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Home Loan Interest Rates in India

Home Loan Interest Rates in India

Compare the lowest home loan interest rates in India from 6.40% per annum. and apply for the best home loan. Get a complete list of current home loan interest rates in India from all the leading banks and financial institutions.

Home loan interest rates in India can be fixed or variable in nature. The fixed-rate housing loan remains unchanged for a period determined by the bank. This type of home loan is immune to market fluctuations.

Types of Home Loan Interest Rates in India

There are three types of home loan interest rates in India, fixed-rate, variable-rate and hybrid, depending on the interest rate.

Home Loan Interest Rates in India
Types of Home Loan Interest Rates in India

Fixed Rate Loans

The fixed interest rate remains unchanged over the life of the loan, so the home loan EMI remains constant. Applying for a fixed-rate home loan is more appropriate if the current home loan interest rate is quite low and an upward trend is expected in the future.

However, given the current declining trend in lending rates, banks offer customers the option to switch to floating / floating home loan rates after a certain period of time. In this calculation system, the interest rate remains constant over the life of the loan.

Interest costs do not change as the interest rate remains fixed. Depending on the offer, you may be able to switch to a variable rate scheme after a certain period of time.

Pros

Since the interest rate is fixed, you know how much interest you pay in advance. They protect your credit from frequent interest rate fluctuations and save you money in the long run if interest rates rise.

Cons

If normal interest rates fall, there will be no benefit as the interest component freezes.

Floating Rate Loans

The Home loan interest rates in India are determined by the bank’s current most interest rates. The interest rate is linked to the bank’s most recently published interest rate, which in turn depends on a number of factors, such as the RBI’s monetary policy and the revision of lending rates, the bank’s reaction to the revision, and so on.

It is also known as a variable interest rate, is a function of current market lending rates; and thus may change over the life of the loan. Home loan EMIs increase or decrease in line with interest rate movements. In addition to the current downward trend in home loan interest rates, prospective home borrowers will benefit from applying for a floating rate home loan.

Pros

The most spectacular advantage of choosing a floating interest rate is that you have the advantage of billing based on the most recent interest rate. If exchange rates fall, you can save on interest costs.

Cons

In a rare scenario, if the normal interest rate rises, you will have to bear the loan to be billed at a higher interest rate.

NOTE
interest rates on floating home loans are cheaper
than fixed home loans
on the front lines.
Home loan interest rates in India

Hybrid Loans

Hybrid interest rate home loans are a mixture of fixed and floating rate home loans. Initially, they will have a fixed interest rate for a set period of time, then this will change to a variable interest rate. Such home loans are best suited for those who have taken out a loan at a low fixed interest rate and plan to prepay or block it before the start of variable interest rates.

Compare all Bank’s Home Loan Interest Rates Today in India, March 2022

The table below shows the home loan interest rates in India and management fees for home loans offered by multiple lenders.

Home Loan Interest Rates In India of Top Public Sector Banks

Name of LenderHome Loan Interest RatesProcessing Fees
Bank of Baroda6.75% – 8.25%Up to 0.50% of the loan amount or up to 7500 INR + GST
Punjab National Bank6.75% – 7.80%0.35% of the loan amount, with a minimum and maximum of INR 2,500 and INR 15,000, respectively
Punjab & Sind Bank7.30% – 7.65%Up to 0.25% of the loan amount, up to INR 15,000 + GST
State Bank of India6.70%-6.90%0.35% of the loan amount and up to INR 10,000 + GST
Union Bank of India6.75% – 7.80%As applicable
Central Bank of India6.85% – 7.30%0.50% of the loan amount is up to 20,000 INR GST
Bank of India6.85% – 8.35%0.25% of the loan amount + GST
UCO Bank6.90% – 7.25%0.5% of the loan amount, up to INR 15,000 + GST
Bank of Maharashtra7.05% – 8.40%As applicable
Canara Bank6.90% – 8.90%0.5% of the loan amount + GST
Home Loan Interest Rates in India of Top Public Sector Banks

Home Loan Interest Rates In India of Top Private Sector Banks

Name of LenderHome Loan Interest RatesProcessing Fees
Kotak Mahindra Bank6.55% – 7.10%Zero fee for processing an online application
(up to 1.25% of the loan amount for an offline application)
ICICI Bank6.70% – 7.55%Up to 1.00% of the loan amount + GST
Axis Bank6.75% – 7.20%Up to 1% of the loan amount, but not less than INR 10,000.
INR 2500 pre-processing fee + GST
IDBI Bank6.95% – 10.05%0.50% of loan amount up to a maximum of INR 2500 + GST
Karur Vysya Bank7.25% – 9.55%Up to INR 7500 + GST
Karnataka Bank8.08% – 8.85%0.50% of the loan amount + GST
Federal Bank7.65% – 7.80%0.50% of loan amount up to a maximum of INR 7500 + GST
Bandhan Bank8.50% – 11.75%1% of the loan amount, min. INR 5000 + GST
RBL Bank9.50% – 12.30%INR 5,000 – INR 15,000 of loan amount + GST
Home Loan Interest Rates in India of Top Private Sector Banks

Home Loan Interest Rates In India of Top Housing Finance Companies (HFCs)

Name of LenderHome Loan
Interest Rates
Processing Fees
LIC Housing Finance6.66% – 7.90%Loan amount up to INR 50 lakh: – ZERO
Loan amount INR 50 lakh to INR 1 crore – 50% of 0.25% of
loan amount + GST ​​or 50% of INR 10,000 + GST,
whichever less
Loans from INR 1 crore to INR 5 crore – 50%
from INR 25,000 + GST
HDFC Ltd.6.70% – 8.00%Up to 0.50% of the loan amount or INR 3,000,
whichever is greater, plus applicable taxes.
Tata Capital Housing Finance6.90 – 8.75%As applicable
PNB Housing Finance6.75% – 9.25%INR 10,000 + GST
Reliance Home Finance8.75% – 14.00%Up to 0.75% of the loan amount + GST
Indiabulls Housing Finance8.65% Onwards0.50% of the loan amount to a
maximum of INR 15,000 + GST
Home Loan Interest Rates In India of Top Housing Finance Companies (HFCs)

How To Get The Lowest Home Loan Interest Rates In India?

Because home loans are usually high-value loans, banks, and HFCs carefully and in detail assess a borrower’s credit history, repayment ability, and income, and strictly control the property they want to buy. Borrowers seeking a home loan should be aware of the factors that lenders take into account when processing a home loan application and should be deeply aware of their own eligibility.

How to get a home loan at low interest rates In India
How to get a low home loan interest rates In India

It should be noted that low-interest rates are usually accompanied by stricter eligibility conditions. The following is a list of factors that lenders use to determine eligibility for a home loan and the interest offered:

Credit Score

Your credit score is a numerical representation of your credit history. People who pay their EMI and credit card invoices in full on time and have never been overly dependent on credit in the past may be creditworthy.

Lenders welcome mortgages if their credit score from CIBIL or other offices is 750 or higher. In addition, banks and HFCs are increasingly using the creditworthiness of mortgage applicants to fix mortgage rates.

Many banks and HFCs offer mortgages at low-interest rates to credit applicants because high credit reflects responsible lending behavior and financial discipline.

Note that if the apartment is co-owned, the lender will probably check the creditworthiness of each owner, even if a single co-owner has a loan.

Apply At The Young Age

If you are in your late 30s or 20s at the time of your application, you will be entitled to a larger loan amount as you have fewer financial obligations.

Loan Amount

The amount of loan you want to take out can also affect the rate at which you get a home loan. Home loans up to ₹30 lakhs usually have a lower interest rate compared to higher mortgages.

To get the best mortgage interest rate, you should try to make the highest possible down payment. Not only will this reduce your overall loan burden, but it can also help you get a lower interest rate on your loan.

Interest Rate Type

There are three types of home loan interest rates – fixed, floating, and hybrid. The interest rate chosen for a home loan determines the interest rate at which you repay the lender. In the case of fixed-rate home loans, EMI remains unchanged over the life of the loan.

Floating rates, on the other hand, vary depending on changes in the borrowing rate, such as the repo rate (RLLR). Lenders generally charge higher interest rates on fixed-rate home loans because of the higher interest rate risk than fixed-rate home loans.

Property In a Good Location

A property in a reputable company has a better chance of getting a loan, up to 75-90% of the property value.

Type Of Home Loan

Home loan interest rate also differs according to the type of home loan. Regular home loans have standard rates while their peers like plot loans or NRI home loans usually have a higher interest rate.

Income and Employment

Another key factor that lenders evaluate is your income, type of employment, and your employer profile. Lenders generally prefer home loan applicants employed by the government or PSUs or those working with large and/or well-known private sector entities due to their higher employment/income certainty. Consequently, lenders offer lower interest rates for such applicants.

On the other hand, if you are self-employed with unstable income streams, or have an unstable job profile, or have just started your professional journey, getting a home loan at a lower interest rate can be difficult. A person earning a high income is more likely to get a lower interest rate and a higher amount.

External Benchmark Rate

According to the RBI announcement, interest rates on housing loans sanctioned by banks from October 2019 are linked to external benchmark rates such as the RBI Policy Repo Rate, the Indian Government’s 3-month and 6-month Treasury bill yields published by Financial Benchmarks India Private Ltd (FBIL) and any other benchmark market interest rates published by FBIL. Under the new system, a change in the external key interest rate will affect all banks home loan interest rates in India.

Lower Interest Rates For Female Home Borrowers

Most banks offer discounts on home loans, typically at a 0.5% lower interest rate for female borrowers. Therefore, we advise couples to consider a joint home loan and make the wife the primary applicant if they can get a lower interest rate. The use of a joint home loan increases the eligibility of the home loan as well as the tax benefits of the home loan.

Also Read: 7 Valuable Bad Credit Home Loans of 2022 In Texas

How To Calculate Home Loan Interest Rates In India?

Home Loans are generally long-term loans, and it is important to know the overall interest liability on the loan in the first place. You can calculate the same using one of the two methods listed below.

Calculate the Interest Rates on a Home Loan
Calculate Home loan interest rates in India

Home Loan Interest Rate Calculator

Simply use the home loan EMI calculator to calculate the amount of interest applied to your mortgage. You need to enter the following details in the fields that appear in the calculator :

  • Home loan amount
  • Loan repayment period
  • Interest rate

Once you have entered the details, you can click the Calculate button to get a detailed breakdown of the loan, including the amount you will pay for interest.

EMI Calculation Formula

Use the following formula to calculate your EMI liability for your home loan-
EMI = [P x r x (1+r)^n]/[(1+r)^n-1]
Wherein, P is Principal, r is the rate of interest, and n is the number of installments or loan tenure in months.

Also Read: 10 Best Ways to Get First-Time Home Buyer Loans with Bad Credit and Zero Down in 2022

Frequently Asked Questions (FAQs)

Is it illegal to charge high Home Loan interest rates in India?

Usury has a long history. Preventing individuals from making predatory loans is primarily illegal. People need to borrow money but are charged high-interest rates, often with interest and financial ruin making it difficult to repay the loan.

What are the illegal Home Loan interest rates in India?

A rate above 18% per year can be considered an exorbitant rate and therefore a violation. However, usury operates outside the scope of these laws and interest rates are several times higher than this legal limit.

Why do banks charge interest on loans?

In general, the higher the risk of credit default, the higher the interest rate charged by the lender. Finally, and most importantly, lenders demand interest because inflation usually reduces the real value, the purchasing power, of a loan while the borrower has money.

What happens when interest rates rise?

As interest rates rise, both businesses and consumers are refraining from spending. This will reduce profits and lower stock prices.