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Home Loan issuers in India

Home Loan Interest Rate

Owning a home makes you feel safe and secure as you can provide shelter for yourself and your family. But at the same time, buying a house entails tremendous financial planning and commitment. A house is generally an appreciating asset and is one of the safe long-term investments to make. Again, this depends on how well you plan your finances.

Whether you are thinking about buying a property or already looking at properties, the most important deciding factor of a home loan is its interest rate. It becomes doubly important to compare different features of a housing loan before zeroing in on one. Home loan interest rates generally range from 8.30%–11% p.a. in India. Home loan interest rate is dependent on your credit history, age, income, employment stability and existing debt obligations amongst others.

Factors that impact Home Loan Interest Rates

While home loans are made available to all, the home loan interest rate offered by the bank will not be the same for all applicants. It differs from individual to individual and is largely based on the following factors:

Credit Score : An applicant’s credit score represents the person’s financial profile. The credit history of the applicant plays an important role in getting a home loan sanctioned and in getting the best interest rates. If the credit rating is on the higher side, it is easier to get a home loan. If it is on the lower side, one needs to improve the credit score by paying off existing debts and managing better sources of income. Since banks take risk in offering home loans, preference is given to those applicants who have sound credit history and consistent repayment capacity.

Loan Amount :The home loan interest rate is directly dependent on the loan amount. If the loan amount is higher, the interest rate will also be on the higher side. This is because the bank takes a higher risk with higher amount of loan taken. Women borrowers are generally offered a concessional rate over other applicants.

Down Payment : While purchasing a house or an apartment, a certain sum of money needs to be paid upfront This amount is called as down payment. If a larger amount is made as down payment, the loan amount will be lower. This will reduce the risk for the bank and will help in getting a better interest rate.

Type of Interest : Normally, two types of home loan interest rates are available – Fixed and Floating ratesp. In the fixed interest rate scheme, the rate of interest remains the same throughout the tenure of the loan. In the floating rate of interest scheme, the interest rate changes as and when market conditions change.

How can I get a low interest rate home loan?

Having a bad credit score can hinder your chances of loan approval. Lenders do not want to risk giving loans to customers who already have demonstrated poor credit behaviour and might possibly default on EMI payments in the future. However, each lender has a different set of requirements and criteria for sanctioning home loans. So, it is possible that even if multiple lenders reject you, you might still have a small chance to qualify with a different lender who has different requirements.

Do a through research on multiple lenders, their home loan features, interest rates and other terms. In a bid to lure a prospective customer, one lender may be ready to offer you a home loan at a better rate than others. Hence, all you need to do is to do the home work and apply with the right lender.

Home Loan Interest Rates Comparison

Once you ensure you have a good credit rating, you can use an online home loan comparison website in order to contrast and compare various loan offers. Don’t just solely rely on one site for comparison. If you are an existing customer of a bank and have a good relationship with your lender, then obviously they make the first choice. You would be given preferential interest rates and other attractive terms and conditions if you have been a loyal customer. Make sure to check with your lender before approaching new lenders. Following are the home loan interest rate of some of the popular lenders in India.

Name of the LenderInterest Rate (Onwards)
HDFC Bank8.90%
ICICI Bank9.10%
SBI8.75%
Canara Bank8.75%
Axis Bank8.90%
Citibank8.75%
Yes Bank9.60%
Bank of Baroda8.65%
Bank of India8.85%
Kotak Mahindra Bank8.95%
Indian Overseas Bank8.70%
Punjab National Bank8.70%
Tamilnad Mercantile Bank9.75%
Karur Vysya Bank8.90%

Home Loan Interest Calculator

Before you jump on the first home loan offer on a house that you absolutely love, you should first check the interest rate on home loan. You must ask yourself this question - “How much can I afford, and how do I calculate the interest amount I would pay?”

Each lender who offers home loans provide a home loan calculator on their website to know about the EMI amount and other details. You can also use CreditMantri’s home loan calculator to find out how much interest amount you will pay towards your loan. Just enter the interest rate, the loan amount and the tenure, and the calculator will show a breakup of the home loan rate of interest. You can use the home loan EMI calculator as an interest calculator for different combinations of loan amounts, interest rates and tenures to get an accurate picture of what your financial outgo would be.

How do I choose the best home loan offer?

The only way to decide which loan offer to apply for is to research the various options thoroughly. Once you have a good idea of the offers and schemes available, you can judge which offer suits your financial situation and requirements the best.

How is my loan eligibility determined?

Your credit history and repayment capacity will be considered while making a lending decision. Also, your home loan interest depends on your credit history. Having a good credit history and an impeccable repayment tracks ensures that you land the lowest interest rate for home loan as per your unique credit profile.

Your credit score and history also influence how much you can borrow. If you have a longer credit history with multiple credit, the lender assumes you have a greater experience in borrowing and lends you the maximum loan amount.

The larger the down payment you make, lower will be the risk for the lender. Hence, there are chances you get a lower interest rate and your eligibility is greatly established.

How can I apply for a home loan?

Applying for a home loan is easy and it takes less than an hour if you are applying online. You can also apply by visiting the nearby bank branch or call the customer support for helping with the application process. Before applying for the home loan, check your eligibility, interest rates and other features related to the loan. It helps you secure the best deal.

You can check your eligibility and apply for a home loan by signing up with CreditMantri. It is quick, simple and above all, free. You can compare the interest rate for home loan offered by different lenders on a single page and make an informed decision.

CreditMantri matches your credit and demographic profile to the lender's lending criteria and presents you a shortlist of only those lenders willing to lend to you based on your unique credit profile. In effect, we pre-screen your application to make sure you are likely to qualify as per the lender’s credit criteria. Hence, the chances of your home loan application getting approved are higher.

Frequently Asked Questions: Home Loan Interest Rate

1. What is the lowest interest rate that I am likely to get on a home loan?

Interest rates on a home loan range between 8.30% to 12%. If you have a good credit score, income and paid high down payment, you are likely to get the lowest interest rate of 8.30%.

2. What is the recommended credit score to get the best interest rate on a home loan?

A credit score of 750 and above is considered a good credit score. This will guarantee a better interest rate on a home loan.

3. What is the maximum home loan amount I can get from banks?

Most of the banks have no ceiling on a home loan amount as it is a secured loan. However, for higher loan amount above Rs. 75 Lakhs, the margin will be 30%.

4. Can I get a lower interest rate without credit score?

Getting a lower interest rate without a credit score is not impossible. If you have a good income and pay good down payment, you are likely to get a lower interest rate.

5. What is the maximum tenure on a home loan?

Most banks allow you repay the home loan up to 30 years.

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