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Home Loan Interest Rates In India

Comments(9) Sub Category:Home loan,Property,Property Buying Posted On: Jun 08, 2012

Home Loan Interest RatesHaving an elegant home is every person’s dream, as it is one of the most important assets which can be possessed. Maximum number of property buyers go for a home loan to buy a property in India. Perhaps, the escalating property prices are one of the major hindrances while buying a home. Not just the property rates hit the customer, but also the high interest rates. Apart from these interruptions, the property buyers also have to experience various complications while trying to look out for the best home loan rates. Major banks such as ICICI, SBI, IDBI, Syndicate, HDFC and others provide different packages of home loan interest rates.

What are home loan interest rates?

An interest rate on a home loan is the amount which is paid by the customer in lieu of the loan which is provided by the financial institution or the bank. The concept of the home loan interest rate is a vital aspect while seeking a home loan. A customer has to carefully decide the right home loan interest rate package and the type of bank to opt for. Depending on the interest amount, the home loan, the home loan tenure and the EMI, a person can repay his loan. The home loan rates are decided based on these principles.

It is very important to choose a bank with lower interest rates because if the interest rate is higher, the customer has to pay a higher EMI and if the interest rate is lower the customer has to pay lower EMI. Doing this will save a lot of money as well.

Types of home loan rates

  • Fixed home loan rates: In this form of home loan rates, the rates are fixed throughout the term in all the conditions. These rates are very expensive and are exclusive in the market.
  • Resettable fixed rates: These forms of home loan rates are mostly present all over the market as the interest rate is fixed for a period of 2-5 years and is then reset for the upcoming years. These rates are considered to be more reasonable and one needs to be clear about the nature before opting for this loan rate.
  • Floating home loan rates: These types of home loan rates can be varied and adjusted.

Importance of base rates of the banks

A base rate is the least interest rate by a bank below which it cannot lend. This can exclude the DRI advances and the loans to the bank’s own employees and depositors against their own deposits.

One of the most important factor on which the interest rate is based on is the bank’s ‘Base rate’. The introduction of the base rate was levied by the RBI on July 2010 with effect. The base rate is declared by every bank once in every quarter of the year and differs from each bank. The fixing of a bank’s base rate can be decided by the bank on its own methodology but the bank will not be allowed to change the methodology once it is chosen. It is the responsibility of the bank to document the influx of the base rate on a continuous basis.

The base rate calculation review will be done by the RBI by following a set system for the calculation. Earlier, the process of BPLR (benchmark prime lending rate) was used to review a bank’s base rate. With the invent of the new policy of documenting the base rate, it has become easier to carry the task in a precise and fair manner even though the customer has a vague idea about the base rate concept. This technique is better than the former BPLR technique.

Off late, the RBI has barred the concept of lending below base rates, but for a selected group of loans such as employee loans, differential Interest rate loans to SC/ST, loan against its own fixed deposits and others are allowed. With this a customer is benefited when the market rate softens as the new borrowers will have many options unlike earlier. If a base rate is fixed at a bank, the same will be followed by the corporates and home loan seekers.

The fall in the interest rates in the market will force the banks to reduce their base rates to the new customers with the previous base rate. Thus, one of the reasons of the fall in the base rate is the fall in the market interest rates. The reduced base rates will be applicable to both the old and the new customers.

The calculation of the base rate

As mentioned earlier, the calculations of the base rates were not precise earlier. Factors like the cost of funds, margin and the administrative costs were considered to calculate the base rates. The factors for the calculation of the base rate include-

  • Cost elements which are clearly identified and are common among borrowers.
  • The card interest rates on the retail deposit (deposits below Rs. 15 lakh) with one year maturity.
  • Adjustment for the negative carry in respect of the CRR and the SLR
  • Un-allocatable overhead cost for banks which would comprise a minimum set of overhead cost elements
  • Average return on net once the factoring in costs is incurred while sanctioning a loan.

Table representing the home loan interest rates in all the major banks and Housing Finances in India

BANK NAME

FLOATING INTEREST RATE PROCESSING FEE

PREPAYMENT CHARGES

ICICI Bank

(Fixed 1 yr) <= Rs 30 L – 10.25%

                    > Rs 30 L - 10.50%

(Fixed 2yrs)

                <= Rs 30 L – 10.25%

                  > Rs 30 L - 10.50%

(Fixed 3yrs)

                <= Rs 30 L – 10.50%

> Rs. 30 L <= Rs. 30L – 11.50%

0.50% of loan amount up to 1 crore N.A

State Bank Of India

Upto Rs 30 lacs – 10%

Above Rs 30 lacs – 10.15%

5,000 + service tax (Upto 30lacs), 10,000 + service tax (above 30lacs)

Nil

HSBC Bank 10% to 13% INR 10,000 plus service tax & cess1% of the loan amount applied for, subject to a minimum of Rs 10,000 plus service tax, payable on application and is not refundable

HDFC Ltd

 <=Rs 30 lacs – 10.50% to 10.75%<Rs 30 lacs – 10.50% to 11.50% 0.5% or maximum 10,000+service tax (12.36%)

No prepayment charges shall be payable for partial or full prepayments irrespective of the source

LIC Housing

[Upto 30 lacs]Scheme I : 10.75% (Fixed for 2 yrs) Scheme II : 11% (Fixed for 3 yrs) , 11.40% (Fixed for 5 yrs)
Scheme III : 11.20%(Fixed for 10 yrs)[30 lacs to 75 Lacs]10.25% – 11.20%[Above 75 lacs]10.75% – 11.20%
Up to 50 lacs : 10,000 +(Service tax)
50 lacs & above : 15,000 +(service tax)

Nil

AXIS Bank

Less than Rs. 25 Lac – 10.75%

Rs.25 lac – Rs. 75 lac - 11.00%

Above Rs. 75 lac – 11.25%

1% of the Loan Amount

2% (For Scheme I)
Nil (For Scheme II)

Standard Chartered

9.99% (Upto 25Lacs), then 10.40% Rs.7500/- + Service tax

NIL

IDBI

Below 75 Lacs – 10.50%75 lacs and above – 10.75% Up to 1%of loan amount
(Rs 2500 to be collected at login and balance at the time of sanction )

If Balance Transfer; 2% otherwise Nil

ING Vysya

10.75%

5000 + 12.36% (service tax) (Up to 20Lacs)
5000 + 12.36% (service tax) (Above 20Lacs)

NIL

DHFL

11.25% NIL

NIL

Deutsch Bank

10.75% 12000 + Service Tax

NIL

Citibank

10.50% – 11.25% 0.25% (for salaried),0.50% (for Self Employed)

NIL

Allahabad Bank

10.25% (Upto 25Lacs), then 10.75%

0.50% of loan amount, maximum Rs. 10,000/-

NIL

India Bulls

10.50% (Up to 25Lacs), Then 10.75% Up to 30lacs – 2,500 + 12.36% (service tax)
above 30lacs to 1.5Cr – 5,000 + 12.36%(service tax)
Above 1.5Cr – 10,000 + 12.36%(service tax)

NIL

Central Bank of India

10.50%

Processing charges are waived from 01.09.2012 to 31.12.2012

N.A

Bank of Maharashtra

10.80% (Up to 25 lacs) then 11% Nil(Up to 25Lacs)
0.50% (Max Rs 50,000/-) (25lacs & above)

N.A

Bank of India

10.50%

Upto 25 lacs : 0.50% of the loan amount Min Rs.4000/- and Max Rs.10,000
25 – 75 lacs : Flat Rs.20,000
75 lacs & above Flat Rs.25,000

NIL

Corporation Bank

10.50% Processing charges are waived from 01.09.2012 to 30.11.2012 under Grand Festival Bonanza.

NIL

Union Bank of India

10.50%

0.50% of the loan amount subject to maximum of Rs. 15,000

NIL

UCO Bank

10.50% N.A

N.A

United Bank of India 10.95% (upto 25 lacs) then 10.75% 0.50% of the loan amount

N.A

Bank of Baroda

10.50% N.A N.A
Oriental Bank of Commerce 10.50% 0.5% of the loan amount or maximum Rs.12,500/-

NIL

Dena Bank

10.50% N.A N.A
Kotak Bank

10.75%

0.25% – 0.5%

2% on Balance transfer else NIL

Canara Bank

10.75%
Punjab National Bank 10.50%

Vijaya Bank

10.75% N.A N.A
First Blue Home Finance 10.25% (for Salaried / SEP), 10.75% (For Self Employed) (Upto 25Lacs), Then 10.75% (for Salaried / SEP), 11.25% (For Self Employed)

Salaried: Up to 30 lacs :7300
30 – 75 lacs : 11800
75 lacs & above : 15,000 + service tax(12.36%)
Self Employed - 0.5% plus doc charges plus taxes.

Nil

Syndicate Bank

10.50% ( upto 25 lacs ), then 10.75% N.A N.A
Federal Bank 10.73% 2% on the balance outstanding or DP whichever is higher for credit limit above 2 lac

0.50% of the limit sanctioned with a minimum of 1000/-

Development Credit Bank

11.50% 1%

NIL

PNB Housing Finance

10.75% 0.5% NIL
State Bank of Travancore 11.25% Limit upto Rs.25,000 – Nil
Limit above Rs.25,000 to Rs.2 lacs – 0.55% of the loan amount (Max.Rs.500/-)
Limit above Rs.2 lacs – 0.55% of the loan amount maximum Rs.10000/-

NIL

Indian Bank

10.50% Upto 10Lacs : 0.25% of loan amount
10 Lac & above: 0.20% of loan amount with a minimum of Rs. 2,500/- & maximum of Rs. 20,000/- (Non refundable, to be remitted at the time of submission of application)
Nil
Dhanalakshmi Bank 12.50% (Uto 25Lacs), then 13% Loans Upto 20 lacs – Non Refundable fee of Rs 3500 plus service tax     Loans above 20 lacs – Non Refundable fee of Rs 5000 plus service tax

NIL

Tata capital Housing Finance ltd

10.75% 0.5 to 1% off the loan amount

N.A

Reliance

12% – 12.50% 0.75% of loan amount + Service Tax

NIL

Indian Overseas Bank

10.50% N.A

N.A

 

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9 Responses to “Home Loan Interest Rates In India”

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