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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:
| Lenders | Interest Rate (p.a.) | Processing Fees |
| Union Bank of India | 6.40% – 7.65% | 0.50% subject to a maximum of Rs. 15,000 |
| Bank of Maharashtra | 6.40% – 8.55% | Processing fee waived up to 31st March 2022 under Festive Offer |
| Punjab National Bank | 6.50% – 7.95% | Full waiver of upfront/processing fees and documentation charges from 01.01.2022 to 31.03.2022 |
| Bank of Baroda | 6.50% – 8.25% | 0.25% – 0.50% (Min. Rs. 8,500 & Max. Rs. 25,000) |
| Bank of India | 6.50% – 8.35% | 0.25% subject to Min.Rs.1,500 and Max. Rs.20,000 |
| Kotak Mahindra Bank | 6.55% onwards | Up to 1% plus statutory dues |
| Canara Bank | 6.65% – 11.45% | 0.5% (Min. Rs. 1,500; Max. Rs. 10,000) |
| LIC Housing Finance | 6.70% – 8.05% | As applicable |
| HDFC | 6.70% – 8.70% | Up to 1% plus statutory dues |
| ICICI Bank | 6.70% – 7.55% | 0.50% – 2.00% or Rs. 1,500 (Rs. 2,000 for Mumbai, Delhi & Bangalore), whichever is higher |
| State Bank of India | 6.70% – 7.75% | No processing fee |
| Bajaj Finserv | 6.65% – 14% | Up to 6% |
| ICICI Home Finance | 9.20% – 12.25% | 0.75% – 2.5% |
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: The can be availed to fund home renovation and home repairing expenses of the existing house. The interest rate for this 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