A home loan is a specialized finance facility that a bank provides to the user where a big amount is offered for purchasing a property in return for interest.
You can purchase a property with this loan and get to own your dream home. It is a long-term loan for which you’ll have to pay an EMI every month to slowly settle the debt.
Houses are extremely expensive and generally, people do not have access to that kind of cash therefore, they get their home purchase financed by the Bank or any other financial institution.
There are various loan providers in the market offering interesting interest rates on the home loan. In this list of Home Loans, you can find the list of home loan rates at which the bank currently offers the home loan to the individual.
Before finding the list of best home loan interest rates in India 2023 let’s learn how to calculate interest on Hoe Loan, Types of Interest rates, etc.
Best Home Loan Interest Rates in India 2023
|Bank Name||Floating Interest rate||Per lac EMI||Processing Fee||Prepayment Charges|
|SBI – State Bank Of India||8.60% – 9.40%||Rs.874 – Rs.926||Nil till 31.03.2023||Nil|
|ICICI Bank||8.75% – 9.80%||Rs.884 – Rs.952||2999+GST for CIBIL Score above 700, .50% + GST for Score below 700||N.A|
|HDFC Ltd||8.65% – 9.35%||Rs.877 – Rs.922||3000 + Tax (Salaried), 5000 + Tax (S. Employed)||Nil|
|LIC Housing||8.65% – 10.25%||Rs.877 – Rs.982||Below 1 Cr: Upto Rs.10000 + AT||Nil|
|Above 1 Cr: Rs.20000 + AT|
|Bank of Baroda||8.45% – 9.80%||Rs.865 – Rs.952||Up to 0.5 % of loan amount + GST||N.A.|
|AXIS Bank||8.60% – 9.05%||Rs.874 – Rs.903||Up to 1% of the Loan amount subject to a minimum of Rs.10,000/-||Nil|
|PNB Housing Finance||8.50% – 10.35%||Rs.868 – Rs.988||0.50% Or 10,000 + GST, whichever is higher.||NIL|
|India Shelter Housing Finance||11.99% – 18.00 %||Rs.1100 – Rs.0||2% – 3%(Including GST)||NIL|
|DMI Housing Finance||12.00% – 18.00%||1.5% + GST||NIL|
|IDBI||8.00% – 11.15%||Rs.836 – Rs.1042||NIL||Nil|
|Union Bank of India||7.90% – 9.60%||Rs.830 – Rs.939||0.50% of loan amount subject to a maximum of 15000 + GST||NIL|
|Bank of India||7.80% – 9.65%||Rs.824 – Rs.942||0.25% of loan amount Min. Rs.1,000/- and Max. Rs.20,000/-||Nil|
|Piramal Housing Finance||0.095||Rs. 932||0.10% – 0.25% (GST)||N.A|
|L&T Housing Finance||0.0835||Rs.858||0.25% plus taxes (for salaried & for self-employed)||NIL|
|Tata capital Housing Finance ltd||0.0775||Rs.821 – Rs.0||Up to 0.5% of loan amount + GST||N.A|
|HSBC Bank||7.44% – 7.55%||Rs.802 – Rs.809||N.A||Nil|
|Federal Bank||9.05% – 9.20%||Rs.903 – Rs.913||Upto Rs.7500 + GST||N.A|
|Allahabad Bank||7.40% – 8.15%||Rs.799 – Rs.846||N.A||NIL|
|Central Bank of India||6.85% – 7.30%||Rs.766 – Rs.793||0.50% of the Loan Amount subject to a maximum of Rs.20,000/-||Nil|
|UCO Bank||7.15% – 7.25%||Rs.784 – Rs.790||0.5% of the loan amount, minimum Rs.1500/- & maximum Rs. 15000/-||NIL|
|Canara Bank||8.60 %- 10.80%||Rs.874 – Rs.1019||0.50% of loan amount + GST|
|Kotak Bank||8.30% – 8.90%||Rs.855 – Rs.893||Upto 1.25% of the Loan amount||Nil|
|Citibank||8.50% onwards||Rs.868 onwards||Rs. 5000 (Application fee)||NIL|
|Oriental Bank of Commerce||7.00% – 7.60%||Rs.775 – Rs.812||0.50% of the loan amount, subject to a maximum of Rs.20000/- plus GST||NIL|
|Indian Overseas Bank||8.45% – 8.70%||Rs.865 – Rs.881||0.50 % (max. Rs.25,000/-)||N.A|
|Indian Bank||8.40%- 8.50%||Rs.862 – Rs.868||0.230% on loan amount + GST or Max Rs.20470/-||Nil|
|Punjab National Bank||8.40%- 9.55%||Rs.862 – Rs.935||0.50% of loan + GST||NIL|
|Bank of Maharastra||7.80% – 9.70%||Rs.824 – Rs.945||As per applicable||Nil|
|GIC Housing Finance||0.082||Rs.849 – Rs.0||Rs.2500 + GST||N.A|
|India Infoline Housing Finance Ltd.||0.09||Rs.900||Up to 1% of loan amount + GST||N.A|
|Karnataka Bank||8.24% – 10.31%||Rs.851 – Rs.986||N.A||N.A|
|Reliance Home Finance Private Ltd.||9.75% – 13.00%||Rs.949 – Rs.1172||Up to 2% + GST||N.A|
|Repco Home Finance Ltd.||7.70% – 10.40%||Rs.818 – Rs.992||1% of loan amount + GST||N.A|
How to Calculate Interest on Home Loan?
To calculate interest on the home loan, you’ll have to evaluate various factors which help you calculate the interest amount on the home loan calculator.
The following are the factors that affect the Interest rate amount-
- Loan amount
- Interest rates
The formula for Calculating the Home Loan Interest Rate
The following is the formula for calculating the home loan interest rate-
P x R x (1+R)^N / [(1+R)^N-1], where-
P = Principal loan amount
N = Loan tenure in months
R = Monthly interest rate
R = Annual Rate of interest/12/100
Let’s say, A bank is offering you a loan of Rs.50 Lakhs for a 9.2% interest rate for 10 years. The calculation of the home loan is as follows-
When we imply the above data into the formula for finding the home loan EMI, i.e., 50,00,000 x 9.2% x (1+9.2)^10/(1+9.2)^10-1
The monthly EMI is calculated as Rs.63,880/-per month which you must pay for 10 years to the bank.
Note- To calculate your home loan you can use the Mudra Nidhi home loan calculator
Types of Interest rates
There are two types of interest rates that a bank or financial institution provides you to choose from for getting the loan, which are explained as follows-
Fixed Interest Rate
Fixed Interest rates are those rates that are fixed in nature which are predefined and do not change during the tenure of the loan.
The entire structuring of this interest rate is fixed and no alteration can be done during the tenure which helps in determining the cost during the entire period.
Determining the fixed cost that you’ll have to bear helps in financial planning and no matter what the financial condition of the economy would be, you’ll have a fixed cost to bear. Due to this reason, the fixed interest rates are 1-2% higher than the floating interest rates.
Floating Interest Rate
Floating Interest rates are those that may vary from time to time and it highly depends on the RBI’s base rate.
RBI is the central bank of India which develops the monetary policy to aid the country in maintaining economic advancement.
To manage that RBI, lends the money itself to the banks so that the banks can further lend that money to the end users.
Floating interest rate charges with base rate + the interest decided by the bank. The base rate is the variable element that changes from time to time.
RBI decides the base rate depending on various factors like economic performance, inflation rate, the money supply in the market, etc.
Which one to choose: Fixed Interest Rate or Floating Interest Rate?
Fixed Interest rates are a preferred choice of many as the fixed interest rate provides the end user with an assurance that whatever the market condition is, the fixed cost of the loan will not change.
On contrary, floating interest rate changes from time to time which might enforce pressure on your cash flow from time to time.
In general, if the loan amount is big and the payment tenure is also long then you should always go for a fixed interest rate and if the tenure is small and the loan amount is moderate to low then you can choose a floating interest rate.
In India, the inflation rate is generally 3-4% which keeps the economy growing well, however, during times of economic difficulties like COVID or depression, the inflation rate increase which affects the floating interest rates.
The above mention practice will help you in playing safe during any economic difficulty as generally, the economic performance of a country can be anticipated for a year or two in advance, and keeping the amount lower will not adversely affect your cash flow during the time of economic difficulty.
Yes, a credit score is required to avail of the Home Loan. The chances of getting a loan from a reputed bank increase with a higher CIBIL score.
The following documents are required to apply for a Home Loan-
Loan application form.
3 photographs passport sized.
Bank Account Statement/Passbook for the last 6 months.
Signature verification by bankers of the applicant.
Liabilities statement and Personal Assets.
Property detailed documents
Salary Certificate (original) from the employer. (salaried individuals)
Form 16/IT Returns for the past 2 financial years. (salaried individuals)
IT Returns/Assessment Orders copies of the last 3 years. (self–employed professionals)
Challans as proof of Advance Income Tax payment. (self–employed professionals)
Proof of business address for non-salaried individuals. (self–employed professionals)
IT returns/Assessment Orders copies of the last 3 years. (Self–Employed Businessmen)
Challans as proof of Advance Income Tax payment. (Self–Employed Businessmen)
Yes, you can pre-close your home loan account with the bank by paying all the amount. If you have a surplus amount with your then you can close your loan amount easily.
Yes, the bank charges a preclosure fee which has to be paid by the borrower to the bank in addition to the loan principal amount left.
To get the best interest rate from the bank, the borrowers are required to have a good CIBIL score along with strong and error-free documentation. You can also check for the MudraNidhi compilation of Home Loan Interest Rates in India 2023 which will guide you on applying for the best home loan for your home.