For most people and families, purchasing a home is a major milestone in life, which usually involves obtaining a home loan. The interest rate on a home loan is a critical determinant of the total cost of the loan, so it is important to select lenders with the lowest interest rates. Check out banks and NBFCs offering competitive rates so you can make a financially sound decision.
1 Banks & NBFCs Offering the Lowest Home Loan Interest Rates
- State Bank of India (SBI)
SBI is known for its low-cost and customer-friendly home loan schemes. The interest rates of the bank begin from as low as 8.50% per annum for salaried individuals. Special schemes like SBI Shaurya Home Loan are available for defense personnel, which provide extra concessions on interest rates.
- HDFC Bank
HDFC Bank offers flexible home loans at 8.55% interest rate per annum. Customer support is provided with complete attention, and loan sanction is done promptly by the bank, making it popular among many borrowers.
- ICICI Bank
ICICI Bank offers a home loan starting at 8.60% interest rate per annum. The loan application procedure by the bank can be easily done online and made easy and convenient for borrowers.
- Bank of Baroda
With interest rates starting at 8.50% per annum, home loans from the Bank of Baroda are the cheapest in the market. The bank also offers a 0.25% discount for women borrowers under its Baroda Home Loan scheme.
- Punjab National Bank (PNB)
The home loan rates from PNB start at 8.65% per annum, with flexible repayment options and no hidden charges. The transparent loan policies of the bank attract many first-time homebuyers.
- Union Bank of India
Union Bank starts its interest rates at 8.50% p.a. It also provides pre-approved home loans to existing customers, which helps ease the loan approval process.
- Kotak Mahindra Bank
One of the most customer-centric banking services available, Kotak Mahindra Bank offers loans for purchasing a home, starting from 8.55% p.a. Borrowers can enjoy other benefits that include no prepayment charge.
- Ujjivan Small Finance Bank
For cheap home loans, Ujjivan SFB comes with interest rates beginning with 8.75% per annum, and the best for low and middle-income groups.
- Bajaj Housing Finance Limited
Bajaj Housing Finance is an NBFC, but it still gives competition to the interest rates by starting from 8.70% per annum and even has flexible loan tenors and minimal documentation requirements.
- LIC Housing Finance Limited
LIC Housing Finance Limited (LIC HFL) is an esteemed NBFC, and its home loan interest rate begins at 8.65% per annum. It focuses significantly on satisfying customers and offers specific types of loans to salaried and self-employed people. For more details, you can explore LIC HFL home loan offers.
- Axis Bank
The interest rates for home loans from Axis Bank begin at 8.75% per annum and come with special schemes for salaried and self-employed individuals to cater to varied borrowing needs.
| Banks/NBFCs | Interest Rate |
| SBI | 8.50% |
| HDFC | 8.55% |
| ICICI Bank | 8.60% |
| Bank of Baroda | 8.50% |
| PNB | 8.65% |
| Union Bank of India | 8.50% |
| Kotak Mahindra Bank | 8.55% |
| Ujjivan Small Finance Bank | 8.75% |
| Bajaj Housing Finance Limited | 8.70% |
| LIC Housing Finance Limited | 8.65% |
| Axis Bank | 8.75% |
2 Can you lower your home loan interest rate?
Yes, it is possible to lower your home loan interest rate, and it isn’t solely dependent on the lender. Here are some ways to reduce your home loan interest burden:
- Credit score improvementÂ
Your credit score significantly impacts the interest rate. Regularly check your score and rectify errors, if any. Repaying debts on time and maintaining a low credit utilization ratio can improve your score over time.
- Balance transferÂ
If you are already repaying a home loan at a higher rate, consider transferring your loan balance to a lender offering lower rates. Many banks provide this facility with minimal processing fees. However, carefully weigh the pros and cons of balance transfer before making a decision.
- Increase your down payment
Making a higher percentage of the property value as a down payment reduces the amount of the loan and consequently reduces the interest payable.
- Negotiate with your lender
If you have been banking with a particular bank for years, don’t hesitate to ask for better terms. The banks will often offer some concessions to loyal customers who have a good credit history.
- Shorten your loan tenure
Although the monthly EMIs might go up, a short tenure can cut down the interest outflow to a large extent.
- Utilize special schemes
There are special schemes available for female borrowers, government employees, and senior citizens. Grab these opportunities to save on interest rates.
3 Other factors to keep in mind
- Processing fees and hidden charges
While taking interest rates into consideration, do not forget to pay attention to processing fees and hidden charges that can drive up the total cost of your loan.
- Prepayment Options
Select a loan that does not charge you heavily for prepayment. This way, you can save on interest if you choose to pay the loan early.
- Loan Insurance
Some banks tie home loans with insurance policies. Consider whether this is advantageous for you or not, as it may increase the cost.
4 Summing up
Getting the lowest home loan interest rate involves extensive research and a strategic approach. First, compare the rates offered by major banks and NBFCs, and then find ways to improve your eligibility for better terms. Once you improve your credit score, opt for a balance transfer, save enough to make a large down payment, or use special schemes for interest reduction, you are reducing your interest burden significantly.
A home loan is one type of long-term financial commitment, so take your own time to evaluate all sides before making a decision. With proper planning, you can make your dream of owning a home come true without putting too much pressure on your finances.
