Which bank is offering the cheapest home loan in India?

The higher or lower of a home loan mainly depends on its interest rate. Considering that the tenure of the home loan is up to 30 years, even a slight difference in the interest rate can make a big difference in the interest cost of the entire home loan. Since home loan banks consider various factors while estimating home loan rates, having an understanding of such factors can help you avail the best deals with lowest interest cost. In this article, we will examine the best home loan interest rates, which bank will offer the lowest home loan interest rate, what is the best home loan rate for government employees, home loan rate for women. We will also understand the difference between floating interest rate and fixed interest rate.

Let us first list the best home loan interest rates in India:-

Best Home Loan Interest Rates

Home Loan Interest Rate (%)
Name of bank loan amount
up to 30 lakhs Above 30 lakhs up to 75 lakhs above 75 lakhs
public sector banks
Punjab And Sind Bank 6.65-7.60 6.65-7.60 6.65-7.60
state Bank of India 6.70-7.50 6.95-7.65 7.05-7.75
Bank Of Baroda 6.75-8.35 6.75-8.35 6.75-8.60
Union Bank of India 6.80-7.60 6.90-7.65 6.90-7.65
Punjab National Bank 6.80-7.75 6.80-7.90 6.80-8.00
Central Bank Of India 6.85-7.30 6.85-7.30 6.85-7.30
bank of india 6.85-8.35 6.85-8.35 6.85-8.35
Canara Bank 6.90-8.90 6.90-8.90 6.90-8.90
UCO Bank 6.90-7.25 6.90-7.25 6.90-7.25
Bank Of Maharashtra 6.90-8.05 6.90-8.40 6.90-8.40
IDBI Bank 6.95-10.05 6.95-10.05 6.95-10.05
Indian Bank 7.00-7.25 7.10-7.35 7.20-7.40
Indian Overseas Bank 7.05 7.15 7.30
private sector banks
Kotak Mahindra Bank 6.65-7.30 6.65-7.30 6.65-7.30
ICICI Bank 6.75-7.30 6.75-7.45 7.10-7.55
axis Bank 6.90-11.50 6.90-11.50 6.90-8.55
HSBC Bank over 7.20 over 7.20 over 7.20
Karur Vysya Bank 7.35-9.55 7.35-9.55 7.35-9.55
Karnataka Bank 7.50-8.75 7.50-8.75 7.50-8.85
federal bank 7.65-7.70 7.70-7.75 7.75-7.80
Dhanlaxmi Bank 7.85-9.00 7.85-9.00 7.85-9.00
South Indian Bank 7.95-9.45 7.95-9.45 7.95-9.45
Tamilnad Mercantile Bank 8.25 8.25 8.25
Bandhan Bank 8.50-11.75 8.50-11.25 8.50-11.25
RBL Bank 10.20-12.80 10.20-10.70 9.50-10.00
Housing Finance Company (HFC)
HDFC Ltd 6.75-7.50 7.00-7.75 7.10-7.85
Bajaj Finserv 6.75-8.50 6.75-8.50 6.75-8.50
Tata Capital over 6.90 over 6.90 over 6.90
LIC Housing 6.66-7.85 6.66-8.05 6.90-8.05
PNB Housing 7.35-9.35 7.35-9.55 7.70-9.55
GIC Housing Finance over 7.45 over 7.45 over 7.45
Repco Home Finance over 7.75 over 7.75 over 7.75
Indiabulls Housing over 8.65 over 8.65 over 8.65
Aditya Birla Capital 9.00-12.50 9.00-12.50 9.00-12.50
Reliance Home Finance 9.75-13.00 9.75.13.00 9.75-11.00
*Rebate of 10 bps to women borrowers under limited period offer
**Interest rate of 6.85% to 7.00% p.a. under Ind Awas Yojana
Rates till 6th July 2022
The data has been taken from the website of the concerned bank.

Currently, the best home loan interest rates in India start from 6.65% p.a. offered by Punjab & Sind Bank and Kotak Mahindra Bank.

Other banks offering best home loan interest rates below 7% p.a. are State Bank of India, Bank of Baroda, ICICI Bank, Union Bank of India, Punjab National Bank, Central Bank of India, Bank of India, Canara Bank, UCO Bank, Bank of Maharashtra, IDBI Bank, Axis Bank, HDFC Ltd., Tata Capital, Bajaj Finserv and LIC Housing.

Home Loan Minimum Interest Rate
Name of bank Rate of interest (%)
Punjab And Sind Bank 6.65 to 7.60
Mahindra Bank Box 6.65 to 7.30
LIC Housing 6.66 to 8.05
state Bank of India 6.70 to 7.75
Bank Of Baroda 6.75 to 8.60
ICICI Bank 6.75 to 7.55
HDFC Ltd 6.75 to 7.85
Bajaj Finserv 6.75 to 8.50
Union Bank of India 6.80 to 7.65
Punjab National Bank 6.80 to 8.00
Central Bank Of India 6.85-7.30
bank of india 6.85 to 8.35
Canara Bank 6.90 to 8.90
UCO Bank 6.90 to 7.25
Bank Of Maharashtra 6.90 to 8.40
axis Bank 6.90 to 11.50
Tata Capital from 6.90 onwards
IDBI Bank 6.95 to 10.05
10 bps discount to women borrowers under limited period offer
Rates till 6th July 2022
The data has been taken from the website of the concerned bank.

Best interest rates for home loan of 30 lakhs and below

The loan amount you intend to borrow can also affect the interest rate at which you can avail a home loan. Generally, home loan rates up to Rs 30 lakh are lower as compared to home loans available with higher quantum. To avail the best home loan interest rates, individuals should make the maximum down payment as possible. Doing this will not only reduce your entire debt burden but you can also get a lower interest rate on the home loan.

Home Loan Interest Rates (%)
Name of bank loan amount
up to Rs 30 lakh
Punjab And Sind Bank 6.65 to 7.60
Mahindra Bank Box 6.65 to 7.30
LIC Housing 6.66 to 7.85
state Bank of India 6.70 to 7.50
Bank Of Baroda 6.75 to 8.35
ICICI Bank 6.75 to 7.30
HDFC Ltd 6.75 to 7.50
Bajaj Finserv 6.75 to 8.50
Union Bank of India 6.80 to 7.60
Punjab National Bank 6.80 to 7.75
Central Bank Of India 6.85 to 7.30
bank of india 6.85 to 8.35
Canara Bank 6.90 to 8.90
UCO Bank 6.90 to 7.25
Bank Of Maharashtra 6.90 to 8.05
axis Bank 6.90 to 11.50
Tata Capital from 6.90 onwards
Rates till 21st July 2022
The data has been taken from the website of the concerned bank.

Best Home Loan Interest Rates for Government Employees

Many home loan lenders also take into account the salary sources of their home loan applicants while deciding their rates. Generally, lenders charge a lower rate to salaried individuals as compared to self-employed individuals.

Self-employed like chartered accountants and doctors are generally more likely to get approved home loans at lower rates. Among the salaried, government and PSU employees are most preferred by lenders because of their job security and income certainty. They are followed by those employed in reputed and large private sector organizations as these companies are generally considered stable and have increased ability to withstand economic downturns compared to other private companies. This lowers the credit risk perception of the lenders as a result of which they lure such employees by offering them low home loan rates.

Here, we are sharing the best home loan interest rates offered to government employees:

home loan rates for government employees
Name of bank Rate of interest (%)
Punjab And Sind Bank

(Available for permanent employees of Central/State Governments/Public Sector Undertakings)

6.65 to 7.35
Punjab National Bank (PNB Pride Housing Loan for Government Employees)

(For permanent employees of Central/State Governments/Defence Personnel and Para Military Forces)

6.90 to 7.35
Rates till 21st July 2022
The data is taken from the website of the respective bank
Women-specific and regular loan interest rates
Name of bank For ladies for other people
state Bank of India 6.70 to 7.70 6.75 to 7.75
Union Bank of India 6.80 to 7.60 6.85 to 7.65
Punjab National Bank 6.80 to 7.95 6.95 to 8.00
Rates till 21st July 2022
The data is taken from the website of the respective bank

Which is better floating rate loan or fixed rate loan?

Fixed interest rate: The fixed interest rate of the loan means that the interest rate charged on the home loan amount will remain constant throughout the tenure. This means that your home loan EMI will remain constant throughout the repayment tenure as well. The advantage of a fixed-rate home loan is that the home loan EMI will remain the same, allowing you to manage your finances with ease. Taking such loans is good if you expect the home loan interest rates to rise in the future. The flip side of a fixed-rate home loan is that even if market rates fall, you will still pay higher interest.

Floating interest rate: Floating rate means that your rates for home loan will not remain fixed and will change throughout the tenure of the loan. Under floating rate home loans, the rates are linked to external benchmarks such as T bills or repo rates which are market linked. Your Home Loan EMI may drop or increase subject to changes in the benchmark rates. The plus point of floating interest rates is that when the interest rate regime has a declining trend, the home loan interest rate tends to be lower. The flip side is that if the rates are high, the home loan EMI may also go up, which can negatively impact your budget.

Thus, since fixed-rate home loan interest rates remain the same throughout the loan tenure, many home loan applicants may opt for it as it eliminates the possibility of interest rate fluctuations. But, note that some banks offer fixed-rate home loans for the entire repayment tenure and those that do usually charge higher interest rates for fixed-rate home loans to reduce their interest rate risk.

Most banks may also offer a compound rate home loan, where the interest rates remain fixed for a specified period, like 2 or 3 years from the repayment tenure of the home loan, and then switch to a floating rate home loan . Remember that the rates charged during the fixed-rate tenure are usually higher as compared to home loans with floating interest rate at the time of home loan approval.

How to get home loan at low interest rate?

Since a home loan is a large loan, banks carefully evaluate the credit history, income, repayment capacity, etc. of the applicant. For applicants looking for a home loan, it is important that they are well aware of it. There are several factors that banks look into while processing their home loans. Knowing such factors can help them get their home loan approved at lower rates.

Here is a list of some of the factors looked into by home loan lenders to determine your interest rate:

credit score

Banks consider an applicant’s score as one of the important factors while evaluating his/her home loan application. People with a score of 750 and above are generally considered to be creditworthy and the chances of getting a home loan approved at lower rates increase. This is because people with low scores are generally considered to lack financial discipline, leading banks to charge higher rates for their increased risk of credit default.

Thus, if you are someone who has a poor credit score, consider building up your credit score by using your credit card in a regular and disciplined manner. Once your credit score is equal to a score of 750 or above, apply for a home loan.

monthly income

Banks generally consider income applicants as safe bets because they tend to have higher incomes. Low-income people are considered by the bank to have a higher default probability. Thus, many banks charge such applicants with high home loan rates.

Employer’s Profile

Also, many lenders check the income sources of their home loan applicants while deciding their interest rates. Generally, lenders charge lower home loan rates to the salaried than to the self-employed.

Doctors and chartered accountants under the self-employed category generally have a higher chance of getting their home loan approved at lower rates. In the salaried class, government employees and PSUs are most preferred because of their job security and income certainty. Then there are those working in reputed private sector organizations that are preferred by the lenders for home loan approval at low interest rates. This is because the companies where these individuals are working are considered to be highly stable with higher potential to withstand economic downturn than other private companies. This lowers the loan risk perception of the lender as a result of which they attract such employees through lower home loan rates.

existing relationship with the bank

Many banks are offering low interest rates on home loans to their existing customers. Such relationships can be in the form of current, savings or FD accounts or in the form of credit cards or various other loan options. Thus, home loan seekers should initiate their loan search by directly approaching their banks or NBFCs with whom they share a long-term existing banking relationship. The interest rates offered to such individuals can be seen as a benchmark to compare the home loan rates offered by other lenders.

loan amount

The loan amount you choose to take can also affect the home loan interest rate. Generally, home loans up to Rs 30 lakh come at lower rates as compared to loans available in higher quantum. To avail the best home loan interest rates, you should choose to contribute the higher down payment from your own resources. This lowers the loan risk of the lender, which in turn helps increase your chances of getting a home loan at a lower interest rate.

Thus, there are prudent ways to get your home loan at low interest rates. Having a credit score of 750 and above, contributing a high down payment from your own funds, your long-term good relationship with the bank, can help you get a home loan at a lower interest rate.

FAQs on Cheap Home Loans

Question: Which banks are charging the lowest interest rate on home loan?

Answer: Punjab and Sind Bank and Kotak Mahindra Bank are among the banks that charge the lowest interest rates on home loans. They are offering the best home loan interest rates of 6.65% p.a. Other lenders who are offering the best home loan interest rates below 7% p.a. are – Bank of Baroda, State Bank of India, Union Bank of India, ICICI Bank, Central Bank of India, Punjab National Bank, Canara Bank, Bank of India, Bank of Maharashtra, UCO Bank, HDFC Ltd., IDBI Bank, Axis Bank, Bajaj Finserv, Tata Capital and LIC Housing.

Question: What is the current HDFC home loan interest rate?

Answer: Currently HDFC Ltd.’s home loan interest rate ranges between 6.75% and 7.85% p.a.

Question: What is the EMI of Rs 20 lakh loan?

Answer: A home loan of Rs 20 lakh, tenure of 20 years and an interest rate of 7% per annum will be Rs 15,506. If the repayment tenure is increased to 30 years along with other factors, i.e. the loan amount and interest rate remain the same, then the loan EMI will be Rs 13,306. If the repayment tenure is reduced to 10 years with other components, i.e. loan amount and interest rate remaining the same, the loan EMI would be equal to Rs 23,222.

Q: How can I reduce my home loan interest rate?

Ans: One can take advantage of low home loan interest rates by expanding the scope of their home loan search. Apart from the interest rate, applicants should also take into account the processing fee and prepayment fee of a particular lender. It is important to do so as the interest rate and various other associated charges vary depending on the credit risk assessment of the loan applicant by the lender. For example, many home loan lenders may offer low home loan rates and processing fees to those with a high score of 750 or above. Many lenders also fix their rates based on the job of the applicant.

Therefore, applicants should initially start their home loan search by contacting those with whom they already share a relationship. Thereafter, such applicants should approach the online lending market to compare rates and other facilities offered by other lenders. The final application for a home loan should be with the lender who offers the adequate loan amount and the lowest home loan interest rate for the loan tenure.

Question: How can I calculate my home loan EMI?

Answer: Home loan applicants can use the online EMI calculator to know the EMI for their repayment capacity. They should take into account their contribution towards financial goals while computing their monthly settlement income. Applying for a home loan after ascertaining your EMI repayment capacity can help you reduce the chances of any EMI default in the near future or settle on a monthly investment to achieve financial goals.

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