HDFC Loan Against Property
Interest Rate

HDFC, the premier home loan funding institution in India, offers non-housing loans like loans against property. The primary characteristic of a Loan Against Property is that it is equivalent to a personal loan but backed by collateral. Thus, you can also refer to it as a secured personal loan. The features of an HDFC Loan Against Property are as follows.

The features of the loan are:

• HDFC Loan Against Property is available for meeting personal and business needs.
• HDFC offers loans against the property by accepting residential and commercial property.
• Loans are available against entirely constructed, freehold residential and commercial properties.
• Individual needs can range from marriage to education and medical expenses to other personal emergencies.
• Business needs can be meeting working capital requirements or for expansion of the business
• Convenient extended tenures up to 15 years
• Attractive interest rates
• Simplified documentation formalities
• Relaxed eligibility norms
• Comfortable repayments through monthly instalments
• Pan-India reach
• Loans are available for salaried and self-employed persons

You can also check Loan Against Commercial Property Online.

The HDFC Loan Against Property Eligibility parameters are:

• Salaried and self-employed individuals having a regular source of income can apply.
• The applicant should be the owner of an unencumbered residential or commercial property.
• Joint applications are permissible.
• The applicant should be between 21 and 65 years of age.
• Resident Indians are eligible for this loan facility.

HDFC refers to its Retail Prime Lending Rate (Non-housing) for determining the individual interest rates on Loan Against Property. The RPLR (Non-housing) of HDFC is 9.50% - 11.00% as of date.

The interest rate on the individual Loan Against Property depends on various factors:

• The amount of the loan
• Whether the property is self-occupied or rented
• Whether the property is residential or commercial
• The credit score of the borrower

HDFC offers both fixed-rate and floating rate of interest on its Loan Against Property. HDFC terms its floating rate structure as Adjustable Rate Loan. The fixed-rate structure is known as a Tru-Fixed Loan. In this structure, the rate of interest remains fixed for two years. Subsequently, the loan switches over to a floating rate of interest loan. The Adjustable-rate of interest applies to such loans after the switchover.

HDFC calculates interest on the reducing balance method. Banks calculate interest on the daily reducing balances, whereas HDFC does so on a monthly reducing basis.

Drawbacks of calculating interest on monthly reducing balances

• This mode of calculation not as beneficial to the borrower as the daily reducing balances method.
• HDFC considers the closing balance of the previous month for the calculation of the interest for the current month.
• It implies that the borrower does not get the benefit of interest on the EMI that they pay for the current month.
• Usually, HDFC collects the instalments between the 5th and the 10th of the month. Therefore, the customers lose the benefit of interest on the current month EMI for a period of around 20 to 25 days. Over the entire tenure, it adds up to a substantial sum.

Difference between the Monthly reducing and Daily reducing balance methods

In the daily reducing balance method, the borrower gets the benefit of interest on the current month's instalment. It is not so in the case of the monthly reducing balance methods. All banks calculate interest on the daily reducing balance method, whereas the NBFCs do so on the monthly reducing balances.

Difference between Adjustable Rate and TruFixed Loan Rate

• The Adjustable Rate is a floating rate of interest that changes whenever HDFC varies its RPLR (Non-Housing).
• The TruFixed Loan Rate is a unique rate structure where the rate of interest remains fixed for two years.
• Subsequently, the rate of interest switches over to the Adjustable Rate of Interest structure.

Benefits of Adjustable Rate Structure

• The interest rate changes with every variation of the HDFC RPLR. The RPLR is a market-linked rate. Hence, every reduction in the market rates benefits the borrower.
• The Adjustable Rate Structure is beneficial in a falling interest rate scenario

Benefits of TruFixed Loan Rate Structure

• The TruFixed Loan rate structure is advantageous in a fluctuating rate scenario
• The borrower gets the benefit if the HDFC RPLR increases during the initial two years of the loan

However, the benefit is only for two years. The loan automatically switches over to the Adjustable Rate of Interest structure.

The benefit of a floating rate structure is that there are no pre-payment or foreclosure penalties for individual borrowers. This benefit is not available to the borrowers if they are in the fixed-rate period of a TruFixed Loan structure.

You can also compare Mortgage Loan Interest Rate Online from Top Lenders.

The bank levies the following charges on loan apart from the interest rate:

HDFC Loan Against Property - Prepayment Charges

HDFC Loan Against Property - Conversion Charges

• Switch from the TruFixed rate to the variable rate: 1.75% of the outstanding amount and the undisbursed amount, if any.
• Switch to a lower rate of interest: Half of the spread difference on the outstanding amount plus the undisbursed amount with a minimum of 0.5% and a maximum of 1.50%.

HDFC Loan Against Property - Processing Fees and Other Charges

• Processing fees: Up to 1.50% of the loan with a minimum of 4,500
• External opinion fees: Actual basis
• Insurance of property: The customer bears the premium amount directly to the insurance provider.
• Delayed payment charges: 2% per month on the late payment amount
• Incidental charges: As per actuals
• Statutory charges: As per actuals
• Other charges: Between 200 and 500