State Bank of India : Cuts Processing Fees on Housnig Loan

The country’s largest lender State Bank of India  (SBI) on recently reduced the processing fee on housing loan by 50% to cash in on festive season demand.

This offer is applicable on home loans availed from October 17 to December 31, 2012 SBI said in a statement.

With this reduction, the SBI is quoting the lowest processing fee on home loan to our esteemed customers, SBI said.

For housing loans up to Rs. 25 lakh, the processing charge has become 0.125% of the loan amount from 0.25% it said.
In case of loans between Rs. 25 lakh & Rs 75 lakh, the processing fee would be Rs. 3,250, against Rs. 6,500 at now, while for loans above Rs. 75 lakh, it would be flat Rs. 5,000, compared with Rs. 10,000 per application earlier.

This festive offer will be withdrawn on December 31, 2012  and processing fee will be back to current levels.

Hence, if you are looking at switching home loan to SBI, this may be the right time for you depending on the amount of loan outstanding. While switching your housing loan to SBI, do calculate the remaining tenor, interest rate differential and switching cost.

Earlier switching cost included the sum of pre - payment penalty, if any, and a processing fee. As there is no prepayment penalty for floating rates now, the only additional cost is the processing fee. With a flat rate of Rs.1,000, in case your remaining loan tenor is longer, then you stand to benefit if you switch your loan during this period.

Mr. Adhil Shetty, CEO, Bankbazaar.com, said, ''''There are 2 important costs that you need to consider before taking any loan,  interest rate & processing fee. Always calculate the interest rate & processing fee component when you apply for a loan. Only the sum of these  2 components will give you the true picture of benefits, if any, when you opt for a home loan.”

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