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Know Everything About Low interest rates for home loans

  • 17-May-2022
Know Everything About Low interest rates for home loans

Planning to avail a housing loan is a great idea, it is provided to buy a new or pre-owned house. A home loan is offered by banks, financial bodies, or Non-Banking Financial Institutions. (NBFCs).  


Types of home loan 

Home purchase loan – It allows you to avail a loan for the purchase of a new home or property at an easy and affordable rate of interest. 


Self-construction loan – These loans provide you the opportunity to buy a plot and construct it or the plot that you already owned for self-construction. You can also get an attractive rate of interest with flexible tenure. 


Home improvement loan – If you are planning to redesign or renovate your pre-owned home, then you can take a home improvement loan facility to implement your planning into reality. 


Home loan Top-up – When you have already taken a housing loan but feel inadequate to meet your needs. Therefore, you can avail home loan top-up for the extra loan amount on the same collateral with the lowest rate of interest. 


Home loan balance transfer – Have you ever felt that you are paying a higher interest rate on the current housing loan, then you can switch to a home loan balance transfer.  


Details of housing loan 

Rate of interest  6.40% onwards  
Loan amount  Rs. 5 crores 
Repayment tenure Up to 30 years 
Processing fee  Up to 1% 


Here is the complete list of housing loan interest rates in India from all banks and financial institutions. 

Bank name  Interest rates Processing fee  
Bandhan Bank  8.75% Up to 0.25% 
Axis Bank  6.70% 1% 
Aditya Birla  9% Up to 1% 
Bank of India 6.70% Up to 0.25% 
Bank of Maharashtra  7.05% 10,000 
Canara Bank  6.90% Up to 0.25% 
HDFC Bank 6.65% Up to 0.25% 
Federal Bank  7.90% Rs. 3000 to Rs. 7500 
Central Bank of India  6.85% Up to 0.25% 
Bank of Baroda 6.75% Up to 0.25% 
PNB Housing  7.35% Up to 0.25% 
HSBC Bank  7.45% 1% (Rs. 10,000) 
ICICI Bank  6.70% Up to 0.25% 
IDBI Bank  6.90% Up to 0.25% 
IDFC First Bank  7.00% Rs. 5000 
IIFL  8.70% 1.25% 
Indiabulls 8.99% Up to 2% 
Indian Overseas Bank  7.05% 0.50% 
Kotak Mahindra Bank  6.65% 0.50% 
LIC Housing Finance 6.90% Up to 0.25% 
Yes Bank  7.00% Up to 0.25% 
United Bank of India 7.10% 0.59% (Rs. 1180 – Rs. 11,800) 
Union Bank of India  6.80% 0% - 0.35% 
UCO Bank 7.15% 0.15% (Rs. 1500 – Rs. 15,000) 
Tata Capital  8.50% 2% 
State Bank of India 6.70% 0% - 0.35% 
Standard Chartered Bank  7.99% Up to 1.00% 
Punjab National Bank  6.70% Up to 0.25% 


Types of interest rates in home loans 

There are 3 types of interest rates for home loans charged by many banks. 

1 Fixed-rate  

A fixed rate of interest is a rate which remains the same throughout the loan tenure. There will be no change in the charges of interest. Therefore, it is easy to track the credit flow. 


  • Fixed monthly installment
  • Better cash flow management.
  • Safeguard from interest rate fluctuations.


  • Expensive than floating rates.
  • Lenders often have the right to change the rates.
  • High pre-payment penalties.


2. Floating rate  

A floating rate of interest is the one that changes over the duration. It is reversed from a fixed interest rate, where the rate of interest remains the same. Loans like residential mortgages, can be obtained at both fixed as well as floating rates of interest that can be adjusted periodically based on the market conditions.  


  • Cheaper than fixed loan rates.
  • Flexibility in repayment.
  • Might work well in the long term.


3. Hybrid 

Hybrid loans are the combination of fixed loan rates and floating rate. In this, you can start with a fixed interest rate for some time, and then your interest rate will modify according to the loan terms.


Home loan calculator in India  

Home loans are long-term loans, and it is crucial to evaluate the overall interest liability towards the loan. There are two ways to calculate the Equated Monthly Installment (EMIs). 


  • EMI Calculator

An individual can evaluate the interest amount suitable for their home loan by using the EMI calculator. The individual requires to fill in the loan amount, rate of interest, and repayment tenure. 

When the details have been filled in, you can automatically get the detailed breakup of a loan within a second including the amount payable on the interest. 


  • EMI Calculation formula

On the other hand, the individual can also use the mathematical formula to evaluate the EMI.

EMI = [P x r x (1+r)^n]/[(1+r)^n-1] 


P = Principal amount 

R = Rate of interest  

n = Loan tenure or number of installments (in months) 

For example,  

The individual has taken a loan amount of 10 lakhs for a repayment tenure of 8 years at an interest rate of 7%. What will be the monthly EMI? 

Principal amount  10,00,000 
Rate of interest  7% 
Repayment tenure (in months) 96 
Monthly EMI  13,634 


Points to be kept in mind while applying for a home loan 

  • option for a balance transfer facility 

You must look precisely at the terms and conditions of the current banks before looking for new ones, as there are several banks and financial institutions that do not permit you to transfer the balance for a loan from other banks. 


  • Collect details about the banks

When you finalize any bank, the first thing you need to do is conduct deep research on that specific lending institution to ensure that their criteria is matching with your profile and their features are fulfilling your needs. 


  • Check your credit score 

The credit score provides an indication of whether you are eligible for the loan or not. Credit / CIBIL Score must be good i.e., above 750. And if your score is poor I.e., below 650 then the chances to get a loan become less. 


  • Bargain for a lower rate of interest

Before getting a loan, bargain for a lower interest rate with your lender. If you have an honest relationship with the bank, then it may assess your request and look through your repayment ability & credit history. 


Home loan eligibility criteria 

For salaried individuals: -  

  • The age criteria of the salaried individual should range between 23 years to 62 years of age.
  • The credit score must be 750 or above.
  • The minimum salary of the borrower should be Rs. 25,000.
  • Work experience should be a minimum of three years.
  • The salaried individual can get a maximum loan amount of up to Rs. 3.5 crores.


For self-employed individuals: - 

  • The age criteria of the salaried individual should range between 21 years to 65 years of age.
  • The Minimum salary should be Rs. 10,000 per month.
  • The Minimum business income should be Rs. 2 lakhs per annum.
  • The Maximum loan tenure is 30 years.
  • Record of CIBIL Score & Credit history must be positive.
  • There should not be any financial obligations such as credit card debt, car loans, etc.


For professional individuals: -  

  • Professionals such as Dentists, Cost accountants, Management consultants, Dentists, Doctors, Architects, Engineers, Chartered Accountant, etc... are eligible for the criteria of a housing loan.
  • At the time of getting a loan, the age of the borrower should be above 21 years to 65 years of age.


Factors affecting home loan eligibility  

Eligibility criteria of home loans are determined by the banks on the basis of the following factors: -  


  • Age criteria – The age of the borrower plays an important role in determining the eligibility and loan tenure which turns in the monthly EMI. As long as the tenure, the less will be the EMI and vice-versa to an interest rate and loan amount.


  • Repayment tenure – The primary factor that lenders decide is whether you are capable of paying back the borrowed amount or not. It also depends on the income and revenue of the borrower.


  • Nature of employment – Eligibility criteria vary from job to job. The eligibility for a home loan of salaried individuals differs from self-employed individuals. Your monthly income is calculated by the amount of Equated Monthly Installment (EMI) and determines whether you are eligible or not.


  • Professional experience – Professional record is also one of the main factors that affects the eligibility for a housing loan. It helps to work in your Favour during the loan sanction.


  • Number of existing loans – If the borrower has many existing loans, the possibility of approving loan by the banks is less.


Documents required for a home loan 

Given below are the documents required for a housing loan. 

  • Duly filled application form with 2 passport-sized photographs.

Identity Proof (Anyone) - 

  • Aadhar Card
  • Voter ID card
  • PAN Card
  • Passport
  • Driving license
  • passport

Address Proof (Anyone) -  

  • Electricity bill
  • Water bill
  • Ration card

Income Proof-  

  • Bank statement for the previous one year of salary account.
  • Profit and loss statement.
  • Income Tax Return with computation of income for the last three years form – 16 (if filed).
  • Salary slips for the last 3 months and appointment letter.
  • Audited financial by registered Chartered Accountants.

Other mandatory documents -  

  • A cheque for processing fee in Favour of the bank.
  • Sanction letter and loan schedule if running.
  • Complete property documents with ATS + MAP and Chain.


How to apply for a home loan? 

Step by step to apply online process: - 

Step 1: - Visit the official website of the preferred lender and check your eligibility.   


Step 2: - With the help of using the EMI calculator, you can calculate your monthly EMI.   


Step 3: - You need to download an application form. 


Step 4: - Enter all the required information and select the needed loan amount and repayment tenure.   


Step 5: - After filling in the application form, click on the ‘submit’ button.   


Step 6: - Bank representative will analyze your application to cross examine whether your profile meets the basic criteria. If your profile fulfils the requirements, you will be contacted shortly to process further formalities 


Step by step to apply offline: -   

 Step 1: - Visit the nearest branch of the preferred bank.  


Step 2: - Ask for an application form to get a loan and fill it with all the necessary details.  


Step 3: - Submit all the required documents such as income proof, address, age proof, identity proof, etc.  


Step 4: - The bank representative will analyze all the documents and verify the eligibility of the individual.  


Step 5: - After that, the loan amount will be transferred to the bank account of the individual.  


Why to choose financeseva for a home loan?  

Financeseva will help you -  

  • Comparing various offerings from different lenders
  • In getting a hassle-free loan process
  • In selecting the best deal based on your requirements
  • To get a doorstep service / personalized loan offer



FAQs -

Which bank provides home loans at the lowest rate of interest? 

There are many banks that provide home rates at lower interest rates, some of the most popular are -  

  • HDFC Bank
  • Canara Bank
  • Bank of India
  • Central Bank of India
  • Punjab National Bank

What is a home loan? 

A home loan is a credit facility provided by many lenders and NBFCs to the borrower for the purchase or renovation of a home. 

How to apply for a housing loan? 

You can avail through online as well as offline, you have to fill in the application form and affix required mandatory documents such as age proof, address proof, identity proof, bank statement for the previous three months, and property details, etc... 

How to lower the interest rate on a home loan? 

  • Choose shorter tenure
  • Opt for a balance transfer facility
  • Make regular payments

How to calculate loan EMI? 

Calculating EMI for a housing loan is very easy and simple. You just need to enter the interest rate, loan tenure, and loan amount. You can use it anywhere and anytime. 

 Also read: - Things You Must Know Before Transferring Your Home Loan

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