Current Home Loan Interest Rates in India
|Lenders||Interest Rate||EMI/Lakh**||Processing Fees (exclusive of GST)|
|Union Bank of India||6.70%||Rs. 645||0.50% of loan amount (Max. Rs. 15,000)|
|Bank of India||6.85%||Rs. 655||0.25 % of loan amount (Min. Rs. 1,500; Max. Rs. 20,000)|
|Central Bank of India||6.85%||Rs. 655||0.50% of loan amount (Max. Rs. 20,000)|
|Canara Bank||6.90%||Rs. 659||0.50% (Min. Rs. 1,500; Max. Rs. 10,000)|
|HDFC Bank||6.90%||Rs. 659||Up to 0.5% of loan amount or Rs. 3,000, whichever is higher|
|ICICI Bank||6.90%||Rs. 659||0.50% of loan amount|
|Punjab & Sind Bank||6.90%||Rs. 659||Full waiver|
|State Bank of India||6.95%*||Rs. 662||Full waiver for homebuyers in approved projects|
|Bank of Baroda||7.00%||Rs. 655||0.25% – 0.50% of loan amount (Min. Rs. 8,500 & Max. Rs. 25,000)|
|IDFC First Bank||7.00%||Rs. 665||Up to Rs. 10,000|
(additional premium is charged based on risk profile)
|Punjab National Bank||7.15%||Rs. 675||0.35% of loan amount (Min. Rs. 2,500; Max. Rs. 15,000)|
|UCO Bank||7.15%||Rs. 675||0.5% of the loan amount (Min. Rs. 1500; Max. Rs. 15,000)|
|Kotak Mahindra Bank||7.35%||Rs. 689||Up to 2% of loan amount|
|Indian Overseas Bank||7.45%||Rs. 696||Up to 1.20% of the loan amount|
|LIC Housing Finance||7.50%||Rs. 699||As applicable|
|Axis Bank||7.75%||Rs. 716||Up to 1% of the loan amount (Min. Rs. 10,000)|
|IDBI Bank||7.80%||Rs. 720||Rs. 2,500 – Rs. 5,000|
|Bajaj Finserv**||8.10%||Rs. 741||For salaried individuals: Up to 0.80%|
For self-employed individuals: Up to 1.20%
|Federal Bank||8.15%||Rs. 744||0.50% of loan amount (Min. Rs. 3,000; Max. Rs. 7,500)|
|IIFL||8.70%||Rs. 783||Up to 1.75% of loan amount|
|Standard Chartered Bank||8.86%||Rs. 795||Up to 1% of loan amount|
|Fullerton Grihashakti||8.99%||Rs. 804||Up to 3% of loan amount|
|Indiabulls Housing Finance||8.99%||Rs. 804||Up to 2% of loan amount|
|Aditya Birla Housing Finance Ltd.||9.00%||Rs. 805||Up to 1% of loan amount|
|PNB Housing Finance||9.25%||Rs. 823||Up to 1% of loan amount|
|Tata Capital||9.25%||Rs. 823||0.5% of the loan amount|
|DHFL||9.50%||Rs. 841||Salaried/Self Employed Professional – Rs. 2,500 – Rs. 20,000|
Self Employed Non Professional – Net PAT: 0.5%, Others: 1.5%
|YES Bank||9.85%||Rs. 867||2% of loan amount or Rs. 10,000, whichever is higher|
|India Shelter Finance Corp. Ltd.||13.00%||Rs. 1,106||2% – 3% of loan amount|
Home Loan Interest Rates as of 30 September 2020.
The housing loan interest rates in the table are subject to change anytime without prior notice.
*In addition to the above SBI home loan rate, customers can avail interest concession of up to 10 bps based on their credit score and loan amount. They can also avail 5 bps interest concession if they apply for SBI home loan via SBI YONO app.
**To calculate Home Loan EMI, the loan tenure is assumed as 30 years.
Home loan interest rate is one of the key factors that determines the cost of borrowing. A lower housing loan interest rate is always preferred as it reduces the total interest payout for the borrower. As per today’s home loan interest rate, the Union Bank of India offers the lowest home loan rate at 6.70% p.a., followed by other top banks such as Bank of Baroda, Canara Bank, HDFC Bank, SBI and ICICI Bank.
Above is the list of top Banks, Non-banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs) in India offering home loan interest rates. Compare and apply for the lowest home loan interest rate.
Besides home loan rate of interest and loan amount, there are various other fees and charges that make up the total cost of your home loan such as processing fees, CERSAI charges and prepayment charges. It is important to know and understand about these additional costs so that you can identify which home loan offer will help you save more. Some lenders might have the same home loan rate but different associated fees and charges, which depending on the value can increase or decrease your loan burden. Knowing home loan fees and charges also helps in planning your repayment accordingly.
Types of Interest Rates Offered on Home Loans
There are two types of home loan interest rates at which lenders sanction a home loan, fixed and floating.
1. Fixed Interest Rate – Fixed interest rate remains the same throughout the loan period, thereby, keeping the home loan EMI constant. Applying for a home loan at a fixed rate of interest is better when the current home loan rate of interest is quite low and an upward trend is anticipated in future. But considering the current trend of decreasing lending rates, banks provide customers with an option to switch over to the variable/floating housing loan interest rates after completing a specific period of time.
2. Floating Interest Rate – Floating interest rate, also known as the variable rate of interest, is subject to the current market lending rates; and thus, they may change during the loan tenure. The home loan EMIs will increase or decrease as per the interest rate movement. With the current trend of decreasing home loan rates, it will be advantageous for prospective home loan borrowers to apply for home loans at a floating rate of interest.
Suggested Read: Fixed Rate vs. Floating Rate – Which one is better?
Change in home loan rate? Use home loan EMI calculator to know its effect on your EMIs. The online loan calculator also works as a home loan interest rate calculator as it helps you know the interest amount due on your home loan along with the overall EMI amount.
What are the different methods of interest calculation?
Home Loan interest can be calculated in two ways: Flat Rate Method and Reducing Balance Method.
1. Fixed/Flat Rate Method of Interest Calculation
In this method, the interest is calculated on the principal amount that you initially borrowed from the lender. This further implies that even after 10 years of loan repayment, the interest will be calculated on the same principal amount, making you pay more on your interest. This method of interest calculation is usually used in microfinance.
2. Reducing Balance Method of Interest Calculation
When you make an EMI payment, you pay some part of that amount as principal and the remaining part as interest on your loan. This reduces the outstanding principal amount with time. On this reduced outstanding balance, lenders calculate the interest. In this method, you pay lesser interest as every time your pay loan EMI, the principal outstanding decreases.
Reducing balance method further can either be annual reducing, monthly reducing or daily reducing. Banks use the daily reducing balance method to calculate interest for housing loans. Some housing finance companies, on the other hand, use the monthly method for calculating interest on a home loan.
Interest Formula and Calculation
Here are the formulae for calculating interest using both the flat rate and reducing balance methods of interest calculation:
EMI Calculation by Flat Rate Method = (Principal + Total Interest Payable)/ Loan Tenure in Months
Total interest payable = (principal*interest rate*loan tenure)/100
EMI Calculation by Reducing Balance Method = [P x R x (1+R)^N]/[(1+R)^ (N-1)]
P = Principal amount
R = Rate of interest on a monthly basis
N = Loan repayment tenure in months (Principal + Total Interest Payable)/ Loan Tenure in Months
Example of Flat Rate & Reducing Balance Method of Interest Calculation
Let’s assume Vivek takes a home loan of Rs. 30 lakh for 30 years at 7% p.a. rate of interest. Read the table below and see what the total charges would be under each method of interest calculation.
|Parameters||Flat Rate Method||Reducing Balance Method|
|Loan Amount||Rs. 30 lakh||Rs. 30 lakh|
|Tenure||360 months||360 months|
|Interest Rate||7% p.a.||7% p.a.|
|Total Interest||Rs. 63 lakh||Rs. 41.9 lakh (approx.)|
|EMI||Rs. 25,833||Rs. 19,959|
* Savings occur due to lower total interest payout when reducing balance method of interest calculation is used.
How to calculate effective home loan rate of interest?
The method of calculating the home loan rate or effective interest rate is simple and straight forward. Under floating rate home loans, banks specify a formula, which may be external benchmark rate such as Repo Rate and 3-month Treasury Bill Rate plus a given spread. Adding the two of these components will give you the effective home loan interest rate.
Effective Interest Rate (EIR) = Base Rate + Markup
Let’s know more about these two components:
External Benchmark Rate: It is the minimum rate set by the Reserve Bank of India (RBI). Lenders cannot sanction loan to customers below this rate. It can be linked to RBI’s repo rate or any other benchmark market interest rate published by the Financial Benchmarks India Private Limited (FBIL). It is also subject to frequent changes depending on various inputs.
Read Also: How is RLLR different from MCLR?
Markup/Spread: Spread or margin is added over and above the external benchmark rate to get the Effective interest rate (EIR). The spread may vary from one home loan scheme to another.
How to get a home loan at the lowest interest rate in India?
There is no set formula to avail housing loan at the lowest rate. However, there are a few practices which can help you avail the lowest home loan rate possible. Some of these practices are:
- Keep Your Credit Score Close to 900
Your credit score is an indicator of your creditworthiness. As per RBI guidelines, banks now use it upfront to fix home loan rate of interest over and above the external benchmark rate. Since high credit score reflects responsible credit behaviour and vice-versa, applicants with a lower credit score will pay higher interest on their home loans. And, applicants with a higher credit score will enjoy lower rates.
- Apply for Home Loan Jointly
You can get the lowest housing loan rate if you apply for a home loan jointly with your wife and make her the primary applicant of your home loan. Most of the banks provide interest concession home loan to women on an interest rate which is less than 0.5% of the general home loan interest rate. Availing joint home loan will also increase your home loan eligibility as well as home loan tax benefits.
Check Also: Home Loan Tax Benefits
- Consider Availing Home Loan Balance Transfer
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. But before making the switch, consider the total cost of loan transfer.
Click to Know: When should you go for home loan balance transfer facility
- Increase Your Home Downpayment
Loan amount is yet another factor that affects your home loan rate. Higher loan amount usually attracts a higher interest rate and vice-versa. To get a home loan at the lowest possible interest rate, try reducing your loan amount by contributing more towards your home down payment.
How to reduce home loan interest burden?
Following are the few effective ways to reduce home loan interest burden:
- Transfer your existing loan to another bank offering home loan at a lower interest rate
- Increase your home loan EMIs to reduce the total interest payable
- Part-prepay your home loan to decrease EMIs and save on interest
What factors affect home loan interest rates?
Factors responsible for the increase or decrease in the housing loan interest rate in India are:
- Credit score: Credit score is now used upfront by lenders to fix home loan interest rates over and above the external benchmark rate. Lower credit score attracts a higher rate of interest on home loan and vice-versa.
- Loan amount: The loan amount you wish to borrow can also influence the rate at which you get the housing loan. Home loans up to Rs. 30 lakh usually have a lower interest rate as compared to home loans of a higher amount.
- Type of employment: The home loan interest rate for salaried professionals is lower than the interest rate charged for self-employed professionals. This is so because the income of salaried employees is stable. In case of self-employed, the income is dependent on market conditions and other external factors.
- Type of interest rate: Home loan rate of interest is of two types – fixed and floating. The type of interest rate you choose for your home loan will determine the rate at which you will repay it to your lender. In case of fixed rate home loans, EMIs remain the same for the entire loan period. Floating rates, on the other hand, change as per change in its lending rate such as Repo Linked Lending Rate (RLLR).
- Gender of the applicant: Many lenders such as the SBI 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.
- Type of home loan: Home loan rate of interest also differs as per the types of home loan. Regular home loans have standard rates while its counterparts such as Plot Loans or NRI Home Loans usually have a higher rate of interest.
- External benchmark rate: As per RBI’s notification, from October 2019, housing loan interest rates are linked to external benchmark rates such as RBI Policy Repo Rate, the Government of India 3-Months and 6-Months Treasury Bill yields published by Financial Benchmarks India Private Ltd (FBIL) and any other benchmark market interest rate published by FBIL. Under the new regime, any change in the external benchmark rate will affect the home loan interest rate of all banks in India.
Interest Rate FAQs
What is today’s home loan interest rate?
Home loan interest rate today is 6.70% onwards. The final rate of interest at which your lender will give you a home loan will depend on multiple factors including your credit score, repayment capacity, loan amount and age.
Which bank offers the lowest interest rate on home loans?
Union Bank of India gives home loan at the lowest rate of interest starting at 6.70% per annum. Following Union Bank of India is Bank of Baroda, Bank of India and Central Bank of India, which offer home loans at 6.85% p.a. onwards. Canara Bank, Punjab and Sind Bank, HDFC Bank, SBI and ICICI Bank are other notable banks that offer housing loans at low interest rates.
Home loan rate of interest is currently at its all-time low due to a series of repo rate cuts by RBI. You can get a home loan at the lowest home loan rate, provided you are salaried with a property value of up to Rs. 30 lakh. The home loan rates are even lower for women borrowers as lenders offer interest concession on properties with a primary owner of co-owner as a woman.
What is the home loan interest rate offered by SBI and HDFC Bank?
The latest home loan interest rate offered by both SBI and HDFC Bank is 6.95% onwards.
What is the EMI for 20 lakhs home loan?
The EMI for 20 lakhs loan at the latest Home Loan interest rate of 6.85% for the tenure of 30 years is Rs. 655.26.
How can I check total interest payout for my home loan?
You can know your total home loan interest payout by using a home loan EMI calculator. The calculator also tells you about your home loan EMIs and total principal amount. To get the results, all you need to provide are a few details, loan amount, interest rate and loan tenure.
Which one offers home loan at a lower rate of interest – Banks or HFCs?
Banks, usually, offer home loans at a lower rate of interest than Housing Finance Companies (HFCs). However, the eligibility criteria for home loans from banks are often more stringent than that of HFCs.
Which bank is the best to get a 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:
- Know how much loan amount you can afford to borrow with the help of a home loan eligibility calculator
- Compare home loan interest rates from the eligible offers. Opt for a lender offering home loans at lowest interest rates
- Check and compare other fees and charges applicable on home loans such as the processing fees and prepayment charges
- Check if the lender offers prepayment facility, customized home loan insurance scheme, online account access, etc.
- Also, check for different loan repayment options
Which are the top banks/HFCs offering home loan in India?
Top banks / NBFCs / HFCs offering home loan in India are:
- State Bank of India (SBI)
- HDFC Ltd.
- Bajaj Housing Finance Ltd.
- ICICI Bank
- LIC Housing Finance Ltd.
- Axis Bank
- Bank of Baroda
- Kotak Mahindra Bank
- Aditya Birla Housing Finance Ltd.
- IDFC First Bank
Home Loan Interest Rate News
SBI’s special offers on home loans
11 September 2020: The State Bank of India (SBI) has announced special offers on home loans. The lender will offer borrowers applying for SBI home loans three benefits, nil processing fee, 0.10% interest concession for borrowers with a higher CIBIL score for loans above Rs. 30 lakh and less than Rs. 1 crore and lastly additional 0.5% of interest concession of the loan is applied through SBI’s YONO app.
Bank of Maharashtra and Indian Overseas cut MCLR rates
08 September 2020: Bank of Maharashtra has cut its Marginal Cost of funds based Lending Rate (MCLR) by up to 10 basis points for select tenors. The Indian Overseas Bank (IOB) has also decided to cut its MCLR by 10 basis points across all tenors with effect from September 10. Bank of Maharashtra has reduced its 1-year and 6-month MCLR to 7.30% and 7.25%, respectively. For overnight and 1-month and 3-month tenors, the lender has reduced the MCLR to 6.8%, 7% and 7.2%, respectively. The IOB has also revised its 1-year, 6-month and 3-month MCLRs to 7.55% and 7.45%, respectively.
HDFC reduces MCLR by 10 bps
07 September 2020: HDFC Bank has cut its Marginal Cost of funds based Lending Rate (MCLR) on home loans by 10 basis points across all tenors. The revised MCLR rates will be effective from 7 August 2020. After the latest rate cut, its overnight MCLR has reduced to 7%, one-month MCLR has decreased to 7.05%, one-year MCLR is now 7.35% and the three-year MCLR currently stands at 7.55%.
HDFC approves Rs 47k cr home loans under PMAY scheme
07 September 2020: In a regulatory filing, HDFC Ltd. revealed that it approved over Rs 47,000 crore of home loans under Pradhan Mantri Awas Yojana Credit Linked Subsidy Scheme (PMAY CLSS) to over two lakh eligible homebuyers.
PNB raises repo-linked lending rate by 15 bps
01 September 2020: Punjab National Bank has raised its repo-linked lending rate by 15 basis points to 6.8%. All new retail loans including home loans are linked to the repo rate. The increase in the repo rate will also increase the interest rate of retail loans including PNB home loan. The bank has also cut its base rate by 10 bps to 8.9%. The revised lending rates will be effective from 01 September.
Indian Bank slashes 1-year MCLR by 5 basis points
01 August 2020: Indian Bank has announced cut on one year Marginal Cost of funds based Lending Rate (MCLR) by 5 basis points. The revised one year MCLR of the bank stands at 7.3%, effective from 03 September.
Indian Bank cuts lending rates by 30 bps
01 June 2020: Indian Bank has announced cut on its Marginal Cost of funds based Lending Rate (MCLR) by 30 basis points across all tenors. The revised MCLR will be effective from 03 June. After the rate revision, the bank’s one-year MCLR will stand at 7.5%. And overnight and one-month MCLRs have been reduced to 7.2% and 7.25%, respectively.