Home loan interest rates: Pay for a house, not a coffin!
Created on 04 May 2023
Wraps up in 11 Min
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Home is more than just a building constructed of bricks, cement, or other basic building materials; it is a place where one's heart belongs. Everyone has a desire to own a home at least once in their lifetime. Owning your own home is definitely something you want to do once you start making money.
We start to become anxious when property prices don't meet our budget, which is when the problem begins. We start looking for ways to arrange financing right away, and banks are the first place that springs to mind, and we head to the banking institutions immediately.
So let's understand what a home loan really is.
A home loan is a secured loan obtained to buy a property by using the same as collateral. A home loan offers extended terms and high-value financing at low-interest rates.EMIs are the method of payback. The borrower receives ownership of the property back after repayment.
A secured loan, known as a home loan, is obtained to buy a property by using the property as collateral. A home loan offers extended terms and high-value financing at low-interest rates.EMIs are used to pay them back. The borrower receives ownership of the property back after repayment.
One sort of loan offered by banks and other financial institutions is a home loan. NBFCs are non-banking financial institutions that assist people in buying homes. Home loans have grown in popularity in India over the past few years as a result of the sharp increase in real estate prices and the rising need for affordable housing.
5 Types of Home Loans Available in India
Given the escalating cost of real estate in India, most individuals can only accomplish their ambition of owning a home thanks to a home loan. Lenders in India now offer a variety of home loans to better satisfy the demands of the borrowers.
In India, getting a house has increasingly been considered a need for settling down. Many people in the country dream of buying a property, but the country's demand for home loans has grown dramatically as a result of the rising cost of real estate.
Some of the most popular home loan choices are listed below for your consideration:
1. Basic home loan: The most common loan people take to realize their ambition of owning a home is a typical home loan. And it's a loan that allows you to obtain cash from the lender to pay for the property of your preference. You can then pay back the loan to the bank in monthly instalments every month after making the transaction.
The financial institution may approve a home loan for up to 80%-90% of the cost of the property if you meet the requirements for the loan.
2. Home construction loan: You should think about a home building loan if you previously owned land and want to build the house of your dreams on it. A house construction loan is typically disbursed in instalments depending on the completion of the construction project, unlike a standard home loan where the lending institution makes a single payment of the loan amount.
A home building loan's approved amount is typically determined by the estimated cost of the project.
3. Home Extension/Improvement Loan: A home expansion or improvement loan is one of the most popular kinds of house loans. A home extension loan can be useful if you currently own a house but wish to add a room or perhaps a floor to it. An existing home can be renovated with a home improvement or renovation loan.
Millions of rupees could be spent on a home addition or refurbishment. Even if you don't have enough money saved up right now, these loans guarantee that you can grow or improve.
4. Home loan Balance transfer: You have the choice to change lenders if you have previously taken out a home loan and are already repaying it. When they can obtain a home loan from another financial institution at an interest rate that is lower, borrowers typically do this.
However, take into account the actual savings before transferring your home loan, as the new lender could charge costs like processing fees and more.
5. Pradhan Mantri Awas Yojana (PMAY): First-time homebuyers can obtain Home Loans at discounted interest rates through the Credit-Linked Subsidy Scheme (CLSS) under PMAY. You can save up to ₹2.67 lakh as a result of your home loan.
Longer loan terms of up to 20> years are one of the extra perks offered by this programme.
Only banks that have enrolled on the programme are permitted to provide this subsidized credit. If you're a first-time home buyer looking for a lender, take into account one that is accredited by the PMAY programme to be eligible for the discount.
Best Home Loan Rates in India
Now that we know some standard types of loans then, let's take a look at some of the popular banks that provide home loans in India:
SBI Home Loan Interest Rate
Mumbai, Maharashtra, is home to the State Bank of India (SBI), a multinational public sector bank and statutory organization in India. The only Indian bank in the 2020 Fortune Global 500 list, SBI is the 49th-largest bank in the world by total assets and is rated 221st overall.
State Bank of India offers house loans with competitive interest rates beginning at 8.50% per year. A loan tenure extension option of up to 30 years guarantees a reasonable repayment time.
For these loans, the processing charge is 0.35 per cent of the loan amount (minimum ₹2,000; maximum ₹10,000) plus any applicable taxes. On SBI Home Loans, female borrowers are also eligible for an interest reduction of 0.05%.
They are one of the most popular housing loan programmes in the nation because there are no additional fees, and prepayment penalties are completely waived.
HDFC Home Loan Interest Rate
Mumbai-based HDFC Bank Limited, popularly known as HDB, is an Indian banking and financial services organization. As of April 2021, it was the largest private sector bank in India by assets and the tenth-largest bank in the world by market capitalization.
With a $127.16 billion market capitalization on the Indian stock exchanges, it is the third-largest firm overall. With little under 150,000 workers, it ranks as India's fifteenth-largest employer.
At HDFC Bank, the standard home loan rate ranges from 8.95% to 9.45%. Additionally, the maximum loan term for home loans is 30 years. Also, any loan that is provided to you for a period of no more than five years has a short tenure.Axis Bank Home Loan Interest Rate
Formerly known as UTI Bank, Axis Bank Limited is an Indian banking and financial services organization with its corporate headquarters in Mumbai, Maharashtra. It offers financial services to big and small corporations, SMEs, and retail outlets. As of 30 June 2016, the promoters and the promoter group controlled 30.81% of the shares.
The average interest rate for a house loan at Axis Banks is between 8.75% and 9.15%.
The amount of interest charged will vary depending on the loan amount and the state of the market. The longest payback period offered by Axis Bank is 30 years.
IDBI Home Loan Interest Rate
The Life Insurance Corporation of India and the Indian government jointly own the development finance organization IDBI Bank Limited. The Industrial Development Bank of India was founded in 1964 as a development finance organization that offered financial services to the industrial sector.
Now, if we discuss IDBI Bank's home loan interest offering, then refer to the table below to get an idea of home loan schemes by IDBI.
Loan Amount Sanctioned
Up to ₹30 Lac
Up to 90% of the property value
In between ₹30 lac to 75 lac
Up to 80% of the property value
Above ₹75 lac
Up to 75% of the property value
However, IDBI Bank's interest rates might range from 7.15 to 8.65 per cent, with the remaining percentage depending on the creditworthiness of the borrower. Similar to all other banks, this bank also offers a range of payback terms, ranging from one year to thirty years.
Bank of Baroda Home Loan Interest Rate
Gujarat's Vadodara serves as the home base for the Bank of Baroda, a public sector bank in India. With 153 million clients, a US$218 billion in annual revenue, and a global footprint of 100 abroad locations, it is India's second-largest public sector bank after the State Bank of India. It is listed on the Forbes Global 2000 list at position 1145 as of 2019.
The bank was established on 20 July 1908 in the Gujarati princely state of Baroda by the Maharaja of Baroda, Sayajirao Gaekwad III. On 19 July 1969, the Bank of Baroda and 13 other significant Indian commercial banks were nationalized by the Indian government. The bank was subsequently declared a profitable PSU.
Just like other banks, even the Bank of Baroda offers home loans, and the interest rates range between 9.15% to 10.60%; however, it depends on other factors like credit worthiness of the customer, market conditions, etc.
Also, a maximum repayment period of 30 years is allowed for the loan, which is repaid through equivalent monthly instalments (EMI).
Union Bank Home Loan Interest Rate
Indian public sector bank Union Bank of India, also known as Union Bank or UBI, has its headquarters in Mumbai. It does business with over 120 million people and generates US$106 billion in revenue.
After combining with Corporation Bank and Andhra Bank, which took effect on 1 April 2020, the combined company has over 8700+ branches, making it one of the largest PSU banks when it comes to branch network. The bank employs more than 75,000 people and serves more than 120 million customers through a network of more than 8700 domestic branches, 11100 ATMs, and 15300 business correspondent points.
The interest rates of the Union Bank of India start at 8.70% and vary depending on how much a person borrows and the state of the market. Additionally, a CIBIL score above 700 is required to get a home loan from Union Bank of India, and the repayment tenure can be up to 30 years.
Mumbai is the home of the global Indian bank and financial services provider ICICI Bank Limited. Through a variety of delivery channels and specialized subsidiaries in the fields of investment banking, life, non-life insurance, venture capital, and asset management, it provides a broad range of banking products and financial services for corporate and retail customers.
A network of 15,589 ATMs and 5,275 branches spread across India make up this development finance organization, which also operates in 17 other nations.
The usual interest rate for house loans offered by ICICI Bank is 9%, although the rate will vary depending on how much the borrower borrows, so take a look at the table below to get an idea about the interest rates -
Up to 35 lacs
9.25% to 9.80%
Between 35 lacs to 75 lacs
9.50% to 9.90%
More than 75 lacs
9.60% and 10.05%
Bank of India
Bank of India (BOI) is a public sector bank with its main office in Mumbai's Bandra Kurla Complex. It was established in 1906, and since nationalization in 1969, it has been held by the government.
The provision of efficient financial processing and communication services is made possible by BoI's founding membership in SWIFT (Society for Worldwide InterBank Financial Telecommunications).
With 5,108 branches and 5,551 ATMs worldwide (including 24 international branches), Bank of India's total business as of 31 March 2021 was 1,037,549 crore (US$130 billion). With loan terms of up to 30 years, Bank of India offers house loans with interest rates starting at 8.85% per year.
The maximum loan amount for the Bank of India house loan is ₹5 crore. You may use a Bank of India home loan to buy or build a home or flat, as well as to remodel, expand or repair an existing home or flat. A takeover of a mortgage from another bank or financial institution is another service provided by the bank.
Punjab National Bank
An Indian public sector bank with its headquarters in New Delhi is known as Punjab National Bank (abbreviated as PNB). Since its founding in May 1894, the bank has grown to become India's second-largest networked public sector bank and the third-largest public sector bank in terms of business volume.
The bank has more than 180 million clients, 12,248 locations, and 13,000 or more ATMs.
PNB has seven branches of its UK banking affiliate, PNB International Bank, as well as locations in Kabul, Dubai, Kowloon, Hong Kong, and Kowloon. Almaty, Kazakhstan; Dubai, United Arab Emirates; Shanghai, China; Oslo, Norway; and Sydney, Australia, are all home to representative offices for the company. It holds a 51% stake in the five-branch Druk PNB Bank in Bhutan.
Home loans from PNB Housing start at 8.75% interest rates and require little paperwork. If someone wants to take out a home loan, this is the place to go because the payback period is up to 30 years, just like other banks.
An Indian public sector bank called UCO Bank was first created in Kolkata in 1943 under the name United Commercial Bank. Its overall business for FY 2020–21 was worth 3.24 lakh crore. On the Fortune India 500 list, it is rated 80th using 2020 statistics. In the Forbes Global 2000 ranking for 2018, UCO Bank came in at number 1948.
The bank had 49 zonal offices and more than 4,000 service units as of 30 March 2017, dispersed across India. Additionally, it has locations in Singapore and Hong Kong. The BTM Sarani neighbourhood in Kolkata is home to the UCO Bank headquarters. UCO Bank offers home loans with two alternative interest rate schemes (MCLR and RLLR), with rates starting at 6.90% p.a.
The processing fee is 0.5% of the loan amount, which ranges from ₹1500 to ₹15,000. The loan's maximum term is 30 years, and the borrower must be older than 70 when the loan is paid off.
The list below includes the interest rates that UCO Bank offers on its various home loan schemes. Your quoted interest rate is based on the bank's assessment of your creditworthiness and the size of your mortgage.
UCO Bank Home loan schemes
UCO Pre-approved Home Loan
8.40% p.a. to 8.60% p.a.
7.90% p.a. to 8.10% p.a.
UCO Top-Up Home Loan
6.50% p.a. to 7.30% p.a.
The following uses are permitted for UCO house loans:
- Extension, renovation or repair of a house or flat that is no older than 50 years.
- Building and purchasing an independent residential home or a pre-built flat.
- Home loans are assumed from other banks or financial entities.
- For equipping home furnishings.
- Acquisition of a residence (up to 40 years old).
The Bottom Line
People today frequently choose different types of loans to meet practically all of their financial needs. The majority of loans are regarded as liabilities. After all, a borrower must cut back on even daily expenses after taking out a loan, and they should frequently pay attention to the repeating EMI. One must set up a tight budget after taking out any type of loan, even for necessities.
However, a home loan cannot be compared to these types of loans because purchasing a home is similar to creating an asset that will typically increase in value over time, making home loans advantageous in the long run. In fact, it gives you a sense of accomplishment.
Currently, banks offer loans for all types of needs, whether you're building a new home, renovating an existing one, or even looking to buy a flat that has already been constructed.
Thanks to home loans, it is now much easier to realize your dreams because you only need to select the best loan scheme by weighing the advantages that different banks have to offer. So now, you no longer need to wait to purchase the house of your dreams because “A house is made of bricks and beams, but a home is made of hopes and dreams.”
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