Home Loan Interest Rates

 

Home Loan Interest Rates

Compare the lowest home loan interest rate starting from 6.64% 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 2021

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	6.75%	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	6.75%	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	6.85%	Full Waiver
IDFC First Bank	6.90%	Rs. 5,000 - Rs. 5,000
Bank of Maharashtra	6.90%	Rs. 10,000
Indian Overseas Bank	7.05%	0.50% (Max Rs. 20,000)
Punjab National Bank	6.95%	0.35% (Max Rs. 15,000)
United Bank of India	8.00%	0.59% (Rs. 1,180 - Rs. 11,800)
UCO Bank	6.90%	0.15% (Rs. 1,500 - Rs. 15,000)
DBS Bank	7.30%	0.25% (Rs. 10,000)
IDBI Bank	6.95%	0.50% (Rs. 2,500 - Rs.5,000)
HSBC Bank	6.64%	1% (Rs. 10,000)
Karur Vysya Bank	7.20%	Rs. 5,000
Saraswat Bank Home Loan	6.70%	Nill
Jammu and Kashmir Bank	7.20%	Rs. 500 - Rs. 10,000
South Indian Bank	7.85%	0.50% (Rs. 5,000 - Rs. 10,000)
PNB Housing Finance	7.35%	0.25% - 0.50% (Rs. 10,000)
Federal Bank	7.65%	Rs. 3,000 - Rs. 7,500
Standard Chartered Bank	7.99%	1%
Aavas Financiers	8.00%	1.00%
Karnataka Bank	7.50%	Rs. 250
Sundaram Home Finance	6.95%	Rs.3,000 (for salaried)
Dhanlaxmi Bank	7.85%	Rs. 10,000
Tata Capital	6.90%	0.50%
Tamilnad Mercantile Bank	8.25%	Rs. 15,000
IIFL	10.50%	1.25%
DHFL Housing Finance	8.75%	Rs. 2500
Bandhan Bank	8.50%	1% (Rs.5,000)
Yes Bank	8.95%	1% (Rs. 10,000)
Hudco Home Loan	9.45%	NA
Indiabulls	8.65%	2%
Aditya Birla	9.00%	1%
GIC Housing Finance	7.45%	Rs. 2,500
Reliance Home Finance	9.75%	Rs. 3,000 - Rs. 6,500
Shriram Housing	8.90%	NA
India Shelter Finance	12.00%	2.00%

*Home loan interest rates for all banks updated on 09 Aug 2021

*Union Bank of India home loan interest rate at 6.80% (Revised on 1st Nov 2020) is available for Salaried Women customers with Cibil score above 700 applying for a loan up to 30 Lakh.
*ICICI home loan interest rate at 6.90% onwards is for salaried borrower applying for loan up to 35 Lakh.
*All HDFC Home Loans are at the sole discretion of HDFC Ltd.

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 6.90% p.a. for home loans of up to Rs.30 lakh and 7.00% p.a. for home loans above Rs.30 lakh. Those applying through the bank’s YONO mobile application get an additional interest rate concession of 5 basis points. Applicants across 8 metro cities in India will get a concession in interest rate of 20 basis points for home loans of up to Rs.3 crore. In the rest of the country, this will be applicable for home loans ranging from Rs.30 lakh to Rs.2 crore. For home loans of above Rs.75 lakh, there will be an interest rate concession of 25 basis points. All interest rate concessions are also linked to the credit scores of applicants.

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 6.75%. The 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 five housing finance companies which offer home loans below 8% 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.

Home Loan Interest Rate FAQs

1. What is 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 Union Bank of India is offering the lowest home loan interest of 6.70% 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 R.s75 akh 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 6.85% p.a,6.85% p.a. and 6.90% 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.