Home Loan Rates Key Highlights:
- RBI cuts repo rate by 35 basis points (bps) reducing it to 5.40% from 5.75%.
- Current home loan rates comparison in India for top providers like SBI, HDFC Bank, Axis Bank and ICICI Bank as updated on 17 August 2019
Home Loan Interest Rates 2019
Home loan interest rates vary from one lender to another. Currently, SBI and Syndicate Bank offer the lowest home loan rate at 8.35% p.a. The 4th consecutive RBI repo rate cut by 35 bps has brought down the home loan interest rates in India across all banks, NBFCs and HFCs. The prevailing repo rate is 5.40%. Compare latest housing loan interest rates of all Banks and Housing Finance Companies (HFCs) in India as updated on 17 August 2019.
Compare Home Loan Interest Rates for All Leading Banks in India
| Home Loan Providers | Home Loan Rates | Processing Fees* |
| Allahabad Bank | 8.40% onwards | 0.24% – 0.40% of loan amount (Max. Rs. 50,000) |
| Axis Bank | 8.85% onwards | Up to 1% of loan amount (Min. Rs. 10,000) |
| Bank of Baroda | 8.45% onwards | 0.25% – 0.50% of loan amount (Min. Rs. 8,500; Max. 15,000) |
| Bajaj Finserv | 8.80% onwards | 0.80% – 1.20% of loan amount |
| Bank of India | 8.45% onwards | 0.25% of loan amount (Min. 1000 and Max. Rs. 50,000) |
| Canara Bank | 8.50% onwards | 0.50% of loan amount (Min. Rs. 1,500; Max. Rs. 10,000) |
| Central Bank of India | 8.50% onwards | Up to 0.50% of loan amount (Max. Rs. 20,000) |
| Citibank | 8.50% onwards | Up to Rs. 5,000 |
| DBS Bank | Up to 9.50% | Up to Rs. 10,000 |
| DHFL | 9.75% onwards | Salaried/Self Employed Professional – Rs. 2,500 – Rs. 20,000 Self Employed Non Professional – Net PAT: 0.5%, Others: 1.5% |
| Federal Bank | 8.75% onwards | 0.50% of loan amount (Min. Rs. 3,000; Max. Rs. 7,500) |
| HDFC Bank | 8.40% onwards | Up to 0.5% of loan amount or Rs. 3,000, whichever is higher |
| ICICI Bank | 8.70% onwards | 0.50% – 1.00% of loan amount or Rs. 1,500 – Rs. 2000, whichever is higher |
| IDBI Bank | 8.60% onwards | Up to Rs. 10,000 |
| IDFC First Bank | Up to 12.30% | Up to Rs. 10,000 |
| IIFL | 10.25% onwards | Rs 5,000 to 1% of loan amount |
| Indiabulls Housing Finance | 8.80% onwards | Up to 1% of loan amount |
| India Shelter Finance Corp. Ltd | 13.00% onwards | 2% – 3% of loan amount |
| Karur Vysya Bank | 8.80% onwards | Rs. 2,500 – Rs. 7,500 |
| Kotak Mahindra Bank | 8.75% onwards | Up to 2% of loan amount |
| LIC Housing Finance | 8.80% onwards | As applicable |
| Punjab National Bank | 8.50% onwards | 0.35% of loan amount (Min. Rs. 2,500; Max. Rs. 15,000) |
| PNB Housing Finance | 9.25% onwards | Up to 1% of loan amount |
| Reliance Home Finance | 9.75% onwards | 0.50% – 1.5% of loan amount |
| SBI | 8.35% onwards | 0.35% – 0.50% of loan amount (Min. of Rs. 2,000; Max. of Rs. 10,000) |
| Standard Chartered Bank | 9.41% onwards | Up to 1% of loan amount |
| Syndicate Bank | 8.35% onwards | 0.125% of loan amount (Min. Rs. 500 to Max. Rs. 5,000) |
| Tata Capital | 9.25% onwards | 0.50% of loan amount |
| United Bank of India | 8.40% onwards | 0.59% of loan amount (Min. Rs.1,180; Max. Rs.11,800) |
| YES Bank | 9.85% onwards | 2% of loan amount or Rs. 15,000, whichever is higher |
*GST rates could be applicable depending on banks.
What are the Different Types of Home Loan Interest Rate?
There are two types of home loan interest rates at which lenders sanction a home loan, fixed and floating. Each type of home loan interest rate is discussed below:
What is Fixed Interest Rate?
Fixed interest rates remain the same throughout the loan tenure. For instance, if you get a home loan at 10% p.a. for a period of 15 years, the interest rate will not change till the end of your loan period. However, lenders allow their customers to switch over to the variable/floating home loan interest rates after completing a specific period of time.
What are the advantages and disadvantages of availing home loan at fixed rate?
The pros and cons of availing home loan at fixed rates are:
Pros: With fixed rate home loans, planning for finances beforehand becomes much easier. Since the rates are fixed, borrowers know the loan amount which they need to pay upfront every month to the lender. It also helps you save money in case the lending rates increase.
Cons: You cannot reap the benefits in case the standard lending rates decrease because the rates remain same throughout the loan tenure.
What is Floating Interest Rate?
Floating interest rate, also known as the variable rate of interest, is subject to the latest lending rates of the bank. Unlike the fixed rate of interest, floating interest rates may change during the loan tenure. The rate is dependent on various factors such as RBI’s monetary policies and revised MCLR or other lending rates.
What are the advantages and disadvantages of availing home loan at floating rate?
The pros and cons of availing home loan at floating rates are:
Pros: The best thing about availing home loan at floating rates is that you pay interest as per the latest home loan interest rates. So if the rate falls, you save on the payable interest amount. Also, the floating home loan rates are cheaper than fixed home loan rates.
Cons: On the flip side, if the standard home loan rates rise, the payable interest amount will also increase. However, this happens rarely and thus is preferred by many borrowers.
What Factors Affect Home Loan Interest Rate?
The factors responsible for the increase or decrease in the home loan interest rate in India are:
- Credit score: Your credit score is an indicator of your creditworthiness. The higher your credit score, the more creditworthy you will be for lenders. Lower credit score usually attracts a higher interest rate.
- Loan amount: The loan amount you wish to borrow can also influence the rate at which you get the loan. Lenders have amount slabs as per which they set the rate of interest.
- Income: The home loan interest rates for salaried professionals is lower than the interest rate charged for self-employed professionals. This is because the income of salaried employees is stable. In case of self-employed, the income is dependent on various external factors.
- Interest rate type: Home loan interest rate is mainly of two types – fixed and variable. The interest type you choose for your home loan will determine the rate at which you will repay the loan for the entire tenure. In case of fixed rates, the EMIs remain the same for the entire loan period. In case of variable rates, they change as per the change in its lending rate such as MCLR.
- Gender of the applicant: Many lenders offer a fixed concession on home loan interest rates for women borrowers. Such banks offer a concession of 0.5 bps for women borrowers on the prevailing interest rates.
- Bank MCLR: Home loan interest rates are linked to MCLR (Marginal Cost of Funds based Lending Rate). It is a benchmark lending rate at which lenders sanction loans. Change in the MCLR will resultantly change the home loan interest rate in India across all banks and HFCs.
How to Get Home Loan at Lowest Interest Rate?
The sanctioning of loans is at the discretion of the lending institution. There is no set formula to avail home loan at the lowest home loan interest rate. However, there are a few practices which can help you avail home loan at the lowest rate possible. Some of these practices are:
- You can get the lowest interest rate if you opt to avail a home loan jointly with your wife and make her the primary applicant of your home loan. Most of the banks provide home loan to women on an interest rate which is less than 0.5% of the general home loan interest rate. This will also increase your home loan eligibility.
- You can even opt for a home loan balance transfer if your current bank or financial institution is charging a higher rate of interest. You can switch to another bank, which offers a lower rate of interest. With such a tough competition, banks prefer to retain their customers who make timely repayments and have a good credit history.
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How to Calculate Effective Interest Rate (EIR)?
At times, lenders mention interest rate in the form of a formula, which can be hard to understand for a layman. So how to know at which rate the lender is offering home loan? The method of calculating the effective interest rate is simple and straight forward. In many cases, what we see is the base rate and markup rate. Adding the two of these components will give you the effective interest rate. Let’s know more about these two components:
- Base Rate: It is the minimum rate set by the Reserve Bank of India (RBI). Lenders cannot sanction loan to customers below this rate. This rate is subject to frequent changes on the basis of multiple inputs.
- Markup: This is the spread or margin over and above the base rate. This amount is added to the base rate to get the Effective interest rate (EIR). The markup may vary from one home loan scheme to another.
Effective Interest Rate (EIR) = Base Rate + Markup
Note: 1 April 2016 onwards, RBI has introduced a new method for calculating the retail loan interest rates. Earlier, the lending rates were calculated on the basis of BPLR (Benchmark Prime Lending Rate) but now they are linked to Marginal Cost of Funds based Lending Rate (MCLR). The disadvantage of BPLR was that it wasn’t transparent and lenders could give loans below the rate. There was also no fixed time of revising the rates. MCLR brings transparency to rates at which loans are sanctioned. Also, lenders cannot give out loan below this rate.
Home Loan Calculator
Taking a home loan requires a good amount of planning as you are borrowing a huge amount of money, which needs to be repaid on time. For this, you need to assess your repayment capacity so that you don’t end up in a financial crisis. This is where Home Loan Calculators can help. To plan a budget, you must at least have an estimate of how much money you are liable to pay towards your home loan every month. To help you with the same, there is a Home Loan EMI Calculator. It is an easy-to-use online tool that helps you calculate EMI of a home loan. The calculator gives results are per the details you provide regarding, home loan interest rate, loan tenure and loan amount. As soon as you enter the details, you will get the results. Click here to calculate your home loan EMI.
FAQs
Which bank offers home loan at the lowest interest rate?
The State Bank of India (SBI) and Syndicate Bank are the cheapest home loan providers in India. The banks offer home loans at an interest rate starting from 8.35%, which is currently the lowest home loan interest rate in India.
Are the home loan rates going up?
Considering the recent repo rate slash of 35 bps by the Reserve Bank of India (RBI), the home loan interest rates are expected to go further down. Before announcing the repo rate reduction on 7 August 2019, the RBI had slashed the rate reducing it thrice each by 25 bps. This is the 4th consecutive cut by the Central Bank. If banks decide to transfer the repo rate cut benefit to consumers, the MCLR will go down, leading to a subsequent reduction in the home loan interest rate.
What is the SBI home loan interest rate?
The current SBI home loan interest rate linked to Marginal Cost of Funds based Lending Rate (MCLR) is 8.35% onwards. The SBI Home Loan linked to repo rate is 8.40% onwards. The interest rate at which an applicant will get SBI home loan depends on various factors including applicant’s income, credit score, gender, age and employment type.
To get a home loan, which type of interest rate is better?
Home loan interest rates are mainly of two types, floating and fixed. Each has its own set of pros and cons. Which type of interest rate will work best for you pick depends on various factors such as the prevailing lending rates, the rate at which you got the loan, market conditions, etc. Make an informed decision with the help of the comparison given above.
Which bank is the best to avail home loan?
Which bank will be the best to avail home loan depends on your loan requirements. Some of the tips that can help you choose the best home loan offer are as follows:
- Check for the lowest home loan interest rate
- Besides the interest rate, check for other fees and charges such as the processing fees and prepayment charges
- Check for the eligibility criteria
- Check if the lender offers prepayment facility, customized insurance scheme, online account access, etc.
- Also, check for different loan repayment options
Which are the top 10 home loan providers in India?
The top 10 home loan providers in India are:
- HDFC Limited
- State Bank of India (SBI)
- LIC Housing Finance
- ICICI Bank
- PNB Housing Finance Ltd.
- Bajaj Finserv
- Axis Bank
- IDBI Bank
- Tata Capital Housing Finance Ltd.
- Kotak Mahindra Bank
Read Also: Most Popular Home Loan Providers in India for 2019
How is home loan eligibility calculated?
Banks and other lending institutions calculate home loan eligibility on the basis of various factors, which includes:
- Age: The loan applicant’s age is an important factor for lenders to determine his/her loan eligibility. With the increasing age of the applicants, their eligibility also decreases as their remaining years of service decrease.
- Income: Your income determines your loan repayment capacity. The more your income, the easier it will be for you to repay the loan, thus reducing the credit risk for lenders.
- Credit Score: Credit score helps lenders determine how well you can handle credit. Your eligibility for a loan decreases with a low credit score. Therefore, customers must always keep a check on their credit score.
- Property Value: The market value of the property helps in determining its resale value. It is on the basis of the property value, lenders decide on the loan amount you are eligible for.
- Work Experience: Lenders prefer giving loan to applicants with stable income. The longer you work for an organisation, the more stable you are considered. The minimum work experience required to apply for a home loan is usually 2 years.
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