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Zomint Blog
Home Loan Complete Process || Best Bank for Home Loan
Dec 8, 2025
The RBI has officially decreased the repo rate by 25 basis points, bringing it down to 5.25%.
What does this mean for you? Simply put: interest rates are dropping, making this one of the best times in recent history to take out a loan. For a 50 Lakhs Loan you can save ₹7-₹8 Lakhs.
For most people, a home loan is one of the largest financial commitments of their lives. With interest rates trending downward, it may feel like the perfect time to finalize your dream home.
But before you take the home loan, you need to understand exactly what you are getting into. In this edition, we are conducting a Home Loan Masterclass.
We will walk you through the entire process from choosing the right bank to mastering the repayment process so you can close your home loan years earlier than expected. Apart from this, we will also share simple strategies to help you save lakhs on your home loan, up to ₹18–19 lakh on a ₹50 lakh loan.
Top 5 Mistakes People Make With Home Loans
1. Chasing only the lowest headline rate Banks advertise low rates to hook you. However, the starting interest rate matters less than the spread (how the bank adjusts the rate over time). A slightly higher interest rate with transparent terms over spread is often cheaper in the long run.
2. Choosing a low EMI for comfort To keep monthly costs low, many people opt for the longest possible tenure (20-30 years). While this looks comfortable monthly, it forces you to pay lakhs in extra interest.
3. Ignoring service quality Slow support and poor communication cause stress—especially during disbursement. If a bank makes it hard to contact them, imagine how hard it will be when you want to negotiate terms later.
4. Signing without checking prepayment rules Many borrowers realize too late that their bank limits how often they can prepay the loan. Ensure you have the freedom to pay off your debt early without penalties.
5. Ignoring the Credit Score Advantage Even a small improvement in your credit score can unlock better rates. Many people don't know that if your score improves after taking the loan, you can negotiate a lower rate with your bank.
Step 1: Market Research
The first step of taking a home loan is market research. You should compare offers from at least 3-4 banks.To save you time, we’ve analyzed the projected interest rates of all major banks for the coming year. Due to the recent rate cuts by RBI, the interest rates have also gone down for Home Loans. Below is the comparison of interest rates before and after the rate cut.
PSU Banks (Generally lower rates, strict eligibility)
Bank Name | Interest Rate Range — Before Rate Cut | Interest Rate Range — After Rate Cut |
Bank of India | 7.35% – 9.50% (as per your table) | ~7.10% – ~9.25% (or slightly lower) |
Canara Bank | 7.40% – 10.25% | ~7.15% – ~10.00% |
State Bank of India (SBI) | 7.50% – 8.70% | ~7.25% – ~8.45% |
Punjab National Bank (PNB) | ~7.45% – 9.20% | ~7.20% – ~8.95% |
Private Banks & HFCs (Better service, slightly higher rates)
Lender | Interest Rate Range — Before Rate Cut | Interest Rate Range — After Rate Cut |
Bajaj Housing Finance | 7.75% onwards | ~7.50% onwards |
Tata Capital | 7.75% onwards | ~7.50% onwards |
Godrej Housing Finance | 7.75% onwards | ~7.50% onwards |
HDFC Bank | 7.90% – 10.00% | ~7.65% – ~9.75% |
Our Verdict
Choose PSU Banks if you want the absolute lowest rates and have a straightforward income profile.
Choose Private Banks if you value premium service and faster processing.
Choose Housing Finance Companies (HFCs) only if you struggle to get approved by banks, as their charges and penalties are often higher.
Step 2: The Interview (Talking to the Bank)
Once you have shortlisted a bank, the discussion you have with the manager is critical. This conversation decides your financial fate for the next 15 years. Ask these specific questions:
How much loan am I eligible for?
Banks may offer you an EMI that eats up 50% of your income. Don't take it. For financial safety, keep your EMI within 30-35% of your monthly income. Remember, banks usually only fund 75-80% of the property value; you must arrange the rest.
Will my interest rate decrease if my Credit Score improves?
Ask this upfront. If they say "no," walk away. As you pay off your loan, your credit score will rise, and you deserve a lower rate because of it.
Fixed or Floating Rate?
Most Indian home loans are offered on floating interest rates, which move up or down with market conditions. Floating rates usually turn out cheaper over the long term. Fixed rates remain stable only for a few years, are priced higher, and later shift to floating anyway.
MCLR or EBLR?
MCLR (Marginal Cost of Funds Based Lending Rate) is the older home-loan system where banks decide when and how much of an RBI rate cut is passed to customers. Because of this, even after rate cuts, your EMI may not reduce immediately or in full.
EBLR (External Benchmark Lending Rate) is directly linked to the RBI repo rate. The interest rate resets automatically every three months, so any RBI cut reaches you quickly without depending on the bank.
Our Verdict: Borrowers on MCLR usually end up paying higher interest, while those on EBLR benefit from faster EMI reductions and long-term savings running into lakhs. As currently RBI has done rate cuts, please make sure that it is being reflected on your Home loan interest rate.
What are the EXACT charges apart from the interest rate?
Ask for a written breakup of:
Processing fees (0.5% – 2%)
Legal/Technical verification fees
Prepayment penalties (There should be ZERO penalty for floating rate loans as per RBI rules)
Once you have clarity on all this, the bank begins the home loan process
Step 3: Home Loan Processing & Disbursement
Once you finalised, Bank starts the processing of your home loan
Document Verification - The bank checks your personal (Aadhaar, PAN, income proofs, bank statements) and property documents (sale agreement, approvals, title papers, plans).
Legal & Technical Checks - Ownership verification, approval validation, and property valuation to ensure the price matches the loan amount.
Credit Underwriting - CIBIL score review, income stability checks, employment verification, and field visits.
Sanction Letter Issued - Final loan amount, interest rate, EMI, tenure, and prepayment rules are confirmed — read this carefully.
Loan Agreement & Mortgage - You sign the agreement and the property is legally mortgaged to the bank (stamp duty & registration apply).
Disbursement- Money is paid to the seller/builder, fully for ready homes or in stages for under-construction properties. Interest starts from the disbursement date, even before EMIs begin.
Step 4: Smart Repayment (How to Save Lakhs)
Once your home loan is disbursed, you repay it through monthly EMIs. Every EMI has two parts — interest and principal. In the early years, most of your EMI goes toward paying interest, while only a small part reduces your actual loan balance.
Home loans are usually taken on floating interest rates, which means your EMI or loan tenure can change when market interest rates move up or down. This is where most borrowers unknowingly lose money.
The Big Mistake Most People Make
When interest rates increase, banks usually extend your loan tenure while keeping your EMI the same.
This feels comfortable, but it silently adds more years and much more interest to your loan.
When interest rates decrease, banks often reduce your EMI instead of shortening your tenure.
This gives a small monthly relief but wastes the opportunity to reduce your principal faster.
Both decisions work in the bank’s favour and not yours.
Your Smart Repayment Rule
Whenever interest rates change, always ask the bank to keep your EMI higher and reduce your tenure, never the opposite.
Interest Rate Movement | Recommended Action |
If rates rise | Accept a higher EMI and do not allow tenure extension |
If rates fall | Continue paying the earlier EMI and do not allow EMI reduction |
The extra payment goes straight toward the principal, which dramatically cuts your interest cost and shortens your loan duration.
Now that you understand the repayment process, let’s move to one of the most important parts, simple prepayment hacks that can help you save lakhs on your home loan.
How to Repay Your Home Loan Early & Save Lakhs
Closing your home loan early does not need huge sacrifices. A few simple habits can quietly cut years off your loan tenure and save you lakhs of rupees in interest.
1. Use Bonuses for Principal Prepayment
Whenever you receive a bonus, incentive, or any lump-sum income, use a portion of it to prepay your principal amount.
Because interest is calculated on the outstanding loan balance, reducing your principal early gives you the maximum long-term benefit and saves a large amount of interest.
2. Pay One Extra EMI Every Year
An extremely powerful yet easy strategy is to pay one extra EMI each year in addition to your regular monthly payments.
This alone can reduce your loan tenure by 2–3 years and save several lakhs of rupees, without changing your lifestyle.
3. Step-Up Your EMI by 5–7% Each Year
As your income increases over time, gradually increase your EMI by 5% to 7% every year.
Your lifestyle usually improves anyway, so directing this income growth towards your EMI helps you repay faster without feeling the pinch.
Even a small annual step-up can shorten your loan by 4–6 years and generate massive interest savings over the lifetime of your home loan.
If you can follow all these steps you will surely save ₹10-₹12 lakhs on a 50 lakh loan.
Step 5: Closing the Loan
When your home loan is fully repaid, the job is not finished yet. Closing the loan properly and collecting the right documents is critical to ensure your property is legally free from any bank claim.
Once your final payment is made, request the bank to issue a Loan Closure Letter / No Dues Certificate (NDC). This confirms in writing that your loan has been completely cleared and no outstanding amount remains.
Next, collect all original property documents that were deposited with the bank at the time of loan sanction. These include your sale deed, agreement papers, title documents, approved plans, and completion or occupancy certificates.
Ask the bank to issue a No Objection Certificate (NOC) stating that the bank no longer has any charge over your property. Also request an updated loan account statement showing zero outstanding balance for your personal records.
If the bank registered a mortgage in government records, complete the lien or mortgage removal process at the local Sub-Registrar office using the bank’s confirmation documents. This step officially clears the bank’s claim from public records.
Finally, ensure the bank updates credit bureaus so your CIBIL report reflects full loan closure. Check your credit report within 30–45 days to confirm the status shows “Closed” and not “Active.”
And with that, your house is truly yours. Enjoy your new home, stress-free.
We hope this masterclass has given you the confidence to navigate your home loan journey. Every financial situation is unique, and if you are looking for a personalized strategy to invest smartly and structure your home loan in a way that can make it effectively “interest-free,” we’re here to help.
Talk to our SEBI-registered experts today
The RBI has officially decreased the repo rate by 25 basis points, bringing it down to 5.25%.
What does this mean for you? Simply put: interest rates are dropping, making this one of the best times in recent history to take out a loan. For a 50 Lakhs Loan you can save ₹7-₹8 Lakhs.
For most people, a home loan is one of the largest financial commitments of their lives. With interest rates trending downward, it may feel like the perfect time to finalize your dream home.
But before you take the home loan, you need to understand exactly what you are getting into. In this edition, we are conducting a Home Loan Masterclass.
We will walk you through the entire process from choosing the right bank to mastering the repayment process so you can close your home loan years earlier than expected. Apart from this, we will also share simple strategies to help you save lakhs on your home loan, up to ₹18–19 lakh on a ₹50 lakh loan.
Top 5 Mistakes People Make With Home Loans
1. Chasing only the lowest headline rate Banks advertise low rates to hook you. However, the starting interest rate matters less than the spread (how the bank adjusts the rate over time). A slightly higher interest rate with transparent terms over spread is often cheaper in the long run.
2. Choosing a low EMI for comfort To keep monthly costs low, many people opt for the longest possible tenure (20-30 years). While this looks comfortable monthly, it forces you to pay lakhs in extra interest.
3. Ignoring service quality Slow support and poor communication cause stress—especially during disbursement. If a bank makes it hard to contact them, imagine how hard it will be when you want to negotiate terms later.
4. Signing without checking prepayment rules Many borrowers realize too late that their bank limits how often they can prepay the loan. Ensure you have the freedom to pay off your debt early without penalties.
5. Ignoring the Credit Score Advantage Even a small improvement in your credit score can unlock better rates. Many people don't know that if your score improves after taking the loan, you can negotiate a lower rate with your bank.
Step 1: Market Research
The first step of taking a home loan is market research. You should compare offers from at least 3-4 banks.To save you time, we’ve analyzed the projected interest rates of all major banks for the coming year. Due to the recent rate cuts by RBI, the interest rates have also gone down for Home Loans. Below is the comparison of interest rates before and after the rate cut.
PSU Banks (Generally lower rates, strict eligibility)
Bank Name | Interest Rate Range — Before Rate Cut | Interest Rate Range — After Rate Cut |
Bank of India | 7.35% – 9.50% (as per your table) | ~7.10% – ~9.25% (or slightly lower) |
Canara Bank | 7.40% – 10.25% | ~7.15% – ~10.00% |
State Bank of India (SBI) | 7.50% – 8.70% | ~7.25% – ~8.45% |
Punjab National Bank (PNB) | ~7.45% – 9.20% | ~7.20% – ~8.95% |
Private Banks & HFCs (Better service, slightly higher rates)
Lender | Interest Rate Range — Before Rate Cut | Interest Rate Range — After Rate Cut |
Bajaj Housing Finance | 7.75% onwards | ~7.50% onwards |
Tata Capital | 7.75% onwards | ~7.50% onwards |
Godrej Housing Finance | 7.75% onwards | ~7.50% onwards |
HDFC Bank | 7.90% – 10.00% | ~7.65% – ~9.75% |
Our Verdict
Choose PSU Banks if you want the absolute lowest rates and have a straightforward income profile.
Choose Private Banks if you value premium service and faster processing.
Choose Housing Finance Companies (HFCs) only if you struggle to get approved by banks, as their charges and penalties are often higher.
Step 2: The Interview (Talking to the Bank)
Once you have shortlisted a bank, the discussion you have with the manager is critical. This conversation decides your financial fate for the next 15 years. Ask these specific questions:
How much loan am I eligible for?
Banks may offer you an EMI that eats up 50% of your income. Don't take it. For financial safety, keep your EMI within 30-35% of your monthly income. Remember, banks usually only fund 75-80% of the property value; you must arrange the rest.
Will my interest rate decrease if my Credit Score improves?
Ask this upfront. If they say "no," walk away. As you pay off your loan, your credit score will rise, and you deserve a lower rate because of it.
Fixed or Floating Rate?
Most Indian home loans are offered on floating interest rates, which move up or down with market conditions. Floating rates usually turn out cheaper over the long term. Fixed rates remain stable only for a few years, are priced higher, and later shift to floating anyway.
MCLR or EBLR?
MCLR (Marginal Cost of Funds Based Lending Rate) is the older home-loan system where banks decide when and how much of an RBI rate cut is passed to customers. Because of this, even after rate cuts, your EMI may not reduce immediately or in full.
EBLR (External Benchmark Lending Rate) is directly linked to the RBI repo rate. The interest rate resets automatically every three months, so any RBI cut reaches you quickly without depending on the bank.
Our Verdict: Borrowers on MCLR usually end up paying higher interest, while those on EBLR benefit from faster EMI reductions and long-term savings running into lakhs. As currently RBI has done rate cuts, please make sure that it is being reflected on your Home loan interest rate.
What are the EXACT charges apart from the interest rate?
Ask for a written breakup of:
Processing fees (0.5% – 2%)
Legal/Technical verification fees
Prepayment penalties (There should be ZERO penalty for floating rate loans as per RBI rules)
Once you have clarity on all this, the bank begins the home loan process
Step 3: Home Loan Processing & Disbursement
Once you finalised, Bank starts the processing of your home loan
Document Verification - The bank checks your personal (Aadhaar, PAN, income proofs, bank statements) and property documents (sale agreement, approvals, title papers, plans).
Legal & Technical Checks - Ownership verification, approval validation, and property valuation to ensure the price matches the loan amount.
Credit Underwriting - CIBIL score review, income stability checks, employment verification, and field visits.
Sanction Letter Issued - Final loan amount, interest rate, EMI, tenure, and prepayment rules are confirmed — read this carefully.
Loan Agreement & Mortgage - You sign the agreement and the property is legally mortgaged to the bank (stamp duty & registration apply).
Disbursement- Money is paid to the seller/builder, fully for ready homes or in stages for under-construction properties. Interest starts from the disbursement date, even before EMIs begin.
Step 4: Smart Repayment (How to Save Lakhs)
Once your home loan is disbursed, you repay it through monthly EMIs. Every EMI has two parts — interest and principal. In the early years, most of your EMI goes toward paying interest, while only a small part reduces your actual loan balance.
Home loans are usually taken on floating interest rates, which means your EMI or loan tenure can change when market interest rates move up or down. This is where most borrowers unknowingly lose money.
The Big Mistake Most People Make
When interest rates increase, banks usually extend your loan tenure while keeping your EMI the same.
This feels comfortable, but it silently adds more years and much more interest to your loan.
When interest rates decrease, banks often reduce your EMI instead of shortening your tenure.
This gives a small monthly relief but wastes the opportunity to reduce your principal faster.
Both decisions work in the bank’s favour and not yours.
Your Smart Repayment Rule
Whenever interest rates change, always ask the bank to keep your EMI higher and reduce your tenure, never the opposite.
Interest Rate Movement | Recommended Action |
If rates rise | Accept a higher EMI and do not allow tenure extension |
If rates fall | Continue paying the earlier EMI and do not allow EMI reduction |
The extra payment goes straight toward the principal, which dramatically cuts your interest cost and shortens your loan duration.
Now that you understand the repayment process, let’s move to one of the most important parts, simple prepayment hacks that can help you save lakhs on your home loan.
How to Repay Your Home Loan Early & Save Lakhs
Closing your home loan early does not need huge sacrifices. A few simple habits can quietly cut years off your loan tenure and save you lakhs of rupees in interest.
1. Use Bonuses for Principal Prepayment
Whenever you receive a bonus, incentive, or any lump-sum income, use a portion of it to prepay your principal amount.
Because interest is calculated on the outstanding loan balance, reducing your principal early gives you the maximum long-term benefit and saves a large amount of interest.
2. Pay One Extra EMI Every Year
An extremely powerful yet easy strategy is to pay one extra EMI each year in addition to your regular monthly payments.
This alone can reduce your loan tenure by 2–3 years and save several lakhs of rupees, without changing your lifestyle.
3. Step-Up Your EMI by 5–7% Each Year
As your income increases over time, gradually increase your EMI by 5% to 7% every year.
Your lifestyle usually improves anyway, so directing this income growth towards your EMI helps you repay faster without feeling the pinch.
Even a small annual step-up can shorten your loan by 4–6 years and generate massive interest savings over the lifetime of your home loan.
If you can follow all these steps you will surely save ₹10-₹12 lakhs on a 50 lakh loan.
Step 5: Closing the Loan
When your home loan is fully repaid, the job is not finished yet. Closing the loan properly and collecting the right documents is critical to ensure your property is legally free from any bank claim.
Once your final payment is made, request the bank to issue a Loan Closure Letter / No Dues Certificate (NDC). This confirms in writing that your loan has been completely cleared and no outstanding amount remains.
Next, collect all original property documents that were deposited with the bank at the time of loan sanction. These include your sale deed, agreement papers, title documents, approved plans, and completion or occupancy certificates.
Ask the bank to issue a No Objection Certificate (NOC) stating that the bank no longer has any charge over your property. Also request an updated loan account statement showing zero outstanding balance for your personal records.
If the bank registered a mortgage in government records, complete the lien or mortgage removal process at the local Sub-Registrar office using the bank’s confirmation documents. This step officially clears the bank’s claim from public records.
Finally, ensure the bank updates credit bureaus so your CIBIL report reflects full loan closure. Check your credit report within 30–45 days to confirm the status shows “Closed” and not “Active.”
And with that, your house is truly yours. Enjoy your new home, stress-free.
We hope this masterclass has given you the confidence to navigate your home loan journey. Every financial situation is unique, and if you are looking for a personalized strategy to invest smartly and structure your home loan in a way that can make it effectively “interest-free,” we’re here to help.
Talk to our SEBI-registered experts today
