Personal Home VS Home Loan

State Bank of India (SBI), India's biggest loaner, has taken competitive head on by launching a personal loan program on property loans at interest lower than those of some of its close competitors. The program, aimed at old property loan India borrowers and linked to the price of property or house, is offering personal loan at 11.25% to existing Real Estate Loans customers. The offer is similar to the top-up program of other players such as ICICI Bank and mortgage Bank HDFC, which have pegged their Real Estate Loans at 12.25% and 12.50%, respectively. The new product, called 'SBI Home Equity scheme', gains relevance in the context of the rise in property or house over the last few years.

The personal bank loan entitlement under the program is linked to the value the property or house for which the client is already paying EMI. The lender will give a maximum 75% of the value of the property or house after deducting the excellent amount of the loan. For instance, if the property or house is valued at Rs 1 crore and the client has an excellent principal loan of Rs 10 Lac, the lender will deduct a margin of Rs 25 Lac and the excellent principal of Rs 10 Lac, making the client eligible for a financial loan of Rs 65 Lac, provided his annual income supports it. The Loan against Property Documents will remain the same but the difference will be in the type interest rate that will be followed although, Loan against Property documents matter little when you are getting a great deal altogether.

"It is too early to gauge how successful the program is since it was launched less than a month ago," said an official from SBI. The interest rate of 11.25% charged by SBI is benchmarked to the bank's base rate of 10%. Similarly, prices offered by other players like ICICI Bank and HDFC for top-up loans are benchmarked to their base prices or prime lending prices. The program, which links Property loan India to other loans and will attract property loan customers of other banks, say industry experts.

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