Home Loan Interest Rates

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

Particulars of Interest Rate Home Loan

Interest Rate and Other Charges Applicable

Interest Rate

8.35% onwards

Type of Interest Rate

Fixed and Floating

Processing Fees

1% to 2% of the loan amount

Loan Amount

Up to 80% of the house purchase value (20 percent is margin minimum)

Loan Tenure

1 year to 15 years or more

Preferable Credit Score

650 and above

Home Loan Interest Rates from Top Indian Banks

Following are the interest rate in home loan by leading banks and NBFCs in India.

Factors Affecting Home Loan Interest Rates

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.

  • Income- A good and stable income confirming that you can easily repay the amount, results in lowest interest rate for home loan.
  • Credit Score- If your credit history is good then you can have a nice deal and secure low interest rates home loans.
  • Property's Location- This factor also plays a major role in deciding the rate. The applicants with properties that are located in prime location or a trusted agency or builder is procuring it, have chances of getting most favourable charge on rate of interest.
  • Amount of the Loan- If the amount of the loan is high then there are chances that the rates will be lower. At loanbaba, you can compare home loan interest rates as per the amount you require.
  • Loan Type- Standard loans which you avail for buying a house etc. fetch normal rates but loans like home improvement fetch higher interest rate. Be sure to check banks home loan interest rates of specific nature before choosing the financial institution.
  • Tenure of the Loan- Generally long term loans offer lower rate of interest. Be sure to know about the tenure of the loan and its effect on the rate so that you can get maximum advantage from the loan.
  • Interest Rate Type- As we have told earlier, the interest charges highly depend on the interest rate type of the loan. Fixed rate loans fetch somewhat higher interest charge. 
  • Type of Employment - The banks maintain different slabs for people who are self-employed and for salaried people. Applicants who are salaried are offered lower bank home loan interest rates than self-employed people because of the risk involved.

Types of Interest Rates for Home Loan

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:

  • Home Loans with Fixed Rate

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.

  • Advantages - As the rate is fixed, you will have the clear idea about the interest charges you are going to pay upfront. In this way, you will save money as the rates won't fluctuate in case the lending rates increase. 
  • Disadvantages - In case the rates get reduced, then you won't get advantage as your rates will be the same.
  • Home Loans with Floating Rates

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. 

  • Advantages- The first and important benefit of this loan is that the bill will be based on the latest rates. In case the rates go down, then you have to pay lesser interest charge.
  • Disadvantage - In case the rates increase, then you have to pay higher interest charge and you will be billed according to higher rate.

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. 

How to Get Better Interest Rates on Home Loans?

Here are some of the ways you can get lowest interest rate home loans for yourself.

  • Set the Target of the EMI- You can repay the amount at a faster pace by paying more amount than the decided EMI each year. Plan your finances accordingly. This way you are paying lower interest outflow on the total loan amount.
  • Increase the EMI-If you get promotion or your income increases, then you can increase the amount of the equated monthly instalment or choose a repayment patter that allows discounted rates.
  • Refinance the Loan- You can also switch to another lender in case the lender is providing the loan at lower home loan bank interest rates. But, you should be updated about the penalties for prepaying the amount and other legal charges before switching. 
  • Shorter Tenure- If the tenure is short then the EMI will be high. But in all you need to pay less interest amount in this case.

Home Loan Interest Rates Tips

Here are some home loan rates tips to help you get a suitable offer:

  • Choose a Suitable Tenure: Shorter tenure means greater equated monthly instalment. But it also means that you will be able to close the loan earlier and pay lower amount as you save on the interest payout on a longer tenure. If you can afford to pay larger EMIs then you should do so.
  • Special Housing Loans: Some financial institutes have special loan schemes for specific residential purposes. For example: home extension loan, home construction loan, home improvement loan and so on. Rather than taking a general loan, you can choose specific ones and enjoy the discounted rates and greater benefits associated with the scheme.

Frequently Asked Questions about Home Loan Interest Rate

Following are the FAQs on home loan rate of interest in India:

  • add1. How to choose lowest interest rate home loans?

    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.

  • add2. What is Home Loan base rate?

    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.

  • add3. What is Home loan markup rate?

    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.

How to Apply for a Home Loan?

Applying for a home loan at Loanbaba.com is simple, just follow the below mentioned steps.

Step 1: Apply for housing loan at:https://www.loanbaba.com/home-loan

The application is sent electronically to Loanbaba team. The customer service representative gets in touch with the applicant directly.


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