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Home Loan Interest Rates Offered by Banks/HFCs
Home loan interest rates can widely vary depending on the applicant’s credit profile and the lenders’ credit policies. As even a slight difference in the interest rate can lead to a significant difference in the total interest cost for the home loan borrower.
Prospective borrowers should always compare the interest rates offered by as many lenders as possible before making the loan application.
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Home Loan Interest Rate 2024
Below are the home loan interest rates offered by banks and housing finance companies (HFCs):
| Name of Lender | Up to Rs. 30 Lakh | Above Rs. 30 Lakh & Up to Rs. 75 Lakh |
Above Rs. 75 Lakh |
| Public Sector Banks | |||
| Bank of Baroda | 8.40% – 10.65% | 8.40% – 10.65% | 8.40% – 10.90% |
| Punjab National Bank | 8.45% – 10.25% | 8.40% – 10.15% | 8.40% – 10.15% |
| Punjab & Sind Bank | 8.50% – 10.00% | 8.50% – 10.00% | 8.50% – 10.00% |
| SBI | 8.50% – 9.85% | 8.50% – 9.85% | 8.50% – 9.85% |
| Union Bank of India | 8.35% – 10.75% | 8.35% – 10.90% | 8.35% – 10.90% |
| Bank of India | 8.35% – 10.85% | 8.35% – 10.85% | 8.35% – 11.10% |
| UCO Bank | 8.45% – 10.30% | 8.45% – 10.30% | 8.45% – 10.30% |
| Bank of Maharashtra | 8.35% – 11.15% | 8.35% – 11.15% | 8.35% – 11.15% |
| Canara Bank | 8.50% – 11.25% | 8.45% – 11.25% | 8.40% – 11.15% |
| Indian Overseas Bank | 8.40% – 10.60% | 8.40% – 10.60% | 8.40% – 10.60% |
| Private Sector Banks | |||
| HDFC Bank Ltd. | 8.75% onwards | 8.75% onwards | 8.75% onwards |
| Kotak Mahindra Bank | 8.75% onwards | 8.75% onwards | 8.75% onwards |
| ICICI Bank | 8.75% onwards | 8.75% onwards | 8.75% onwards |
| Axis Bank | 8.75% – 13.30% | 8.75% – 13.30% | 8.75%- 9.65% |
| Karur Vysya Bank | 9.00% – 11.05% | 9.00% – 11.05% | 9.00% – 11.05% |
| South Indian Bank | 8.70% – 11.70% | 8.70% – 11.70% | 8.70% – 11.70% |
| Karnataka Bank | 8.50% – 10.62% | 8.50% – 10.62% | 8.50% – 10.62% |
| Federal Bank | 8.80% onwards | 8.80% onwards | 8.80% onwards |
| Dhanlaxmi Bank | 9.35% – 10.50% | 9.35% – 10.50% | 9.35% – 10.50% |
| Tamilnad Mercantile Bank | 8.60% – 9.95% | 8.60% – 9.95% | 8.60% – 9.95% |
| Bandhan Bank | 9.16% – 15.00% | 9.16% – 13.33% | 9.16% – 13.33% |
| RBL Bank | 8.90% onwards | 8.90% onwards | 8.90% onwards |
| Housing Finance Companies (HFCs) | |||
| LIC Housing Finance | 8.50% – 10.35% | 8.50% – 10.55% | 8.50% – 10.75% |
| Tata Capital | 8.75% onwards | 8.75% onwards | 8.75% onwards |
| PNB Housing Finance | 8.50% – 14.50% | 8.50% – 14.50% | 8.50% – 11.45% |
| Repco Home Finance | 9.50% onwards | 9.50% onwards | 9.50% onwards |
| GIC Housing Finance | 8.80% onwards | 8.80% onwards | 8.80% onwards |
| Sammaan Capital Limited (Formerly known as Indiabulls Housing Finance) | 8.75% onwards | 8.75% onwards | 8.75% onwards |
| Aditya Birla Capital | 8.60% onwards | 8.60% onwards | 8.60% onwards |
| ICICI Home Finance | 9.30% onwards | 9.30% onwards | 9.30% onwards |
| Godrej Housing Finance | 8.55% onwards | 8.55% onwards | 8.55% onwards |
| L&T Finance Limited | 8.65% onwards | 8.65% onwards | 8.65% onwards |
| Foreign Banks | |||
| HSBC India | 8.50% onwards | 8.50% onwards | 8.50% onwards |
| Standard Chartered Bank | 8.95% onwards | 8.95% onwards | 8.95% onwards |
Note: Interest rates as of 20 November 2024
How Banks/HFCs Calculate Home Loan Interest Rates
For home loan interest rate calculations, banks and HFCs use the monthly reducing balance method. The interest is computed using this method on the principal amount that remains after each installment mortgage payment.With a home loan, the interest component of the monthly interest payment (EMI) is highest during the first few years of the loan term and declines with each payment as the principal amount owed is paid off.
How to Calculate Housing Loan EMI?
Individuals can calculate their home loan EMIs manually using the home loan EMI calculation formula, EMI = [P x R x (1+R)^N]/[(1+R)^N-1]. However, as manual calculations are time-consuming and more prone to errors, individuals can save their efforts and time by using home loan EMI calculator.
Anyone can use the calculator with ease and it is accurate, fast, and convenient. Users only need to enter a few loan details, like the loan amount, interest rate, and tenure, to calculate their EMI as well as the total amount payable and interest costs.
Home Loan EMI Calculator
Monthly EMI ₹ 15,622
Total Amount Payble ₹ 5,62,395(Principal + interest)
Principal Amount ₹ 5,00,000
Total Interest Payble ₹ 62,395
Difference Between Fixed and Floating Home Loan Interest Rates
Applicants must understand the key difference between fixed and floating home loan interest rate before submitting the applications.
| Fixed Interest Rate | Floating Interest Rate |
| EMIs remain same throughout the loan tenure regardless of the changes in the interest rate regime | EMIs change with the changes in the linked benchmark rates |
| Offers higher certainty in financial planning | Sudden increase in EMIs might derail household finances of the borrowers |
| Better option when the current home loan interest rate is quite low and an upward trend is anticipated in the future | Better option when the current interest rates are quite high and a downward trend is predicted in the future |
| No benefit from the falling interest rate regime | Benefit from the lowered interest rate if the underlying benchmark rate decreases |
| Lenders charge higher rates as compared to floating rate home loans | Home loan interest rate offered on a floating rate is generally lower than that of housing loans availed at fixed interest rate |
| Lenders are free to levy charges on prepayments or foreclosure of fixed rate home loans | As per RBI’s guidelines, banks and HFCs are not allowed to levy prepayment and foreclosure charges on floating rate home loans disbursed to individuals |
Also Read: How much home loan can I get based on my salary?
Tips to Reduce Home Loan Rate of Interest
Those planning to avail home loans can try availing it on lower interest rates by following the tips below:
- Keep your credit score as high as possible, preferably at least 750
- Apply for a joint home loan, preferably with a female member of the family as some lenders offer concession on home loan interest rate to female applicants.
- Existing home loan borrowers can lower their home loan rates by transferring their outstanding balance to another lender offering lower interest rate
- Many lenders set lower home loan interest rates for applicants having lower LTV ratios. Thus, applicants should make the maximum contribution possible towards home down payment so as to lower their loan amount, which thereby might help them get lower interest rates on their home loans.
Factors Determining Home Loan Interest Rates
Since home loans are typically large-ticket items, banks and HFCs carefully consider the borrower’s credit history, ability to repay the loan, income, and property to be purchased, among other factors. Home loan applicants need to be thoroughly informed about their eligibility as well as the elements that lenders consider when reviewing their application.
It needs to be noted that low interest rates usually come with strict home loan eligibility conditions. Here are the factors that lenders consider while determining your eligibility and the home loan interest rate offered:
Credit Score
Your credit score is a numerical representation of your credit history. People who have paid their EMIs and credit card bills in full, on time, and have not relied heavily on credit in the past are likely to have a good credit score.
- If your credit score from CIBIL and other bureaus is 750 and above, lenders will look at you favourably for a home loan.
- Also, banks and HFCs are using the credit score of home loan applicants to decide their home loan interest rates.
- Since a high credit score reflects responsible credit behaviour and financial discipline, many banks and HFCs offer home loans at lower interest rates to applicants with high credit scores.
- Those who have no or low credit score can improve their credit score by availing the lifetime free Step UP Credit Card, a secured credit card co-branded with SBM Bank India Ltd.
Home Loan Types
Home loan interest rate also differs as per the types of home loan. Regular home loans have standard rates while their counterparts such as Plot Loan or NRI Home Loan usually have higher rate of interest.
Income and Employment
When evaluating your home loan eligibility, lenders also take into account your income, type of employment and your employer’s profile. Home loan applicants employed in government or public sector undertakings or working in large and/or reputed private sector organisations are usually preferred by lenders due to their higher job/income certainty.
Hence, lenders offer lower home loan interest rates to such applicants. On the other hand, home loan applicants with irregular or insufficient income might find hard to get home loan at a lower interest rate.
Loan Amount
The loan amount you wish to borrow can also affect the rate at which you get a home loan. Home loans up to Rs 30 lakh usually have lower interest rates than home loans of higher amounts. To get a lower home loan interest rate, one should try to make the maximum possible down-payment. This will not only reduce the overall loan burden but can also help them get a lower rate of interest on their loan.
Types of Home Loan Interest Rate
The type of interest rate you choose for your home loan will determine the rate at which you will repay your lender. In the case of fixed-rate home loans, EMIs remain the same for the entire loan period. Floating rates, on the other hand, change as per change in its lending rate such as Repo Linked Lending Rate (RLLR).
Lenders usually charge higher interest rates on home loans offered on fixed interest rates due to the higher interest rate risk involved with fixed-rate home loans.
Home Loan Interest Rates for Women
Some lenders offer interest rates as low as 0.05% on home loans to women. Hence, it is advised that married couples should consider taking a joint home loan and make the wife the primary applicant if they can get a lower rate of interest. Availing joint home loan will also increase your home loan eligibility as well as home loan tax benefits.
Types of Home Loan Interest Rates
Depending on the interest rate, a home loan is of three types, fixed-rate, floating rate and hybrid.
Fixed Rate Loans
The fixed interest rate remains the same throughout the loan tenure, keeping the home loan EMI constant. It is better to apply for a home loan at a fixed interest rate when the current home loan interest rate is quite low and is expected to increase in the future.
Floating Rate Loans
Floating interest rate, also known as the variable rate of interest, is subject to the current market lending rates; and thus, they may change during the loan tenure. The home loan EMIs will increase or decrease as per the interest rate movement.
Hybrid Loans
Hybrid rate home loans are a mix of fixed-rate and floating rate home loans. These will initially have a fixed interest rate for a fixed period, after which it will convert into a floating interest rate. Such home loans are best suited for people who have taken a loan at a lower fixed rate and are planning to prepay or foreclose it before the floating rate kicks in.
FAQs on Home Loan Interest Rate
What is the current home loan interest rate?
The current home loan interest rates start from 8.35% per annum depending on the lender and applicants credit profile.
Which bank offers the best home loan interest rate?
Currently, Union Bank of India, Bank of India and Bank of Maharashtra offer the lowest home loan interest rates starting at 8.35% per annum. For most consumers, the lender offering the best home loan interest rates will be the same as the lender offering the lowest home loan interest rate. However, lenders set home loan interest rates for their loan applicants based on their credit risk assessment.
Which bank offers the lowest home loan rate of interest for salaried and self-employed?
For new home loan borrowers, Union Bank of India, Bank of India and Bank of Maharashtra offer the lowest interest rates on home loans starting at 8.35% per annum, followed by Bank of Baroda, Punjab National Bank, Canara Bank and Indian Overseas Bank, which offer home loans starting at 8.40% per annum. Next, UCO Bank offers home loans at one of the lowest home loan interest rates starting at 8.45% per annum.
How to get the lowest home loan rates in India?
The home loan interest rates offered to an individual may vary between different lenders, due to their varying cost of funds and credit risk assessment of their applicants. Hence, when looking for the lowest home loan rates, one should visit online financial marketplaces to compare home loan interest rates from multiple banks and HFCs.
How to check the total interest cost payable on the home loans?
Home loan applicants can use home loan EMI calculators to calculate the total interest cost payable on their home loan. They just need to enter their home loan amount, tenure and interest rates in these calculators to calculate the EMI and total interest cost of the housing loan.
What is the home loan interest rate offered by SBI?
SBI home loan interest rates start from 8.50% per annum.
Which home loan interest rate is better – floating or fixed?
Some lenders offer home loans at fixed interest rates and those that offer fixed rate home loans charge higher interest rates. Moreover, as the home loan tenure is up to 30 years, a home loan borrower will experience several changes in the interest rate cycle during his loan tenure. This makes it difficult for any borrower to repay his home loan as per the interest rate cycle.
Can I switch my fixed home loan rate to floating interest rate during the loan tenure? Are there any charges involved?
Yes, you can switch from a fixed rate to a floating interest rate. However, lenders usually charge 0.5% of the outstanding principal as a conversion fee.
How can I lower my home loan interest rate?
Existing home loan borrowers can reduce their interest burden by transferring their outstanding loan amount to a new lender that offers them a lower interest rate and/or better terms. The lower interest rate will reduce their EMI and overall interest cost. Balance transfer customers can also choose to reduce their loan tenure during the loan application process. One can also opt for a lower tenure during balance transfer to further reduce their overall interest cost.
However, it will also increase your loan EMIs. Hence, choose shorter tenures only when you are comfortable paying your revised housing loan EMI. Another way to reduce your interest burden could be by making part prepayments on your home loan whenever it’s feasible.
What is pre-EMI interest?
Sometimes home loans are disbursed in installments, depending on the stages of completion of the housing project. Until the final disbursement of the loan amount, borrowers may have to pay the cost of interest charged on the disbursed loan amount. This interest is known as pre-EMI interest. Pre-EMI interest is payable every month from the date of initial disbursement till the date of commencement of EMI.
What is External Benchmarking based Lending Rate (EBLR)?
External benchmark-based lending rate (EBLR) is the reference rate used to determine interest rates for loans based on external benchmarks like RBI’s repo rate, T-bill yields, etc. Before the introduction of EBLR, banks used to determine interest rates for their floating rate loans after considering internal factors like their cost of deposits, operating costs, cash reserve ratio, etc.
As per the RBI’s guidelines, all retail and MSME loans offered by banks on floating rates has to be linked to EBLR. EBLR was introduced with the aim of quickening the transmission of policy or market interest rate changes to the borrowers.
Which other external benchmarks do banks use to set home loan interest rates?
Apart from the Reserve Bank of India’s policy repo rate, other external benchmarks that banks use to set home loan interest rates include:
- Government of India 3-Months Treasury Bill yield published by the Financial Benchmarks India Private Ltd (FBIL)
- Government of India 6-Months Treasury Bill yield published by the FBIL
- Any other benchmark market interest rate published by the FBIL
How frequently would my EBLR-based home loan interest rates change during my home loan tenure?
The changes in the interest rates of your EBLR-based home loan would depend on the changes in the external benchmark rates used by your bank and the set frequency of their interest rate reset. RBI guidelines require banks to reset their EBLR-linked interest rates at least once in 3 months.
Does credit score affect home loan interest rate?
Higher credit score indicates higher creditworthiness, which reduces the credit risk for the lenders. This leads banks and HFCs, as part of their credit risk pricing policy, to charge home loan borrowers with lower spread and/or credit risk premium, resulting in lower interest rates.
Since a high credit score indicates financial discipline and regular repayment and thus reduces the credit risk for lenders, many banks charge lower credit risk premium from borrowers with high credit scores. This results in lower home loan interest rates for borrowers with high credit scores.
Can the credit risk premium component of my home loan interest rate change during the loan tenure?
As per RBI guidelines on External Benchmark Based Lending Rate, banks are permitted to change the credit risk premium component if there is a significant change in the credit risk assessment of the borrower during the loan tenure.
Can the other components of the spread used in my housing loan interest rate change during the loan tenure?
As per the RBI guidelines, your bank can change the other components of the spread used for setting your home loan interest rate once in three years.
Can adding a co-applicant help me get a lower rate of interest?
Yes, adding a female earning member of your family as a co-applicant can help you get a home loan at a lower interest rate. Lenders like SBI Bank, HDFC Bank, Union Bank of India, Bank of India, etc. offer an interest concession of 0.05% to female applicants.
At what credit score can the applicants avail best home loan interest rates?
Lenders usually offer lower home loan interest rates to applicants having credit scores of 750 and above. Some lenders also offer home loans to applicants having a credit score of less than 750, but at higher interest rates. Thus, prospective home loan applicants should try to improve/maintain their credit scores to 750 & above to avail home loan at best possible interest rate based on their credit profile.
What will be the interest rate for home loans below Rs 30 lakh?
Home loan interest rate for Rs 30 lakh home loans start from 8.35% p.a., which is currently offered by Bank of Maharashtra, Bank of India and Union Bank of India.
What will be the home loan interest rate for government employees?
Home loan interest rates, including for government employees, can vary widely depending on the lender and the credit profile of the applicant. Therefore, government employees should check and compare the interest rates offered by as many lenders as possible before applying for a home loan.
What is the difference between APR and interest rate?
Interest rate is a percentage of the loan amount charged by a lender from its borrower for availing the loan. On the other hand, Annual Percentage Rate (APR) of a loan is its annualised cost of borrowing, expressed in the form of percentage, and includes the interest cost as well as other associated costs like processing fees, documentation charges, etc. charged during loan origination.