Introduction
For many in India, owning a home is a significant life goal. The journey toward this dream often involves securing a home loan, making it essential to understand home loan interest rates, as they directly impact the overall cost of the purchase and monthly financial obligations. This guide provides a comprehensive overview of current home loan interest rates in India, factors influencing them, and tips for choosing the right loan.
Current Home Loan Interest Rates in India (2025)
As of early April 2025, home loan interest rates in India vary across lenders. Below is a comparison of starting interest rates from leading banks and housing finance companies:
| Banks | Starting Interest Rate (p.a.) | Processing Fees |
|---|---|---|
| Bank of Maharashtra | 8.10% p.a. onwards | No processing fees. |
| Central Bank of India | 8.10% p.a. onwards | 0.50% up to Rs.20,000 Plus GST (waived till 31 March 2024) |
| Union Bank of India | 8.10% p.a. onwards | 0.50% of the loan amount. |
| Bank of Baroda | 8.15% p.a. onwards | No processing fee; discounted upfront fee. |
| Canara Bank | 8.15% p.a. onwards | 0.50% of the loan amount. |
| Indian Bank | 8.15% p.a. onwards | 0.23% to 1.00% of the loan amount. |
| Punjab National Bank | 8.15% p.a. onwards | Nill |
| Punjab and Sind Bank | 8.25% p.a. onwards | 0.15% of the loan amount will be charged, with a minimum of Rs.1,000 and a maximum of Rs.3,750. For loans above Rs.25 lakh and up to Rs.50 lakh, the fee is 0.25% of the loan amount, capped at a maximum of Rs.12,500. Similarly, loans above Rs.50 lakh but less than Rs.75 lakh incur a fee of 0.25% of the loan amount, with a maximum limit of Rs.15,000. Loans of Rs.75 lakh and above carry a charge of 0.25% of the loan amount. |
| State Bank of India | 8.25% p.a. onwards | 0.35% of the loan amount plus GST. |
| IndusInd Bank | 8.35% p.a. onwards | Non-Refundable Loan Processing Charges. Upto 1% of the Loan Amount. |
| Bank of India | 8.40% p.a. onwards | Nil |
| HSBC Bank | 8.50% p.a. onwards | 1% of loan amount or Rs.10,000, whichever is higher. |
| IDBI Bank | 8.50% p.a. onwards | 0.50% (Rs. 2,500 - Rs.5,000) |
| LIC Housing Finance | 8.50% p.a. onwards | For amounts up to Rs.1 crore, it is 0.25% of the loan amount, with a maximum of Rs.15,000 plus GST. For amounts above Rs.1 crore and up to Rs.2 crore, the fee is Rs.20,000 plus GST. For amounts above Rs.2 crore and up to Rs.5 crore, the fee is Rs.25,000 plus GST. For amounts above Rs.5 crore and up to Rs.15 crore, the fee is Rs.50,000 plus GST. |
| South Indian Bank | 8.50% p.a. onwards | 0.50% of the loan amount plus GST |
| Aditya Birla | 8.60% p.a. onwards | Up to 1% |
| Tamilnad Mercantile Bank | 8.60% p.a. onwards | 0.50% of loan amount Plus GST |
| Kotak Mahindra Bank | 8.65% p.a. onwards | Salaried: 0.5% Plus taxes; Self-Employed/Commercial: 1.0% Plus taxes. |
| Saraswat Bank | 8.70% p.a. onwards | Up to Rs.35 lakh: NIL Rs.35 lakh - Rs.50 lakh: 0.30% of loan amount Rs.50 lakh - Rs.70 lakh: 0.40% of loan amount Rs.70 lakh - Rs.1.40 lakh: 0.50% of loan amount |
| Axis Bank | 8.75% p.a. onwards | Up to 1% or min. Rs.10,000 Plus GST |
| HDFC Home Loans | 8.75% p.a. onwards | Up to 0.50% or Rs.3000 Plus taxes, whichever is higher. Minimum retention: 50% or Rs.3000 Plus taxes, whichever is higher. |
| Jammu and Kashmir Bank | 8.75% p.a. onwards | 0.50% Plus GST (min. Rs.2,000 and max. Rs.50,000) |
| Karur Vysya Bank | 8.75% p.a. onwards | Loans up to Rs.25 Lakh incur a charge of Rs.2,500 Plus GST.Loans ranging from Rs.25 Lakhs to Rs.50 Lakh carry a processing fee of Rs.5,000 Plus GST.For loans exceeding Rs.50 Lakh, the processing fee is Rs.7,500 plus GST. |
| Tata Capital | 8.75% p.a. onwards | 2.00% p.a. plus GST. |
| Federal Bank | 8.80% p.a. onwards | 0.50% of the loan amount with a minimum of Rs. 10,000 and a maximum of Rs. 20,000. |
| GIC Housing Finance | 8.80% p.a. onwards | Rs.2,500 Plus Applicable GST |
| IDFC First Bank | 8.85% p.a. onwards | Up to 3% of the overall loan amount. |
| Karnataka Bank | 8.85% p.a. onwards | Contact the bank |
| Standard Chartered Bank | 8.95% p.a. onwards | Contact the bank |
| ICICI Bank | 9.00% p.a. onwards | 0.50% to 2.00% of the loan amount. |
| Yes Bank | 9.00% p.a. onwards | 1.5% of the loan amount plus GST or Rs.10,000, whichever is higher |
| Bandhan Bank | 9.16% p.a. onwards | Contact the bank |
| Hudco Home Loan | 9.25% p.a. onwards | Nil |
| Dhanlaxmi Bank | Contact the bank | 1.00% of the loan amount, plus service tax (with a minimum of Rs.10,000 Plus service tax). |
| Sundaram Home Finance | Contact the bank for information on the floating/variable interest rate linked to market lending rates. | Up to 0.75% of the loan amount plus applicable GST. |
| India Shelter Finance | Contact the institute | Contact the institute. |
Updated On – 05 Apr 2025
Note: These rates are subject to change. Always verify with the lender before applying.
Key Observations:
Lowest Rates: Union Bank of India and Bank of Maharashtra offer the lowest starting rate at 8.10% p.a.
Processing Fees: These can significantly impact the total loan cost. Some banks waive fees during promotions.
Variation: Interest rates range from 8.10% to 9.50%, highlighting the importance of comparison.
Factors Influencing Home Loan Interest Rates
Several factors determine the final interest rate offered to a borrower:
1. RBI Policies (Repo Rate)
Since October 2019, most banks link floating-rate home loans to the RBI Repo Rate under the External Benchmark Lending Rate (EBLR) system. Changes in the Repo Rate directly affect home loan rates.
2. Borrower’s Credit Profile
Credit Score: A high score (750+) can secure lower rates.
Income Stability: Salaried individuals with steady incomes often get better rates.
Employment Type: Government employees may qualify for special schemes.
3. Loan Terms
Loan Amount & Tenure: Larger loans or longer tenures may attract higher rates.
Loan-to-Value (LTV) Ratio: A lower LTV (higher down payment) can reduce interest rates.
4. Property Details
Location: Properties in prime areas may get preferential rates.
Type: Under-construction properties may have higher rates than ready-to-move homes.
5. Special Schemes
Women Borrowers: Often receive a 0.05% to 0.10% discount.
First-Time Buyers: May benefit from government subsidies (e.g., PMAY).
Fixed vs. Floating Interest Rates: Which is Better?
| Aspect | Fixed Rate | Floating Rate |
|---|---|---|
| Rate Stability | Remains constant throughout the tenure. | Changes with market conditions (linked to Repo Rate). |
| Initial Rate | Slightly higher than floating rates. | Lower initially but can fluctuate. |
| Risk | No risk of rate hikes. | Risk of rising EMIs if rates increase. |
| Prepayment Penalty | May apply in some cases. | Usually no penalty. |
| Best For | Borrowers who prefer predictable EMIs. | Borrowers expecting rates to fall or remain stable. |
Mixed Rates: Some lenders offer hybrid options (fixed for 2-5 years, then floating).
How to Get the Best Home Loan Interest Rate?
Compare Multiple Lenders: Use online tools like Bankbazaar or Paisabazaar.
Improve Credit Score: Pay bills on time and reduce outstanding debt.
Negotiate with Banks: Existing customers may get preferential rates.
Opt for Shorter Tenure: Reduces total interest paid.
Watch for Promotions: Festive seasons often bring lower rates or fee waivers.
Frequently Asked Questions
As of April 2025, the lowest starting rate is 8.10% p.a. (Union Bank, Bank of Maharashtra).
EMI = [P x R x (1+R)^N] / [(1+R)^N-1], where:
P = Principal loan amount
R = Monthly interest rate
N = Loan tenure in months
Yes, but lenders may charge a conversion fee. Check terms before switching.
Yes, many banks offer a 0.05% to 0.10% discount for female borrowers.
Choosing the right home loan involves comparing interest rates, understanding fees, and assessing personal financial stability. Fixed rates offer predictability, while floating rates may save money if rates drop. Always check lender terms and leverage special schemes (e.g., women discounts, PMAY) for the best deal.
Conclusion
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