Home Loan Interest rates: Purchasing a home is a significant milestone in anyone’s life, and for most people, it is a dream come true. However, the financial aspect of buying a home often requires securing a home loan. One of the crucial factors to consider while opting for a home loan is the interest rate.
In recent times, the real estate market has seen fluctuations, influencing the lending rates offered by financial institutions. This article will explore the latest home loan interest rates, helping potential homebuyers make informed decisions.
Understanding Home Loan Interest Rates:
Home loan interest rates represent the cost of borrowing money from a lender to buy a home. These rates can be fixed, variable, or a combination of both. Fixed rates remain constant throughout the loan tenure, providing stability to borrowers, while variable rates fluctuate based on market conditions, potentially offering lower initial rates.
Current Trends in Home Loan Interest Rates:
As of the latest market trends, home loan interest rates have remained relatively low, primarily due to favorable economic conditions and central bank policies. Central banks worldwide have kept interest rates low to stimulate economic growth, making borrowing more affordable for consumers.
Home Loan Interest Rate of all Banks 2023
| List of Banks/NBFCs | Home Loan Interest Rates | Processing Fees |
| Allahabad Bank | 8.75% – 9.90% | Up to 0.40% of the loan amount to a max INR 50,000 |
| Andhra Bank | 8.60% – 11.20% | 0.50 % of loan amount subject to maximum of INR 10,000 + GST |
| Axis Bank | 8.75% – 9.15% | Up to 1% of the Loan amount subject to minimum of INR 10,000 |
| Upfront processing fee of INR 2,500 + GST | ||
| Bandhan Bank | 8.65% – 13.00% | 1% of Loan Amount , Min INR 5,000 + GST |
| Bank of Baroda | 8.50% – 10.60% | Up to 0.50% of the loan amount or a maximum of INR 7,500 + GST |
| Bank of India | 8.85% onwards | 0.25% of the loan amount + GST |
| Bank of Maharashtra | 8.60% – 10.80% | As applicable |
| Canara Bank | 8.85% – 11.25% | 0.5% of the loan amount + GST |
| Central Bank of India | 8.55% – 9.10% | 0.50% of the loan amount subject to maximum INR 20,000 + GST |
| Citibank | 8.45% Onwards | Up to 0.40% of the loan amount + GST |
| Corporation Bank | 8.60% – 11.20% | 0.50% of loan amount. Max INR 50,000 + GST |
| Dena Bank | 8.50% – 10.60% | As applicable |
| Federal Bank | 10.15% – 10.30% | 0.50% of the loan amount to a maximum of INR 7,500 + GST |
| Fullerton India | 9.50% – 10.50% | 3% of the loan amount + GST |
| HDFC Limited | 8.50% – 9.40% | Up to 0.50% of the loan amount or INR 3,000 whichever is higher, plus applicable taxes. |
| HSBC | 8.75% – 9.10% | 1% of the loan amount + GST |
| ICICI Bank | 9.00% – 10.05% | Up to 1.00% of the loan amount + GST |
| IDBI Bank | 8.80% – 12.25% | 0.50% of loan amount to a maximum of INR 2,500 + GST |
| IDFC First Bank | 8.85% – 9.25% | Upto INR 10,000 + GST |
| IndusInd Bank | 8.40% – 9.75% | INR 10,000 + GST |
| Indiabulls Housing Finance | 9.30% Onwards | 0.50% of the loan amount to a maximum of INR 15,000 + GST |
| Jammu & Kashmir Bank | 9.10% Onwards | 0.25% of the loan amount to a maximum of INR 10,000 + GST |
| Karnataka Bank | 9.08% – 10.35% | 0.50% of the loan amount + GST |
| Karur Vysya Bank | 9.23% – 12.13% | Up to INR 7,500 + GST |
| Kotak Mahindra Bank | 8.85% – 9.40% | Zero processing fee for online application (Upto 1.25% of Loan amount for offline application) |
| Lakshmi Vilas Bank | 8.25% Onwards | As applicable |
| Nainital Bank | 10.50% Onwards | As applicable |
| Oriental Bank of Commerce | 8.60% – 9.95% | 0.50% of the loan amount to a maximum of INR 20,000/- + GST |
| Punjab National Bank (PNB) | 8.60% – 9.95% | 0.35% of the loan amount, subject to a minimum and maximum of INR 2,500 and INR 15,000 respectively |
| PNB Housing Finance (PNBHFL) | 8.50% – 11.95% | INR 10,000 + GST |
| Punjab & Sind Bank | 8.85% – 9.95% | Up to 0.25% of the loan amount to a maximum of INR 15,000 + GST |
| Reliance Home Finance | 9.75% – 13.00% | Up to 0.75% of the loan amount + GST |
| RBL Bank | 9.10% – 11.55% | INR 5,000 – INR 15,000 of the loan amount + GST |
| State Bank of India (SBI) | 9.15% – 11.30% | 0.35 % of loan amount and maximum INR 10,000 +GST |
| Standard Chartered Bank | Starting at 8.65%* | INR 10,000 + GST |
| Syndicate Bank | 8.85% – 11.25% | 0.125% of loan amount or a maximum of INR 5,000 + GST |
| Tata Capital | 8.95% – 12.00% | As applicable |
| UCO Bank | 8.85% – 10.40% | 0.5% of the loan amount, to a maximum INR 15,000 + GST |
| United Bank of India | 8.60% – 9.95% | As applicable |
| Vijaya Bank | 8.50% – 10.60% | INR 4,000 + GST |
| YES BANK | 9.15% – 11.25% | 0.5% of the loan amount or a maximum of INR 10,000 + GST |
How to Calculate Interest on Home Loan?
Home loans are typically long-term loans, so it’s critical to determine your total interest obligation before taking out the loan.
The same can be calculated using either of the two techniques given below:
EMI Calculator: All you need to do is use a home loan EMI calculator to find out how much interest will be charged on your loan. You will need to enter the following information in the fields on the calculator: After the data has been entered, you can obtain a comprehensive breakdown of your loan, including the amount owed for interest, by selecting the “Calculate” button.
- Home Loan Amount
- Loan Repayment Tenure
- Rate of Interest
EMI Calculation Formula: Alternatively, you can compute your EMI liability for your home loan using the following formula: EMI = [P x r x (1+r)^n]/[(1+r)^n-1] where n is the number of installments or the loan tenure in months, P is the principal, and r is the interest rate.
Read also: Home Loan : All You Need to Know About Getting Home Loans
How to Calculate the Effective Interest Rate?
Two components make up the applicable interest rate on a home loan: the markup rate and the base rate. What you will be paying for the loan is the total of the two. To help you understand these elements better, let’s examine them.
Base Rate: This is the bank’s standard lending rate, which is used for all personal loans. This rate is prone to frequent fluctuations based on various inputs.
Markup – This component of a small percentage is added to the base rate to arrive at the EIR (Effective interest rate) for a specific type of home loan and varies from one type to another.
Effective Interest Rate (EIR) = Base Rate + Markup
Types of Interest Rates in Home Loan
1. Fixed Interest Rate:
The rate is fixed in this computation system for the duration of the loan. The interest rate is fixed, so there won’t be any changes to the charges. You might be able to convert to the floating rate system after the loan term has been in place for a predetermined amount of time, depending on the terms of the offer.
Benefit: Since the interest rate is fixed, you are aware of the total amount you will pay up front. If there is an increase in lending rates over time, your loan will be protected from frequent rate fluctuations and will end up costing less overall.
Drawback: Since the interest component stays fixed, you will not profit if standard lending rates drop.
2. Floating Interest Rate:
Your home loan’s interest rate is determined by the bank’s most recent lending rates. The rate is based on the bank’s most recent published rate, which is based on a number of variables including the RBI’s monetary policy, changes to lending rates, the bank’s reaction to the change, etc.
- Advantage: The most visible perk of opting for the floating rate is that you have the advantage of being billed on the basis of the latest rate. If the rates fall, you save on interest charges.
- Disadvantage: In rare scenarios, if the standard rates go up, the loan has to be bear the brunt of being billed a higher rate.
Determining Factors for Your Home Loan Interest Rate
It’s critical to comprehend the variables that lenders take into account when evaluating your eligibility and setting the interest rate when you apply for a home loan.
Because home loans are large sums of money, banks and Housing Finance Companies (HFCs) carefully consider your credit history, ability to repay the loan, income, and specifics of the property. It’s important to remember that tighter qualifying requirements frequently accompany reduced interest rates. The following are the main considerations that lenders make:
Credit Score: Your credit score indicates the quality of your credit and financial performance. Timely payment of credit card bills and EMIs, along with responsible credit management, are indicators of a high credit score. Lenders will consider you more favorably for a home loan if your credit score, as determined by CIBIL or other bureaus, is 750 or higher. Furthermore, the credit score is being used by banks and HFCs more frequently to set interest rates for home loans. Lower interest rates might be extended to applicants with better credit scores, which demonstrate responsible credit behavior. The Step-UP Credit Card, a secured credit card co-branded with SBM Bank India Ltd., is free for life. This credit card is ideal for those with poor or no credit.
Income and Employment – Lenders take into account factors such as your income, employment type, and employer profile when assessing your home loan eligibility. Applicants with stable employment in government, PSUs, or large/reputed private sector organizations are generally preferred by lenders due to the higher certainty of job and income. Consequently, such applicants may be offered lower home loan interest rates. Conversely, individuals with irregular or insufficient income might face challenges in obtaining a home loan at a lower interest rate.
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Loan Amount – The amount you intend to borrow for your home loan can also impact the interest rate. Home loans up to Rs. 30 lakh usually have lower interest rates compared to higher loan amounts. Making a lump sum down payment can help reduce the overall loan burden and potentially secure a lower interest rate on your loan.
Type of Home Loan: Interest rates for various home loan types vary. While specialized loans like plot loans or NRI home loans may have higher interest rates, regular home loans typically have standard rates.
Interest Rate Concession for Women Borrowers – Some lenders offer a home loan interest rate concession, often around 0.05%, specifically for women borrowers. Therefore, it is advisable for married couples to consider a joint home loan and designate the wife as the primary applicant if it can result in a lower interest rate. Opting for a joint home loan can also increase eligibility and provide additional tax benefits.
Type of Interest Rate: The repayment rate of your home loan is influenced by the type of interest rate you select. EMIs for fixed-rate home loans stay constant over the course of the loan. Conversely, floating rates are subject to variations in the lending rate due to factors such as the Repo Linked Lending Rate (RLLR). Because there is more interest rate risk associated with fixed-rate home loans, lenders usually charge higher interest rates.
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