Cheapest Home Loans in India

In 2017, the interest rates of home loans dipped down to the lowest level in six years when SBI cut down the rate of interest to 8.6% from 9.10% and reduced the MCLR or Marginal Cost of Lending Rate to 8% from 8.9%. This slump in rates gave an opportunity of buying homes at a cheaper rate to all new borrowers.

Along with the public sector banks, some private sector banks also joined the league. The slash in lending rates has been a pillar of support in the 'Affordable Housing for All' scheme announced by the honorable Prime Minister of India, Mr. Narendra Modi, in the same year. A home loan lets you borrow a lump-sum amounting to at least 80% of the property value, and you can repay it in the form of Equated Monthly Instalments or EMIs on a monthly basis.

As per the new guidelines of RBI, now banks are required to apply the MCLR method to calculate the rate of interest. For home loan schemes with floating interest rates, the rate can be changed half-yearly or yearly. A reduction in MCLR is a boon for first-time borrowers as home loans connected to MCLR for a year in fixed rate means that the rate will be the same for the whole year.

However, for the old loans that were borrowed at a higher base rate, it is helpful only after the end of the one year lock-in period. To avail the benefit of the new MCLR, the borrowers of old loans need to start a fresh contract with the bank.
Other banks that had declared the rate cut in the same year were State Bank of Travancore, IDBI Bank, and Indian Overseas Bank. India Bulls Housing Finance had also subsidized their home loan offerings.

MCLR in 2017

Bank MCLR(%) Previous Rates

Union Bank 8.65 9.3

IDBI Bank 9.15 9.3

SBI 8 8.9

SBT 9.2 9.4

PNB 8.45 9.15

Indian Overseas Bank 9.15 9.5

Difference 8.6% 9.10%

Loan 50 Lakh 50 Lakh

Years 15 15

Interest(overall) 39 Lakh 42 Lakh

EMI Rs. 49,530 Rs. 51,101

EMI is reducing by Rs. 29,000 on Rs. 1 Lakh with effect to this reduction.

Interest Rate of All Leading Banks in 2018

The interest rate of home loan varies from one bank to another, depending on the location of the property, the loan amount, and the monthly income of the borrower. There are many banks that offer a concession for women. The range of interest rate starts from 8.50% and extends to 12%.

Banks Providing Home Loans	Interest Rates(Onwards)	Processing Fees	Prepayment Charges
YES BANK	9.35%+	0.5% of loan amount or Rs.10,000 (+ GST)	NA for the floating rate
State Bank of India	8.70%+	Rs. 0 Rs. 10,000	NA
HDFC Bank	8.80%+	Up to 0.5% of the loan amount	NA
ICICI Bank	8.85%+	0.5% Rs. 1.00% of loan amount.	NIL
IDFC Bank	8.90%+	Rs 10,000	NIL
India Bulls Housing Finance	8.70% +	Up to 1% of the loan amount	NA
LIC Housing Finance	8.50%	For up to 1 Crore - Rs 5000, Above 1 Crore- Rs 10,000	NIL
PNB Housing Finance	8.99%	Up to 1% of the loan amount	NA
DHFL	8.70%	Up to 1% of the loan amount	NIL
Axis Bank	8.70%	Up to 1% of the loan amount	NA
IDBI Bank	9.30%	0.5% of the loan amt.	NIL
Tata Capital	8.70%	0.2% of loan amt.	NA
PNB	8.85%	Nil	NIL
Bank of India	8.70%	Minimum Rs.1000 and Maximum. Rs. 20,000	NIL
Syndicate Bank	8.75%	Minimum. 500 to Maximum. Rs.5,000	NA
Canara Bank	8.70%	Varies depending on applicant profile	NIL
UBI	8.65%	Varies depending on applicant profile	NA
IIFL	8.75%	0.75% of the loan amount (Min. Rs. 5,000)	NA

Home Loan Interest Rates for Women

The slab of Home Loan	Interest Rates (% per annum)
For Women* (up to 30 Lakhs)	8.70-9.20
For Others* (up to 30 Lakhs)	8.75-9.25
For Women* (Above 30 Lakhs)	8.80-9.30
For Others* (Above 30 Lakhs)	8.85-9.35

How to Get the Lowest Interest Rate on Home Loans?

Apart from the enforced interest rate cuts by the banks, there are other ways through which the borrower can get a home loan on lower interest rate:

1. Avail a home loan jointly with your wife and make her the primary applicant of the home loan. Most of the loan provider institutions offer home loan to women on an interest rate that is less by 0.5% of the general interest rate of the same loan.

2. One can also opt for a balance transfer facility and switch to another bank that provides a lower rate of interest if the current bank or financial institution is charging a higher interest rate. In such a fierce competition, banks prefer to retain their customers - especially the ones who make repayments on time and have a good credit report. We at mymoneykarma help you in transferring your home loan to a different financer with favorable interest rates.

You could also apply for a home loan through mymoneykarma! We offer the best, lowest interest rates (sourced from across different banks); as well as a seamless, hassle-free process.

Factors that Affect Home Loan Interest Rates

a. Credit Score - Your credit score is one of the most critical factors that affect the home loan interest rates. The banks check the credit scores of every borrower of a home loan to assess his/her creditworthiness. The credit score is determined from your credit report which includes the credit history of your loans and credit card repayments.

b. Down Payment - A substantial down payment leads to a lower interest rate. A borrower who pays a considerable amount as down payment and opts for the remaining payment through monthly installments is generally considered a low-risk borrower by the lender.

c. Loan Tenure - The loan tenure is the duration of the loan by which the borrower has to repay the loan. A shorter loan term means lower interest rates and lesser costs, but higher monthly payments. A more extended mandate will result in higher interest payments but lower monthly payments. You can use mymoney's home loan calculator to plan your tenure.

d. Types of Interest Rate - Interest rates are of two basic types: Fixed and Floating. Fixed interest rates don't change over time. Floating interest rate varies periodically over the loan term. The banks have their MCLR rate to calculate the interest rate for home loans.

Now, with the interest rate cuts and consequently easy EMI payments, buying a dream home is surely possible.

Why wait? Apply for a home loan right away through mymoneykarma.