Current Home Loan Interest Rates:
| Bank Name |
Home loan interest rates |
Processing Fee |
Aditya Birla Housing Finance Home loan |
9.40% to 9.55% |
Nil |
Aspire Home Finance Corporation Limited |
14.00% |
2% |
Au Housing Finance |
12.50% to 19.00% |
2% |
Axis Bank Home loan |
9.40% to 11.75% |
₹2,875 to ₹11,500 |
DBS Bank |
9.30% |
₹11,500 |
Dena Bank |
9.45% to 9.7% |
0.5% |
Federal Bank |
9.59% to 9.84% |
0.5% (min. ₹8,625) |
Gruh Finance Limited |
11.12% |
1% |
HDFC LTD Bank Home loan |
9.40% |
0% to 0.5% (max. ₹11,500) |
ICICI Bank Home loan |
9.45% to 9.70% |
0.5% (min. ₹11,500) |
Indiabulls Home loan |
9.45% to 10.25% |
0.5% (min. ₹8625) |
India Shelter Finance Home loan |
11.75% |
2% to 3% |
PNB Housing Finance Limited Home loan |
9.50% - 9.95% |
0.25% to 0.50%(min.₹11,500) |
Reliance Home Finance Limited Home loan |
9.70% - 10% |
0.50% |
State Bank of Bikaner and Jaipur Home loan |
9.55% |
0.25% (max. ₹10,000) |
SBI Home loan |
9.35% |
0% to 0.35% (max. ₹11,500) |
Sundaram BNP Paribas Home loan |
9.40% to 10.25% |
0.5% (min. ₹ 5750) |
Tata Capital Home loan |
9.40% |
₹5,750 to ₹11,500 |
Yes Bank Home loan |
10.25% to 10.75% |
Up to ₹11,500 |
Overview:
A housing loan is one of the most preferred loan instruments to fund the costs involved in fulfilling our housing needs, more so because it offers to pay a large chunk of money involved in procuring a home and lets you payback in installments over a term of your choice. It has been the most preferred route taken by millions in India and abroad to realize their housing dreams. In India, nearly all public sector, commercial and foreign banks offer home loan under their retail lending portfolio. The different types of loans available under this category are as below.
- Loan for purchasing a home
- Loan for procuring a plot
- Home construction loan
- Home improvement loan
- Balance transfer loan
In a home loan, the most visible component which catches our attention is the interest rate. It is the most decisive factor which helps us in choosing a specific home loan. Let's explore the various facets of this component with a view to help you to avail the most cost effective housing loan in India.
Home is the basic and the most expensive necessity that a man has to fulfil in his life. With an increase in prices and the reduction in purchasing power, a man cannot accumulate huge funds at a time. So, in order to fulfil its basic necessity, a man has to go for a home loan. As the repayment of home loan comprises of a large portion of interest rates, here we’ll quickly follow up the Home loan interest rates offered by major banks in Home loan segment. Take a quick look below:
Therefore, these are the Home loan interest rates offered by different banks to its customers. The normal range of Home loan interest rates are from 9.50% to 12.75%. In this race, Government banks along with some private numbers and financial institutions are running in a front panel by offering lowest interest rates on home loans @ 9.50% to 12.75%. The front runners are SBI, ICICI, Standard chartered bank and LIC. SBI and ICICI bank has given a privilege to its women borrowers by providing them a home loan interest rate at 9.35% and 9.40% which is 0.05% lesser than the home loan interest rate provided to the male borrowers. So, women are going to be benefited with this revolution in home loan interest rate and this will encourage women to put a hand for buying her own house.
Check out New MCLR based lending rate.
BankBazaar facilitates you to compare the home loan interest rates offered by different banks and then to take the most important decision of your life. After comparing the interest rates offered by different banks, you can also calculate your EMI based upon that by just entering few particulars in the EMI calculator provided by the BankBazaar. This calculation will help you decide the loan amount that you can easily pay off and the loan tenure in which you can easily pay off the debt without compromising on your other needy expenses.
Before going for a home loan, you must be careful enough to see the nature of its interest rates. There are two types of interest rates i.e. fixed interest rates and floating interest rates. You have to carefully choose between the two. Fixed home loan interest rates will remain fixed all over the tenure and floating home loan interest rate will keep on changing with the change in the base rate. But, the floating home loan interest rates are cheaper than the fixed home loan interest rates on the first front.
So, check and compare your home loan interest rates at BankBazaar and get your dream home at just few simple steps.
Types of Home Loan Interest Rates:
In India, two of the most predominant methods of computing interest charges on the principal amount are as below. Depending in the bank in question, you may be offered both or either of them at the time of availing the loan.
Fixed Rate Home Loans:
In this system of computation, the rate remains even throughout the loan tenor. There will be no change in the interest charges since the rate remains fixed. Depending on the offer, you may be allowed to switch over to the floating rate system after completing a certain duration into the loan tenure.
| Advantages |
Since the rate remains fixed, you know how much interest charges you’re paying upfront.
Your loan will be shielded from frequent rate fluctuations and saves money in a longer run if there is a hike in lending rates.
|
| Disadvantage |
If the standard lending rates fall, you will not benefit since the interest component remains frozen.
|
Floating Rate Home Loans:
As the name suggests, the interest charges on your home loan is subject to the current most lending rates of the bank. The rate is linked to the latest published rate of the bank which in turn depends on multiple factors such as RBIs monetary policy and lending rate revisions, the bank’s response to the revision etc.
| Advantage |
The most visible perk of opting for the floating rate is that you have the advantage of being billed on the basis of the latest rate. If the rates fall, you save on interest charges.
|
| Disadvantage |
In rare scenario, if the standard rates go up, the loan has to be bear the brunt of being billed a higher rate.
|
Note: Some banks allow you to switch from fixed to floating or vice versa, after a stipulated time, say 5 years into the loan. Make sure to inquire about switching at the time of availing the loan and opt for it to make the best use of fluctuating rates in your favor.
Basis for Arriving at Effective Interest Rate:
The applicable interest rate on home loan consists of two components, the base rate and markup rate. The combination of two is what you will be paying on the loan. Let's explore these components to give you a better understanding.
Base rate: It is the standard lending rate of the bank, applicable for all retail loans. This rate is subject to frequent changes on the basis of multiple inputs. For example, the current base rate of Axis Bank is 9.45%. Base rate is published on the official website of the bank.
Markup: This component of a small percentage is added to the base rate to arrive at the EIR (Effective interest rate) for a specific type of home loan and varies from one type to another.
Effective Interest Rate (EIR) = Base Rate + Markup:
From April 2016 onwards, the Reserve Bank of India (RBI) has mandated a new method for computing lending rate to replace the base rate system. The Marginal Cost of Funds based Lending Rate (MCLR) is aimed at bringing more accountability and flexibility to the way rates are published by banks and financial institutions in India. RBI mandates banks to fix the interest rate after studying the risk factor associated with lending to borrowers. It takes into account, various factors involved such as repo rate, deposits etc.
This MCLR based computation works out to be slightly lower than the erstwhile base rate.
Factors that Determine Home Loan Interest Rates and eligibility:
There are multiple factors driven by your background and income group which influence the rate bank offers you. Let’s look at some of leading factors to help you negotiate the best rate.
- Income: One of the most crucial factors considered by lenders to ascertain the interest rate to be offered on your home loan. The amount of salary drawn at the end or month or revenue figures if self-employed is of much interest to banks. The industry you work and your employer also has a say along with the income factor. A stable and high income, sufficient enough to afford the loan will be rewarded with a pleasing interest rate.
- Credit score: Perhaps, the second most crucial determinant of the rates offered on your home loan. When you apply, the processing involves a thorough scrutiny of your credit report. It involves checks on your past and current credit. It you’re up to date with a good credit score, you’re likely to get a competitive rate. A good credit history also gives you the confidence to negotiate a good deal.
- Location of the property: The location and vicinity has a bearing too. If the property is situated in a prime location or is being procured from a trusted builder/agency, you can look forward to an optimal charge on the interest rate front.
- Loan amount: The proposed loan amount has the ability to influence the rate. The representatives are open to negotiate the rate if you’re willing to get a higher amount of loan. The thumb rule is, higher the loan amount, chances are that you will get a lower rate.
- Type of loan: The rates offered also depends on the type of loan you’re availing (see types of loans described earlier in this article). Standard loans such as home purchasing will come at standard rates while its counterparts like home improvement can be charged a higher rate.
- Loan tenure: The term opted for has a say when the bank decides the interest rate to be offered to you. Chances are that if you’re willing to opt for a longer term, the interest rate offered is lower. Make sure to check with the bank before signing up so that you can benefit from this practice.
- Type of interest rate: In furtherance to the content earlier in this write up, the interest charges on your home loan is dependent on the “Fixed” or the “Floating” rate you opt for. The fixed rate is slightly higher than its counterpart.
- Employment type: Salaried applicants are likely to get a slightly lower rate compared to the self-employed, owing to the risks involved. Banks’ maintain separate slabs for salaried and self employed applicants.
- Ongoing promo offers: Scout for promo offers made by lenders on multiple fronts. Some of these offers are made locally and some at the national level. In their quest to come up with the most customer centric schemes, lenders will tie up with multiple partners such as builders, aggregators to offer tailor made deals which includes competitive rates.
How to apply for a home loan?
There are multiple ways to apply for a home loan. You can do so offline at a designated branch or online, over the internet. It's highly recommended that you compare various loan offers from lenders on a neutral website like bankbazaar, draw conclusions and create an application, all under a single window.
This website provides you the right kind of resources and information to equip you with knowledge to apply and negotiate a good home loan deal. Bankbazaar has partnered with the likes of leading banks and financial institutions in public and private sector, to bring to you, customized loan deals on the basis of your background.
Frequently Asked Questions about Home Loan Interest Rate:
- I stumbled upon a term called Pre-EMI interest charges in my newly signed home loan contract. Please explain its nature.
It is the interest applied on the loan amount disbursed by your bank. Such charges are payable every month from the time of disbursement on each release. Pre-EMI interest will continue to be applied until EMI payments start.
- Do I get any tax benefits for the interest charges paid on my housing loan?
Yes, you can claim deduction for the interest charges paid on your home loan under Section 24 of the Income Tax Act. The cap on the tax deduction you can claim on interest paid is Rs.2 lacs for self-occupied property. For a let out property, there is no ceiling prescribed under this section.
- Do banks charge for switching over from fixed to floating rate or vice versa?
Yes, there will be a fee derived on the basis of a percentage of the outstanding loan amount in the account, subject to a minimum amount. For loans with part disbursals, the fee is calculated on the outstanding principal along with the undisbursed value of the loan amount sanctioned.
- How does an increase in interest rate affect my repayment? I am currently under the floating rate system.
With your consent, the bank will make an attempt to increase the loan term to save you from the burden of having to pay additional interest charges. After this change, if the EMI does not cover the interest charges, there will be an increase in the EMI amount. The standard system varies from bank to bank.
- Do banks charge for making changes in the EMI amount due to change in the interest rate? My loan is under the floating rate system.
Generally, there is no charge levied for such changes. However, the amendment is subject to reassessment of your loan repayment history. You may be required to produce additional documents in this regard.
News About Home Loan Interest Rates
