Top Banks & HFCs Offering Lowest Home Loan Interest Rates in India

The interest rate can significantly influence the total cost of a housing loan. As home loans are usually of higher value and longer tenure, even a slight difference in its rate of interest can lead to long-term financial implications. Therefore, when looking for a home loan, you should choose the lowest rate on offer. Getting a housing loan at a lower rate of interest will not only reduce your outgoing EMIs but also the overall home loan interest payout.

Here is the list of top lenders that offer the cheapest home loans in India:

Banks	Loan to Property Value	Interest Rates	MCLR Rates	Processing Fee
India Shelter Housing Finance	75% - 80%	12.99% - 18.00%		2% - 3%(Including GST)
LIC Housing		6.66% - 7.20%	14.60%	Below 1 Cr: Upto Rs.10000 + AT Above 1 Cr: Rs.20000 + AT
State Bank Of India (SBI)	75% - 90%	6.70% - 6.90%	7.05%	NIL (upto 31.12.2021)
Union Bank of India	65% - 80%	6.70% - 7.10%	8.65%	0.50% of loan amount subject to a maximum of 15000 + GST
HDFC Ltd	75% -80%	6.70% - 7.15%	16.20%	Rs 10,000+ AT or 0.25% + AT ( Which ever is lower)
ICICI Bank	Upto 85%	6.70% - 7.55%	8.75%	Flat Rs 3000 /- + AT
Bank of India	75% - 85%	6.85% - 7.75%	8.55%	Nil
Bank of Baroda	75% - 90%	6.85% - 7.85%	8.55%	Upto 0.5 % of loan amount + GST
AXIS Bank	75% - 85%	6.90% - 8.40%	8.70%	Up to 1% of the Loan amount subject to minimum of Rs.10,000/-
PNB Housing Finance	75% - 80%	6.99% - 8.90%	8.45%	Rs.10000 + GST
United Bank of India	75% - 80%	7.00% - 7.60%	8.60%	N.A
PNB Home Loan	75% - 80%	7.00% - 7.60%	8.45%	0.35% of the loan amount Minimum- Rs. 2,500/ Maximum- Rs. 15,000/
UCO Bank	75% - 80%	7.15% - 7.25%	8.55%	NIL
Indian Bank	80% - 90%	7.15% - 7.50%	8.60%	Nil
Allahabad Bank	75% - 80%	7.15% - 7.50%	8.45%	NIL
Vijaya Bank	Upto 80%	7.25% - 8.25%	8.55%	N.A
Federal Bank	Upto 85%	7.35% - 7.70%	8.95%	N.A
IDBI	75% - 90%	7.80% - 8.80%	8.85%	Nil
Citibank	75% - 80%	8.50%	8.45%	0.5% + ST or Rs 25,000 + ST (whichever is higher)
Indiabulls Housing Finance Limited	75% - 80%	8.80% - 12.00%	9.50%	Nil
Kotak Bank	up to 90%	8.90% - 9.25%	8.65%	Nil
Bajaj Finserv	75% - 80%	9.05% - 11.15%		Nil
Standard Chartered	Upto 80%	9.41%	8.90%	NIL
DHFL	80% - 85%	9.75%	18.82% RPLR	Upto Rs. 20,000 + document charges + GST

Note: Home loan interest rates as of 22nd December 2021. Home loan rates in the table are subject to the credit/ risk profile as assessed by the lender on the basis of parameters such as credit scores, age, and repayment capacity of the applicant. Housing loan interest rates in the table are subject to change anytime without prior notice.

Home Loan Banks

Home Loan Eligibility Criteria

Home loan eligibility differs across lending institutions and loan schemes. However, a common set of housing loan eligibility criteria is given below:

• Nationality: Indian Residents, Non-Resident Indians (NRIs), and Persons of Indian Origin (PIOs)
• Credit Score: Preferably 750 and above
• Age Limit: 18 - 70 years
• Work Experience: At least 2 years (for salaried)
• Business Continuity: At least 3 years (for self-employed)
• Minimum Salary: At least Rs. 25,000 per month (varies across lenders & locations)
• Loan Amount: Up to 90% of property value

* Apart from these, your home loan eligibility also depends on the property you are buying and the location of the property.

Tax Benefits on Home Loans

The Government of India offers tax benefits on home loans under the Income Tax Act of 1961. These home loan tax benefits help borrowers save a substantial amount of money every year. Below are the tax benefits that you can get on your home loan EMI payments:

Home Loan Tax Benefit 2021-22
Section of Income Tax Act	Nature of Home Loan Tax Deduction	Max. Tax Deductible Amt.
Section 24(b)	Interest paid	Rs. 2 lakh
Section 80C	Principal (including stamp duty and registration fee)	Rs. 1.5 lakh
Section 80EE	Additional interest (for first-time homebuyers)	Rs. 50,000
Section 80EEA	Additional interest (for affordable housing)	Rs. 1.5 lakh

Note: In addition to Section 24(b) of the IT Act, you can claim tax benefit on home loan interest either under Section 80EEA or Section 80EE.

Home Loan Mustread

Home loans are provided based on the market value, mainly estimation given by banks or the registration value of the property. Availing various types of house loans to suit your individual needs at the lowest rates & easy financing can now fulfill the need for a house of your own.

Home loan is not a one-time decision; do review the market periodically before availing them. Today there are unlimited numbers of home loan banks in the country wanting to give out Home loans. Given this scenario, it may seem easy getting yourself a loan. But is it really??

Buyers tend to make mistakes while entering into deals, which may not be beneficial for them, so better compare all the variables before signing a housing loan agreement by different banks. However the loan agreement should be finalized only after reading the terms and conditions carefully.

You can Apply Home Loan even before you select your property. The loan amount would be sanctioned or approved for you, based on your repayment capability. You can get more details about home loans at Articles about Home Loan

Unique Features of house loan:

• Purpose: For purchase of house from builder / resale and construction / extension of existing house.
• Loan amount: You can avail for Home loans ranging from Rs.2 lac to Rs.200 lac depending on your eligibility, income and repayment capacity.
• Security: Home loan is a secured loan wherein collateral are required.
• Loan tenor: The maximum loan tenure is 20 years.

So if you are planning to avail a home loan, here are some tips:

Firstly, take your own time and evaluate your expenses and do a market survey about the property buying process. Buying a house, which is way beyond your range, could affect you financially; banks help in financing your dream home via home loans.

Eligibility

Banks determine your eligibility based on your repayment capacity and discuss about the loan amount up front. The eligibility for acquiring a home loan is augmented by clubbing income of your father/spouse/mother/son, by clearing your outstanding debts, by stretching your loan tenure, Salaried individuals can increase their eligibility by showing their performance linked income or bonus earned.

Secondly, Do your own analysis and check the impact of your repayment of home loan on your monthly expenditure, as a thumb rule, it's recommended to make sure the EMI of your home loan do not exceed more than 40% of your gross monthly income.

Interest rates best suited

An important factor that goes into your EMI calculations is the interest rates, which may vary from bank to bank, so do compare them. Also do a complete and detailed analysis of the various options like the interest rates i.e. fixed and floating rate of interest.

Thirdly, if two banks give you the same amount of loan but at different interest rates do your math and work out what's best for you.

Fixed interest loans

Fixed interest loans charge an interest, which remains the same through out the tenure of the loan. This means that the consumer is immune to market risk or the possible upward movement in the interest rates.

Hence, fixed rate is a good option when the home loan interest rates are expected to move up in the future.

As for floating rate loan, a consumer is exposed to market risk and his gain or loss depends on the interest rate condition prevailing in the market. Floating rate is beneficial if the interest rate falls in the future. A floating rate is considered non-transparent and is also known as 'adjustable rate'.

Fourthly, if you decide to opt for a fixed rate loan, you can still switch to a floating rate loan in the future and vice versa as and when rates go in your favour and if you do decide to switch, you should take into account the cost of doing so and the home loan rate benefits of switching.

For a given interest rate, loan with a daily or monthly reducing balance is better than an annual reducing balance loan. Interest rates vary depending on the tenure of the loan, the amount of the loan and your personal profile.

Insurance cover (an added cost) Also, many banks may insist on getting your home insured to safeguard their interest. There are various kinds of insurance covers available for you. Apart from getting the mandatory ones you should try to get insurance as per your circumstances. You also have a choice of getting insured from another company without any objection from your bank.

Other costs The interest rates and EMIs are not the only cost factor. A 1% administration fee and a 1% processing fee on a Rs.10 lac loan, would amount to Rs.20,000.

Processing fees, administration fees, valuation fee, legal fee, is to be paid when you apply for a loan and other fees paid at closing. Many of these fees are negotiable. You should ask for zero processing fees and zero-penalty for pre-payment option. If this were not available, then lowest cost would be better.

Make sure you work out as to how much these other costs add up to. So even though the interest rate may be lower, it usually adds up to being expensive. If the EMIs may come out a lot more than what you can afford on a monthly basis; try to redo the math with changes in the tenure and loan amount (if possible).

Document required Most importantly, all deals and offers agreed upon are supported by relevant papers. Self employed and salaried require different documents to support the deal.

So make sure you always ask for a letter on the banks letterhead mentioning the likes of, exact rate of interest, processing fees, pre-payment charges along with interest-schedule.

Before signing the documents, make sure you recheck all terms and conditions.

Do make sure you understand and agree with each of the clauses in the documents. Do not sign any blank documents. Even if it takes you a few hours to fill-up the form, please do so.

Do not leave anything for the executive to fill-up. It's always better to get a legal opinion from someone on your loan papers.

Do not under any circumstance give any false information. This may amount to fraud and could land you in trouble.

Penalties Once you have received the loan do your best to pay it back as quickly as possible. But this early payment might invite a pre-payment clause.

Banks make their money off the interest they charge and the sooner you pay back a loan the less money you will have to pay in interest. When it comes to Home loans, penalties are binding, like if you chose to pay up your entire money before the tenure, a Pre-payment penalty is charged. So you should know about such penalties beforehand to avoid future misunderstanding between you and the bank.

Documents Required to Apply for a Home Loan

• Proof of Identity: Copy of any one (PAN Card, Passport, Aadhaar Card, Voter's ID Card, and Driving License)
• Proof of Age: Copy of any one (Aadhaar Card, PAN Card, Passport, Birth Certificate, 10th Class Mark-sheet, Bank Passbook, and Driving License)
• Proof of Residence: Copy of anyone (Bank Passbook, Voter’s ID, Ration Card. Passport, Utility Bills (Telephone Bill, Electricity Bill, Water Bill, Gas Bill) and LIC Policy Receipt
• Proof of Income for Salaried: Copy of Form 16, latest payslips, IT returns (ITR) of past 3 years, and investment proofs (if any)
• Proof of Income for Self Employed: Details of ITR of last 3 years, Balance Sheet and Profit & Loss Account Statement of the Company/Firm, Business License Details, and Proof of Business Address
• Property-related Documents: NOC from Society/Builder, detailed estimate of the cost of construction of the house, registered sale deed, allotment letter, and an approved copy of the building plan

Note: The above list is indicative and your lender might ask for additional documents.

FAQs