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Home Loan Interest Rates

Home Loan is a secured loan taken to purchase a residential property or for home renovation, repairs or improvement.

Banks and NBFCs provide home loans upto 90% of the property value for a tenure upto 30 years.

Home Loan Features and Benefits

Some common features and benefits of home loans that make it a go-to option are listed as follows:

Multi-Purpose

You can avail of housing loans for multiple purposes. These can range from buying a new residential flat or building, constructing a new house on a plot, home renovation, or extending your current house.

Long Tenure

The longer repayment tenure of home loans upto 30 years allows you to choose an affordable EMI. You can, thus, ensure that your monthly budgets are not under any pressure.

High Loan Financing

Banks fund a home loan for upto 90% of your property's market value. The remaining amount is to be paid as a down payment when you avail of a housing loan.

Prepayment and Foreclosure

You can avail of prepayment and foreclosure facilities if you can pay more than the EMI or want to close your home loan account early. As per the Reserve Bank of India, banks and NBFCs cannot charge any fee or penalty on prepayment or foreclosure of a floating rate home loan.

Tax Benefits on Housing Loan

The housing loan has attractive tax benefits associated with it. You can avail of a deduction of up to ₹ 1.50 Lakh under Section 80C to repay the principal amount. Further, under Section 24, a deduction of up to ₹ 2 Lakh is available for the interest accrued in a financial year on a home loan. In addition, as per the regulations of budget 2019-20, you can also avail of additional tax benefits on a home loan as per Sec 80EEA.

Tax Benefits on Second Home

Suppose you have availed of a housing loan to buy a second house. In that case, the entire interest amount accrued on that loan for a financial year is available for deduction without any ceiling limit under Section 24B.

Affordable Rates and EMI

The lowest rates for housing loans is very low, starting @ 6.50%. Thus allowing you to repay the home loan at the lowest EMI per lakh at ₹ 2,926.

Ability to Balance Transfer your Home Loan

If you are not satisfied with your home loan's rates, charges, or terms and conditions, you can avail balance transfer facility. The lending financial institutions such as banks and NBFCs provide the facility of transferring your home loan to another lender.

Home Loan Top Up

A top-up loan is the additional loan amount offered over and above the existing home loan amount. You can take a top-up loan amount to buy furniture, construct, extend, or renovate your residential property.

PMAY

The Pradhan Mantri Awas Yojana is a Credit Linked Subsidy Scheme introduced by the Central Government. The scheme was designed to provide 'Housing For All' to different segments by the end of the year 2022. These sections include the Economically Weaker Section (EWS), Low Income Group (LIG), Middle Income Group-I (MIG-I), and Middle-Income Group-II (MIG-II). If you are eligible, you can avail of a home loan interest subsidy under PMAY on your home's purchase, construction, extension, or home improvement.

Types of Home Loans

It is often assumed that a home loan is only available for buying a new property or construction. However, there are various types of home loan available catering to a variety of requirements. These are as follows:

  • Home Purchase: The most common house loan type is the loan availed to buy a residential property, it can be a house or a flat. You can avail of a home loan for purchasing a house for up to 90% of the property's value.
  • Home Improvement Loan: If you already own a house but don't have enough funds to renovate it, then Home Improvement Loan is best suited for you. It includes works like repair, painting the walls, rewiring, waterproofing, etc.
  • Home Extension Loan: You can also avail of a loan for expanding or extending your current house. Some lenders have curated a separate loan product for this purpose, while some include this purpose as part of their home improvement loan product.
  • Home Construction Loans: Housing loan is also available for those who want to construct their own house. Although there are certain aspects which you need to keep in mind in this case, they are:
    • The land or the plot on which the house is to be constructed should have been bought within a year.
    • If you do not include the cost of the plot in the loan amount, then only the cost of construction would be estimated.
    • A rough estimate of the cost has to be made for the cost incurred in construction.
  • Loan for Land Purchase: Banks and NBFCs also provide loans for buying a plot on which an individual is looking to construct their own house. Usually, the maximum financing for plot loans is done up to 70-80% of the land value. The interest rates on plot loans are higher than the regular home loan rates.
  • Home Loan for NRI: Home loan is also available for non-resident Indians who want to buy their own house in India. The structure of this loan is similar to a regular housing loan. However, the documentation part is comparatively lengthy.
  • Joint Home Loan: You can add an earning member of your family like parents, spouse or children as a co-applicant to increase the loan eligibility. Banks allow a maximum of six co-applicants to increase the loan eligibility for a joint home loan.
  • Affordable Housing Loan: Modi Government launched PMAY scheme in 2015 to provide affordable housing to the urban poor by 2022. Under this scheme, you are eligible for interest subsidy if you take a loan to buy or construct a house.
  • Home Loan Top-Up: After a certain period, you can also opt for a top-up loan on your home loan. A top-up is an additional loan amount that is borrowed in between the home loan tenure for varied purposes like, home renovation, meeting an emergency, etc.
  • Home loan Balance Transfer: A home loan balance transfer is the facility provided by banks and non-banking financial institutions to pay the outstanding balance of your home loan to another institution. With a home loan balance transfer, you can repay the home loan at a lower interest rate and other additional benefits like top-up home loans. However, before availing a home loan balance transfer, you must compare the interest rates and other charges of different lending institutions. It is done to ensure that the total balance transfer costs do not exceed the present cost of the home loan.

How to Apply for a Home Loan?

If you apply for a home loan through MyLoanCare, you can get the home loan from top banks and NBFCs at the lowest rates. Along with rates and charges comparison of top banks at one place, you can also check the eligibility for a home loan online through MyLoanCare Home Loan Eligibility Calculator.

Step by step home loan procedure is explained below:

Step 1 : Check Eligibility and Calculate EMI
Check your loan amount eligibility and calculate monthly home loan using home loan eligibility and home loan EMI calculator.

Step 2 : Check Legal Documents and Property Approval Status
Ensure that the property registration documents are accurate. To ensure the authenticity of the documents, shortlist the banks that give loans on your selected property.

Step 3 : Decide on Home Loan Interest Rate Type
Most of the banks offer home loans at either floating or fixed interest rates. As per the fixed interest rates on home loans, the interest rate remains constant during the loan tenure. On the other hand, rate changes in response to changes in the external benchmark as per the floating home loan.

Step 4 : Compare Shortlisted Banks
You can compare home loan interest rates of all banks and NBFCs at an online marketplace like MyLoanCare. Along with rates, you can also check processing fee, prepayment charges and any other associated cost on loan. Compare all the rates and charges to shortlist the banks further and reduce the options to 2-3 banks.

Step 5 : Select the Bank Based on Other Service Related Parameters
Finally, as you decide to take the loan, consider other services and related transparency parameters of the chosen banks. These factors are turnaround time, quick loan delivery, doorstep services, transparency in the loan process. Lastly, read reviews of existing customers of banks on their services, interest rates and transparency to make your decision to borrow from a bank.

Top Home Loan Schemes

The top home loan schemes are mentioned below:

  • SBI Privilege Home Loan
    • It is a home loan scheme that is exclusively designed for government employees.
    • Individuals who are Central or State Government employees, including PSBs, PSUs of Central Government, and other individuals with pensionable service, can apply for this home loan.
    • SBI Privilege Home Loan offers competitive interest rates starting at 6.90% and a processing fee of Maximum ₹ 10,000.
  • LIC Home Loan for Pensioners
    • LIC Home Loan for Pensioners is a housing scheme tailor-made for the homebuyers who are retired from PSU insurers, PSUs, Nationalized Banks, Central Govt. & State Govt.
    • To avail of the benefit of this scheme, you must be drawing pension under Defined Benefit Pension Schemes (DBPS) and have a minimum age of 21 years.
    • Under this scheme, you can avail of a home loan with your spouses as joint-applicant. It helps to increase the home loan amount eligibility. The lowest interest rate on LIC Home Loan for Pensioners is 6.90%.
  • Bank of Baroda Home Advantage Scheme
    • Bank of Baroda Home Advantage scheme is a home loan scheme linked with the bank savings account.
    • Under this scheme, you can deposit all your savings in the linked savings account to avail maximum interest benefits in the home loan account.
    • Any credit available in the savings account will be counted for credit in the linked home Loan account.
  • SBI Bridge Home Loan
    • It is a home loan product designed to help people who want to upgrade or renovate their homes.
    • This home loan has a maximum tenure of 2 years, and the lowest interest rate on this home loan is 6.90%..
    • In addition, the bank has special rates on home loan for women.
  • HDFC Reach Home loan
    • HDFC Reach Home loan aims to help customers who do not have sufficient income documents.
    • Under this home loan product, you can get a home loan even without the income document.
    • Customers can avail of this loan product for purchase or construction of your home, purchase a shop/office to run your business, or purchase a plot of land.
    • The interest rate on HDFC Reach Home Loan starts from 6.90%.

Document Requirements

To avail of a home loan, you would require to submit the following list of documents.

  • Application Form - Signed Application form with photo
  • Identity Proof - PAN card, Passport, Driving License, Aadhaar Card, Voter id, Govt issued i-card.
  • Address Proof - Any residence proof like Passport, Driving License, Election ID card, Electricity/ Telephone/ Mobile bill/ Bank statement (not more than 3 months old) etc.
  • Income Proof - Salary slip, bank statement of 6 months, Form 16
  • Documents Related to Property: Past title chain - Conveyance deed, Sales deed, Allotment letter, Possession letter, Latest property tax receipt, Copy of approved plan for construction/ extension.
Documents Required for Home Loan

EMI Calculator

Home Loan EMI Calculator is an online tool that helps you to calculate the EMI based on multiple factors. These factors include loan amount, housing loan interest rate and tenure. With the help of an EMI calculator, you can also check the total interests you need to pay on your Home Loan. To calculate EMI, enter required loan amount, interest rate and loan tenure. You can know about Home Loan EMI without any error and free of cost.

Eligibility Criteria

Before availing of a home loan, you must check home Loan eligibility based on specific parameters like age, net income, existing obligations, property type. The eligibility for a housing loan is listed in the table below:

Parameters Eligibility criteria
Eligible Age 18-70 years
Net Monthly Income ₹ 25,000 or above
Employment History Job continuity of 3 years and more
Work Experience 2 years
CIBIL Score 650 and above

How to Get Instant Approval on Home Loan?

Many banks and NBFCs have an attractive housing loan product called instant home loan or pre-approved home loan product. Lenders provide this scheme to their existing customers. Under this scheme, the amount of home loan you are eligible for is calculated based on certain factors. These factors include your income level, credit score, and FOIR. The sanction letter on such loans is valid for a period of up to 6 months. In this period, you can finalize a property and get the amount disbursed. The bank does a legal and technical evaluation of the property before final approval and disbursing the loan. This pre-approved home loan offer allows buyers to take an instant decision to purchase a property without worrying about arranging funds. It also gives the home loan borrower an idea of how much loan they can get.

The steps to get a pre-approved home loan are very simple:

  • You can enquire in the bank with which you have your savings or salary account.
  • If Instant home loan is available, then you can apply for it right away through their website or by visiting the branch.
  • After you apply and submit the required documents, you will be issued a pre-approved home loan sanction letter that details the loan amount, interest rates, tenure, validity of the offer and other terms and conditions.

Home Loan Rejection

To reduce your chances of rejection of a home loan application, keep the following do's and don'ts in mind.

Do’s Don’t
Always pay your ongoing EMIs on time so that your credit score never drops. Never apply for a home loan just for the sake of it.
Check your credit score regularly and apply only when it's at least above 650. While filling your application form for the home loan, don’t give wrong or incomplete information and it should match your relevant documents.
Proper research is a must before you apply with any lender for a home loan. Don’t just blindly apply with the bank in which you have an existing account because of the previous relationship.
You should have stable employment before you opt for a home loan. Do not default in your current EMIs or accumulate too much credit on your credit card.
Read the fine print of the document carefully before signing it. Don’t blindly sign any document before you have read all its terms and conditions.
Make sure you submit all the necessary documents along with your loan application. Do not choose a random number for your tenure, as it can cost you more in the long run.
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