Home loan interest rate lowest

Compare the lowest home loans interest rate starting from 6.80% p.a. and apply for the best home loan. Get the complete list of current housing loan rate of interest in India from all leading banks and financial institutions.

Home loan interest rate lowest

Home Loan Interest Rate of all Banks 2023

BanksStarting Interest Rate (p.a.)Processing Fees
Kotak Mahindra Bank8.65% p.a. onwards0.50%
Citibank6.80% p.a. onwardsRs. 10,000
Union Bank of India8.60% p.a. onwards
Bank of Baroda8.60% p.a. onwardsContact the bank for information
Central Bank of IndiaContact the bankRs. 20,000
Bank of India8.65% p.a. onwards
State Bank of India8.75% p.a. onwards0.35% onwards
HDFC Home Loans8.60% p.a. onwards*0.5% or Rs.3,000 whichever is higher
LIC Housing Finance8.90% p.a. onwardsRs. 10,000 -Rs. 15,000
Axis Bank8.60% p.a. onwardsRs. 10,000
Canara Bank8.55% p.a. onwards0.50% of the loan amount
Punjab and Sind Bank8.60% p.a. onwardsFull Waiver
IDFC First Bank8.75% p.a. onwardsRs. 5,000 – Rs. 5,000
Bank of Maharashtra8.35% p.a. onwardsRs. 10,000
Indian Overseas Bank9.30% p.a. onwards0.50% (Max Rs. 20,000)
Punjab National Bank8.55% p.a. onwards0.35% (Max Rs. 15,000)
UCO Bank8.75% p.a. onwards0.15% (Rs. 1,500 – Rs. 15,000)
IDBI Bank8.75% p.a. onwards0.50% (Rs. 2,500 – Rs.5,000)
HSBC Bank8.35% p.a. onwards1% (Rs. 10,000)
Karur Vysya Bank8.95% p.a. onwardsRs. 5,000
Saraswat Bank Home Loan8.60% p.a. onwardsNil
Jammu and Kashmir Bank8.00% p.a. onwardsRs. 500 – Rs. 10,000
South Indian BankRepo Rate + 3.35% p.a. onwards0.50% (Rs. 5,000 – Rs. 10,000)
PNB Housing Finance Limited8.75% p.a. onwardsUp to 0.50%
Federal Bank9.90% p.a. onwardsRs. 3,000 – Rs. 7,500
Standard Chartered Bank8.40% p.a. onwards1%
Aavas FinanciersContact the bank1.00%
Karnataka Bank8.67% p.a. onwardsRs. 250
Sundaram Home FinanceContact the bankRs.3,000 (for salaried)
Dhanlaxmi BankContact the bankRs. 10,000
Tata Capital8.95% p.a. onwards0.50%
Tamilnad Mercantile Bank8.75% p.a. onwardsRs. 15,000
Bandhan Bank8.65% p.a. onwards1% (Rs.5,000)
Yes Bank8.95% p.a. onwards1% (Rs. 10,000)
Hudco Home Loan8.35% p.a. onwardsNA
Indiabulls8.95% p.a. onwards0.50% onwards
Aditya Birla8.50% p.a. onwards1%
GIC Housing Finance8.10% p.a. onwardsRs. 2,500
Reliance Home FinanceContact the bankRs. 3,000 – Rs. 6,500
Shriram Housing9.50% p.a. onwardsNA
India Shelter Finance13.00% p.a. onwards2.00%

*Home loan interest rates for all banks updated on 12 Feb 2023

*All HDFC Home Loans are at the sole discretion of HDFC Home Loans.

How to Calculate Interest on Home Loan?

In general, home loans are long-term loans and it is important to figure out your overall interest liability towards the loan at the first place. You can calculate the same using one of the two methods listed below:

  1. EMI Calculator: You can calculate the interest amount applicable to your home loan by simply using a home loan EMI calculator. You will be required to fill up the fields provided on the calculator with the following details –
    • Home Loan Amount
    • Loan Repayment Tenure
    • Rate of Interest
    Once the details have been fed, you can click on the ‘Calculate’ button to get a detailed breakup of your loan including the amount payable towards interest.
  2. EMI Calculation Formula: Alternatively, you can also use the following formula to calculate your EMI liability for your home loan-
    EMI = [P x r x (1+r)^n]/[(1+r)^n-1]
    Wherein, P is Principal, r is rate of interest, and n is number of instalments or loan tenure in months.

How to Calculate the Effective Interest Rate?

The applicable interest rate on home loan consists of two components, the base rate and markup rate. The combination of two is what you will be paying on the loan. Let’s explore these components to give you a better understanding.

  • Base Rate: It is the standard lending rate of the bank, applicable for all retail loans. This rate is subject to frequent changes on the basis of multiple 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
  • From April 2016 onwards, the Reserve Bank of India (RBI) has mandated a new method for computing lending rate to replace the base rate system. The Marginal Cost of Funds based Lending Rate (MCLR) is aimed at bringing more accountability and flexibility to the way rates are published by banks and financial institutions in India. RBI mandates banks to fix the interest rate after studying the risk factor associated with lending to borrowers. It takes into account various factors involved such as repo rate, deposits etc. This MCLR-based computation works out to be slightly lower than the erstwhile base rate.

Types of Interest Rates in Home Loan

There are mainly two types of home loan interest rates charged by most of the banks.1. Fixed Interest Rate:

In this system of computation, the rate remains even throughout the loan tenor. There will be no change in the interest charges since the rate remains fixed. Depending on the offer, you may be allowed to switch over to the floating rate system after completing a certain duration into the loan tenure.

  • Advantage: Since the rate remains fixed, you know how much interest charges you’re paying upfront. Your loan will be shielded from frequent rate fluctuations and saves money in a longer run if there is a hike in lending rates.
  • Disadvantage: If the standard lending rates fall, you will not benefit since the interest component remains frozen.

Read More: Fixed Home Loan Rates2. Floating Interest Rate:

The interest charges on your home loan is subject to the current most lending rates of the bank. The rate is linked to the latest published rate of the bank which in turn depends on multiple factors such as RBIs monetary policy and lending rate revisions, the bank’s response to the revision 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 scenario, if the standard rates go up, the loan has to be bear the brunt of being billed a higher rate.

Note: But, the floating home loan interest rates are cheaper than the fixed home loan interest rates on the first front.

Factors that Determine Home Loan Interest Rate

Things to Know Before Taking Home Loan

FAQs on Home Loan Interest Rate

  1. What is the home loan interest rate?Home loan interest rate is the percentage of the principal amount charged by the lender to the borrower for using the principal amount. The interest rate charged by banks and non-financial institutions determine the cost of your home loan. So, when you are paying your home loan EMI (equated monthly instalment), the interest rate charged determines how much you have to pay your lender against your loan every month. Interest rates are usually linked to repo rate and can vary from lender to lender.
  2. Which bank has lowest home loan interest rate?Though interest rates offered by banks can increase or decrease as per the banks’ discretion, right now the Citibank is offering the lowest home loan interest of 6.65% p.a. to its customers. However, note that this rate is applicable only on home loan for women applicants.
  3. How to Get Lowest Home Loan Rates in India?Home loan interest rates are at a 15-year low, so almost all the banks are offering lower interest rates on home loans compared to what they were offering in the previous financial year. However, to get the lowest home loan interest rates, compare rates offered by lenders. Always use a home loan EMI calculator while comparing rates; it will help you estimate how much you have to pay every month against your loan.
  4. How to reduce home loan interest?Reducing your home loan interest will help ease the EMI burden off your shoulders. There are several ways you can consider that will help reduce your loan interest.
    • Choose a shorter tenure – For long term loans, though the EMI is less, the overall cost of the loan drastically increases because you are paying interest for a longer period of time. So, choose shorter tenures as the interest amount will get much lower with time. Use a home loan EMI calculator while comparing long-term and short-term home loans.
    • Make regular prepayments – During the first few years of your home loan, you will be paying more towards the interest charged and less towards the principal. Thus, if you make housing loan prepayments, you will eventually bring down your outstanding principal, thereby reducing the interest in the process. However, some banks charge a certain percentage for loan prepayments, especially on fixed rate loans.
    • Get a balance transfer – Opt for balance transfer only if you feel that your current lender is charging a higher interest rate than other lenders. Most banks offer home loan balance transfer facilities, through which you can shift your loan account to the concerned bank offering lower rate of interest.
  5. How Home Loan Risk weightage is linked to LTV Ratio?An LTV or a loan-to-value ratio is the percentage of the property cost that the bank will finance while the rest of the amount is financed by the homebuyer. Most banks finance up to 90% of the property cost. This percentage may vary depending the loan amount. Lenders generally use LTVs to determine how risky the loan is and whether they will approve or deny it. For instance, for loans up to Rs.30 lakh with LTV ratio of less that 80%, the risk weightage is 35%. Similarly, for the same amount, if the LTV ratio is between 80% and 90%, the risk weightage is 50%. For home loans above Rs 75 Lakh and LTV ratio above 75%, the risk weightage is 50%.
  6. Which bank has the lowest rate of interest for the self-employed?Union Bank of India, Bank of India and SBI are the banks that are offering attractive interest rates for self-employed professionals and non-professionals, with the rates starting at 8.25% p.a,6.85% p.a. and 8.05% p.a. respectively.
  7. How can I check total interest payout for my housing loan?Use a home loan EMI calculator to check your total interest payout against your loan. Just enter the loan amount, tenure, and interest rate. Upon calculation, you will not only be able to check your EMI, but also a detailed break-up of your repayment schedule through an amortisation table. Through the amortisation table representing your repayment schedule, you can check how much interest you have paid against your loan.

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