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).
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.
| Rate of interest | 6.40% onwards |
| Loan amount | Rs. 5 crores |
| Repayment tenure | Up to 30 years |
| Processing fee | Up to 1% |
| 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% |
There are 3 types of interest rates for home loans charged by many banks.
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.
Pros
Cons
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.
Pros
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 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).
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.
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]
Wherein,
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 |
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.
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.
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.
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.
For salaried individuals: -
For self-employed individuals: -
For professional individuals: -
Eligibility criteria of home loans are determined by the banks on the basis of the following factors: -
Given below are the documents required for a housing loan.
Identity Proof (Anyone) -
Address Proof (Anyone) -
Income Proof-
Other mandatory documents -
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.
Financeseva will help you -
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 -
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?
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
CA Vikas Jain - Our Mentor
9863-02-02-02