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  • Home Loan Interest Rates

    Compare the lowest home loan interest rates starting from 8.25% 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 Rates all Banks 2019

    Banks Interest Rates Processing Fees
    State Bank of India 8.20% - 11.60% p.a. Rs.2,000 – Rs.10,000
    HDFC Ltd. 8.25% - 9.60% p.a. Up to 0.50%
    ICICI Bank 8.65% - 9.40% p.a. 0.50% to 1%
    Axis Bank 8.90% - 12.45% p.a. Up to 1%
    Bank of Baroda 9.15% p.a. onwards 0.25% to 0.50%
    PNB Housing Finance Ltd. 9.25% - 11.50% p.a. Up to 1%
    Karnataka Bank 8.65% - 14.30% p.a. Rs.12,000
    Sundaram BNP Paribas Home Finance 8.55% - 9.25% p.a. 0.50% - 1%
    (min. Rs.2,000; max. Rs.20,000)
    Kotak Mahindra Bank 8.90% - 9.25% p.a. up to Rs.10,000
    DBS Bank 9.35% – 11.95% p.a. upto Rs.10,000
    Aditya Birla Capital Housing Finance 9.00% – 12.50% p.a. upto 1% on loan amount
    LIC Housing Finance Limited 8.95% - 9.05%p.a. Rs. 10,000- Rs.15,000
    (+Service Tax)
    Indiabulls Housing Finance 8.80% - 12% p.a. max. 1% on loan
    IDFC First Bank 8.00% – 14.00% p.a. Rs.10,000
    Canara Bank 8.50% – 9.50% p.a. 0.50%
    (Max. Rs.10,000)
    Federal Bank 8.90% - 9.10% p.a. 0.5%
    (Max Rs 7500)
    Andhra Bank 8.55% - 9.65% p.a. 0.50%
    (max. Rs.10,000)
    Dhanalakshmi Bank 9.80% p.a. onwards 1%
    Bank of India 8.50% - 8.55% p.a. 0.25%
    (Max. Rs.20,000)
    Bank of Maharashtra 8.55% – 9.00% p.a. 0.25%
    IDBI Bank 8.30% - 9.30% p.a. 0.50%
    Indian Overseas Bank 8.50% - 11.20% p.a. 0.50%
    Karur Vysya Bank 8.80% - 12.45% p.a. Rs.2,500 - Rs.7,500
    South Indian Bank 9.10% - 10.45% p.a. 0.50%
    (Max. Rs.10,000)
    Tamilnad Mercantile Bank 9.20% p.a. 2% or Rs.15,000/-
    Central Bank of India 8.55% p.a. 1%
    (or Min. Rs.10,000)
    Tata Capital 9.25% p.a. 2%
    Yes Bank 9.85% - 12% p.a. Up to 2%
    Jammu and Kashmir Bank 8.65% - 8.95% p.a. 2% - 3%
    Aavas Financiers 10% - 19% p.a. Up to 2% plus GST
    Indian Shelter Finance Corporation 16% p.a. Up to 3%
    DHFL Housing Finance 9.75% p.a. onwards Rs 2500/-
    (+ GST+ document charges)

    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.

    Factors that Determine Home Loan Interest Rates:

    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.

    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.

    Things to Look

    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.
      

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