Five banks that offer cheaper home loan rates in India

Five banks that offer cheaper home loan rates in India

Due to the fact that mortgage rates have been at a 10-year low for some time, the home loan industry has received significant attention during the past two years.
This may alter in the future, though, since the Reserve Bank of India is anticipated to raise interest rates at its upcoming policy. This was expected, and somehow took place in June.
The State Bank of India has announced an increase in the marginal cost of lending rate (MCLR) on loans by ten basis points across tenures, which is one of the early warning signs of rising home loan interest rates. Beginning on April 15, 2022, the new rates took effect.

According to RBI regulations, the minimum lending rate below which a bank is not allowed to lend is called the Marginal Cost of Funds based Lending Rate (MCLR). On April 1, 2016, RBI put into effect MCLR.
This occurs at a time when many central banks across the world have either boosted interest rates or are about to do so to combat inflation, with the RBI being one of the few notable exceptions.
It has been more than three years since SBI increased the MCLR. Following this, many other big lenders raised their rates, including Bank of Baroda, Axis Bank, and Kotak Mahindra Bank. Soon, more banks and mortgage lenders could follow.

After SBI, HDFC has been a major player in the home loan market. Analysts anticipate that after the merger, the huge bank’s home lending division will grow strongly.
However, compared to other banks, these five public sector banks offer loans at lower interest rates:

After SBI, HDFC has been a major player in the home loan market. Analysts anticipate that after the merger, the huge bank’s home lending division will grow strongly.
However, compared to other banks, these five public sector banks offer loans at lower interest rates:

Banks Up to 30 lakh
Bank of Maharashtra 6.40% – 8.30%
UCO Bank 6.50% – 7%
Bank of India 6.50% – 8.35%
Indian Bank 6.50% – 7.70%
Punjab & Sind Bank 6.50% – 7.60%

When it comes to house loan interest rates, banks typically give two options: fixed and variable.
For a loan with a fixed rate of interest, the interest rate is set either for the full term of the loan or for a portion of it. The equated monthly installment (EMI) is constant when a loan is strictly fixed.
Borrowers are encouraged to inquire about a reset clause, or whether the bank would raise rates after the predetermined period has passed, if a bank provides a loan that is fixed just for a portion of the loan’s tenure.

Borrowers may also attempt to negotiate a lock-in, which should specify the beginning rate and duration of the lock-in.

Here are five simple tips that will help you select the right bank.

  • Get estimates and information on house loans from as many banks and housing finance companies as you can.
  • To compare loan offers, take careful note of the interest rates, loan terms, and anticipated EMIs offered by each bank.
  • Make a list of all extra charges, including processing, processing fees, prepayment, and hidden costs, charged by each bank.
  • Check to see if any banks are willing to waive any particular fees for you.
  • Avoid being seduced by offers and freebies.

Conclusion

We have listed the best and cheapest home loan offering banks. One of the simplest methods to choose a bank is to compare interest rates, but this should not be your only consideration. As was already indicated, finding information about the processing charge and prepayment penalty is crucial.

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