resale apartment, or even the location and builder’s reputation. “It’s about matching the right bank to your property and financial profile,” he adds.
Mohan said, “For reputed builders, public sector banks often offer the best interest rates and highest approval probabilities. In cases of properties with legal deviations or in peripheral areas, private banks or NBFCs might be more suitable.”
Final word
Gupta debunks a common myth—that one bank is universally better than another.
“It’s not just the bank. It’s the branch, the agent, or the platform you choose. Home loans are still very manual, and your experience can vary widely even within the same bank.”
For first-time buyers, the process may seem overwhelming, but digital tools, improved customer support, and clearer guidelines have made it far more accessible. The real game-changer, however, is preparation—having your documents in order, understanding your credit profile, reading the fine print, and choosing a lender that suits your specific situation.
“The right bank, right loan value, and right tenure, these three decisions determine whether your home loan journey is peaceful or painful. Plan wisely,” Mohan concludes.
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