Planning to take a home loan? Choose a bank over housing finance company

The benchmark that banks follow is more transparent. HFCs, however, are more flexible

• For a long-tenure loan, opting for the lender offering cheapest interest rates is the obvious choice

• But if you have a choice, go for a bank over housing finance companies (HFCs)
• The benchmark — MCLR (marginal cost of funds based lending rate) — that banks peg their rates to is more transparent than the benchmark HFCs use.
• Soon, MCLR, too, will be replaced. Banks will need to link interest rates to an external benchmark, which will make interest rates movement on your loans completely transparent
• HFCs, however, are more flexible in evaluating your credit profile. Many are willing to lend to individuals with a low credit profile
• HFCs can also offer a higher loan amount. But beware of the compulsory bundling of life and home insurance products