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    Compare the lowest home loan interest rate starting from 6.65% p.a. and apply for the best home loan. Get the complete list of current housing loan rate of interest in India from all leading banks and financial institutions.

    Home Loan Interest Rate of all Banks 2022

    Banks Starting Interest Rate (p.a.) Processing Fees
    Kotak Mahindra Bank 7.50% p.a. onwards 0.50%
    Citibank 6.65% p.a. onwards Rs. 10,000
    Union Bank of India 7.90% p.a. onwards -
    Bank of Baroda 7.45% p.a. onwards Contact the bank for information
    Central Bank of India 7.20% p.a. to 7.65% p.a. Rs. 20,000
    Bank of India 7.30% p.a. onwards -
    State Bank of India 8.55% p.a. onwards 0.35% onwards
    HDFC Home Loans 8.10% p.a. onwards* 0.5% or Rs.3,000 whichever is higher
    LIC Housing Finance 7.55% p.a. onwards Rs. 10,000 -Rs. 15,000
    Axis Bank 7.60% p.a. onwards Rs. 10,000
    Canara Bank 8.10% p.a. onwards 0.50% of the loan amount
    Punjab and Sind Bank 7.50% p.a. onwards Full Waiver
    IDFC First Bank 7.50% p.a. onwards Rs. 5,000 - Rs. 5,000
    Bank of Maharashtra 7.30% p.a. onwards Rs. 10,000
    Indian Overseas Bank 7.05% p.a. onwards 0.50% (Max Rs. 20,000)
    Punjab National Bank 7.40% p.a. onward 0.35% (Max Rs. 15,000)
    United Bank of India 7.50% p.a. onwards 0.59% (Rs. 1,180 - Rs. 11,800)
    UCO Bank 7.40% 0.15% (Rs. 1,500 - Rs. 15,000)
    DBS Bank 7.30% 0.25% (Rs. 10,000)
    IDBI Bank 7.60% 0.50% (Rs. 2,500 - Rs.5,000)
    HSBC Bank 7.35% 1% (Rs. 10,000)
    Karur Vysya Bank 8.05% Rs. 5,000
    Saraswat Bank Home Loan 7.50% p.a. onwards Nil
    Jammu and Kashmir Bank 7.85% Rs. 500 - Rs. 10,000
    South Indian Bank Repo Rate + 3.35% p.a. onwards 0.50% (Rs. 5,000 - Rs. 10,000)
    PNB Housing Finance 7.50% p.a. onwards Up to 0.50%
    Federal Bank 8.55% p.a. onwards Rs. 3,000 - Rs. 7,500
    Standard Chartered Bank 7.25% p.a. onwards 1%
    Aavas Financiers 8.00% 1.00%
    Karnataka Bank 7.89% p.a. onwards Rs. 250
    Sundaram Home Finance 6.95% Rs.3,000 (for salaried)
    Dhanlaxmi Bank 8.35% p.a. onwards Rs. 10,000
    Tata Capital 7.75% p.a. onwards 0.50%
    Tamilnad Mercantile Bank 7.95% Rs. 15,000
    IIFL 10.50% 1.25%
    DHFL Housing Finance 8.75% Rs. 2500
    Bandhan Bank 7.30% p.a. onwards 1% (Rs.5,000)
    Yes Bank 8.95% 1% (Rs. 10,000)
    Hudco Home Loan 9.25% NA
    Indiabulls 7.60% 0.50% onwards
    Aditya Birla 8.00% p.a. onwards 1%
    GIC Housing Finance 8.20% Rs. 2,500
    Reliance Home Finance 9.75% Rs. 3,000 - Rs. 6,500
    Shriram Housing 8.90% NA
    India Shelter Finance 13.00% 2.00%
    *Home loan interest rates for all banks updated on 05 Oct 2022

    *All HDFC Home Loans are at the sole discretion of HDFC Home Loans.

    As part of the upcoming festive season in the country, leading banks are offering special home loan offers to attract customers to avail home loans. State Bank of India is offering attractive interest rates starting at 7.55% p.a. for home loans of up to Rs.30 lakh.Bank of Baroda’s home loan rates start at 8.05%. PNB Housing Finance,Bank of India and Central Bank are now offering home loans at low interest rates. Now, India has numerous housing finance companies which offer home loans below 8.00% p.a.

    Bank of Baroda has cut the repo rate that is linked to the external benchmark by 15 basis points. The reduction in the interest rate has seen the home loan rates start at 6.50%.PNB Housing Finance,Bank of India and Central Bank are now offering home loans at low interest rates. These home loans start at 6.75% p.a. and LIC Housing Finance offers home loans which start at 6.90% p.a. Now, India has numerous housing finance companies which offer home loans below 8.00% p.a.

    How to Calculate Interest on Home Loan?

    In general, home loans are long-term loans and it is important to figure out your overall interest liability towards the loan at the first place. You can calculate the same using one of the two methods listed below:

    1. EMI Calculator: You can calculate the interest amount applicable to your home loan by simply using a home loan EMI calculator. You will be required to fill up the fields provided on the calculator with the following details –
      • Home Loan Amount
      • Loan Repayment Tenure
      • Rate of Interest
      Once the details have been fed, you can click on the ‘Calculate’ button to get a detailed breakup of your loan including the amount payable towards interest.
    2. EMI Calculation Formula: Alternatively, you can also 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 rate of interest, and n is number of instalments or loan tenure in months.

    How to Calculate the 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.
    • 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.

    Types of Interest Rates in Home Loan

    There are mainly two types of home loan interest rates charged by most of the banks.

    1. Fixed Interest Rate:

    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.

    • Advantage: 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.

    Read More: Fixed Home Loan Rates

    2. Floating Interest Rate:

    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: But, the floating home loan interest rates are cheaper than the fixed home loan interest rates on the first front.

    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: The industry you work and your employer both has a say along with the income factor. A stable and high income, sufficient enough to afford the loan will be rewarded with a lower interest rate.
    • Credit Score: 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 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 types of home loan you’re availing. 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 loan tenure 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.
    • Type of Interest Rate: 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: Lookout for promo offers made by lenders on multiple fronts, 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.
    Apply for Home Loan

    The most important thing that you have look at is the cost of the house and the way you plan to finance it. There are many banks in India that offer amazing home loan schemes at affordable rates of interest. If you are confused and unable to decide which scheme you should apply for, then you must follow the rules mentioned below:

    • Compare Interest Rates – If you find a home loan scheme with the lowest rate of interest, do not apply for it in a haste. Look at all the terms and conditions associated with the scheme and try to find out why the rate is so low compared to other house loans. Experts advise people to compare the interest rates of different house loan schemes before applying.
    • Read Lender’s History – Before you borrow a home loan from a bank or any other lender, ensure that you are familiar with its history. Loans are a liability and can result in huge financial problems if you borrow money from an unknown or untrusted lender. You have to look for news about the different lenders online, read up on their history and check out reviews of the services and products they offer. You can also contact mortgage brokers or experts to find out information about any lender.
    • Make a Down Payment – While applying for a home loan, ensure that you make a down payment. Do not be attracted by schemes that do not require any down payment. If you apply for a home loan without paying any money upfront, then you might not realise and pay more interest. Also, the more money you pay as down payment, the lower your EMIs will be, which means that you will be able to repay your loan earlier.
    • Read the Fine Print – It is very important that you read the fine print before you take a home loan. It may look long and you may be lazy, but reading it will save you from future shocks. The fine print document will contain all the information and term and conditions related to the loan you plan to apply for. If you are unable to understand the clauses mentioned in this document, then ask the help of a Chartered Accountant.
    • Understand the Fees and Charges – There are many fees and charges associated with a home loan such as late payment fee, prepayment fee, processing fee, legal charges, documentation charge, etc. You should make yourself aware of all these fees and charges. Ask the lender to give you a list of all the fees in writing.
    • These are only some of the many rules that you must follow while applying for a home loan. Apart from the above, you should also find out about the tax benefits on home loan and how you can claim them. Once you get your home loan, make sure you pay the EMI on time every month.

    Home Loan Interest Rate FAQs

    1. What is the home loan interest rate?

    Home loan interest rate is the percentage of the principal amount charged by the lender to the borrower for using the principal amount. The interest rate charged by banks and non-financial institutions determine the cost of your home loan. So, when you are paying your home loan EMI (equated monthly instalment), the interest rate charged determines how much you have to pay your lender against your loan every month. Interest rates are usually linked to repo rate and can vary from lender to lender.

    2. Which bank has lowest home loan interest rate?

    Though interest rates offered by banks can increase or decrease as per the banks’ discretion, right now the Citibank is offering the lowest home loan interest of 6.65% p.a. to its customers. However, note that this rate is applicable only on home loan for women applicants.

    3. How to Get Lowest Home Loan Rates in India?

    Home loan interest rates are at a 15-year low, so almost all the banks are offering lower interest rates on home loans compared to what they were offering in the previous financial year. However, to get the lowest home loan interest rates, compare rates offered by lenders. Always use a home loan EMI calculator while comparing rates; it will help you estimate how much you have to pay every month against your loan.

    4. How to reduce home loan interest?

    Reducing your home loan interest will help ease the EMI burden off your shoulders. There are several ways you can consider that will help reduce your loan interest.

    • Choose a shorter tenure – For long term loans, though the EMI is less, the overall cost of the loan drastically increases because you are paying interest for a longer period of time. So, choose shorter tenures as the interest amount will get much lower with time. Use a home loan EMI calculator while comparing long-term and short-term home loans.
    • Make regular prepayments – During the first few years of your home loan, you will be paying more towards the interest charged and less towards the principal. Thus, if you make housing loan prepayments, you will eventually bring down your outstanding principal, thereby reducing the interest in the process. However, some banks charge a certain percentage for loan prepayments, especially on fixed rate loans.
    • Get a balance transfer – Opt for balance transfer only if you feel that your current lender is charging a higher interest rate than other lenders. Most banks offer home loan balance transfer facilities, through which you can shift your loan account to the concerned bank offering lower rate of interest.
    5. How Home Loan Risk weightage is linked to LTV Ratio?

    An LTV or a loan-to-value ratio is the percentage of the property cost that the bank will finance while the rest of the amount is financed by the homebuyer. Most banks finance up to 90% of the property cost. This percentage may vary depending the loan amount. Lenders generally use LTVs to determine how risky the loan is and whether they will approve or deny it. For instance, for loans up to Rs.30 lakh with LTV ratio of less that 80%, the risk weightage is 35%. Similarly, for the same amount, if the LTV ratio is between 80% and 90%, the risk weightage is 50%. For home loans above Rs 75 Lakh and LTV ratio above 75%, the risk weightage is 50%.

    6. Which bank has the lowest rate of interest for the self-employed?

    Union Bank of India, Bank of India and SBI are the banks that are offering attractive interest rates for self-employed professionals and non-professionals, with the rates starting at 7.90% p.a,6.85% p.a. and 8.05% p.a. respectively..

    7. How can I check total interest payout for my housing loan?

    Use a home loan EMI calculator to check your total interest payout against your loan. Just enter the loan amount, tenure, and interest rate. Upon calculation, you will not only be able to check your EMI, but also a detailed break-up of your repayment schedule through an amortisation table. Through the amortisation table representing your repayment schedule, you can check how much interest you have paid against your loan.

    News About Home Loan Interest Rate

    • HFCs and Banks have revised home loan interest rates after repo hike

      The Governor of the Reserve Bank of India (RBI) on Wednesday announced a hike in repo rate by 40 basis point. This will affect all floating rate home loans. The public sector bank Bank of Baroda (BOB) hav increased its interest rate on home loan from 6.5% to 6.9%. Bank of India, on the other hand has also increased its home loan interest rates from 6.5% to 6.9%.India’s largest mortgage lender, HDFC has increased its prime lending rate by 30 basis points. Federal Bank’s home loan interest rate has gone up from 7.65% to 8.05%.

      13 May 2022

      

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