Home Loan Interest Rate & EMI In India, September 2020
HIGHLIGHTS
- Lowest Home loan interest rates starting at 6.90%/annum
- No prepayment charges on home loans linked to floating rate of interest
- A base point is equal to one-hundredth of a percentage point.
- Interest rates are based on the floating rate system.
- Factors that high income, property in a good location, valid income proof, and good CIBIL score affect the home loan interest rate.
- The home loan interest rate can be reduced by transferring the balance to a new lender offering a lower rate of interest than the existing lender.
It is quite common that people look for a lower interest rate. As a borrower, you can check the home loan interest rates of various lenders and then select one. Home loan interest rates in the country are at a 15-year low, with many banks charging less than 7% in slabs. Interest rates have fallen sharply since the Reserve Bank of India’s (RBI) cumulative 115 basis point rate cut following the outbreak caused a nation-wide lockdown of COVID-19 in March 2020. A base point is equal to one-hundredth of a percentage point.
Good income and proof of this is one of the most important things to get a home loan. Your credit history and credit score are also helpful in getting the desired home loan interest rate. Here are the interest rates offered by the top banks in India.
The home loan interest rate is one of the major factors that determine the cost of borrowing. A lower home loan interest rate is always preferred because it reduces the total interest payment for the borrower.
Interest Rate And Processing Fee On Home Loan By Banks
The below table shows the home loan interest rates and processing fees offered by several lenders in alphabetical order:
| List of Banks/NBFCs | Floating interest rate (percent, per annum) | EMI per ₹ one lakh | Processing fee |
| Allahabad Bank | 7.15 – 7.50 | Up to 0.40% of the loan amount to a max ₹ 50,000 | |
| Andhra Bank | 6.70 – 7.15 | 0.50 % of loan amount subject to a maximum of ₹ 10,000 + GST | |
| Axis Bank | 7.75 – 8.55 | 821-871 | Up to 1% of the loan amount subject to a minimum of ₹ 10,000
Upfront processing fee of ₹ 2,500 + GST |
| Bandhan Bank | 8.50 – 11.75 | 1% of Loan Amount, Min ₹ 5,000 + GST | |
| Bank of Baroda | 7.00 – 8.40 | 775-858 | Up to 0.50% of the loan amount or a maximum of ₹ 7,500 + GST |
| Bank of India | 6.85 – 7.75 | 766-821 | 0.25% of the loan amount + GST |
| Bank of Maharashtra | 7.05 – 8.45 | As applicable | |
| Canara Bank | 6.90 – 8.90 | 769-893 | 0.5% of the loan amount + GST |
| Central Bank of India | 6.85 – 7.30 | 766-793 | 0.50% of the loan amount subject to maximum ₹ 20,000 + GST |
| Citibank | 7.20 Onwards | Up to 0.40% of the loan amount + GST | |
| Corporation Bank | 6.70 – 7.15 | 0.50% of the loan amount. Max ₹ 50,000 + GST | |
| Dena Bank | 7.00 – 8.40 | As applicable | |
| Federal Bank | 7.90 – 8.05 | 0.50% of the loan amount to a maximum of ₹ 7,500 + GST | |
| Fullerton India | 8.99 – 12.00 | 3% of the loan amount + GST | |
| HDFC Limited | 6.95 – 8.00 | 772-827 | Up to 0.50% of the loan amount or ₹ 3,000 whichever is higher, plus applicable taxes. |
| HSBC | 7.45 – 7.55 | 1% of the loan amount + GST | |
| ICICI Bank | 6.95 – 8.05 | 772-840 | Up to 1.00% of the loan amount + GST |
| Indian Overseas Bank | 7.05-7.3 | 778-793 | 0.5%, up to ₹ 25,000. |
| IDBI Bank | 7.40 – 8.40 | 0.50% of the loan amount to a maximum of ₹ 2,500 + GST | |
| Indian Bank | 7.15-7.5 | 784-806 | 0.23% of the loan amount, with a maximum of ₹ 20,470. |
| IDFC First Bank | 11.00 | Upto ₹ 10,000 + GST | |
| IndusInd Bank | 7.55 – 8.45 | ₹ 10,000 + GST | |
| Indiabulls Housing Finance | 8.99 Onwards | 0.50% of the loan amount to a maximum of ₹ 15,000 + GST | |
| Jammu & Kashmir Bank | 7.20 – 7.60 | 0.25% of the loan amount to a maximum of ₹ 10,000 + GST | |
| Karnataka Bank | 8.17 – 8.99 | 0.50% of the loan amount + GST | |
| Karur Vysya Bank | 8.20 – 10.05 | Up to ₹ 7,500 + GST | |
| Kotak Mahindra Bank | 7.40 – 9.70 | 781-919 | Zero processing fee for online application (Up to 1.25% of the Loan amount for offline application) |
| LIC Housing Finance | 6.90 – 7.90 | Loan Amount Upto ₹ 1 crore – 0.25% + GST or ₹ 10,000 + GST which ever is less
Loan Amount More than ₹ 1 crore – ₹ 25,000 + GST |
|
| Lakshmi Vilas Bank | 8.55 | As applicable | |
| Nainital Bank | 7.00 – 7.60 | As applicable | |
| Oriental Bank of Commerce | 7.15 – 7.75 | 0.50% of the loan amount to a maximum of ₹ 20,000/- + GST | |
| Punjab National Bank | 7.15 – 7.75 | 775-812 | 0.35% of the loan amount, subject to a minimum and maximum of ₹ 2,500 and ₹ 15,000 respectively |
| PNB Housing Finance | 8.60 – 9.45 | ₹ 10,000 + GST | |
| Punjab & Sind Bank | 7.30 – 7.65 | Up to 0.25% of the loan amount to a maximum of ₹ 15,000 + GST | |
| Reliance Home Finance | 8.75 – 14.00 | Up to 0.75% of the loan amount + GST | |
| RBL Bank | 10.30 – 11.65 | ₹ 5,000 – ₹ 15,000 of the loan amount + GST | |
| SBI | 6.95 – 7.60 | 772-812 | 0.35 % of loan amount and maximum ₹ 10,000 +GST |
| Standard Chartered Bank | 8.71 Onwards | ₹ 10,000 + GST | |
| South Indian Bank | 7.85-9.25 | 827-916 | 0.50% of the loan amount (minimum of ₹ 5,000 and a maximum of ₹ 10,000). |
| Syndicate Bank | 6.90 – 8.90 | 0.125% of the loan amount or a maximum of ₹ 5,000 + GST | |
| Tata Capital | 9.25 Onwards | As applicable | |
| UCO Bank | 7.15 – 7.25 | 784-790 | 0.5% of the loan amount, to a maximum ₹ 15,000 + GST |
| United Bank of India | 7.15 – 7.75 | As applicable | |
| Union Bank | 6.7-7.15 | 757-784 | 0.50% of the loan amount, subject to a maximum of ₹ 15,000 (plus applicable tax). |
| Vijaya Bank | 7.00 – 8.40 | ₹ 4,000 + GST | |
| Yes Bank | 8.95 – 11.80 | 0.5% of the loan amount or a maximum of ₹ 10,000 + GST |
Note: The EMI is based on a loan amount of ₹1 lakh for a tenure of 20 years.
Interest rates are based on the floating rate system. Rates may be subject to revision after a specified period depending on the terms and conditions of the bank. The EMI range is indicative and calculated based on the interest rates given in the table. In the actual cases, this may include other fees and charges as per the terms and conditions of the bank. The actual interest rate may vary depending on the credit profile of the loan applicant. The data in the table are for illustration purposes only.
Data were taken from the respective bank’s website, as on September 14, 2020.
FAQs
Tips To Get The Lowest Home Loan Interest Rates
There are some factors based on which a home loan interest rate is offered which are mentioned below:
- Good credit score – To get approval for this, you must have a CIBIL score of 650 or higher.
- High Income – A person with a higher income is more likely to receive a lower rate and a higher amount.
- Valid income proof – Many people do not know that if you do not have income proof or salary slip then your loan application can be rejected. Only a few NBFCs accept such cases but then they offer higher rates.
- Apply at the existing bank – A good understanding with the bank helps you to avail higher loan amount and that too at the interest rate of your home loan without any hassle.
- Keep all property-related documents – It is very important to maintain and keep all property documents with you as it helps the lender to properly identify your property and its value and thus trust your profile.
- Apply at a young age – If you are in your late 30s or 20s at the time of applying, you are more eligible for a higher loan amount because you have lower financial liabilities.
- Property in a good location – Assets in an accepted society are more likely to receive a loan amount of up to 75–90% of the property value.
- Transfer your home loan to a lower EMI – You can transfer your existing home loan to a lender offering a lower rate on your home loan to save your money.
What Factors Affect Home Loan Interest Rates?
Factors responsible for the increase or decrease in the rate of home loan interest in India are:
Credit score
Credit scores are now used by lenders to fix home loan interest rates over and above the external benchmark rate. A low credit score attracts higher rates of interest on home loans and vice versa.
Loan amount
The loan amount you borrow can also affect the rate at which you get a home loan. Home loan up to Rs.30 lakhs usually have lower interest rates as compared to a high amount of home loans.
Employment Type
The home loan interest rate for salaried professionals is lower than the interest rate charged for self-employed professionals. This is because the income of salaried employees is stable. In the case of the self-employed, income is dependent on market conditions and other external factors.
Interest Rate Type
There are two types of home loan interest rates – fixed and floating. The type of interest rate you choose for your home loan will decide the rate at which you will return it to your lender. In the case of fixed-rate home loans, the EMI remains the same for the entire loan term. Floating rates, on the other hand, vary according to changes in its lending rate, such as the repo linked lending rate (RLLR).
Applicant’s Gender
Many lenders like SBI offer fixed concessions on home loan interest rates for women borrowers. Such banks offer a concession of 0.5 bps to women borrowers at prevailing interest rates.
Home Loan Types
The interest rate of a home loan also varies according to the type of home loan. Regular home loans have standard rates while their counterparts such as plot loans or NRI home loans typically have higher interest rates.
External Benchmark Rate
According to the RBI notification, from October 2019, housing loan interest rates are linked to external benchmark rates such as the RBI Policy Repo Rate, 3-month and 6-month Treasury bills by the Government of India, which are Financial Benchmark India Private Limited (FBIL) and any other benchmark market interest rate published by FBIL. Under the new rule, any change in the external benchmark rate will affect the home loan interest rate of all banks in India.
How to calculate your Home Loan EMI?
A home loan EMI calculator is used to check monthly installments on a home loan. You have to mention the housing loan interest rate, total loan amount, and tenure. The formula used for calculation is as follows:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
Where EMI = Equated Monthly Installment
P = Principal Loan Amount
R = Monthly Interest Rate
N = Number of Monthly Installments
Types of Interest Rates Offered on Home Loans
There are two types of home loan interest rates, on which lenders approve home loans, fixed and floating.
Floating rate Home Loan
A floating rate home loan is one where the interest rate is linked to the benchmark rate and the interest rate changes with the change in the benchmark rate.
Fixed-rate Home Loan
A fixed-rate home loan is one where the rate of interest is set for a specific period and the rate of interest does not change with the benchmark rate movements.
Which bank is the best to avail of home loans?
Which bank would be best for taking a home loan depends on your loan requirements. Some tips that can help you choose the best home loan offer are as follows:
Which bank is the best to avail of home loans?
Which bank would be best for taking a home loan depends on your loan requirements. Some tips that can help you choose the best home loan offer are as follows:
- Know how much loan amount you can avail with the help of a home loan eligibility calculator.
- Compare home loan interest rates with eligible offers. Options for home loan lenders at the lowest interest rates.
- Check and compare other fees and charges that apply to home loans, such as processing fees and prepayment fees.
- Check if the lender offers a prepayment facility, customized home loan insurance scheme, online account access, etc.
What is the difference between fixed and floating interest rates?
Under the fixed-rate, the interest rate you pay remains the same. In floating rate, the interest you have to pay will vary according to the prevailing MCLR / RLLR.
Which interest rate is better?
Usually, fixed interest rates are higher than floating rates. However, fixed interest rate home loans have fixed EMIs, while EMIs vary according to floating interest rates. Fixed rates can save more money than floating rates on home loans.
Can you change your home loan from floating to fixed?
There are two ways to convert your home loan interest rate from floating to fixed. You can reconcile the terms with your existing lender or you can transfer your loan to a new lender.
At what rate is interest paid a better option?
The rate of interest offered by banks, which is associated with the external benchmark rate, is considered better because it offers a rapid change in the rate.
How can I reduce my Home Loan interest rate?
The home loan interest rate can be reduced by transferring the balance to a new lender offering a lower rate of interest than the existing lender. One can also contact an existing financier to reduce the rate of interest.
Data source: respective banks website
