Home loans: check out the 15 best banks with the cheapest interest rates


oi-Vipul Das


Due to the Covid-19 epidemic, the Indian economy is still reeling from the disruptions, as a result of which the Reserve Bank of India kept the repo rate at a historically low level of 4% to increase credit and support an economic recovery. This prompted banks to lower their floating interest rates on home loans as well. The interest rate is an important factor that affects the overall amount of your home loan. With a higher value and longer term of home loans, the interest rate on the loan can have long-term financial consequences for investors. Having home loans at a lower interest rate will not only decrease the EMI, but also the interest payment.

Hence, borrowers should aim to obtain home loans at the lowest interest rate available. Another thing future homeowners need to remember is their credit score, which is now more important than ever. They should be aware that these repo linked home loans provided by banks usually carry a range of credit risks. In other words, for all eligible borrowers with a credit score above 750, the lowest potential interest rates are usually set. The interest rate spread could be around 100 basis points for borrowers with current or bad credit ratings.

Nonetheless, in order to get the lowest possible rates, you will be well advised to confirm that your credit scores are decent if you are a potential homeowner. Remember that the interest rate charged to you depends on the size and location of your preferred home, your age, salary, gender, credit history, loan amount , the lender and other terms and conditions set by your bank. Summing up everything if you are planning to buy a home loan now, below are the cheapest rates currently offered by the top 15 Indian banks.

Top 15 Banks That Offer the Lowest Interest Rates on Home Loans

Top 15 Banks That Offer the Lowest Interest Rates on Home Loans

No Sr. Banks ROI in% per year
1 Kotak Mahindra Bank 6.75 to 8.45
2 Union Bank of India 6.80 to 7.40
3 National Bank of Punjab 6.80 to 7.75
4 HDFC Bank 6.80 to 7.85
5 SBI > = 6.80
6 central bank 6.85 to 7.30
7 Baroda Bank 6.85 to 8.20
8 UCO Bank 6.90 to 7.25
9 Bank of Punjab and Sindh 6.90 to 7.60
ten ICICI Bank 6.90 to 8.05
11 Bank of Maharashtra 6.90 to 8.40
12 Axis Bank 6.90 to 8.55
13 Canara Bank 6.90 to 8.90
14 IDBI Bank 6.90 to 9.90
15 Bank of India 6.95 to 8.35
Types of mortgage interest rates

Types of mortgage interest rates

Fixed interest rate: The rate is maintained even throughout the life of the loan under it. The rate is maintained even throughout the duration of the loan in this IT framework. Since the rate remains constant, there will be no adjustment to the interest payments. After respecting a certain period of loan term, you can switch to the variable rate plan depending on the offer. Here, the interest rates are known to the borrower since the rate remains constant. If there is a rise in lending rates, the loan can be insulated from regular rate increases and hold the money out longer. Since the interest variable remains fixed, if the regular loan rates go down, you won’t win.

Floating interest rate: Interest charges on a home loan are subject to the bank’s latest maximum lending rates. The interest rate is linked to the bank’s recent available rate, which is notably based on many variables such as the RBI’s monetary policy and changes in the lending rate, the bank’s action on adjustment, etc. The most obvious benefit of going with the variable rate is that you get the benefit of being billed based on the going rate. You save on interest charges if the rates go down. In extreme circumstances, the loan faces the burden of being paid at a higher rate if the regular rates go up. However, the floating interest rates for home loans are lower than the fixed interest rates for home loans.

Considerations That Decide The Interest Rate On The Home Loan

Considerations That Decide The Interest Rate On The Home Loan

There are many variables influenced by background and income category that impact the bank’s offer of rates. To help you negotiate a better cost, let’s take a look at some of the key variables.

  • Lenders now use the credit rating beforehand to adjust mortgage interest rates above the external benchmark limit. A higher interest rate on home loans generates a lower credit rating and vice versa.
  • When you apply for a home loan, your credit history is carefully reviewed before it is processed. This includes reviews on substance and current credit. For a decent credit score you are up to date, you are sure to get a fair deal. Plus, a great credit history gives you the confidence to secure a majority.
  • It also has an impact on the location and surroundings. If the domain is in a prime position or purchased from a reputable builder / agency, on the interest rate side you should expect an ideal rate.
  • The suggested loan amount has the potential to affect the rate. The general rule is that the higher the value of the loan, the lower the rate you will get.
  • The interest rates issued often depend on the types of home loan you are using. Standard loans such as buying a home will appear at regular rates, although a higher rate will be applied to their alternatives such as home improvement.
  • When the bank agrees on the interest rate to grant you, the length of the loan chosen has an influence. There is a good chance that the interest rate offered will be lower if you are able to settle for a long time.
  • Compared to the self-employed, salaried candidates should get a slightly lower rate, due to the uncertainties present. For employees and the self-employed, banks hold different slabs.