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Different banks in India provide their customers with different interest rates. Generally the interest rates for home loan range between 8.35% and 14%. Some public and private sector banks and financial companies offer lowest home loan interest rate in India so people tend to avail funds from them. At loanbaba, you can make comparisons of different rates of different banks and companies so you can easily take decision about the bank from which you want to avail the loan
Type of Interest Rate
Fixed and Floating
1% to 2% of the loan amount
Up to 80% of the house purchase value (20 percent is margin minimum)
1 year to 15 years or more
Preferable Credit Score
650 and above
PNB Housing Finance
Several factors may influence the rate of interest for home loan. Below listed are some of the major factors that affect the home loan interest in India.
The home loan interest rates in India are of two types. The concerned bank may offer both or any one option while applying for the loan. Both methods to compute the interest on main amount are given below:
The interest rate remains the same throughout the repayment duration in this type of computing system. As the name suggests, there will not be any change in interest amount. Based on the offer availed, the borrower may switch to any other system with floating rates once he/she completes a fixed period of the tenure. Be sure to compare home loan interest rates India before choosing this type of rate for the housing loan.
The rates floating loans keep changing as per the current rates. The current rates are dependent on various factors like monetary policy and revisions of lending rate by Reserve Bank of India and response of the bank towards revisions etc.
A few banks give permission to change the loan from floating to fixed and vice versa after a decided duration, let's say five years. You should be assure of whether the bank provides the option of switching the loan or not while applying for it and opt for the option for getting advantage of the fluctuating rates.
Here are some of the ways you can get lowest interest rate home loans for yourself.
Here are some home loan rates tips to help you get a suitable offer:
Following are the FAQs on home loan rate of interest in India:
You can compare offers from leading banks such as SBI home loan interest rates, HDFC home loan interest rates and so on to come to a conclusion about the best rate. However, you must also note other charges involved and terms and conditions regarding repayment, tenure etc, before deciding on a financial institution for the funds.
This is bank's standard rate which is applied on all the retail loans. The rate gets changed frequently based on various inputs. Effective from April 2016, a new method to compute lending rate for replacing the system of base rate is mandated by RBI.
This rate of small percentage in addition with base rate results in Effective Interest Rate (EIR) for a specified kind of home loan and it is different for each loan. EIR= Base rate + Markup rate. The aim of the MCLR is to bring more flexibility and accountability in the way the financial institutions and banks publish the rates.
The Reserve Bank of India has mandated the banks for fixing the rate because of the risk factors involved in lending. For this, different factors are taken into account like deposits and repo rate etc. The computation system based on the MCLR is somewhat lower as compared to previous base rate.
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