A "low interest" loan shouldn't mean you have very little interest in paying it back!
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    Home Loan Interest Rates

    Bank Name
    Interest Rate Range
    Processing Fee Range
    Loan Amount
    Tenure Range
    9.40% Floating
    0.35% (max. ₹10,000)
    15L - 10Crs
    1-30 Years
    Response Time Within 30 minutes
    What you'll love
    Fees & Charges
    Good to Know
    Eligibility Criteria
    9.45% - 10.25% Floating
    0.5% (min. ₹7500) One time fee
    2L - 3Crs
    1-30 Years
    Response Time Within 30 minutes
    What you'll love
    Fees & Charges
    Good to Know
    Eligibility Criteria
    9.55% - 9.80% Floating
    0.25% to 0.50%(min.₹10,000) One time fee
    5L - 5Crs
    1-30 Years
    Response Time Within 30 minutes
    What you'll love
    Fees & Charges
    Good to Know
    Eligibility Criteria

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    Home Loan Interest Rates 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:

    Bank Name Home loan interest rates Processing Fee

    Aditya Birla Housing Finance Home loan
    9.60% ₹5,000

    Aspire Home Finance Corporation Limited
    14.00% 2%

    Au Housing Finance
    12.50% to 19.00% 2%

    Axis Bank Home loan
    9.60% to 11.75% ₹10,000+S.T.

    DBS Bank
    9.50% ₹0

    Dena Bank
    9.70% to 9.95% 0.5%

    Federal Bank
    9.59% to 9.84% 0.5% (min. ₹7,500)

    Gruh Finance Limited
    11.12% 1%

    HDFC LTD Bank Home loan
    9.55% to 9.60% 0% to 0.5% (max. ₹10,000)

    ICICI Bank Home loan
    9.45% to 9.70% 0.5% (min. ₹10,000)

    Indiabulls Home loan
    9.45% to 10.25% 0.5% (min. ₹7500)

    India Shelter Finance Home loan
    11.75% 2% to 3%

    Kotak Mahindra Bank
    9.55% to 9.65% 0.25% (max. ₹10,000)

    PNB Housing Finance Limited Home loan
    9.50% - 9.95% 0.25% to 0.50%(min.₹10,000)

    State Bank of Bikaner and Jaipur Home loan
    9.55% 0.375% (max. ₹10,000)

    SBI Home loan
    9.40% 0.35% (max. ₹10,000)

    Tata Capital Home loan
    9.45% to 9.55% ₹5,000 to ₹10,000

    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.

    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.

    1. 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.
    2. 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.

    1. 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.
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. 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.
    8. 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.
    9. 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:

    1. 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.

    2. 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.

    3. 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.

    4. 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.

    5. 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

    • Housing Finance Companies to Cut Home Loan Rates

      With the banks in the country shifting to the new MCLR (Marginal cost of funds-based lending rate) regime and home loans becoming cheaper, major housing companies are to follow suit and bring about a reduction in the home loan rates as well.

      Most housing finance companies are experiencing a drop in their fund costs, owing to the reduction in the base rate by banks. Therefore, major players like HDFC and LIC Housing Finance are also expected to revise their home loan rates.

      12th May 2016

    • Repo cut by 25 bps, resulting in the lowest point seen in the last five years

      On Tuesday, the Reserve Bank of India (RBI) cut its policy interest rate to 6.50 %, which is the lowest it has been in the last five years. The prospect of it being cut further this year is also at large, as long as the trend of inflation stays.

      This cut of 25 bps on Tuesday did not meet the market expectations of 50 bps cut. The reason behind this market expectation was the fact that the government stuck to the fiscal consolidation path in the Budget. Also there was reduced rates on small savings schemes.

      26th April 2016

    • Home buyers can rejoice: RBI cut rates by 25 bps

      RBI has yet again cut the repo rate. On Tuesday the cut of 25 bps was made. This means that banks will have to reduce the interest rates that they charge borrowers. If this happen, borrowers can benefit from the reduced interest rate. When and how much change will happen is yet to be seen.

      The repo rate cut of 0.25 per cent and the reduction in small savings rate means that banks will be under pressure to reduce lending rates. However, borrowers should ideally wait a while before these changes take effect. If the bank that one has already taken a loan does not cut rates, it’s possible to get it refinanced from a bank which has the changes in effect.

      18th April 2016

    • RBI Repo Rate Cut – A Relief to Homebuyers

      In a welcome move by the Reserve Bank of India, the institution announced the 25 basis points drop in repo rates to 6.50 percent in the first bi-monthly policy. There is a possibility of further easing of policy rates resulting in a renewed interest in the real estate sector. This decision is expected to bring some relief to the homebuyers as the drop in repo rates will in turn reduce the home loan interest rates.

      In order to encourage prospective homebuyers, the banks will have to extend the same benefit, enabling them to book themselves their dream house. Passing on the benefits to the buyers would mean a reduction in the EMIs (Equated Monthly Installments) as interest rate is directly linked to it. This is sure to accelerate the demand for housing and purchase of new properties.

      7th April 2016

    • According to Keki Mistry, home loan rebate may be hiked in the Budget 2016

      Chief Executive Officer and Vice Chairman of HDFC, Keki Mistry says it is crucial that tax exemptions on home loans should be increased. According to him, even a small hike will encourage home-buyers. This is mainly because house prices have shot up while exemptions have not changed on par. Thus, even a little increase of around Rs. 50000 will boost up the morale of home buyers. Although Mr. Mistry expects changes in the income tax norms, changes in tax rates and tax slabs may or may not come around.

      6th April 2016

    • Zero interest Home Loan Scheme Introduced by Investors Clinic

      Home loan buyers have a great reason to rejoice! Investors Clinic, one of India’s trusted property consultants have launched the ‘Byaaj Mukt Awas Yojana’, an exciting new scheme introduced for home buyers which eliminates the interest component from home loans. This essentially means that home loan takers will not be required to pay any interest on their home loan principal amount. To provide this scheme, Investors Clinic has partnered with IndiaBulls, one of India’s most trusted Non-banking Finance Company, and several other well-known builders like Supertech, Jaypee Group, ABA Corp, Lotus Greens and more to facilitate the sale of over 7,000 housing units.

      Honey Katiyal, CEO of Investors Clinic Infratech Ltd., said that buyers will only have to repay the principal loan amount in 100 equated monthly installments, other wise to be known as Equal Principal Repayment. On being asked whether or not the cost of interest is compensated for in the total cost of the flat, the company has assured buyers that the interest amount is being adjusted and shared between the developers and IndiaBulls itself. Also, strict penalty clauses for the developers have been are included in the agreement if there is a delay in possession of the housing units i.e. house and flats which are located across several areas in Faridabad, Ghaziabad, Noida, etc.

      4th April 2016

    • HDFC Not to Offer Interest-Only Home Loans

      HDFC has announced that it will not offer State Bank of India-style ‘interest-only’ mortgages. However, the housing finance company allows ‘step-up’ repayment products, under which borrowers can pay lower EMIs in the initial years and later increase the instalment amounts.

      HDFC will also not reduce interest rates until after the budget, despite the Reserve Bank of India keeping its repo rates unchanged. Keki Mistry, VC and MD of HDFC, told the Times of India that if the budget was in line with expectations, the interest rates could go down by around 25-50 basis points.

      The SBI’s new interest-only home loan allows borrowers to avail larger loans by making smaller repayments in the first few years.

      14th March 2016

    • Property Developers Call for Lower Housing Loan Interest Rates

      CREDAI expressed its disappointment with the unchanged key rate policy for housing loans. The property developer body is of the opinion that the rates should be set below 9% so as to increase demand.

      The RBI chose to keep key rates unchanged on the back of concerns regarding growth and inflation, speaking of an easing of the fiscal policy on budget proposals by the government.

      The news was met with disappointment within the industry, who were hoping for a 25 point cut to boost the flagging market.

      The real estate sector is pinning its hopes on rate cuts and sops being announced in the forthcoming budget.

      Big players such as Mahindra have also expressed their disappointment, stating that a cut in repo rates would have lowered rates, thereby encouraging buyers to invest in properties and drive growth in the market.

      01st March 2016

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