If you're keen on buying a home and want to apply for a housing loan, there's one thing you'll want to know — which bank has the lowest interest on home loans? Since home loan rates fluctuate from time to time (as it depends on the repo rate, i.e. the rate at which the regulator lends money to commercial banks), you need to keep one eye on the loan market to know which banks offer the cheapest housing loans. You can then check if you qualify for these loans and submit an application accordingly.
The regulatory authority revisits the repo rate (i.e. the rate at which it lends money to commercial banks) every quarter. Depending on the prevailing economic conditions, the regulator will leave the repo rate unchanged or will increase or decrease it. It impacts home loan interest rates too, and banks will adjust the rate of their borrowings accordingly.
In the current loan market (as of February 2023), some of the top banks in India offering affordable home loans are listed below.
Disclaimer: These rates are valid as of February 2023. They may be subject to changes and revisions at the bank’s discretion.
Truth be told, there are no secrets to unlocking the lowest home loan interest rates! Just a few smart tips: Compare interest rates, opt for a shorter tenure, make a higher down payment to reduce the overall burden of the loan, and so on.
A higher credit score also makes qualifying for more affordable home loan interest rates easier. Check your credit score easily using Fi's AI-driven tool — Analyser — and see if it is high enough to qualify for the lowest home loan interest rates. Though as a platform, we don't provide Home Loans yet, you can avail of instant personal loans on Fi (up to Rs. 5 Lakh).
As of February 1, 2023, the mortgage rates in India are 8.00% to 9.00% in most leading banks. However, these rates are subject to change at the banks' discretion — with economic factors like the repo rate as the benchmark.
Many factors come into play when determining your eligibility for a housing loan. Top among these are your credit score, your income level, the nature of your employment, your age and your credit history. With a good credit score and a stable job, you can avail some of the cheapest housing loans in the market.
While home loans assist in financing the purchase or construction of a house, a down payment is still typically required by lenders, including banks or housing finance companies (HFCs) because they do not offer 100% house loans. Typically, they finance around 75% to 90% of the property's cost, requiring you to contribute 10% to 25% as your share of the payment.
There are many banks that offer attractive EMI schedules for home loans such as State Bank of India, HDFC Bank, ICICI Bank, PNB Bank, Union Bank of India and Axis Bank.
It is not a common practice for banks or housing finance companies (HFCs) in India to offer such provisions. Typically, lenders finance 75% to 90% of the total property cost, and the remaining amount is the responsibility of the customer. Since 0% home loans are not available, it is advisable to compare the offerings of various financial institutions and choose the one that best meets your requirements, considering factors such as the lowest interest rate, flexible tenure, affordable EMIs, and documentation.