The best area to stay in Banihal is generally around the town centre, particularly near the National Highway 44 (NH44).
This area provides the most convenience for travellers, with easier access to transport links and local amenities. The main road through Banihal, which is part of NH44, is where you'll find most of the guesthouses and small eateries. It's a practical base for exploring the surrounding region.
For travellers passing through, perhaps en route to Srinagar or Jammu, staying close to NH44 is ideal. It allows for quick departures and minimises travel time within the town.