Five banks that offer cheaper home loan rates in India

Kariuki Maina
By Kariuki Maina 9 Min Read

Are you anticipating purchasing your first home? Particularly in this market, looking for a house is thrilling, demanding, and even scary. In the end, you want to own a house that you enjoy at a price that you can afford.

Use the list below to compare and reduce your options to get the best option for you. We have gathered all the required data on the current interest rates for house loans with the finest bank for home loans in India in order to assist our customers.

Comparison of 10 Best Home Loan Banks in India

Here is the list of the best home loan banks in India that provide the best interest rates and approve the loan as soon as possible:

S.No Bank Name Interest Rate Processing Fees
1 Union Bank of India 6,40 to 7.0 0.50% of the loan amount. Maximum of Rs. 15,000
2 Kotak Mahindra Bank 6.55 to 7.10.
3 HDFC Bank 6.70 to 7.40. Up to 0.50% of the loan amount or Rs. 3,000/- whichever is higher.
4 ICICI Bank 6.70 to 7.40. 0.50% – 2% of the loan amount or

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Rs. 1,500/- whichever is higher

5 LIC Housing Finance 10.05% to 10.15% Rs. 10,000 for loans up to 50 lakhs.

Rs. 15,000 for loans above Rs. 50 Lakhs

6 Canara Bank 6.90 to 8.90
7 Axis Bank 7.0 to 11.0 Higher of – 1% of the loan amount or Rs. 10,000
8 State Bank Of India 7.0 to 7.55 0.35% of the loan amount

Minimum – Rs. 2,000 and Maximum – Rs. 10,000

9 PNB Housing finance 7.35 to 9.45. 1% of the loan amount. Minimum fees – Rs. 10,000

Upon approval, PNBHF retains all the loan fees.

Unless the loan is approved, PNBHF retains 3,000 rupees per property.

10 Indiabulls bank 7,60 to onwards Up to 2% of the loan amount

The EMIs for loans, such as personal loans, mortgages, and auto loans, would rise as a result of the RBI’s September 30 hike in the repo rate by 50 basis points to 5.9%. The bank regulator has raised rates four times in a row. Prior to this, the RBI increased repo rates by 40 basis points in May, 50 basis points each in June and August. The benchmark interest rate been risen by 1.90 percent by the RBI since May.

Another thing to keep in mind is that consumers with great credit, which is over 750–800, generally receive house loans with the lowest interest rates. Therefore, if your credit score is poor, it would be advisable for you to make an application for a long-term loan, such a house loan, before making an effort to raise it.

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.

Through home loans, prospective homebuyers have a fantastic opportunity to realize their goal of owning a home. However, homeowners must make sure they have the required reserve cash and a suitable income in order to keep the loan stress under control and pay off the complete mortgage on time. Depending on one’s age, gender, income, credit score, loan amount, property value, or any other terms and circumstances imposed by the lender, the interest rate that applies to each individual may vary, according to BankBazaar.

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.

Based on your cash flow, loan requirements, and capacity to repay, you should choose a house loan that is suitable for you. Your lender has to be very clear about the costs that the loan will cover. Lenders often do not finance clubhouse dues, yearly maintenance fees, registration and stamp duty payments. Finding a lender who will finance the amount you need while also providing straightforward loan approval and repayment options is so crucial.

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By Kariuki Maina Kariuki Maina
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