Current Home Loan Interest Rates, October 2021
|Name of Lender||Up to 30 Lakh||Above 30 Lakh &|
Up to 75 Lakh
|Above 75 Lakh|
|PUBLIC SECTOR BANKS|
|Bank of Baroda||6.50% – 8%||6.50% – 8%||6.50% – 8.25%|
|Punjab National Bank||6.80% – 7.75%||6.60% – 7.90%||6.60% – 8%|
|Punjab & Sind Bank||6.65% – 7.60%||6.65% – 7.60%||6.65% – 7.60%|
|State Bank of India||6.70% – 7.50%||6.70% – 7.75%||6.70% – 7.75%|
|IDBI Bank||6.75% – 9.90%||6.75% – 9.90%||6.75% – 9.90%|
|Union Bank of India||6.80% – 7.60%||6.90% – 7.65%||6.90% – 7.65%|
|Indian Bank||6.80% – 8.75%||6.80% – 8.50%||6.90% – 8.50%|
|Central Bank of India||6.85% – 7.30%||6.85% – 7.30%||6.85% – 7.30%|
|Bank of India||6.50% – 8.35%||6.50% – 8.35%||6.50% – 8.35%|
|UCO Bank||6.90% – 7%||6.90% – 7%||6.90% – 7%|
|Bank of Maharashtra||6.80% – 8.30%||6.80% – 8.45%||6.80% – 8.55%|
|Canara Bank||6.90% – 11.45%||6.90% – 11.45%||6.90% – 11.45%|
|Indian Overseas Bank||7.05% – 7.40%||7.15% – 7.40%||7.30% – 7.40%|
|PRIVATE SECTOR BANKS|
|Kotak Mahindra Bank||6.50% – 7.25%||6.50% – 7.25%||6.50% – 7.25%|
|ICICI Bank||6.70% – 7.55%||6.70% – 7.55%||6.70% – 7.55%|
|Axis Bank||6.75% – 11.50%||6.75% – 11.50%||6.75% – 11.50%|
|Karur Vysya Bank||7.15% – 9.35%||7.15% – 9.35%||7.15% – 9.35%|
|South Indian Bank||7.25% – 10%||7.25% – 10%||7.25% – 10%|
|Karnataka Bank||7.50% – 8.75%||7.50% – 8.75%||7.50% – 8.85%|
|Federal Bank||7.65% – 7.70%||7.70% – 7.75%||7.75% – 7.80%|
|Dhanlaxmi Bank||7.85% – 9%||7.85% – 9%||7.85% – 9%|
|Tamilnad Mercantile Bank||8.25%||8.25%||8.25%|
(GRUH Home Loan)
|8.50% – 13.50%||8.50% – 13.50%||8.75% – 13.50%|
|RBL Bank||10.20% – 12.80%||10.20% – 10.70%||9.50%- 10%|
|HOUSING FINANCE COMPANIES (HFCs)|
|LIC Housing Finance||6.66% – 7.85%||6.66% – 8.05%||6.66% – 8.05%|
|HDFC Ltd.||6.70% – 8.45%||6.70% – 8.60%||6.70% – 8.70%|
|Tata Capital Housing Finance||>=6.70%||>=6.70%||>=6.70%|
|Bajaj Finserv||6.70% – 14%||6.70% – 14%||6.70% – 14%|
|PNB Housing Finance||7.20%-12%||7.20% – 12%||7.40% – 12%|
|Repco Home Finance||>=7.50%||>=7.50%||>=7.50%|
|GIC Housing Finance||>=7.90%||>=7.90%||>=7.90%|
|Indiabulls Housing Finance||>=8.65%||>=8.65%||>=8.65%|
|Aditya Birla Capital||9.00 – 12.50%||9.00 – 12.50%||9.00 – 12.50%|
|Reliance Home Finance||9.75% – 13%||9.75% – 13%||9.75% – 13%|
Home loan interest rates for all lenders as on 20th October 2021.
Housing loan interest rates in the table are subject to change anytime without prior notice. The interest rates given in the table are subject to the credit/ risk profile as assessed by the lender on the basis of parameters such as credit scores, age and repayment capacity of the applicant.
Home loan interest rate is perhaps the most important factor that can significantly influence the total cost of your house. As home loans are usually of higher value and longer tenure, even a small difference in its interest rate can have considerable financial implications, especially in the long run. Getting a lower home loan rate would not only reduce your outgoing EMIs, but also the overall home loan interest payout. Hence, it is imperative that if you are looking for a home loan, you consider comparing all possible options available to you and choose the lowest interest rate on offer. Currently, the lowest home loan interest rate being offered is 6.50% p.a. by Kotak Mahindra Bank, Bank of Baroda and Bank of India followed by other top lenders such as LIC Housing Finance, Punjab National Bank, Punjab and Sind Bank, ICICI Bank, Bajaj Finserv, State Bank of India, Union Bank of India and HDFC Ltd.
|Note: Besides interest rate, there are several other fees and charges that impact the total cost of your housing loan, like processing fees, CERSAI charges and prepayment charges (in case you want to close the home loan before the tenure ends through lumpsum payments). It’s important you are aware and understand these additional charges so that you can identify which home loan offer will help you save more. For instance, some lenders might have the same home loan interest rate but different associated fees and charges, which may make a large difference to the total cost of the home loan.|
Table of Contents
Use a home loan EMI calculator to know the EMIs you would be paying against different interest rates and loan tenures. The online loan calculator also works as a home loan interest calculator as it helps you know the interest amount due on your home loan along with the overall EMI amount. Click to know how does the home loan calculator work?
How to get a home loan at a low interest rate?
Since home loans are usually high-ticket size loans, banks and NBFCs do a careful and detailed assessment of the borrower’s credit history, repayment capacity, income along with stringent checks on the property to be purchased. For borrowers seeking a home loan, it’s crucial they are aware of the factors lenders look at while processing a home loan application, and have a deep awareness of their own eligibility. It needs to be noted that low interest rates also usually come with stricter eligibility conditions. Here are the factors that lenders evaluate to determine your eligibility for a home loan and the interest rate to be offered:
- Credit score: Your credit score is a result of your behaviour with credit in the past. Those who have paid their EMIs and credit card bills in full, timely and have not been over-dependent on credit in the past are likely to have a good credit score. If your credit score from CIBIL and other bureaus is 750 and above, lenders would see you favourably for a home loan. Also, as per RBI guidelines, banks now use an applicant’s credit score to fix home loan rate of interest, over and above the external benchmark rate. Since a high credit score reflects responsible credit behaviour, applicants with an excellent credit score can get home loans at a lower rate of interest. Please note that if the home has a co-ownership, the credit score of each owner is likely to be checked by the lender, even if the loan is taken by a single co-owner.
- Income and employment: Another key factor lenders evaluate is your income, type of employment and profile of your employer. Home Loan applicants, who have a stable job with a large and reputed organization like an MNC, or those employed by the Government, are usually preferred by lenders. On the other hand, if you are self-employed with erratic income flows or have an unstable job profile or have just begun your professional journey, getting a Home Loan at a lower rate of interest may be difficult.
- Loan amount: The loan amount you seek 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 higher amounts. To get a better rate of interest on your home loan, one should try and make the maximum down-payment possible. This will not just reduce the overall loan burden but may also help get a lower rate of interest on their loan.
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Please note along with the above, there are certainly other factors that may also impact the interest rate on home loans:
- 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 their 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.
- Lesser interest rate for women home loan borrowers: Most banks provide concession on home loans, typically 0.5% lesser interest rate, to women borrowers. Hence, it is advised that married couples should consider taking a joint-home loan and make the wife the primary applicant if they are able to get a lower rate of interest. Availing joint home loan will also increase your home loan eligibility as well as home loan tax benefits.
- 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 to your lender. In the 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).
Which type of interest rate should you choose – fixed or floating interest rate?
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.
How much interest do you need to pay on your home loan?
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.
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 the reducing balance method of interest calculation is used.
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Interest Rate FAQs
Q. What is today’s home loan interest rate?
A. Home loan interest rate today is 6.50% 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.
Q. Which bank offers the lowest interest rate on home loans?
A. Kotak Mahindra Bank, Bank of India and Bank of Baroda offers home loan at the lowest rate of interest starting at 6.50% per annum. Followed by Punjab & Sind Bank and LIC Housing Finance, which currently is offering housing loans at 6.65% and 6.66% p.a., respectively. Other lenders following the suit are SBI, HDFC Bank, ICICI Bank, Bajaj Finserv, PNB, Union Bank of India, Axis Bank and Tata Capital Housing Finance offering housing loans at low interest rates.
The 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 and a credit score as close to 900 as possible. The home loan rates are even lower for women borrowers, as lenders offer interest concession on properties with a primary owner or co-owner as a woman. Existing home loan borrowers too can benefit from the lower rates by transferring their home loan to another bank offering them a better home loan rate of interest.
Q. How to reduce home loan interest burden?
A. 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 or reduce the loan tenure to reduce the total interest payable
- Part-prepay your home loan to decrease EMIs and save on interest
Q. What factors determine interest rates?
A. Factors responsible for the increase or decrease in the housing loan interest rate in India include credit score, loan amount, type of employment, total income, interest rate type, gender of the applicant, home loan type and external benchmark rate.
Q. How to get the cheapest home loan in India?
A. There is no set formula to avail housing loan at the lowest interest rate. However, there are a few practices which can help you avail the lowest housing loan rate possible. Some of these practices are:
- Keep credit score close to 900: Your credit score shows how well you handled your credit in the past. 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 joint home loan: You can get the cheapest home loan interest 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 loans 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.
- Refinance your home loan: Apply for 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.
- Increase home down payment: Loan amount is yet another factor that affects your home loan rate. For lenders, as the home loan amount increases, the associated credit risk also increases. To accommodate the increased risks, lenders levy a higher rate of interest. So, customers striving to avail home loan at the lowest interest rate possible should try borrowing less by contributing more towards their home down payment.
Q. Which one offers home loan at a lower rate of interest – Banks or HFCs?
A. 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 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
- 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
Q. Which is the best bank for home loan in India?
A. Top banks / NBFCs / HFCs offering best 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
Q. How can I calculate home loan interest?
A. You can calculate home loan interest payable with the help of a home loan EMI calculator. Besides calculating EMI, the home loan calculator also computes the total interest payable on your housing loan. to give results, the online loan calculator requires just a few basic details, loan amount, interest rate and tenure. Additionally, it also displays amortization schedule, which basically is the detailed breakup of your home loan repayment schedule. With the help of an amortization table, you can check how much of your money went into interest payment.