A home loan is a loan that is taken from banks to purchase a home. It is a secured type of loan and the money is repaid by paying monthly EMIs. The interest rates on a home loan can be fixed or floating. A fixed rate of interest is fixed throughout the tenure whereas a floating rate of interest changes according to the market conditions.
Home Loan Interest Rates Comparison in India
| Bank | Loan Rate | Processing Fee |
|---|---|---|
| Allahabad Bank | 8.85% | 0.40% Max Rs. 50,000 |
| Andhra Bank | 8.60% | 0.50% Min Rs. 2,500 – Max Rs. 25,000 |
| Axis Bank | 8.45% | 0.50% Min Rs. 7,500 – Max Rs. 25,000 |
| Bandhan Bank | ||
| Bank of Baroda | 8.85% | 0.25% Min Rs. 1,000 – Max Rs. 20,000 |
| Bank of India | 8.85% | Upto 0.25% |
| Bank of Maharashtra | 8.50% | 0.50% |
| Canara Bank | 8.75% | 0.50% Min Rs. 1,500 – Max Rs. 10,000 |
| Central Bank of India | 8.60% | 0.50% Max Rs. 20,000 |
| City Bank | 8.50% | Nil |
| Corporation Bank | 8.80% | 0.50% Min Rs. 1,000 – Max Rs. 50,000 |
| DBS | 9.45% | Max Rs. 10,000 |
| DCB Bank | 10.24% | 2.00% Min Rs. 5,000 |
| Dhan Laxmi Bank | 9.90% | 1.00% Min Rs. 10,000 |
| DHFL | 9.75% | 0.50% Min Rs. 2,500 – Max Rs. 20,000 |
| Federal Bank | 8.75% | 0.50% Min Rs. 3,000 – Max Rs. 7,500 |
| HDFC Bank | 8.40% | 0.50% Min Rs. 3,000 – Max Rs. 10,000 |
| HSBC Bank | 8.85% | 1.00% Max Rs. 10,000 |
| ICICI Bank | 9.05% | 0.25% Min Rs. 5,000 – Max Rs. 5,000 |
| IDBI Bank | 8.75% | 0.50% Min Rs. 2,500 |
| IDFC First Bank | 9.60% | Min Rs. 5,000 – Max Rs. 5,000 |
| Indian Bank | 8.75% | 0.23% Max Rs. 20,381 |
| Indian Overseas Bank | 8.65% | 0.53% Min Rs. 8,900 – Max Rs. 13,350 |
| Jammu and Kashmir Bank | 8.85% | 0.25% Min Rs. 500 – Max Rs. 10,000 |
| Karnataka Bank | 8.90% | 0.25% Min Rs. 250 |
| Karur Vysya Bank | 9.65% | Min Rs. 5,000 |
| Kotak | 8.90% | Max Rs. 10,000 |
| PNB | 8.50% | 0.50% Min Rs. 20,000 – Max Rs. 50,000 |
| Punjab and Sind Bank | 8.85% | 0.25% Min Rs. 1,000 – Max Rs. 15,000 |
| RBL | 10.45% | Min Rs. 5,000 – Max Rs. 15,000 |
| Sbi | 8.05% | 0.25% Max Rs. 10,000 |
| South Indian Bank | 9.45% | 1.00% Max Rs. 10,000 |
| Standard Chartered | 9.41% | 1.00% Min Rs. 5,000 – Max Rs. 10,000 |
| UCO Bank | 8.65% | 0.50% Min Rs. 1,500 – Max Rs. 15,000 |
| Union Bank of India | 8.70% | 0.50% Max Rs. 15,000 |
| United Bank of India | 8.65% | 0.59% Min Rs. 1,180 – Max Rs. 11,800 |
| Yes Bank | 9.85% | 1.00% Max Rs. 15,000 |
Quick Home loan Guide
Due to digitization, loan processing in India has become easy. Generally, the banks have the following procedure.
Step 1: Fill the application form along with the required documents. This is done so as to verify your documents and also to see whether you will be able to pay back the loan amount.
Most of the bank’s representatives for your convenience will visit your home to collect the documents.
Step 2: Banks will require you to pay a processing fee. This fee is charged for the maintenance of your loan account.
Step 3: Sometimes bank might call you to their branch for face to face discussion.
This is done to collect more information about you.
Step 4: Bank will verify your documents. It might take 1 to 2 days.
Step 5: If the bank finds that all requirements are met, they will sanction the loan. A sanction letter will be sent to the customer. The following details will be checked.
Step 6: If the loan is approved, an offer letter will be sent stating the loan amount that is approved, the Interest rate on it, type of interest rate, loan tenure, modes of repayment and terms and conditions.
Step 7: An acceptance letter will be signed. This letter has to be signed for the bank’s record.
Step 8: Here all the details regarding the property will be checked by the bank. You have to submit all the property-related documents to the bank
Step 9: After the submission of the property documents, the bank will do a legality check.
The bank’s lawyer will check the documents to make sure that it doesn’t have any illegality in the property.
Step 10: The bank will do a thorough check of the site. They will find out the valuation of the property.
Step 11: After the loan agreement has been signed the loan will be disbursed
Documents required
Following are the documents that are required for applying for a home loan.
| Salaried Person | Self-Employed Professional | Self-Employed Non-Professional |
| Identity proof like a voting card or a passport or a driving license or a Pan Card. | Identity proof like a voting card or a passport or a driving license or a Pan Card. | Identity proof like a voting card or a passport or a driving license or a Pan Card. |
| Residence proof like a ration card or an electricity Bill or a passport | Residence proof like a ration card or an electricity Bill or a passport | Residence proof like a ration card or an electricity Bill or a passport |
| last 6 months of bank statements | last 6 months of bank statements | last 6 months of bank statements |
| Processing fee cheque | Processing fee cheque | Processing fee cheque |
| Form 16/Income tax returns | Form 16/Income tax returns | Form 16/Income tax returns |
| Salary slips of the last 3 months | Proof of business existent | Proof of business existence |
| Educational qualification certificate | Business profile | |
| Last 3 years Income tax Returns | Last 3 years income tax returns | |
| last 3 years CA audited Balance sheet and Profit & Loss account statement | Last 3 years CA audited Balance sheet and Profit and Loss account |
Factors affecting interest rates
Following are the factors that affect interest rates on home loans.
Credit Score
Interest rates are influenced by credit scores. If the credit score is high then you will be charged low-interest rates.
Loan Amount
You will be charged higher interest rates if you borrow a high loan amount.
Interest Rate Types
Fixed interest rates are fixed for the entire loan tenure. The rate is not affected due to market conditions as compared to the floating rate of interest. Thus to be on a safer side from the loss of future interest income, they charge high-interest rates as compared to the floating rate of interest.
Job Profile
Interest rate is also influenced by one’s job profile. Generally, Salaried employee will be charged low-interest rates as compared to the self-employed individuals. This is done because a salaried employee has a stable source of income. Moreover, a government employee will be prefered more than salaried employees.
Loan-to-Value ratio
It is the ratio that determines what percentage of the price of a house will be furnished by the banks. The remaining amount has to be paid by you. Generally, Low-interest rate will be charged to you if the ratio is low.
MCLR
The marginal cost of funds based lending rates (MCLR) also affects interest rates. Lower the MCLR rate, lower will be interest charged to you. MCLR depends on the marginal cost of funds, operating cost, negative carry on account of cash reserve ratio (CRR) and tenor premium. Furthermore, the MCLR rate keeps on changing even after the loan has been sanctioned.