Home Loan Interest Rates of Banks in India

On February 16, 2025 By newsroom Topic: India Money Advice

| Bank |--------------------------------| | Kotak Mahindra Bank | Union Bank of India | Bank of Baroda | Central Bank of India | Bank of India | State Bank of India | HDFC Home Loans | LIC Housing Finance | Axis Bank | Canara Bank | Punjab & Sind Bank | IDFC First Bank | Bank of Maharashtra | Punjab National Bank | IDBI Bank | HSBC Bank | Karur Vysya Bank | Saraswat Bank | Jammu & Kashmir Bank | South Indian Bank | Federal Bank | Standard Chartered Bank | Karnataka Bank | Sundaram Home Finance | Dhanlaxmi Bank | Tata Capital | Tamilnad Mercantile Bank | Bandhan Bank | Yes Bank | GIC Housing Finance | Shriram Housing | India Shelter Finance | Starting Interest Rate (p.a.) | Processing Fees |
-----------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 8.75% onwards | Salaried: 0.5% + taxes; Self-Employed/Commercial: 1% + taxes |
| 8.35% onwards | 0.50% of the loan amount |
| 8.40% onwards | No processing fee; discounted upfront fee |
| 8.50% onwards | 0.50% (max20,000 + GST, waived till 31 March 2024) |
| 8.40% onwards | Nil |
| 8.50% onwards | 0.35% of loan amount + GST |
| 8.75% onwards | Up to 0.50% or3,000 + taxes, whichever is higher |
| 8.50% onwards |15,000-?50,000 + GST, based on loan amount |
| 8.75% onwards | Up to 1% or min10,000 + GST |
| 8.40% onwards | 0.50% of loan amount |
| 8.50% onwards | 0.15%-0.25% of loan amount; max15,000 for loans above50 lakh |
| 8.85% onwards | Up to 3% of loan amount |
| 8.35% onwards | No processing fees |
| 8.40% onwards | Nil |
| 8.50% onwards | 0.50% (?2,500-?5,000) |
| 8.50% onwards | 1% of loan amount or10,000, whichever is higher |
| 9.00% onwards |2,500-?7,500 + GST based on loan amount |
| 8.70% onwards | No fee up to35 lakh; 0.30%-0.50% for higher amounts |
| 8.75% onwards | 0.50% + GST (min2,000, max50,000) |
| 8.50% onwards | 0.50% of loan amount + GST |
| 8.80% onwards | 0.50% (?10,000-?20,000) |
| 8.95% onwards | Contact the bank |
| 8.85% onwards | Contact the bank |
| Contact the bank | Up to 0.75% of loan amount + GST |
| 9.35% onwards | 1% of loan amount (min10,000 + GST) |
| 8.75% onwards | 2% + GST |
| 8.60% onwards | 0.50% of loan amount + GST |
| 9.16% onwards | Contact the bank |
| 9.00% onwards | 1.5% of loan amount or10,000, whichever is higher + GST |
| 8.80% onwards |2,500 + GST |
| 9.50% onwards | Up to 2.5% of loan amount + taxes |
| 12% onwards | Contact the institute |

Types of Home Loan Interest Rates

Fixed Interest Rate:
The rate remains constant throughout the tenure.
Shielded from market fluctuations.
Typically higher than floating rates initially.
Floating Interest Rate:
Varies based on market rates and benchmarks (like Repo Linked Lending Rate - RLLR).
Offers potential savings when rates drop but risks higher EMIs if rates rise.

Tips for Securing Lower Interest Rates

Maintain a good credit score (750+ preferred).
Opt for a shorter tenure to reduce interest costs.
Consider a joint loan to increase eligibility and lower rates.
Research and compare lenders using tools like home loan EMI calculators.

Types of Home Loan Interest Rates

1. Fixed Interest Rate

Definition: The interest rate remains constant throughout the loan tenure.
Advantages:
Predictable EMIs provide financial stability.
Shields borrowers from market fluctuations.
Suitable if lending rates are expected to rise.
Disadvantages:
No benefit from falling market rates.
Typically higher than floating interest rates at the start.

2. Floating Interest Rate

Definition: The interest rate fluctuates based on the bank’s lending rate, influenced by repo rate and other market factors.
Advantages:
Beneficial when market rates drop, reducing interest costs.
Often starts lower than fixed rates.
Disadvantages:
Risk of increased EMIs if lending rates rise.
Less predictable and may strain budgets during rate hikes.

Steps to Apply for a Home Loan

Complete the Application Form
Provide personal details, income information, employment history, property details, and estimated cost.
Verification and Processing
Bank checks submitted documents and credit score. Discrepancies may lead to rejection.
Loan Sanction
On successful verification, the loan is sanctioned within 1-2 days. In-person verification may be required.
Technical and Legal Check
Bank evaluates the property’s legal ownership, quality, and construction progress.
Payment of Processing Fee
Typically 0.25%-0.50% of the loan amount.
Loan Disbursement
After eligibility verification, funds are transferred to the borrower’s account with an EMI schedule provided.

Key Factors Influencing Home Loan Interest Rates

Credit Score
A score of 750+ improves eligibility and can secure lower rates.
Income and Employment
Stable, high-paying jobs in reputed organizations are favored by lenders.
Loan Amount
Smaller loans (up to30 lakh) usually have lower rates.
Type of Loan
Regular home loans typically have standard rates, while specialized loans like NRI or plot loans may have higher rates.
Concessions for Women Borrowers
Women often receive a discount of about 0.05% on interest rates.
Type of Interest Rate
Fixed rates ensure consistent EMIs, while floating rates fluctuate with market conditions.

FAQs on Home Loan Interest Rates

How can I get the lowest home loan rates?
Compare rates, maintain a high credit score, and opt for shorter tenures.
What is the home loan interest rate?
The percentage charged by lenders on the loan principal, determining EMI amounts.
How can I reduce home loan interest?
Make higher down payments, choose shorter tenure loans, and improve credit scores.
What is the Loan-to-Value (LTV) Ratio?
The percentage of the property cost financed by the bank. Higher LTVs may result in higher rates.
Can I switch from fixed to floating rates?
Yes, usually with a conversion fee (~0.5% of the principal).
How can I check the total interest payout?
Use an EMI calculator to estimate interest and repayment breakdown.
How often do interest rates change for floating loans?
Rates reset at least once every three months, based on RBI policies.
Can credit risk premiums change during the loan tenure?
Yes, if there are significant changes in the borrower’s creditworthiness.

Understanding the nuances of fixed and floating rates can help borrowers make informed decisions and manage their home loan efficiently.