Securing Lowest Home Loan Interest Rate: Cracking the Code for You

BASIC TEAM

6 mins read

Last updated on 31st January 2024

Buying your own house in today’s time can be a challenging financial proposition, and that is where home loans come to your rescue. However, another challenge awaits you when you plan to secure a loan from a bank or financial institution and that is the difficulty in finding the lowest home loan interest rate deal. The reason to look for loans with low interest rates is that the tenure of home loans is 20-30 years, generally. Now imagine being in a situation, where you have to shell out a sizeable amount of money just to pay the interest on the principal amount of your loan, for all these years. It can be burdensome for anybody. Therefore, financial experts advise home buyers to pick up loans from those lending organizations, that offer competitive interest rates on home loans.

Table of Contents

Comparing Housing Loan Interest Rates
Factors that determine whether you can land with the Lowest House Loan Rates
1. Loan amount
2. Type of Interest Rate
3. Employment and Income
4. Credit Score
5. Concession on Interest rates for Women borrowers

Comparing Housing Loan Interest Rates

As a home buyer, you must understand the criticalities of availing a loan and one of the factors to focus on is the home loan interest rate. Remember, the interest rates will have a significant impact on the overall cost of your house. Since house loans have long repayment tenure, even minor differences in the rate of interest can have considerable financial implications. Thus, it becomes a necessity for a housing loan buyer to compare interest rates offered by various financial institutions and zero down on the ones that offer the lowest home loan rates.

Suggested read: Fixed vs Variable Home Loan Interest Rates

Here is the latest home loan interest rate list of Top Public Banks of India (July 2023)

Bank	Up to Rs. 30 Lakh	Above Rs. 30 Lakh & Up to Rs. 75 Lakh	Above Rs. 75 Lakh
UCO Bank	8.45% – 10.30%	8.45% – 10.30%	8.45% – 10.30%
Bank of India	8.45% – 10.75%	8.45% – 10.75%	8.45% – 10.75%
Union Bank of India	8.50% – 10.75%	8.50% – 10.95%	8.50% – 10.95%
State Bank of India	8.50% – 10.15%	8.50% – 10.05%	8.50% – 10.05%
Bank of Baroda	8.60% – 10.65%	8.60% – 10.65%	8.60% – 10.90%
Bank of Maharashtra	8.60% – 11.05%	8.60% – 11.05%	8.60% – 11.05%
Punjab National Bank	8.65% – 9.60%	8.60% – 9.50%	8.60% – 9.50%
Punjab & Sind Bank	8.85% – 9.95%	8.85% – 9.95%	8.85% – 9.95%
Canara Bank	8.85% – 11.25%	8.75% – 11.25%	8.55% – 11.15%
Indian Overseas Bank	8.85% onwards	8.85% onwards	8.85% onwards

Here is the current list of rates of interest on Home Loans of Top Private Banks in India (July 2023)

Bank	Up to Rs. 30 Lakh	Above Rs. 30 Lakh & Up to Rs. 75 Lakh	Above Rs. 75 Lakh
Kotak Mahindra Bank	8.75% onwards	8.75% onwards	8.75% onwards
Karnataka Bank	8.75% – 10.43%	8.75% – 10.43%	8.75% – 10.43%
ICICI Bank	9.00% – 9.80%	9.00% – 9.95%	9.00% – 10.05%
Axis Bank	9.00% – 13.30%	9.00% – 13.30%	9.00%- 9.40%
RBL Bank	9.15% – 11.55%	9.10% – 11.30%	9.10% – 11.30%
Bandhan Bank	9.15% – 15.00%	9.15% – 13.32%	9.15% – 13.32%
Karur Vysya Bank	9.23% – 12.13%	9.23% – 12.13%	9.23% – 12.13%
Tamilnad Mercantile Bank	9.35% – 9.85%	9.35% – 9.85%	9.35% – 9.85%
Dhanlaxmi Bank	9.35% – 10.50%	9.35% – 10.50%	9.35% – 10.50%
South Indian Bank	9.85% – 12.60%	9.85% – 12.60%	9.85% – 12.60%
Federal Bank	10.15% – 10.20%	10.20% – 10.25%	10.25% – 10.30%

Here is the latest home loan interest rate list of Housing Finance Companies in India (July 2023)

Housing Finance Company	Up to Rs. 30 Lakh	Above Rs. 30 Lakh & Up to Rs. 75 Lakh	Above Rs. 75 Lakh
LIC Housing Finance	8.50% – 10.35%	8.50% – 10.55%	8.50% – 10.75%
HDFC Bank	8.50% – 10.35%	8.50% – 10.60%	8.50% – 10.70%
Bajaj Housing Finance	8.50% onwards	8.50% onwards	8.50% onwards
Tata Capital Housing Finance	8.60% onwards	8.60% onwards	8.60% onwards
L&T Housing Finance	8.60% onwards	8.60% onwards	8.60% onwards
Godrej Housing Finance	8.64% onwards	8.64% onwards	8.64% onwards
Indiabulls Housing Finance	8.75% onwards	8.75% onwards	8.75% onwards
PNB Housing Finance	8.75% – 14.50%	8.75% – 11.50%	8.75% – 11.45%
GIC Housing Finance	8.80% onwards	8.80% onwards	8.80% onwards
Aditya Birla Capital	8.80% – 14.75%	8.80% – 14.75%	8.80% – 14.75%
ICICI Home Finance	9.20% onwards	9.20% onwards	9.20% onwards
Repco Home Finance	9.80% onwards	9.80% onwards	9.80% onwards

Based on the interest rate lists mentioned above, you should pick at least 5 financial institutions, and then not just compare their rates but also compare their eligibility and other requisites to see whether you meet their criteria.

5 Factors that determine whether you can Land with the Lowest House Loan Rates

1. Loan amount

A major factor that determines the interest rate on a house loan is the loan amount itself. The more the loan amount, the higher the rate. Therefore, loan experts advise that it is better to apply for loans up to ₹30 lakh as these usually have the lowest rates of interest, and to do so, borrowers should try to make maximum down-payment for their property.

2. Type of Interest Rate

Another factor that defines whether you pay a low interest rate is the type of interest you end up choosing. In the case of fixed interest rates, the interest on the EMIs remains constant for the entire tenure of the loan, and usually, banks charge a higher rate of interest on it. On the other hand, in the case of variable interest rates, banks charge lower rates than fixed ones. Also, since there is a change in interest rates about the Repo Linked Lending Rate, you may end up paying low interest.

3. Employment and Income

Financial institutions while evaluating home loan applications focus on the applicant’s type of employment, income, and work profile. Those working with PSUs or government or those employed with reputed private sector firms have more chances of getting their loan approved and second, a chance to get the lowest interest rates on home loans as banks see less uncertainty of non-repayment of loan in such cases. This becomes the opposite if the applicants have insufficient or irregular income sources.

4. Credit Score

A good credit score is an indication for financial institutions about your credit history. If you have diligently paid your credit card bills or EMIs of other loans on time, then it will work in your favor to get you low-interest rates on home loans. Banks prefer those applicants, who have a credit score of 750 or above and are likely to lower their interest rates.

5. Concession on Interest rates for Women borrowers

A few lending institutions have the provision of giving a concession of up to 0.05% on home loans to women borrowers. Therefore, married couples planning to apply for a loan should consider taking a joint loan in the name of the wife, making her the primary applicant to avail this concession. Also, taking a joint loan increases the chances of securing a house loan but there are many benefits attached to it, one of them being the low interest rates.

So, if you have plans to apply for a home loan shortly, do follow these tips, sit back, and wait for the loan approval letter with the lowest interest rate!