Home Loan

Banks and Housing Finance Companies (HFCs) offer home loans of up to 75% to 90% of the property’s value depending on the credit profiles of their loan applicant, subject to the caps on the LTV ratios set by the lenders and the RBI. The tenures of these loans can go up to 30 years. At Paisabazaar.com, we help you compare home loan interest rates and other features offered by top banks and HFCs and apply online for the best option available on your credit profile.

Home Loan Interest Rates

Home loan interest rates offered to the applicants would depend on their credit scores, monthly income, loan amount, LTV ratio, job profile, employer’s profile, etc.

Here are the interest rates on home loans offered by top banks and HFCs.

Note: Interest rates as of 28 November 2024

Interest Rates offered by Other Banks & HFCs

Note: Interest rates as of 28 November 2024

EMI Calculator

Home loan EMI calculator helps individuals calculate EMIs and total interest cost payable on their home loans. They can use various combinations of interest rates, loan amounts and tenures to ascertain the optimum tenure and EMI after considering their loan repayment capacity.

Fees & Charges

The processing fees and charges of housing loan may vary widely based on lenders and credit profiles of loan applicants. To give a fair idea of the home loan fees and charges, read the table below:

Check home loan processing fees and other charges of top banks and HFCs.

Eligibility Criteria

Home loan eligibility differs across lending institutions and home loan schemes. However, a common set of housing loan eligibility criteria is given below:

• Nationality: Indian Residents, Non-Resident Indians (NRIs), and Persons of Indian Origin (PIOs)
• Credit Score: Preferably 750 and above
• Minimum Age: 18 years with some lenders setting the minimum age of 21 years
• Maximum Age: Usually 70 years at the time of loan maturity with some lenders extending the tenure till 75 years of age
• Work Experience: At least 2 years (for salaried)
• Business Continuity: At least 3 years (for self-employed)
• Minimum Salary: At least Rs. 25,000 per month (varies across lenders & locations)
• Loan Amount: Up to 90% of property value

Note: Apart from the above parameters, your home loan eligibility also depends on the property you are buying and the location of the property.

Also Check: Top 10 Tips to Consider before Availing a Home Loan

Documents Required

Lenders require documents from their home loan applicants as a proof to establish their identity, place of residence, income and repayment capacity. These documents may vary across lenders based on the individual credit profile, property type, home loan type, etc. Given below are the key home loan documents that an applicant will need to furnish when applying for the loan.

• Identity Proof Documents: Copy of any one (PAN Card, Passport, Aadhaar Card, Voter’s ID Card, and Driving License)
• Age Proof Documents: Copy of any one (Aadhaar Card, PAN Card, Passport, Birth Certificate, 10th Class Mark-sheet, Bank Passbook, and Driving License)
• Address Proof Documents: Copy of anyone (Bank Passbook, Voter’s ID, Ration Card. Passport, Utility Bills (Telephone Bill, Electricity Bill, Water Bill, Gas Bill) and LIC Policy Receipt
• Income Proof Documents for Salaried: Copy of Form 16, Latest Payslips, IT returns (ITR) of past 3 years, Investment Proofs (if any).
• Income Documents for Self Employed: Business License Details, Proof of Business Address, ITR of last 3 years, Balance Sheet and Profit & Loss Account Statement of the Company/Firm
• Property-related Documents: NOC from Society/Builder, detailed estimate of the cost of construction of the house, registered sale deed, allotment letter, and an approved copy of the building plan.

Home Loan Documents Required for NRI Applicants

Proof of Identity: Passport with VISA stamps / PIO Card

Proof of Address: Government document mentioning the current overseas address

Proof of Income Documents for Salaried: Salary Certificate/ Latest Pay slips (in English); Latest bank statements showing salary credits NRE / NRO account (if any); Work Permit/ Employment Contract / Appointment Letter / Offer Letter (Duly attested by employer/ Consulate / foreign office / embassy in case it is in any other language); Form P60/P45 and latest employment contract (for salaried).

Income Documents for Self-Employed: Latest ITR, Bank Statements of Overseas Account and Balance Sheets and P&L Accounts audited or certified by a C.A.; a copy of Continuous Discharge Certificate (CDC) for applicants employed in the merchant navy; Business License & Address Proof / License of Professional Practice (for Doctors, Consultants, etc.); Registration Certificate of Establishment (For Shops, Factories & Other Establishments).

Property Documents:

• Original title deeds tracing the title of the property
• Encumbrance Certificate
• Agreement for sale/ sale deed/ detailed cost estimate from the Architect/ Engineer for property to be purchased/ constructed/ extended/ improved
• A copy of approved drawings of proposed construction/ purchase/ extension
• Receipts for payments made for buying the dwelling unit
• ULC clearance/ conversion order, etc.
• Receipts for investing the margin money through normal banking channels from the NRE /NRO account(s) in India
• Latest tax paid receipt
• Allotment letter from the co-operative society/ association of apartment owners

Other Documents:

• If any previous loan from other Banks/Lenders, then Loan A/C statement for the last 1 year

Note: The above list is indicative and your lender might ask for additional documents.

Types of Home Loans

• Home Purchase Loan is offered for buying ready-to-move-in properties, under-construction properties and pre-owned homes/resale properties helps you buy a residential plot and build a house on it within a given time frame
• Composite Loan can be availed for buying a plot and building a house on it. The first disbursement in composite loan is made towards plot purchase. Subsequent payments depend on the stages of construction of the house.
• Home Construction Loan is offered to individuals for house construction. The disbursements depend on the stages of construction of the house.
• Home Renovation/ Improvement Loan is for meeting home renovation costs of an existing house. The interest rate for a home renovation/improvement loan and a regular home loan are usually same.
• Home Extension Loan is for those requiring funds to extend or add more space to their existing house. In this, lenders usually lend 75% – 90% of the construction estimate, depending on the loan amount and LTV ratio.
• Bridge Loan is a short-term home loan suitable for individuals planning to buy a new house with the sale proceeds of their existing house.
• Interest Saver Loan is a home loan overdraft wherein the borrowers’ home loan account is linked to their bank account. Any amount deposited in the bank account over and above the EMI is considered as a prepayment towards the loan, thus, saving on the interest amount.
• Step Up Loan allows borrowers to pay lower EMIs during the initial years of the loan tenure and have the provision of increasing the EMI amount over time. This makes the loan affordable for young professionals who have just started their career.

Benefits of Home Loan

Availing a home loan can help in the following ways:

• Enabling home ownership sooner: Home prices in India are usually multiple times higher than an individual’s annual disposable income, making it challenging for most people to buy a housing property on their savings alone. In such a case, a home loan can help you buy your dream home sooner without having to wait till you accumulate money for your dream home. Moreover, utilizing all your available savings/investments upfront for home purchase may adversely impact your other financial goals. With a home loan, you can manage your finances better by committing only a portion of your annual income towards home purchase.
• Enabling home ownership sooner: Home prices in India are usually multiple times higher than an individual’s annual disposable income, making it challenging for most people to buy a housing property on their savings alone. In such a case, a home loan can help you buy your dream home sooner without having to wait till you accumulate money for your dream home. Moreover, utilizing all your available savings/investments upfront for home purchase may adversely impact your other financial goals. With a home loan, you can manage your finances better by committing only a portion of your annual income towards home purchase.
• Longer repayment period: When compared to its alternatives like personal loans, home loan offers longer repayment period usually extending up to 30 years. Such a longer repayment period helps in spreading out the total loan amount over a greater number of months, resulting in more affordable EMIs.
• Lower interest rates: Home loan interest rates are significantly lower than personal loan interest rates. Home loan interest rates start from 8.35% p.a. whereas personal loan interest rates start from 10.49% p.a. Lower interest rates lead to reduction in the overall interest cost on the loan, making it more affordable for the borrowers. Some banks/ HFCs also offer interest concessions of 0.05% to their women home loan applicants.
• Tax benefits: As per Section 80C of the Income Tax Act, home loan borrowers can claim tax deduction of up to Rs. 1.5 lakh on principal repayments made in a financial year. As per Section 24(b), a deduction of up to Rs. 2 lakh can be claimed on home loan interest payments made in a financial year. However, it’s important to note that home loan borrowers choosing the new tax regime are not eligible to claim tax deductions under these Sections.
• No prepayment charges: Most banks/HFCs offer home loans at floating interest rates. Due to this, they do not levy any prepayment/foreclosure charges when borrowers prepay or foreclose their home loans. Even in case of most fixed rate home loans, lenders waive off prepayment/foreclosure charges, provided the prepayment is made from borrowers’ own fund sources.
• Interest-only home loans: Many lenders offer interest-only home loan schemes wherein borrowers pay just the interest component of the loan during the initial years of the loan tenure and later on makes the regular EMI payments commence until the loan maturity. These home loan schemes are best suited for those who are living on rent and plan to buy an under-construction property. This is also beneficial for those who currently lack adequate monthly surpluses to pay their loan EMIs and have near certainty regarding their income increase in the near future.

Common Causes of Home Loan Rejections

Your home loan application can be rejected due to several reasons, some of them are listed as below:

• Low credit score: Your credit score is a numerical representation of how well you have handled credit in the past. Having a low credit score usually indicates poor financial discipline, causing lenders to deem you as a risky borrower and reject your home loan application. Applicants having credit score of 700 and above usually have higher chances of getting loan approval.
• Low loan repayment capacity: Lenders usually prefer offering home loans to those having their total loan EMI obligations, including the EMI of the proposed loan, within 50-55% of their monthly income. Those exceeding this limit have lower chances of availing home loan.
• Issues related to property: If the property doesn’t meet the lender’s requirements (e.g., value, condition) or does not adhere to the regulations of the local authorities, it can lead to loan rejection. For instance, lenders will not approve your loan application if your property is in some legal dispute, does not have a clear title, is too old or is not authorised by the local authorities.
• Multiple loan or credit applications within a short span: Lender-initiated requests of credit reports are known as hard enquiries. With every hard enquiry initiated, credit bureaus reduce the applicant’s credit score by a few numbers. Making multiple hard inquiries within a short period may sharply decline the applicant’s credit score, thus, reducing his chances of getting a home loan.
• Ineligible occupation profile: Individuals whose occupation or employer profile is not among the lenders’ list of preferred occupation/employer profiles may not get their loans approved.

What tax benefits can I get on a home loan?

House loan borrowers can avail tax benefits under various sections of the Income Tax Act. These home loan tax benefits help borrowers save a substantial amount of money every year. Below are the tax benefits that you can get on your home loan EMI payments:

Dos & don’ts while applying for a home loan

What should I do if my loan application is rejected?

If your home loan application was rejected, follow these tips to improve your chances of approval next time you apply or a home loan:

• Build/maintain your credit score at 750 or above
• Check for any inaccuracies in your credit report
• Add an earning member of your family as a co-applicant
• Contribute more towards home down payment
• Compare housing loan offers of various banks and HFCs before making the loan deal
• Avoid making multiple loan applications within a short span of time
• Ensure your total EMI obligations (including the proposed home loan EMI) are within 55-60% of your net monthly income

What is the difference between a fixed rate and floating rate home loan?

In a fixed rate home loan, the interest rate applied at the time of loan disbursement remains constant throughout the loan period. You will be secured from interest rate increases during the loan term because the interest rates will remain constant. However, if lending rates fall at any time during the loan’s term, the fixed interest rates will remain unchanged, so you will not benefit from the lower EMI.

In a fixed rate home loan, the interest rate applicable at the time of loan disbursement remains constant throughout the loan tenure. You will be protected from interest rate hikes during the loan tenure as interest rates will remain constant. However, if lending rates fall at any time during the loan tenure, the fixed interest rates will remain unchanged, so you will not get the benefit of lower EMIs.

What is a Home Loan?

Home loan is a secured loan facility, which banks and HFCs offer for purchasing, constructing, renovating, repairing and extending an existing/ new residential property. The loan is backed by the underlying property till the loan repayment. In case of default by the borrower, the lender has the legal right to take the concerned property into possession and then auction the property to recover the unpaid loan amount.

Steps to Apply Online for Home Loan

At Paisabazaar, you can compare and apply for home loan offers in three simple steps:

• Step 1- Share Your Details: Enter personal information as well as the details related to your loan requirements.
• Step 2- View Offers: As per the details shared, a list of eligible home loan offers will appear. Compare interest rate, processing fee, and eligible loan amount from the list of eligible housing loan offers.
• Step 3- Submit the Application: Apply for the home loan offer that suits your loan requirements the best.

Once your application is successfully submitted, you will get a confirmation of your home loan application along with a reference number for future reference. Next, our loan expert will get in touch within 24 hours to take this application forward.

FAQs on Home Loan

How to avail a home loan?

Consumers can avail home loans directly from the banks and HFCs. As many home loan lenders now-a-days facilitate online home loan application processes, consumers can consider applying for them through such lender’s official websites, mobile apps or internet banking platforms.

Alternatively, consumers can also get a housing loan through online financial marketplaces to fetch home loan offers from multiple lenders from a single platform, depending on the consumers’ credit profiles.

What is the interest rate on a home loan?

Currently, home loan interest rates start from 8.35% p.a. The final interest rate at which the bank or HFC will offer a home loan will depend on the applicant’s credit score, loan amount, employment profile, employer’s profile, LTV ratio, etc.

Who is eligible for a home loan?

Home loan companies offer home loans to all resident and non-resident Indians. They can be salaried or self-employed professionals/non-professionals.

How much home loan can I get on a 40,000 salary?

Home loan lenders determine applicants’ eligible loan amount based on the EMI/NMI ratio and LTV ratio, which vary as per the lender’s credit risk policy. To estimate the loan amount, consumers can use their lender’s home loan eligibility calculator on the website or explore online financial marketplaces like Paisabazaar for maximum loan offers from different lenders.

What are the property documents required for home loan?

The property documents required to avail home loans may vary on a case-to-case basis. The documents for home loans availed for buying a new house will vary from the documents for home loans availed for house construction. For a detailed home loan document list.

Which bank is best for home loan?

For most consumers, choosing a lender with the lowest home loan interest rate is the key to saving on overall interest cost. However, apart from rates, factors such as loan tenure, amount, LTV ratio, processing fees, approval time and disbursement efficiency are important when looking for the best home loan provider.

Instead of visiting lender websites in person, consumers can simplify their search by comparing rates, tenure, fees and more on online financial marketplaces such as Paisabazaar.

Can I get a home loan for the entire property value?

No, you cannot take a home loan for the entire property value as the Reserve Bank of India (RBI) has limited the loan-to-value (LTV) ratio of housing loans. As per RBI guidelines, for loan amounts up to Rs 30 lakh, the LTV ratio can go up to 90% of the property value; for loan amounts above Rs 30 lakh and up to Rs 75 lakh, the LTV ratio limit is up to 80% of the property value and for loan amounts above Rs 75 lakh, the LTV ratio can go up to 75% of the property value.

This means that at least 10% of the remaining value has to be paid by the borrower as down payment. Subject to the caps set by the RBI on LTV ratios, banks/HFCs further fix the LTV ratio on the basis of the risk assessment and credit profile of the loan applicant. Those with lower creditworthiness are usually offered lower LTV ratio.

What is the maximum home loan that I can get?

Some lenders use the Multiplier Method to determine your maximum home loan eligibility, which involves calculating the eligible loan amount using a predetermined multiple of an applicant’s monthly net income. They usually offer loan amounts of up to 72 times an applicant’s gross monthly income or 6 times their gross annual income (for non-salary applicants).

Others use the EMI/NMI Ratio, which requires the applicant’s total EMI obligations to be within a predetermined proportion, typically 50-55% of their income. Some lenders combine both of these methods to determine the loan amount eligible for the applicant.

How do lenders check the EMI affordability for their home loan applicants?

Lenders consider the repayment capacity of home loan applicants while evaluating their loan application and loan amount eligibility. Home loan lenders usually prefer to lend to home loan applicants whose total EMI including the proposed home loan EMI is within 50-60% of their monthly income. Hence, home loan applicants can use online home loan EMI calculators to find the optimal home loan amount and tenure based on their repayment capacity.

What home loan can I get with a poor credit score?

It is difficult to say which home loan you will get with a low credit score as different lenders have different credit risk policies. Therefore, consumers with poor credit scores should visit online marketplaces like Paisabazaar to check and compare home loan rates and other loan features such as tenure, processing fees and other related costs from different banks and HFCs.

How much credit score should I have to get a housing loan?

Lenders prefer to approve home loans to applicants with a credit score of 750 and above because such high credit scores reflect responsible credit behavior and reduce the credit risk for lenders. This is why many lenders offer lower home loan rates to applicants with high credit scores. However, some lenders offer home loans at higher interest rates to applicants with low credit scores. Therefore, one must check their credit scores at regular intervals.

What is the EMI for Rs. 20 lakh home loan?

EMI calculation for a Rs. 20 lakh home loan would depend on the interest rate and tenure. Let’s assume the interest rate and tenure on your Rs. 20 lakh home loan is 8.50% p.a. and 20 years, respectively. In such a case, your home loan EMI would be Rs. 17,356. For calculating EMI based on other tenure and interest rate values, you can use a home loan EMI calculator.

Who can co-sign a home loan?

Your spouse or blood relatives like your father, mother, siblings and children can co-sign a home loan with you. Also, all co-owners of the property must be co-applicants in a home loan.

Are there any prepayment charges in case of a house loan?

In case of floating rate home loans, lenders do not charge pre-payment penalty as per RBI guidelines. However, lenders may charge prepayment penalty in case of prepayment of fixed rate home loans.

What is a home loan balance transfer?

Home loan balance transfer allows existing home loan borrowers to transfer their outstanding home loan to a new lender at lower interest rates and/or better loan terms. This facility is especially helpful for borrowers who had taken a home loan at higher interest rates but are now eligible for lower interest rates due to their improved credit profile or a reduction in market interest rates.

Can I take two home loans at the same time?

Yes, if the lender of your second home loan is satisfied with your repayment capacity, credit profile and features of the mortgaged property, you can avail a second home loan for another property.

How long does it take to get a home loan sanctioned?

Generally, it takes 1 to 2 weeks for lenders to approve a home loan. However, this can vary considerably depending on the loan approval process of the banks/HFCs, the credit profile of the applicant and the features of the property to be purchased/constructed.

Can I prepay my outstanding housing loan amount?

Yes, you can prepay your home loan. If you have a floating rate home loan, no prepayment charges will be levied. However, in case of fixed rate home loans, lenders may levy a prepayment charge of around 2% to 4%.

Can I avail tax deductions on my home loan?

Yes. Repayment of the principal amount will be eligible for tax deduction under section 80C of the Income Tax Act. Repayment of the interest component will be eligible for tax deduction under section 24(b) of the Income Tax Act.

Can I switch from a fixed rate to a floating rate during my home loan tenure?

Yes, most lenders offering home loans at both fixed and floating rates allow their existing home loan borrowers to convert their fixed rate loans into floating rate loans and vice versa, on the payment of conversion or switching fee.

What is the maximum home loan amount allowed under PMAY-G scheme?

Under Pradhan Mantri Awas Yojana-Gramin scheme, beneficiaries can avail a maximum home loan amount of up to Rs 70,000.

Q. What is a home loan foreclosure charge?

Home loan foreclosure charge is a penalty that your home loan lender may levy when you pay off the loan before the end of the loan tenure. However, the Reserve Bank of India (RBI) has prohibited banks and Housing Finance Companies (HFCs) from charging foreclosure charges on floating rate home loans. Lenders offering home loans at fixed rates usually do not charge foreclosure fees when paid off from the borrower’s own fund sources.

Q. What could be the hidden charges for home loans?

As per the RBI guidelines on Fair Practices Code for Lenders, home loan application forms should include information about the fees/charges, if any. Lenders should also give the notice of any change in the terms and conditions including interest rates, service charges etc. in advance to the borrowers. Therefore, borrowers should always stay updated regarding the schedule of charges of their home loans.

Q. What is a home loan notice of intimation?

A Notice of Intimation (NOI) is a document that serves to inform relevant statutory authorities regarding purchase of a house property or when a home loan is availed for the said house property. The issuance of this notice has been in effect since April 1, 2013, as a measure to combat property fraud, avoid duplicate registrations of the same property, and prevent multiple loans being taken out on a single home.

Q. Can I top up an ongoing home loan?

Existing home loan borrowers can opt for home loan top-up facility to meet additional expenses related to home construction/ improvement/extension, purchase of a new house or taking care of any personal needs except for any speculative purposes. However, lenders will sanction top up home loans only after factoring in the credit profile and repayment history of the borrower.