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Hi,

Please share your experience and tips about composite loans (site+construction) from various banks. It will be useful for people like me.

Sanjay C

State Bank of India.

Pros:
1. Very transparent and no hidden charges
2. Easy to manage OD account online (maxgain). You can operate your loan account just like your savings account without any hassles.
3. Less processing fee
4. No prepayment penalty
5. Any amount can be paid as part payments which increases the principal outgo and reduces interest
6. Any change in interest rates would be effective immediately
7. Peace of mind

Cons:
1. Time consuming (Luckily mine was sanctioned in 20 days and got the property registered in 30 days). But its worth in my opinion
2. Strict legal verification of property documents
3. 80% loan on the registration amount for purchase. For construction, depends on your total income based on which the eligibility is calculated

I have gone for Axis bank, as they are supposed to be slightly flexible with respect to imposing the time constraint. For a composite loan, typically, you are required to start the house construction within two years from the date of registration. In this aspect private banks like Axis, ICICI are supposed to be lenient and Public Sector banks like SBI are supposed to be more rigid. Let me reiterate that this info of mine is gathered only from hearsay. I would appreciate if people, who have already taken loans from SBI can confirm/dispute this assumption. The question for you guys is: Has SBI allowed you to take more time than the stipulated 2 years from the date of registration.

I am raising this point, because for many people it is not possible to start construction of the house within two years due to several reasons. In that case, are we charged extra interest?

I have taken a composite loan from HDFC. The experience has been fine so far. However, their interest rate is higher (compared to SBI, but on par with other private banks).
I believe HDFC's legal process is also elaborate (was told by an ex-Can Bank manager that it is best, but not sure of authenticity of this statement).

SBI should be at the top of your list. You jump through a lot of bureaucracy to get the loan approved but there will less pain afterwards(no hidden fees, no sudden hike in rates etc). With the private banks the approval process is much easier but it will eventually cost you much much more.

Thanks for all those who responded. Very useful information.

Sanjay

I have the experience of taking composite loans from SBI and ICICI. The only problem with SBI is the time taken for the loan sanction (took close to 40 days). Apart from this, SBI is the best (prepayment is very easy, you can do it online and Maxgain is a very good scheme where you can save a lot on interest). Closing the loan and getting the originals back was also very smooth. ICICI sanctioned my loan in 3 days and the disbursement was done in another 3 days, so the initial process was very fast and no major hassles. However for prepayment you have to visit their branch. (Due to time constraint, I had to choose ICICI over SBI for my second loan, otherwise SBI is the best according to me)

Hi greenday,

Can you share some feedback about ICICI? I am looking for land purchase loan (not composite.)
As i do not have much time to register, need to go with a bank which processes faster.

The loan which I have taken from ICICI has a clause which says I've to start construction in 2 years. I think Axis bank gives land loan without this clause, but I'm not sure. ICICI will sanction the loan withing 3-4 working days and then make the DD ready in another 3 days in case yours is a BDA plot (or a plot which does not require much legal verification).

Dear Friends,

I am intending to take construction loan from State Bank of India. The plot is in Sir M Visveshwaraya layout.
Based on your experience, Can you please advise on the contacts of SBI/Branch in this location, that I can approach for getting the loan.

Your inputs would be very helpful.

Regards,
Vajra