Anuj Puri, Chairman – ANAROCK Property Consultants

After zeroing on a property, buyers need to identify a suitable home loan lender to fulfil their financial needs.

Officially, there are two major lenders in the market – banks (including both public and private banks) and the housing finance companies (HFCs).

To get the best deal, a buyer must select a lender depending on their prevailing interest rates, eligibility criteria, processing fee and other factors.

Both banks and HFCs have their own pros and cons. Here are some advice and guidelines for taking a home loan in India.

Banks vs HFCs: Which is the better option?

Declaring an outright ‘winner’ among the two options is indeed difficult. Earlier, the steep interest rates of HFCs gave banks an edge.

However, now there is a parity between the two as most HFCs offer loans at rates within 8.6%-11.2%, while banks offer loans at 8.3%-10.5%. The gap has significantly reduced and buyers may now consider either option.

Eligibility criteria & process:

Rising NPAs over the past years have compelled banks to follow stricter norms for lending.