Loan Interest Rates

Banks with Lowest Home Loan Interest Rates During COVID-19

The pandemic has affected the economy in a bad manner. To help restabilize the economy, the Reserve Bank of India lowered the Repo Rate to 4.0% in their last Monetary Policy Committee meeting. Repo Rate is the rate at which commercial banks borrow from the central bank(RBI) when they need funds.

Just recently, the RBI mandated all banks to link their lending rates to an external benchmark like the Repo Rate or the 3/6 month’s treasury bill yield. This was done so that the monetary policy changes can be passed on more efficiently to the loan borrowers. Currently, all banks link their home loan rates to the Repo Rate. 

In line with the Repo Rates announced by RBI, many banks have gone ahead and dropped their home loan interest rates. 

The latest rates offered by various banks for their home loan borrowers are as given below

Union Bank of India

Union Bank of India offers one of the lowest interest rates to its home loan customers. Know the details here. 

  • Interest Rate –  6.7 -7.15%
  • Processing Fee –  0.5% of the loan amount or Rs 15000 (maximum) plus GST

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Central Bank of India

Central Bank of India is a nationalized bank that allows home loans at lesser interest rates.

The interest rate and other charges on the home loan are

  • Interest Rate : 6.85 – 7.1%
  • Processing Fee: 0.50% of the Loan Amount subject to maximum Rs.20,000/-

Bank of India

Bank of India is a nationalized bank that was established in the year 1906. The headquarters of this bank is situated in Mumbai. The home loan interest rate and processing fee for home loans availed from BOI are

  • Interest Rate:6.85 – 7.75%
  • Processing Fee: 0.25 % of the loan amount with a minimum of. Rs. 1500/ and a Maximum of. Rs. 20000/- for individuals. For rural areas, the processing fee is charged at 75% of the rate charged for individuals.

HDFC Bank

HDFC Bank is a large private sector bank known for its customer service. The rates for home loans from HDFC Bank are

  • Interest Rate: 6.95 -7.85% 
  • Processing Fee: Up to 0.5% of the loan amount

ICICI Bank

ICICI Bank is a leading private sector bank that allows a variety of services and loans to both retail and corporate clients. The interest rate and other charges are

  • Interest Rate: 6.95 -8.05%
  • Processing Fee: 0.5% of the loan amount plus taxes as applicable

State Bank of India

State Bank of India is the biggest bank in India and is a market leader in various banking products.  Various details that you need to know about SBI home loans are:

  • Interest Rate: 7 -7.7% (Additional Premium could be added for non-salaried and those with lower credit score)
  •  Processing Charges – 0.40% of the loan amount plus applicable GST subject to a minimum of Rs 10000/- and maximum of Rs 30000/- plus GST.

Punjab National Bank

PNB holds the distinction of being the third-largest public sector bank. It has an excellent network of banks spread all across the country.  Home loan rates for loans from the bank are

  • Interest Rate:7 -7.6%
  • Processing Fee: 1% of the loan plus taxes

UCO Bank

UCO Bank was formerly known as United Commercial Bank. Headquartered in Kolkata, UCO provides banking and other services to its retail and corporate customers. The home loan rate interest rate from UCO bank is:

  • Interest Rate: 7.15 -7.25%
  • Processing Fee: 0.5% of the loan amount with a  minimum Rs.1500/- & maximum of  Rs. 15000/-.

Bank of Baroda

Bank of Baroda is the 3rd largest public sector bank in India and offers a wide range of banking and financial services to its clients. The rate of interest offered on its home loan is one of the lowest in the market.

  • Interest Rate: 7.25-8.25%
  • Processing Fee: Up to 0.5% of the home loan amount 

Axis Bank

Formerly known as UTI Bank, Axis is the 3rd largest private sector bank in the country and provides a wide range of banking and financial services. 

  • Interest Rate: 7.75 –  8.55%
  • Processing Fee: Up to 1% of the loan amount subject to a minimum of Rs. 10,000/- Upfront processing fee of Rs 5000 plus GST shall be collected at the time of application login

Home Loans are long term loans that can run over a period of 15-30 years, therefore it is important to pick a home loan provider that allows the loan at the lowest rate of interest. Even a 0.1% change in the interest rate can make a huge difference to the total amount paid as EMI through the term of the loan. 

For Example: On a Rs 50lakh loan availed at 8% for 20 yrs, the total amount paid back works out to Rs 1 crore, whereas if the interest rate is changed to 8.1%, the total amount paid back will work up to Rs 1.01crore. This indicates that when the interest rate increases by just .1%, your payable increases by Rs 1lakh.

Related Article: Use House Loan EMI Calculator to Calculate Your Monthly EMIs in No Time

Other Factors that can Affect the Interest Rate offered to You

Credit Score: A credit score is a reflection of your creditworthiness and is a figure that is calculated based on your present and past behavior with the loan and/or credit card. Things like prompt repayment, judicious utilization of your credit card, and spreading out loan applications are some of the factors that can help you maintain a good credit score. 

A good credit score can help you get easier loan approval and in addition, get you a loan on lower interest rates. We have just seen the impact that a small increase in interest rates can have on your overall loan repayment.

Existing Relation with the Bank: Having an existing savings account or a salary account with the bank can make your loan approval easier. This is because the lender has a fair idea of your income, expenses, and balances.

Amount of margin being brought in by you: A home loan is a high ticket borrowing, so the lenders look for some commitment from your end in the form of margin on the loan. If you can bring in a higher percentage of margin, then your home loan may be approved at a lower interest rate.