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Almost all scheduled banks and scores of Housing Finance Companies (HFCs) offer home loans to finance the purchase of home properties. Currently, the home loan interest rate starts from 6.65% p.a. for tenures of up to 30 years based on the applicant’s credit score, monthly income, loan amount, LTV ratio, job profile, employer’s profile, etc.

The home loan amount can go up to 75% to 90% of the home property’s value depending on the credit profile of the loan applicant and the caps on the LTV ratios set by the lenders. At Paisabazaar.com, we help you compare the home loan interest rates and other features offered by top banks and HFCs and make online applications for the best home loan options. 

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:

Lender Rates Processing Fees
Bank of Maharashtra

6.80% - 8.70%

0.25% (Max. Rs 25,000)
Bandhan Bank 6.80%- 13.50% 0.25% - 1.00%
Indian Bank 6.90% – 7.95% Upto 1%
Bank of Baroda 6.90% – 8.60% 0.50% of loan amount (Rs 8,500-Rs 15,000)
UCO Bank 6.90% – 7.10% 0.50% (Min. Rs 1,500; Max Rs. 15,000)
Punjab and Sind Bank 6.90% - 9.05% Up to 0.25%
Bank of India 6.90% – 8.75% 0.25% (Min. Rs 1,500; Max. Rs 20,000)
Punjab National Bank 6.95% – 8.35% Up to 0.35% (Max. Rs 15,000)
Kotak Mahindra Bank 7.00% onwards Up to 1% plus statutory dues
Union Bank of India 6.90% – 8.85% 0.50% (Max. Rs 15,000)
Federal Bank 8.05% – 8.20% 0.50% (Rs 10,000- Rs 45,000)
Bajaj Housing Finance 6.75% onwards 0.3% onwards
Canara Bank 7.05% – 11.85% 0.5% (Min. Rs 1,500; Max. Rs 10,000)
ICICI Bank 7.10% – 7.95% 0.50% - 2.00% or Rs 1,500 (Rs 2,000 for Mumbai, Delhi & Bangalore), whichever is higher
SBI 6.65% - 7.65% 50% waiver on basic processing fee [0.35% of loan amount (Rs 2,000-Rs 10,000)]
LIC Housing Finance 6.90% - 8.40% 0.35% of loan amount subject to maximum of Rs 50,000/- + GST
HDFC 7.00% - 8.50% Up to 1.50% or Rs 3,000/Rs 4,500 (whichever is higher)
Tata Capital 7.15% onwards Up to 0.50%
PNB Housing Finance 6.99% - 16.75% Up to 0.50%
Axis Bank 7.00% - 11.90% Up to 1% (Min. of Rs 10,000)

 

Note: Home loan interest rates as of 27th May 2022. 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.

Apply for Home Loan at Attractive Interest Rates

Types of Home Loans

Banks and Non-banking Finance Companies (NBFCs) offer home loans for different purposes. So before applying for any type of home loan, assess your requirements in order to get a suitable home loan scheme. Some of the types of home loans available are as follows:

  • Home Purchase Loan: It is the most common type of home loan availed usually to buy ready-to-move-in properties, under-construction properties, and pre-owned homes/resale properties. As per RBI guidelines, lenders can offer a loan-to-value (LTV) ratio of up to 75-90% of the property value
  • Composite Loan: It is a perfect financing solution for individuals who want to buy a plot of land either for investment or for building a house. In this type of home loan, the first disbursement is made towards the purchase of a plot. The subsequent payments depend on the stages of construction of the house
  • Home Construction Loan: This type of home loan is available for individuals who want funds for the construction of a house. The loan is granted only if you own a plot of land and plan to construct a house on it. Just as in composite loan, here too the disbursement depends on the stages of construction of the house
  • Home Renovation/Improvement Loan: This type of home loan can be availed to fund home renovation and home repairing expenses of an existing house. The interest rate for home renovation loan is the same as that for a regular home loan. However, its loan tenure is shorter than the regular home loan
  • Home Extension Loan: It is for those who require funds to add more space to their abode. Under this loan type, financial institutions usually lend 75-90% of the construction estimate, depending on the loan amount and LTV ratio
  • Bridge Loan: It is a short-term home loan and is suitable for individuals who wish to buy a new house with the sale proceeds of the existing home. The loan helps in covering the gap between the purchase of a new house and the sale of an existing house
  • Interest Saver Loan: It is similar to a home loan overdraft facility. In this, the borrowers’ home loan account is linked to their bank account. Any amount deposited in the bank account over and above the EMI amount is used as a prepayment towards the loan, thus, saving on the interest amount
  • Step Up Loan: Yet another type of home loan in which borrowers pay lower EMIs during the initial years of the loan tenure. However, there is a provision of increasing the EMI amount over time. This makes the loan affordable for young professionals who have just started their career

Fees & Other Charges Related to Home Loan

Prospective home buyers, usually, are more concerned about the home loan interest rates and tend to overlook other expenses involved in taking a home loan. These additional charges also make up the total cost of your housing loan and hence must be factored in when deciding on an offer. Below are some of the fees and charges that may be applicable to your home loan.

  • Application Fee is charged by lenders to cover all the preliminary expenses that they bear for conducting the verification.
  • Processing Fee covers the cost of credit appraisal and depends on the borrowers’ credit profile, income, and the home loan scheme. Also, not all lenders levy processing fees.
  • The administrative fee is charged by those lenders who split the processing fee into two parts. The part charged after the loan sanction is known as the administration fee. Citibank is one of the banks to levy administrative fees.
  • Foreclosure/Prepayment Charges are levied when a borrower prepays the home loan either fully or partially before the end of the loan tenure. Earlier, lenders used to charge prepayment penalties and foreclosure charges on home loans. But RBI banned lenders from charging individuals with prepayment penalties on floating rate home loans. As far as fixed-rate home loans are concerned, some lenders levy these charges.
  • Repayment Mode Related Charges are levied when borrowers request their lenders to change their existing repayment mode during the loan tenure. The fee usually goes up to Rs. 500 per instance (swap) and varies from one lender to another.
  • Rate conversion/switching fees are charged when borrowers request their lenders to switch or reduce their existing interest rates due to various reasons. The fee varies from one lender to another and usually goes up to 2% of the outstanding principal amount.
  • CERSAI Charges (Central Registry of Securitisation Asset Reconstruction and Security Interest) is the central online security interest registry of India. Potential lenders visit the CERSAI website to check whether the pledged property is not claimed by some other lender. For this process, the lenders pay a nominal fee, which they later collect from borrowers.
  • Overdue Charges on EMI are levied when a borrower misses or delays timely payment of loan EMIs. It attracts penal interest rates on the outstanding dues or overdue installments over the prevailing loan interest rates. Therefore, borrowers must pay the loan EMIs on time.
  • EMI Bounce Charges are levied when you fail to make timely loan payments due to insufficient funds in your bank account. Lenders usually levy Rs. 500 on such defaults which may vary from one lender to another.
  • Legal Fee is usually included in the processing fee but some lenders charge it separately when they engage firms to scrutinize borrowers’ legal documents.
  • Franking Fee, commonly referred to as stamp duty fee is a tax levied by the state government on any form of monetary transaction involving the transfer of rights of a property. The amount varies from one state to another and depends on state laws, type of property, etc.

Check:- Home loan processing fees and charges of top banks and HFCs.

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.

Suggested Read: Tips to Improve home loan eligibility

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.

Must Read: The complete checklist of the home loan documents required

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.

How to Apply for Home Loan Online at Paisabazaar.com

At Paisabazaar.com, you can compare and apply for eligible home loan offers in three simple steps:

Step 1- Share Your Details

Enter personal information as well as the details related to your loan requirements.

Step 2- View Offers

As per the details shared, a list of eligible home loan offers will appear. Compare interest rate, processing fee, and eligible loan amount from the list of eligible home loan offers.

Step 3- Submit the Application

Apply for the home loan offer that suits your loan requirements the best. 

Once your application is successfully submitted, you will get a confirmation of your home loan application along with a reference number for future reference. Next, our loan expert will get in touch within 24 hours to take this application forward.

Click here to apply for home loan online

How to Avoid Home Loan Rejection?

The below-mentioned steps can prove to be beneficial to avoid home loan rejection:

  • Credit Score: It is advisable to maintain a credit score of 750 and above to have a good chance of your application being approved. Banks & Financial Institutions rely on credit scores before approving your home loan to check your credibility and loan repayment history. So, you should always maintain your credit score to avoid home loan rejection.
  • Insufficient Income: Banks and financial institutions look into your monthly income to see if you will be able to repay your equated monthly installments (EMIs) or not. It is always advisable to take a home loan with an EMI of not more than 40% of your monthly income. Lenders have certain minimum income and employment requirements which play an important role in the loan-approval process. Make sure that you meet all the requirements before you apply for a home loan.
  • Too many applications for a home loan in a short span of time: If you apply for a home loan from different lenders, it indicates to banks and financial institutions that you are short of credit and need to apply to several sources to fill the gap. Lenders think that you will not be able to repay your loan, which leads to the rejection of your home loan application.
  • Existing loan portfolio: Currently, if you have a number of loans to repay, then your lender might think that you will not be able to take on another EMI on your existing income, which will lead to your home loan rejection. So, it is better to apply for a home loan once you have paid off a few of your other loans to reduce your EMI burden.

FAQs

1. Can I get a home loan for the entire property value?

Ans. No, you cannot get a home loan for the entire property value as the Reserve Bank of India (RBI) has capped the Loan-to-Value (LTV) ratio of housing loans. As per the RBI guidelines, the LTV ratio can go up to 90% of the property value for loan amounts up to Rs 30 lakh; for loan amounts above Rs 30 lakh and up to Rs 75 lakh, the LTV ratio limit is up to 80% of the property value and for loan amounts above Rs 75 lakh, the LTV ratio can go up to 75% of the property value. This implies that at least 10% of the remaining value must be shelled out by the borrower as down payment.

Subject to the caps set by the RBI on LTV ratios, banks/HFCs further fix the LTV ratio on the basis of the risk assessment and credit profile of the loan applicant. Those with lower creditworthiness are usually offered lower LTV ratio.


2. How much credit score should I have to get a housing loan?

Ans. Lenders prefer sanctioning housing loans to applicants having credit scores of 750 and above as such high credit scores reflect responsible credit behaviour and reduce credit risk for lenders. This is also the reason why many lenders offer lower home loan interest rates to applicants having high credit scores.

3. Who can co-sign a home loan?

Ans. Your spouse or blood relatives such as your father, mother, siblings and children can co-sign a home loan with you. Also, all co-owners of the property must be co-applicants in housing loan.

4. Are there any prepayment charges in case of a home loan?

Ans. In the case of floating rate home loans, lenders don't charge a pre-payment penalty as per RBI directives. However, lenders may levy prepayment penalty in case of prepayment of fixed rate home loans.

5. What is a home loan balance transfer?

Ans. Home loan balance transfer allows existing home loan borrowers to transfer their outstanding home loans to a new lender at lower interest rates and/or better loan terms. This facility is especially helpful for those borrowers who had availed housing loans at higher interest rates but are now eligible for lower interest rates due to their improved credit profile or reduction in market interest rates.

6. Can I take two home loans at the same time?

Ans. Yes, if the lender of your second home loan is satisfied with your repayment capacity, credit profile and the characteristics of the pledged property, you can avail a second house loan for another property.

7. How long does it take to get a home loan sanctioned?

Ans. Usually, it takes 1 to 2 weeks for lenders to sanction a housing loan. However, it may significantly vary depending on banks/HFCs loan approval process, credit profile of the applicant and the features of the property to be purchased/ constructed.

Know more about your lender’s home loan eligibility requirements and documentation process so that you're prepared in advance, which in turn can reduce the time taken for loan approval process.

8. What is the difference between a fixed rate and floating rate home loan?

Ans. In a fixed rate home loan, the rate of interest applicable at the time of loan disbursal remains same throughout the loan period. As the interest rates remain the same throughout the loan tenure, you will be shielded from interest rates increases during the loan tenure. However, at any time during the loan tenure, if the lending rates fall, the fixed interest rates will remain unchanged, giving you no benefit of the reduced EMIs.

In case of floating rate home loans, the interest rates are subject to change as per the changes in the linked benchmark rates used by the lenders. Floating interest rate home loans are usually cheaper than the fixed interest rate home loans and the RBI mandates no prepayment or foreclosure charges for individuals borrowing a floating rate home loan.

9. Can I prepay my outstanding housing loan amount?

Ans. Yes, you can prepay your home loan. If you have floating rate home loans, no prepayment charges will be levied. However, in case of fixed rate home loans, lenders might levy around 2% to 4% of the prepayment charges.

10. Can I avail tax deductions on my home loan?

Ans. Yes. The repayment of principal amount would qualify for tax deductions under Section 80C of Income Tax Act. The repayment of interest component would qualify for tax deduction under Section 24(b) of the IT Act.

11. Can I switch from a fixed rate to a floating rate during my home loan tenure?

Ans. Yes, most lenders offering home loans at both fixed and floating rates allow their existing home loan borrowers to convert their fixed rate loans into floating rate loans and vice versa, on the payment of conversion or switching fee.

 

Current Home Loan Interest Rates in India, 2022

Lender Rates Processing Fees
Bank of Maharashtra

6.80% - 8.70%

0.25% (Max. Rs 25,000)
Bandhan Bank 6.80%- 13.50% 0.25% - 1.00%
Indian Bank 6.90% – 7.95% Upto 1%
Bank of Baroda 6.90% – 8.60% 0.50% of loan amount (Rs 8,500-Rs 15,000)
UCO Bank 6.90% – 7.10% 0.50% (Min. Rs 1,500; Max Rs. 15,000)
Punjab and Sind Bank 6.90% - 9.05% Up to 0.25%
Bank of India 6.90% – 8.75% 0.25% (Min. Rs 1,500; Max. Rs 20,000)
Punjab National Bank 6.95% – 8.35% Up to 0.35% (Max. Rs 15,000)
Kotak Mahindra Bank 7.00% onwards Up to 1% plus statutory dues
Union Bank of India 6.90% – 8.85% 0.50% (Max. Rs 15,000)
Federal Bank 8.05% – 8.20% 0.50% (Rs 10,000- Rs 45,000)
Bajaj Housing Finance 6.75% onwards 0.3% onwards
Canara Bank 7.05% – 11.85% 0.5% (Min. Rs 1,500; Max. Rs 10,000)
ICICI Bank 7.10% – 7.95% 0.50% - 2.00% or Rs 1,500 (Rs 2,000 for Mumbai, Delhi & Bangalore), whichever is higher
SBI 6.65% - 7.65% 50% waiver on basic processing fee [0.35% of loan amount (Rs 2,000-Rs 10,000)]
LIC Housing Finance 6.90% - 8.40% 0.35% of loan amount subject to maximum of Rs 50,000/- + GST
HDFC 7.00% - 8.50% Up to 1.50% or Rs 3,000/Rs 4,500 (whichever is higher)
Tata Capital 7.15% onwards Up to 0.50%
PNB Housing Finance 6.99% - 16.75% Up to 0.50%
Axis Bank 7.00% - 11.90% Up to 1% (Min. of Rs 10,000)

Home loan interest rates for all lenders as on 27th May 2022. Housing loan interest rates in the table are subject to change anytime without prior notice. 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.

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