IDBI Bank Home Loan
Home Loan Bank Information
Table of Contents
- Features of IDBI Bank Home Loan
- Eligibility Criteria for IDBI Bank Home Loan
- IDBI Bank Home Loan Interest Rates
- IDBI Bank Loan Types
- IDBI Bank Home Loan for NRI or PIO
- How to Apply for IDBI Bank Home Loan?
- Document Checklist for IDBI Bank Home Loan
Introduction
IDBI, started functioning in 1964, is one of India’s most promising bank. IDBI is also among India’s leading home loan providers. IDBI bank with reasonable interest rates, better facilitation and quick processing is one among the most trusted financial services in the country.
Presently, 51% of its shares are held by the Life Insurance Corporation of India (LIC) and the bank is jointly owned by the Government of India and the LIC of India. It is expected that the bank will return to profit in the upcoming financial year. The bank at present has nearly 1900 branches and over 3 thousand ATMs. This includes the branch located in Dubai as well. IDBI Bank Limited has signed a loan agreement with Germany. The loan amount is for a whopping amount of 340 million US Dollars and has a tenure of 10 years.
Features of IDBI Bank Home Loan
Below are listed the features that IDBI Bank offers to its customers who have availed a housing loan from them.
- Availability of customized home loan features. This provision is available for both salaried and self-employed applicants.
- The bank has over 2000 branches that are spread all over India.
- Option to apply online for a loan.
- The bank provides assistance in property search and due-diligence of property for acquisition.
- The loan repayment options are flexible.
- The applicant is given the luxury to apply for a loan from anywhere in India to purchase a property anywhere in India.
The bank offers personal loans to armed force personnel. The maximum lending amount in such a case is capped at Rs.10 lakhs. The tenure can go up to 5 years. The main attraction of the scheme is that the client gets a personal accident insurance policy. The insurance policy is free and person gets it along with the loan. Also, partial prepayments are allowed and the bank charges no fee in case one avails this option.
IDBI is among the fastest growing banks functioning in India. Thanks to its promising growth, the bank has been featured in the Fortune 2000 Top Companies in the World.
Awards
- The bank was included in the Forbes Global 2000. Forbes Magazine publishes a report that lists the best 2 thousand public companies from all over the world. The report is published every year. IDBI bank in 2013 secured the 1197th position.
- IDBI Bank in 2011 received the Best Public Sector Bank Award and the Overall Best Bank Award. The bank received both these awards in the Dun and Bradstreet Banking Awards of 2011.
- In 2011, the bank became the proud recipient of Banking Technology awards from Indian Bank Association. The awards were given for the bank’s Risk Management and also for best use of Business Intelligence.
Eligibility Criteria for IDBI Bank Home Loan
For salaried applicants
| Age | 22 years to 70 years |
|---|---|
| Loan amount(maximum) | Rs.10,00,00,000 |
| Interest rate | 8.32% to 8.65% |
For self employed applicants
| Age | 25 years to 65 years |
|---|---|
| Loan amount(maximum) | Rs.10,00,00,000 |
| Interest rate | 8.35% to 8.65% |
The loan eligibility of an applicant is dependent on several factors. Some of these factors are mentioned below.
- Age
- Income
- CIBIL score
- FIOR
- Property value
Based on age
| Age | Maximum tenure (Salaried) | Maximum tenure ( self employed) |
|---|---|---|
| 50 | 10 | 15 |
| 45 | 15 | 20 |
| 40 | 20 | 25 |
| 35 | 25 | 30 |
| 30 | 30 | 30 |
| 25 | 30 | 30 |
Based on net income
| Age | Monthly income –Rs.1,00,000 | Monthly income – Rs.75,000 | Monthly income – Rs.50,000 |
|---|---|---|---|
| 50 | Rs.75,72,642 | Rs.56,79,482 | Rs.37,86,321 |
| 45 | Rs.81,74,621 | Rs.61,30,956 | Rs.40,87,312 |
| 40 | Rs.85,71,712 | Rs.64,29,000 | Rs.42,85,865 |
| 35 | Rs.85,71,712 | Rs.64,29,000 | Rs.42,85,865 |
| 30 | Rs.85,71,712 | Rs.64,29,300 | Rs.42,85,865 |
Based on FIOR
It is a parameter banks resort to in order to calculate an applicant’s bank loan eligibility. All the FIOR of the applicant is taken into account while determining his or her loan eligibility. The minimum required FIOR is 0.65.
Based on Credit score
CIBIL score is a three digit number which summarizes an applicant’s credit payment history over a specific time period. The score is obtained from a CIBIL report.
This report is studied before offering the loan. A high CIBIL score denote that the applicant has a very decent credit behaviour. Hence the chances of approval of loan is very high. Similarly, if a person has a very low CIBIL score, it then denotes that the person has a very poor credit behaviour. Thus his or her chances of getting a loan from the bank are slim.
IDBI Bank Home Loan Interest Rates
IDBI offers both floating interest rates as well as fixed interest rates. At present, the rates are above 8.60%. Also, as per RBI mandate, IDBI has switched from Base rate based lending rate to Marginal Cost of Funds based Lending Rates (MCLR).
The loan interest rates can either be floating or fixed. Floating interest rate is where the EMI may vary from time to time. This is because the interest rates are dependent on market fluctuations and will increase or decrease accordingly. But in the case of fixed interest rates, the EMI is not subject to market fluctuations and hence remains the same throughout the tenure.
Floating rates
Home Loan (Plain Vanilla)
| Amount | Interest rate |
|---|---|
| Up to Rs.35 lakhs | 8.65% |
| Above Rs.35 lakhs and up to Rs.75 lakhs | 8.80% |
| Above Rs.75 lakhs | 8.90% |
IDBI NEEV
| Amount | Interest rate |
|---|---|
| Up to Rs.35 lakhs | 9.30% |
| Above Rs.35 lakhs and up to Rs.75 lakhs | 9.55% |
| Above Rs.75 lakhs | 9.80% |
Fixed interest rate
IDBI bank charges the below mentioned rates as fixed interest rates on home loans.
IDBI Home Loan
The bank charges a fixed interest rate of 10.25% on all home loans that is having a tenure which is less than 3 years. For home loans which have a tenure above 3 years, the bank charges a fixed interest rate of 10.50%.
IDBI NEEV
The bank charges a fixed interest rate of 10.25% for loans if the sanctioned amount is not more than Rs.30 lakhs. The fixed rate of interest for a loan amount that is above Rs.30 lakh is 10.50%.
Scheme for Financing Rural or Semi Urban Housing
In such cases the fixed rate of interest on home loan is 10.35%.
Factors that affect home loan interest rates and EMI
Equated Monthly Instalments (EMI) is an amount that you pay the bank in regular intervals as repayment to the home loan taken from them. This amount comprises of both repayment to the principal amount and the interest rate charged upon the loan amount.
It is to be noted that the amount that the borrower pays to the bank as EMI to the loan taken will remain the same throughout the term. This means that they will pay the same amount as monthly instalment to the bank throughout the scheduled period of repayment. But the proportion of each component will vary. That is, as you start to repay the loan, the portion of the EMI that count as repayment to the principal amount increases and hence the amount that will be credited as interest rate will simultaneously decrease.
There are many factors on which the interest rate on home loans depend. All these factors play a crucial role in deciding what amount one will pay as interest on your loans.
- Loan amount: The most important factor, obviously, has to be the loan amount. Banks usually lower interest rates with increase in loan amount. From IDBI bank, a customer is entitled to avail loans up to Rs.10 crore.
- Salary: The salary of the borrower and even his or her occupation is taken into account while estimating the interest rates that he or she has to pay. The applicants who are self – employed may have to pay a slightly higher amount as interest rate. The salaried applicants are generally charged less. Also, the reputation of the company can also be an important factor that determines the interest rate one has to pay.
- Type of loan: The customer at the beginning will have to choose the type of loan that he or she wishes to opt for. The interest rates may vary from one type to another. The types of loans available includes fixed interest rate loan, home loan with overdraft facility, floating interest rates loan, etc.
Factors affecting the interest rates on loans
- RBI : One of the major factors that determine what amount you pay the bank as interest rate on your bank home loan is the fiscal policies and monetary measures that the Reserve Bank of India adopts. In order to control currency flow in the nation’s economy and to ensure stable economic growth, RBI takes measures like increasing or decreasing the repo rate, bank rate, or reverse repo rate. These changes directly affect the interest rates that the banks charge upon its customers who have opted for loans.
- Inflation and other economic conditions: Inflation and other economic conditions prevalent in the country at a given point of time has a serious influence on the banking sector. Thus with higher rates of inflation, a person may find the interest rate that he or she has to pay increasing and similarly he or she may find the rates decreasing with the inflation being lowered.
Why your loan application did not receive any response?
There may be a number of reasons why a person’s loan application got rejected by the bank. Some of the reasons are listed below.
- Unsatisfactory credit score: The first thing that every lender checks before giving the borrower a loan is their credit score. The procedure that IDBI bank follows is no different. The bank first does a thorough check up of the applicant’s credit behaviour. The person may not receive a positive response from the bank as far as the loan application is concerned, if the person’s credit score is too low. A low credit score means that the person has faced difficulties in repaying the loans that he or she has taken in the past.
- Job: If the applicant is new to the job and has applied for a loan, the bank may not proceed further with the loan since they lack credibility in the financial status of the applicant. Also, the bank is not sure if the person will continue with this job in the future. Since home loans are usually taken for a tenure that lasts decades, it is advised to apply for a loan only after a year or so from the date of joining at the company.
- Documents: Sometimes, when someone applies for a loan, he or she might not have all the necessary documents available. If a person fails to submit the required documents and proofs at the prescribed time, the loan may not get approved. Sometimes there might be slight errors in the documents, like a change in the date of birth or a mistake in the address proof. It is always better to ensure that the documents are all proper before applying since the chances of your loan not getting approved is very high in case such an occasion arises.
- Legal complications: The loan will not be sanctioned if the property has been involved in some sort of legal complications. The property is the collateral that you submit to the bank and thus if there is any complication in that regard, the loan may not be approved.
- Debt: It is common for people to apply for multiple loans and thus many people often find themselves spending huge amounts on their loan repayment. If the bank finds that the applicant already has a huge amount to pay the bank (or any other lender) as loan repayment, then the bank may not approve the loan. Such a condition will be strictly implemented in case of a housing loan since they involve huge amounts of money.
Repayment options
IDBI Bank offers different repayment methods in addition to the regular repayment facility.
- Step up repayment facility: The bank targets young careerist individuals who are expected to have a career growth in the future. Thus they now get the option to take a loan today for an amount that is disproportionate to their present income under the belief that their income will increase with time.
- Step down repayment facility: The EMI will be higher at the early phase and will reduce to a lower amount later. This facility targets those whose loan tenure extends to a period beyond retirement.
- Tranche based repayment facility: In this method, a customer is allowed to repay the loan even before the property is fully constructed.
IDBI Bank Loan Types
IDBI Personal loan
Very often you may find yourself in a situation where you have to raise money for urgent requirements or unforeseen contingencies. You may not always have enough money with you to meet the requirements. You might want to arrange it from other sources.
This is where the idea of a personal loan comes into the picture.
Features:
- The bank offers loans to meet expenses that are related to travel, vacation, medical emergencies, etc. Expenses related to educational needs and any other similar financial requirement is also covered here.
- The loan is being made available to both salaried and self – employed applicants.
- Tenure of the personal loan falls within 12 months to 60 months.
- A customer can borrow an amount which is as low as Rs.50 thousand to as high as Rs.10 lakhs. It is to be noted that for self – employed customers, the upper limit is capped at Rs.5 lakhs.
- The interest rates for the loan is around 13.20% to 13.75%.
- Anybody who is above the age of 22 years and has not reached 60 years of age are eligible to apply for the loan.
It is to be noted that..
- Processing fees: the bank charges a processing fee of about 1% from the applicants.
- Charges: if a customer is interested in paying the entire loan amount before the scheduled period, then he or she is expected to pay a small amount in addition to the specified amount. This is called the pre closure charge. But a customer who has availed a personal loan from IDBI bank need not have to pay any amount as pre closure charge if the amount is repaid after 6 months at least. In case of self -employed clients, a small 2% charge is charged for repayments within 6 months.
- Customized loans: The bank offers customized personal loans to its applicants. This includes customized interest rates on loans, special schemes for borrowers, and many more. The idea of special schemes is that customers working with reputed companies, banks, etc. get special features that are otherwise not covered with the regular plan.
- Part payment charges are applicable: most of the customers want to pay off their loan as soon as possible. But not all can manage to find such a huge amount. IDBI bank provides part payment facility. This allows a borrower to pay an amount that is greater than the scheduled monthly instalments so as to reduce his or her debt to the bank at any point of time. The bank charges a small amount for this service.
- Once the loan is sanctioned, the bank releases a statement to the borrower. The statement will contain all the details about the additional charges that the customer may incur in the future. A penalty may be imposed on late payment of equated monthly instalments. A fine can be charged for loan cancellation. The customer is expected to be familiar with all such circumstances.
Top up loan
A top up loan is an additional loan that a bank offers to its customers over the existing loan that the customer has taken. A client can apply for such an option if he or she has repaid a certain from the borrowed amount. For customers of IDBI bank, this provision is available in case of personal loan, home loan, and loan against property. But, obviously, the bank will go through the repayment track record of the customer before offering the top up loan. If the said track record is clean and the customer has a decent credit behaviour, then there shall be no delay in receiving the amount.
Personal loan with overdraft facility
Overdraft facility is a credit facility through which one can withdraw more money from his or her account than what is actually present in the account. The person can repay the amount partially or fully, as per the payment schedule. Certain banks offer the overdraft facility to its customers by default. Thus their customers are pre entitled to avail such a facility. But in the case of other banks, the customer has to get the approval from the lender before availing the facility. Some banks charge a processing fee while offering the service.
Tax benefits
A customer is eligible for tax benefits if he or she pays a certain amount to the Income Tax Department as income tax. Such a customer is eligible to avail a benefit of up to Rs.1.5 lakh per year. The customer can claim for income tax returns as per what is mentioned in Section 80 C of the Income Tax Act.
Under Certain circumstances, a customer can claim for an income tax return of up to Rs.2 lakhs.
Your immediate family member can become your co borrower for a home loan. In such a case, both borrowers are eligible for a tax benefit of Rs.3.5 lakh each.
It is actually better to have a co borrower if this person has a good credit behaviour. This increases the trust the bank has in you and hence it increases your chances of getting a home loan.
Points to be noted
Below are listed some important points that an applicant has to ensure before applying for a home loan. This makes sure that the entire loan application procedure will be hassle free which otherwise might be tedious.
- Before you start, make sure that you have gathered considerable knowledge in this regard. Find the plan that suits the best for you (as customized plans are being made available to certain customers). Make sure you have all the documents with you prior to applying for a bank loan so that you do not have to waste your valuable time searching for them.
- Make best use of the EMI Calculator available. EMI is a fixed amount that a customer pays the bank as repayment to the loan taken. Since IDBI offers loan for a tenure of up to 30 years, the monthly instalment can go as little as Rs.787 per lakh. Many online websites offer a service which they call as EMI calculator. All that a person has to do is to log into their website and click on the icon. You will be asked to enter your loan amount, interest rate, and the loan tenure. Click on ‘Calculate EMI’ and that will generate the amount that one has to pay as EMI. If one is not satisfied with the online option, the person is free to visit the nearby IDBI bank branch to meet the concerned officer in person and discuss the details regarding the EMI amount. Also, one can log into IDBI Bank’s official website to locate the nearest IDBI Bank branch.
- Get a clear picture of the amount that the bank wants you to pay as processing fees.
IDBI Bank Home Loan for NRI or PIO
Why NRI Home Loans are needed?
- IDBI offers the facility to apply online. Thus, now a non – resident Indian can apply and avail a home loan through online medium. The process is swift and hassle free.
- An NRI can avail the loan for a number of needs like buying a house, building a house, or for renovation of an existing house. But the property has to be located somewhere in India.
- Prepayment facility is being made available and that too by charging no prepayment charges at all.
- The bank ensures that no part payment charge is being imposed on a person who is planning to pay off his or her loan before the due date.
- The applicant is given a choice between floating interest rate and fixed interest rate.
- The bank offers attractive interest rates on housing loan that is offered to non -resident Indians.
Eligibility
Non Resident Indian (NRI)
- Citizens of India staying abroad for an indefinite period of time.
- Citizens of India who are working on assignments with foreign governments, International agencies like United Nations Organization, the International Monetary Fund, etc.
- Government officials who are deputed abroad. They may be on deputation even for a short period of time.
Persons of Indian Origin (PIO)
PIO is a person who is eligible for NRI bank home loan –
- If the person has possessed an Indian passport at any point of time.
- If the person or his or her parents or grandparents were citizens of India.
- The person is the spouse of a person who is a citizen of India.
It is to be noted that even if the above conditions are met, any person belonging to Pakistan or Bangladesh are ineligible for obtaining Indian citizenship.
Others
Those who are employed by foreign airlines or shipping companies and residing abroad but are actually Indian citizens.
How to Apply for IDBI Bank Home Loan?
Applying for a loan from IDBI Bank is a very easy process. The procedures are simple and hassle free. The loan approval and verification process are much simpler and easier for those who already have an account in the bank.
The applicant can download the application form from the bank’s website. The forms are available at the branches also. Fill the form properly and submit it at the branch to the concerned person.
The applicant will be asked to submit all the necessary documents. The document checklist will be made available to the person. A background verification will be conducted by the officials at the bank. This is necessary to ensure that the details mentioned in the form and the documents are true.
If the bank is finished with the verification, then the bank sets the interest rate, EMI, and tenure, and will be notified to you. The loan is approved once you acknowledge it. In case anyone finds the procedures difficult to follow, then they can visit the nearest branch to clarify their doubts. The bank also has a toll free customer care that can help you with the procedures.
Document Checklist for IDBI Bank Home Loan
To process the home loan application, the following documents are necessary.
- Application form – a photograph of the applicant is mandatory.
- Identity proof – AADHAAR Card, driver’s licence, voters ID, etc. will do.
- Address proof – AADHAAR Card, valid passport, or voter ID will be enough.
| Salaried customer | Self – employed (professionals) | Self – employed (non – professionals) |
|---|---|---|
| Form 16 ITR | Last 3 years ITR | Business profile |
| Processing fee cheque | Processing fee cheque or Bank statements (last 6 months) | Processing fee cheque or Bank statements (last 6 months) |
| Last 6 months bank statements | Last 3 years balance sheet | Last 3 years ITR or Last 3 years profit or loss balance |
| Latest salary slip for last 3 months | Proof of business existence and Educational qualification certificate | Proof of business existence |
It is to be noted that the bank may ask for more documents in addition to the aforementioned documents, if need be.
Form 16 is a certificate issued to an employer containing all the information that is required to file income tax returns.
Proof of business ownership is required when there is a need to prove that a person has ownership in a business.
Proof of business existence is a document issued by an authority and is a proof that the entity is legally authorized to conduct business within the specified jurisdiction.
Finally, do not forget to reach out to your nearest IDBI bank branch in case you need any expert opinion or advice in the matter. The bank has around 2 thousand branches all over India and is among the top 10 development banks in the world. IDBI is owned by the Government of India and hence there is certainly no need to worry about the bank’s credibility. The people at IDBI will be happy to help you!