Housing Loan Interest Rates in India
Home loans in India have made people Buy Property in India in spite of the skyrocketing prices. Today, we find considerable Real Estate Investment in India, either in the field of Residential Property in India or Commercial Properties in India. Home Loans in India are disbursed by many Banks as Loan Banking is on of the most important function of the Financial Services in India. Property Dealers and Real Estate Consultants in India usually recommend that we undertake appropriate Home Loan or Housing Loan Counseling so that we can Buy Apartment in India at an affordable Housing Rate.Purchasing the home of your dreams is not an easy task. Especially when you plan to buy a home on loan. Home loan means that you buy a house on installments. In simpler terms when you want to own a home and can’t afford to pay the amount in lump sum, you can pay it in monthly installments with an interest rate.
Home Loan Interest Rate is an important determinant of Real Estate. Owning a home is a dream cherished by us all our life. The task to buy houses can be a little daunting in the absence of prudent guidance. Nevertheless, one needs to have decent funds so to Buy Houses or to Rent Villas and Rent Apartments in any decent locality. However, thanks to the easy availability of Housing Loan in India these days, we can avail Bank Loan at affordable and Best Interest Rates. Be it a Home Loan or a Car Loan, many banks like the ICICI, the State Bank of India, Punjab national Bank offer Housing Loan or Housing Loan at Affordable Housing Rate. In fact, many Banks and Loan Banking agencies, offer Loan Calculators that enable us to maintain Interest Account in case we have availed other loans. For instance, we can consolidate our Housing Loan or and any Car Loan or education loan; also, we can combine the Credit Interest and the Housing Rate by appropriate Interest Calculation.
Interest Rates for Home Loans are undoubtedly the most important parameter to factor into your calculations. And in most cases is the decisive factor for an investor to narrow down on a certain Housing Finance Company’s home loan offer. The interest on housing loans in India is usually calculated either on monthly reducing or yearly reducing balance basis.
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Comparative Chart on Home Loan Interest Rates |
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Financial Institutions |
Tenure (in years) |
Rate of Interest Fixed |
Rate of InterestFloating |
Processing Charges |
| State Bank of India | Up to 5 years | 12.25% | 10.75% | 0.50% of loan amount |
| 5-20 years | 12.25 % | 11.25 % | - | |
| ICICI | 0-20 years | 10.5% | 9.5% | 1% of loan amount |
| LIC Housing Finance Ltd. | 0-20 years | 10.5%- 11% | 9.5% | 0.5 per cent of the amount (max. Rs. 5000) |
| HDFC | 0-20 years | 13.25% | 11.25% | 1% of the loan amount +applicable service taxes and cess) |
| HSBC | 0-20 years | 10.75% | - | 1% of loan amount |
| Citibank | 0-20 years | 9.75% | 9.00% | 1% of loan amount |
| Canara Bank | Up to 5 years | 10.75% | - | - |
| Above 5 yrs up to 10 yrs | 11.00% | - | - | |
| Standard Chartered Bank | 0-20 years | 10.5% | 9.25% | 1.25 % of loan amount |
| Canfin Homes Ltd | 0-20 years | 9.25%-12% | - | - |
| IndusInd Bank | 0-20 years | 10.5 % (for <20 lakhs) 13% (for >20 lakhs) |
9.25 % (for <20 lakhs) 12% (for >20 lakhs) | 1.25% of loan amount |
| Saraswat Bank | 0-20 years | 11 | 10 | - |
| HUDCO | 0-20 years | 10 % (< 10 lacs) 10.5% (>10 lacs) |
9% (< 10 lacs) 9.5% (>10 lacs) |
0.5 % of loan amount (Max. Rs.250) |
Most HFCs follow the yearly reducing-balance method, which accounts for your principal repayments only at the end of their financial year. Thus, you pay interest on the principal that you have already returned to the HFC. The effective interest rate is thus higher than the quoted interest rate by around 0.7%. Banks and some HFCs, on the other hand follow the daily or monthly reducing-balance method, by which the principal on which you pay interest reduces every month as you pay your EMI resulting in a lower interest burden. Thereby, the EMI for the monthly reducing system is effectively lesser than the yearly reducing system of calculating interest.
Those who are bothered, whether the currently prevailing floating rates on home loans, will exceed the fixed rate (currently around 13%-14%) can try to convert their floating rate home loan into a fixed rate one. Though the fixed rate are rarely ‘truly fixed’ but the banks generally lock them for a fixed period of around 3 years. Before taking any such measure it will be beneficial to get all the facts about the fixed rates and their period. Another thing that warrants attention in this case is the fees bank charge to convert from floating to fixed and vice versa. For example the ICICI bank charges 1.75% on the outstanding principal for changing from fixed to floating rates of interest. All such factors should be carefully considered before taking any such step.
