Description
Apply for the best home loan by comparing the lowest home loan interest rates, which start at 6.65% p.a. Get the most up-to-date list of housing loan interest rates in India from all major banks and financial institutions.
|
Banks |
Interest Rate (p.a.) |
Processing Fees |
|
Kotak Mahindra Bank |
6.65%* |
0.50% |
|
Citibank |
6.75% |
Rs. 10,000 |
|
Union Bank of India |
6.80%* |
- |
|
Bank of Baroda |
6.85% |
Rs. 8,500 - Rs. 25,000 |
|
Central Bank of India |
6.85% |
Rs. 20,000 |
|
Bank of India |
6.85% |
Rs. 1,500 - Rs. 20,000 |
|
State Bank of India |
6.70%* |
0% - 0.35% |
|
HDFC LTD |
6.75%* |
Rs. 3,000 - Rs. 4,500 |
|
ICICI Bank |
6.90% |
Rs. 3,000 |
|
LIC Housing Finance |
6.90% |
Rs. 10,000 -Rs. 15,000 |
|
Axis Bank |
6.90% |
Rs. 10,000 |
|
Canara Bank |
6.90% |
Rs. 1,500 - Rs. 10,000 |
|
Punjab and Sind Bank |
6.90% |
Full Waiver |
|
IDFC First Bank |
7.00% |
Rs. 5,000 - Rs. 5,000 |
|
Bank of Maharashtra |
7.05% |
Rs. 10,000 |
|
Indian Overseas Bank |
7.05% |
0.50% (Max Rs. 20,000) |
|
Punjab National Bank |
6.80% |
0.35% (Max Rs. 15,000) |
|
United Bank of India |
7.10% |
0.59% (Rs. 1,180 - Rs. 11,800) |
|
UCO Bank |
7.15% |
0.15% (Rs. 1,500 - Rs. 15,000) |
|
DBS Bank |
7.20% |
0.25% (Rs. 10,000) |
|
IDBI Bank |
6.90% |
0.50% (Rs. 2,500 - Rs.5,000) |
|
HSBC Bank |
7.45% |
1% (Rs. 10,000) |
|
Karur Vysya Bank |
7.45% |
Rs. 5,000 |
|
Saraswat Bank Home Loan |
7.55% |
Nill |
|
Jammu and Kashmir Bank |
7.70% |
Rs. 500 - Rs. 10,000 |
|
South Indian Bank |
7.90% |
0.50% (Rs. 5,000 - Rs. 10,000) |
|
PNB Housing Finance |
7.35% |
0.25% - 0.50% (Rs. 10,000) |
|
Federal Bank |
7.90% |
Rs. 3,000 - Rs. 7,500 |
|
Standard Chartered Bank |
7.99% |
1% |
|
Aavas Financiers |
8.00% |
1.00% |
|
Karnataka Bank |
8.17% |
Rs. 250 |
|
Sundaram Home Finance |
6.95% |
Rs.3,000 (for salaried) |
|
Dhana lakshmi Bank |
8.25% |
Rs. 10,000 |
|
Tata Capital |
8.50% |
0.50% |
|
Tamilnad Mercantile Bank |
8.65% |
Rs. 15,000 |
|
IIFL |
8.70% |
1.25% |
|
DHFL Housing Finance |
8.75% |
Rs. 2500 |
|
Bandhan Bank |
8.75% |
1% (Rs.5,000) |
|
Yes Bank |
8.85% |
1% (Rs. 10,000) |
|
Hudco Home Loan |
8.95% |
NA |
|
Indiabulls |
8.99% |
2% |
|
Aditya Birla |
9.00% |
1% |
|
GIC Housing Finance |
9.10% |
Rs. 2,500 |
|
Reliance Home Finance |
9.75% |
Rs. 3,000 - Rs. 6,500 |
|
Shriram Housing |
10.49% |
NA |
|
India Shelter Finance |
13.00% |
2.00% |
How Do You Calculate Home Loan Interest?
In general, home loans are long-term loans, so it's crucial to find out the total interest obligation upfront. Either of the two methods mentioned below can be used to measure the same:
- EMI Calculator: You can use a home loan EMI calculator to figure out how much interest you'll pay on your loan. You'll need to fill in the fields on the calculator with the following information –
- Loan Amount
- Loan Repayment
- Tenure Interest Rate
After you've entered your details, click the 'Calculate' button to see a full breakdown of your loan, including the sum owed in interest.
EMI Calculation Formula:
EMI = [P x r x (1+r)^n]/[(1+r)^n-1]
P is the principal,
r is the interest rate, and
n is the number of installments or the loan term in months.
What is the formula for calculating the effective interest rate?
The base rate and the markup rate make up the effective interest rate on a home loan. On the loan, you'll be paying a mix of the two. Let's take a closer look at these elements to gain a better understanding.
-
Base Rate: This is the bank's regular lending rate, which applies to all retail loans. Based on several inputs, this rate fluctuates frequently. The EIR (Effective interest rate) for a particular form of home loan is calculated by adding a small percentage to the base rate, which differs from one type to the next.
Base Rate + Markup = Effective Interest Rate (EIR).
The Reserve Bank of India (RBI) has mandated a new method for computing lending rates to replace the base rate system as of April 2016. The Marginal Cost of Funds-based Lending Rate (MCLR) aims to improve the transparency and flexibility of rates reported by Indian banks and financial institutions. After analyzing the risk factor associated with lending to borrowers, the RBI requires banks to fix the interest rate. It considers many variables, including the repo rate, deposits, and so on. This MCLR-based calculation yields a rate that is marginally lower than the previous base rate.
Types of Home Loan Interest Rates
The majority of the banks charge two forms of home loan interest rates.
1. Fixed Interest Rate: This method of calculation ensures that the rate stays constant during the loan term. Since the interest rate is set, there will be no adjustment in the interest charges. Depending on the bid, you will be able to turn to a floating rate scheme after a certain period has passed on your loan.
- Advantage: Since the rate is set, you know exactly how much interest you'll pay upfront. If lending rates rise, your loan will be protected from regular rate increases, saving you money in the long run.
- Disadvantage: You would not benefit if regular loan rates fall because the interest factor remains frozen.
2. Floating Interest Rate: The interest payments on your home loan are determined by the bank's most recent lending rates. The rate is related to the bank's most recent published rate, which is influenced by several factors including the RBI's monetary policy and lending rate revisions, the bank's reaction to the revision, and so on.
- Advantage: The most obvious benefit of choosing a floating rate is that you will be billed according to the most recent rate. You save money on interest payments if interest rates decline.
- Disadvantage: In the unlikely event that regular rates rise, the loan must bear the brunt of the increased cost.
➤ FAQs
Ques. What is the interest rate on a home loan?
The percentage of the principal amount paid by the lender to the borrower for using the principal amount is known as the home loan interest rate. The cost of your home loan is determined by the interest rate paid by banks and non-financial institutions. The interest rate paid decides how much you have to pay your lender on your loan every month when you pay your home loan EMI (equated monthly installment). Interest rates are typically tied to the repo rate, but they can differ from one lender to the next.
Ques. Which bank offers the lowest interest rate on home loans?
Though interest rates offered by banks can change at any time, the Union Bank of India is currently offering its customers the lowest home loan interest rate of 6.70 percent per annum. However, keep in mind that this rate is only available to women who are applying for a home loan.
Ques. What is the Best Way to Get the Lowest Home Loan Rates in India?
Since home loan interest rates are at a 15-year low, almost all banks are offering lower home loan interest rates than they were the previous financial year. Compare rates from different lenders to find the best home loan interest rates. When comparing rates, always use a home loan EMI calculator to estimate how much you'll have to pay per month on your loan.
Ques. How can I lower my home loan interest rate?
Reduced interest on your home loan would help you pay your EMIs more easily. There are some options available to you that will help you lower your loan interest rate. 1. Choose a shorter term – While the EMI on a long-term loan is lower, the total cost of the loan rises dramatically because you are paying interest for a longer period. As a result, use shorter terms because the interest rate would drop dramatically over time. When comparing long-term and short-term home loans, use an EMI calculator. 2. Make daily prepayments – For the first few years of your home loan, you will be paying more interest and less principal. As a result, making prepayments on your mortgage would gradually reduce your unpaid principal, lowering your interest rate. However, some banks levy a fee for loan prepayments, especially on fixed-rate loans. 3. Balance transfer – Use this option only if you believe your current lender is charging you a higher interest rate than other lenders. Most banks provide home loan balance transfer services, which enable you to move your loan account to a bank with a lower interest rate.
Ques. What is the relationship between the risk weighting of a home loan and the LTV ratio?
The proportion of the property expense that the mortgage will fund while the remainder is funded by the homebuyer is referred to as the loan-to-value ratio. The majority of banks would fund up to 90% of the property's expense. Depending on the loan size, this percentage can change. LTVs are commonly used by lenders to decide how risky a loan is and whether to accept or refuse it. For instance, for loans up to Rs.30 lakh with an LTV ratio of less than 80 percent, the risk weightage is 35 percent. Similarly, for the same number, if the LTV ratio is between 80 percent and 90 percent, the risk weightage is 50 percent. The risk weightage is 50% for home loans of more than R.s75 lakh and an LTV ratio of more than 75%.
Ques. Which bank offers the best interest rates for self-employed people?
Banks such as Union Bank of India, Bank of India, Central Bank of India, and SBI are providing competitive interest rates for self-employed professionals and non-professionals, with rates beginning at 6.70 percent p.a., 6.85 percent p.a., and 6.90 percent p.a., respectively.
Ques. How will I find out how much interest I've paid on my mortgage?
To figure out how much interest you'll pay on your home loan, use an EMI calculator. Simply enter the loan number, term, and rate of interest. You'll be able to see not just your EMI but also a thorough breakdown of your repayment plan via an amortization table after you've completed the calculation. You can check how much interest you've accrued on your loan by looking at the amortization table, which represents your repayment plan.