Home Loan Interest Rates in India
Compare the lowest home loan interest rate starting from 8.35% p.a. and apply for the best home loan. Get the complete list of current housing loan rates of interest in India from all leading banks and financial institutions.
Home Loan Interest Rate of all major Banks 2024
| Banks | Starting Interest Rates (p.a.) |
| Bank of India | 8.30% onwards |
| Union Bank of India | 8.35% onwards |
| State bank of India | 8.50% onwards |
| Central bank of India | 8.50% onwards |
| HDFC home loans | 8.70% onwards |
| Kotak Mahindra Bank | 8.70% onwards |
| LIC housing finance | 8.35% onwards |
| Bank of Baroda | 10.15% onwards |
| Axis bank | 8.75% onwards |
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 in the first place.
You can calculate the same using one of the method listed below:
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 –Once the details have been fed, you can click on the ‘Calculate’ button to get a detailed breakdown of your loan including the amount payable towards interest.
- Home Loan Amount
- Loan Repayment Tenure
- Rate of Interest
How to Apply for a Home Loan
Step 1: Complete the Home Loan Application Form
Commence the home loan application process by filling out the application form. Provide the following details:
- Personal information of the applicant (name, contact number, etc.)
- Current residential address
- Monthly income
- Educational background
- Current and previous employment details
- Details of the property for which the loan is sought
- Estimated property cost
- The current method of financing a home
Step 2: Verification and Processing
- After submitting the form and required documents, the bank will process your application and conduct a thorough credit score check. Ensure accurate information submission, as any discrepancies can lead to rejection.
Step 3: Loan Sanction
- Upon verification of submitted documents, the bank sanctions the loan. This typically takes one day to two days, pending accurate paperwork. Occasionally, an in-person verification may be required for additional information.
Step 4: Technical and Legal Check
- Before disbursing the loan, the bank conducts legal and technical assessments. For under-construction properties, the construction progress and quality are assessed. Resale properties undergo scrutiny for age, maintenance, previous mortgages, and ownership rights.
Step 5: Payment of Home Loan Processing Fee
- After successful verification, the applicant pays the home loan processing fee, ranging from 0.25% to 0.50% of the loan amount, to maintain the loan account.
Step 6: Disbursal of Loan Amount
- Upon meeting all eligibility criteria, the applicant receives a formal agreement letter, and the loan amount is disbursed to their bank account. A complete home loan EMI schedule is provided via email.
Determining Factors for Your Home Loan Interest Rate
When applying for a home loan, it’s important to understand the factors that lenders consider while assessing your eligibility and determining the interest rate.
Since home loans involve substantial amounts, banks and Housing Finance Companies (HFCs) conduct a thorough evaluation of your credit history, repayment capacity, income, and property details. It’s worth noting that lower interest rates often come with stricter eligibility criteria. Here are the key factors that lenders take into account:
- Credit Score – Your credit score denotes your credit history and financial track record. A good credit score indicates timely payment of EMIs and credit card bills, as well as responsible credit management. If your credit score, as assessed by CIBIL or other bureaus, is 750 or above, lenders view you more favourably for a home loan. Moreover, banks and HFCs are increasingly using the credit score to determine home loan interest rates. Applicants with higher credit scores, reflecting responsible credit behaviour, may be offered lower interest rates. Those with no or low credit scores can improve their scores by opting for a lifetime free Step-UP Credit Card, which is a secured credit card co-branded with SBM Bank India Ltd.
- Income and Employment – Lenders take into account factors such as your income, employment type, and employer profile when assessing your home loan eligibility. Applicants with stable employment in government, PSUs, or large/reputed private sector organizations are generally preferred by lenders due to the higher certainty of job and income. Consequently, such applicants may be offered lower home loan interest rates. Conversely, individuals with irregular or insufficient income might face challenges in obtaining a home loan at a lower interest rate.
- Loan Amount – The amount you intend to borrow for your home loan can also impact the interest rate. Home loans up to Rs. 30 lakh usually have lower interest rates compared to higher loan amounts. Making a lump sum down payment can help reduce the overall loan burden and potentially secure a lower interest rate on your loan.
- Type of Home Loan – Different types of home loans come with varying interest rates. Regular home loans generally have standard rates, while specialized loans like Plot Loans or NRI Home Loans may have higher interest rates.
- Interest Rate Concession for Women Borrowers – Some lenders offer a home loan interest rate concession, often around 0.05%, specifically for women borrowers. Therefore, it is advisable for married couples to consider a joint home loan and designate the wife as the primary applicant if it can result in a lower interest rate. Opting for a joint home loan can also increase eligibility and provide additional tax benefits.
- Type of Interest Rate – The choice of interest rate type for your home loan affects the repayment rate. Fixed-rate home loans maintain consistent EMIs throughout the loan tenure. On the other hand, floating rates, linked to factors like Repo Linked Lending Rate (RLLR), fluctuate with changes in the lending rate. Lenders typically charge higher interest rates for fixed-rate home loans due to the increased interest rate risk involved.
FAQs on Home Loan Interest Rate
What is the home loan interest rate?
The 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 rates and can vary from lender to lender.
How to How to get lowest home loan rates in India?
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.
How to reduce home 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.
How home loan risk weightage is linked to the 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 on the loan amount. Lenders generally use LTVs to determine how risky the loan is and whether they will approve or deny it.
Can I switch from a fixed rate of interest to a floating rate and are there any associated charges?
Yes, you have the option to switch from a fixed rate to a floating rate of interest during the loan period. However, please note that lenders typically impose a conversion fee of 0.5% of the outstanding principal for this switch.
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.
How is the processing fee for a home loan determined?
The processing fee for a home loan varies among financial institutions. Some institutions charge a fixed amount, while others calculate it as a percentage of the loan amount, typically ranging from 0.5% to 1%.
What are the primary factors affecting my home loan interest rate?
Your home loan interest rate is influenced by various factors, including the MCLR rates, fixed or floating interest rates, Loan-to-Value (LTV) ratio, your credit score, the location of the property, your job profile, and the tenure of the Loan.
How often will the interest rates on my home loan, based on EBLR, change throughout the tenure?
The frequency of changes in the interest rates of your EBLR-based home loan depends on the external benchmark interest rates used by your bank and their rate reset schedule. Banks are required to reset their EBLR-linked interest rates at least once every three months.
Can the component of credit risk premium of my home loan rate of interest change during the loan tenure?
According to RBI guidelines on external benchmark-based lending rates, banks are permitted to adjust the credit risk premium component if there is a significant change in the borrower’s credit risk assessment during the loan tenure.
