Home Loan Interest Rates for All Banks in November 2024

Finding a Home Loan with features and interest rates that work in your favor, can be a daunting task. The right home loan will help you stabilise your finances and will offer flexible terms and conditions at a competitive home loan interest rate.

In this article, we will compare in depth the various home loan offerings available in the market. We will also discuss the interest rates and help you make an informed decision about the home loan you need to take.

Latest Home Loan Interest Rates All Banks in 2024

There are several banks in India presently offering house loans to customers. Let’s have a look at the latest housing loan interest rates provided by different banks in the country:

Bank	Interest Rates (per annum)
HDFC Bank	8.40% - 9.00%
ICICI Bank	9.00% – 10.05%
Axis Bank	9.00% – 9.40%
Bank of Baroda	9.15% onwards
Punjab National Bank	8.75% – 11.25%
Citibank	8% onwards
Canara Bank	9.25% - 10.95%
State Bank of India	8.50% onwards
Bank of Maharashtra	8..60% onwards
Godrej Finance	8.64% onwards
LIC Housing Finance	8.45% onwards
Bajaj House Finance	8.60% onwards
Kotak Mahindra	8.85% – 9.40%
Union Bank of India	8.75% – 10.70%
IDBI Bank	8.75% – 11.45%
Indian Bank	8.75% - 10.40%
Central Bank of India	8.45% – 9.20%
Indiabulls Housing Finance	8.75%
Tata Capital	8.95%
Federal Bank	10.15% – 10.30%

Detailed Guide on Housing Loan in 2024 for All Banks

In 2024, obtaining a housing loan has become an increasingly popular option for individuals looking to purchase or invest in real estate. Current home loan interest rates in India are hovering around 8.30% to 8.75%, with some lenders offering slightly lower rates for well-qualified borrowers. With the rising cost of properties and the desire for homeownership, many people turn to banks and financial institutions to secure the necessary funds. Housing loans, also known as mortgages, are long-term loans specifically designed to assist individuals in purchasing or constructing a residential property.

1. HDFC Bank

HDFC Bank offers the best home loan interest rates, flexible repayment options, and loan amounts tailored to your needs, making it easier for you to fulfil your dream of owning a home. Enjoy hassle-free processing and dedicated customer support throughout your home loan journey with HDFC Bank.

• Interest Rates: HDFC Bank provides the best home loan interest rates, tailored for both salaried and self-employed individuals.
  • For Salaried: Interest rates begin at 8.45% p.a.
  • For Self-employed: Begins at 8.50% p.a.

• Loan Amount: Ranges from Rs. 1 lakh to Rs. 10 crores
• Loan Tenure: Up to 30 years
• Processing Fees: The processing fees are either ₹3000 or up to 0.50% of the loan amount.
• Eligibility Criteria: The eligibility criteria for acquiring the loan are age, income, credit score, and employment stability, ensuring a comprehensive evaluation process.

2. ICICI Bank

With competitive interest rates and a flexible tenure of up to 30 years, ICICI Bank ensures that your loan fits your financial goals. The minimal documentation requirement makes the application process hassle-free, while the digital sanction enables the swift transfer of the loan. Additionally, you can enhance your loan with a Top Up Loan of up to 100%, maximising your borrowing potential. Trust ICICI Bank to make your home ownership journey seamless and rewarding.

• Interest Rates: The new home loan interest rates provided by ICICI Bank are designed to fulfil your dreams of owning a home with its attractive features and benefits. 
  • For salaried: The new home loan interest rates provided by ICICI Bank start at 9.25% p.a. for salaried individuals
  • For self-employed: for self-employed home loan interest rates start at 9.40% p.a.
• Loan Amount: Range from Rs. 5 lacs to Rs. 1 crore
• Loan Tenure: Can extend up to 30 years
• Processing Fees: Processing fees charged by the bank are ₹3000  or 0.50-2.00% of the loan amount.
• Eligibility Criteria: The eligibility criteria include age, income, credit score, and employment stability.

3. Axis Bank

Axis Bank offers the perfect solution for aspiring homeowners with their comprehensive Home Loan offerings. Enjoy smaller EMIs starting from Rs. 3 lakhs, attractive interest rates, flexible repayment options, and the choice between fixed and floating rates. Benefit from a hassle-free application process, doorstep service, and the freedom to prepay without any charges. Notably, the absence of any prepayment charges empowers borrowers with the freedom to settle their loan ahead of schedule, if they choose to do so.

• Interest Rates: Axis Bank provides highly competitive interest rates for housing loans that cater to the needs of both salaried and self-employed individuals.
  • For salaried: starting at 8.75% p.a.
  • For self-employed: 8.85% - 9.15% p.a.
• Loan Amount: Up to Rs. 5 crores.
• Loan Tenure: The bank offers flexible tenure options, allowing borrowers to choose between a floating interest rate with a maximum tenure of 30 years or a fixed interest rate with a tenure of 20 years.
• Processing Fees: 1% of the loan amount.
• Eligibility Criteria: To ensure eligibility, the bank evaluates various factors including age, income, credit score, and employment stability. This comprehensive evaluation process ensures that qualified applicants can avail themselves of the bank's housing loan services without any hassle.

4. Bank of Baroda

Bank of Baroda’s home loan, known as Baroda Home Loan, offers a range of benefits to make your home ownership journey smooth and affordable. They offer low-interest rates, minimal processing charges, and higher loan amounts for affordable financing. Enjoy a free credit card, longer tenures, and the flexibility of easy top-up loans for future needs. You can achieve your dream of homeownership with ease and convenience.

• Interest Rates: Bank of Baroda is one of the leading players in the market providing the best home loan interest rates.
  • For salaried: Starts at 8.60% p.a.
  • For self-employed: Starts at 8.60% p.a.
• Loan Amount: Up to Rs. 20 crores
• Loan Tenure: Up to 30 years
• Processing Fees: Up to 0.25% of the loan amount
• Eligibility Criteria: Eligibility criteria include age, income, credit score, and employment stability.

5. Punjab National Bank

Punjab National Bank's home loan variant offers borrowers the advantage of substantial interest savings by allowing them to deposit their surplus funds in the overdraft account and withdraw the same as per their needs. Eligible customers, including existing housing loan borrowers, can avail of this facility for various purposes except for the purchase of land/plots. 

• Interest Rates: Punjab National Bank offers competitive home loan interest rates to their customers.
  • For salaried: Starts at 8.75% p.a.
  • For self-employed: Begins at 8.80% p.a.
• Loan Amount: Ranges from Rs. 8 lacs to Rs. 35 lacs
• Loan Tenure: Up to 30 years
• Processing Fees: The processing fees charged by the bank are 0.50% of the loan amount and can go up to ₹50,000. 
• Eligibility Criteria: The eligibility criteria include age, income, credit score, and employment stability.

6. Citibank

Citibank recognizes that individuals have varying mortgage needs throughout their lives. It offers a diverse range of mortgage products that cater to your specific aspirations. Whether you're purchasing a new home, renovating your current residence, investing in property, or refinancing an existing loan, Citibank provides an extensive selection of mortgage loan solutions with competitive rates. Its mortgage products are designed to align with your lifestyle and financial objectives, helping you turn your dream home into a reality.

• Interest Rates: Citibank is among the few banks providing the cheapest home loan interest rate.
  • For salaried: Start at 7.45% p.a.
  • For self-employed: Start at 7.45% p.a.
• Loan Amount: Range from Rs. 10 lacs to Rs. 10 crores
• Loan Tenure: Up to 25 years
• Processing Fees: Citibank charges up to 0.50% of the loan amount for its processing fees.
• Eligibility Criteria: The eligibility criteria for availing the home loans are factors such as minimum age of 21, income, credit score, and employment stability.

7. Canara Bank

Canara Bank's home loan offers a range of features and benefits to make your home-buying journey easier. With no requirement for a guarantor, flexible repayment options spanning up to 30 years, and a convenient prepayment facility, you have the freedom to customize your loan as per your financial plan. Additionally, Canara Bank ensures quick loan approval, allowing you to fulfil your dream of owning a home without unnecessary delays.

• Interest Rates: One of the best home loan interest rates of 2024 is offered by the Canara Bank.
  • For salaried: 9.8% - 10.30% p.a
  • For self-employed: 9.8% - 10.30% p.a
• Loan Amount: Maximum loan amount is ₹50 lakhs
• Loan Tenure: Up to 30 years
• Processing Fees: The processing fees are up to 0.50% of the loan amount, with a maximum of ₹10,000 and a minimum of ₹1,500.
• Eligibility Criteria: To be eligible for a home loan from Canara Bank, salaried individuals need a minimum of 2 years of aggregated regular and continuous service, with at least 6 months completed in the current organisation. Business owners, professionals, and self-employed individuals should have a minimum business or professional experience of 3 years. Borrowers should be below the age of 60 at the time of loan availing, aiming to clear the loan before reaching the age of 75. Certain stipulations may apply to individuals above the age of 60.

8. State Bank of India

SBI provides home loans that offer several advantages to borrowers. With SBI Home Loans, you can benefit from attractive interest rates, ensuring affordability and ease in your pocket. The repayment options are flexible and can be customized to suit your specific needs, giving you the flexibility to manage your finances. SBI ensures transparency by eliminating hidden charges, allowing you to plan your budget effectively. Additionally, SBI provides expert legal and technical counselling services to assist you in making informed decisions during the home-buying process, ensuring a smooth and well-informed home loan experience.

• Interest Rates: SBI’s home loan interest rates for 2024 are provided at attractive interest rates.
  • For salaried: start at 8.50% p.a
  • For self-employed: 9.25% - 10.45%
• Loan Amount: The loan amount is provided to the borrower according to their eligibility.
• Loan Tenure: 30 years maximum
• Processing Fees: The processing fees charged by the bank range from 0.35 - 0.50% of the loan amount.
• Eligibility Criteria: Eligibility criteria consider factors such as age, salary, the value of the property, credit score, and employment stability. The borrower should be an Indian citizen. The eligibility criteria for women borrowers are identical to those for other applicants. However, women borrowers are granted a 0.05% interest rate concession.

9. Bank of Maharashtra

With Bank of Maharashtra’s low EMIs and higher loan amounts, you can comfortably finance your dream home. The "Track My Loan" feature enables you to stay updated on the status of your loan application. The bank has a list of approved projects, ensuring a seamless process. With simplified disbursements, no hidden charges, and no prepayment penalty, the Bank of Maharashtra provides transparency and flexibility, making your home loan experience hassle-free.

• Interest Rates: Bank of Maharashtra's home loan offers a range of benefits to make your home ownership journey smoother.
  • For salaried: Starts at 8.60% p.a
  • For self-employed: Starts at 8.80%.
• Loan Amount: Upto ₹15 lacs of the home loan amount is provided to borrowers from rural areas and around ₹25 lacs to semi-urban borrowers.
• Loan Tenure: Up to 30 years/up to the borrower is 75 years old
• Processing Fees: Up to 0.15% of the loan amount is charged by the bank as processing fees, however, the maximum amount is ₹25,000.
• Eligibility Criteria: The eligibility criteria for obtaining a home loan from the Bank of Maharashtra include the maximum loan amount being determined as the lowest value among the loan amount assessed based on Permissible Deduction norms, the maximum permissible LTV ratio, and the loan amount requested.

10. Godrej Finance

Godrej Finance offers a versatile home loan scheme that caters to various housing needs. Whether you're purchasing, constructing, renovating, or extending a house, Godrej's home loan is designed to meet your requirements. With unique features such as 'Design your EMI' and 'Flexible Payment Plan' for under-construction properties, along with 'EMI Break' for convenient repayment, and 'Parallel Funding' for staggered down payments, Godrej Finance ensures that your home loan experience is tailored to your financial convenience and affordability.

• Interest Rates: Godrej Finance offers one of the lowest housing loan interest rates in the Indian market.
  • For salaried: Starts at 8.64% p.a.
  • For self-employed: Starts at 9.14% p.a.
• Loan Amount: The loan amount provided is based on the borrower's credit profile, in accordance with the RBI's loan-to-value (LTV) ratio caps. 
• Loan Tenure: Up to 30 years.
• Processing Fees: The processing fee for the home loan is 2% of the loan amount, and for those opting for a flexible loan, it is 3% of the loan amount.
• Eligibility Criteria: To be eligible for a home loan, applicants must hold Indian citizenship and should be between the 23 to 62 age group, have a stable income, a good credit score, and secure employment.

11. LIC Housing Finance

LIC Housing Finance Ltd provides a diverse range of home loan solutions at highly competitive interest rates. The housing loans are designed to meet the requirements of various customer segments, including salaried individuals, self-employed professionals, NRIs, and more. With flexible terms, easy documentation, and a maximum tenure of 30 years or until the borrower turns 60, we offer among the lowest interest rates in the market. The home loans cover the construction, purchase, repair, or renovation of properties from private developers or housing boards. 

• Interest Rates: The latest home loan interest rate offered by LIC Housing Finance is highly competitive.
  • For salaried: Salaried individuals can enjoy interest rates starting from 8.45% per annum.
  • For self-employed:  Self-employed individuals have access to home loan home rates starting at 8.60% per annum.
• Loan Amount: Ranges from Rs. 1 lac to Rs. 5 crores
• Loan Tenure: Up to 30 years. 
• Processing Fees: The processing fees begin at 0.5% and may increase up to 7% of the loan amount.
• Eligibility Criteria: To be eligible, individuals must be between 21 and 50 years old, have a minimum monthly income of ₹25,000 and an annual income of ₹3,00,000, possess a credit score above 600, and have employment stability.  

12. Bajaj House Finance

Bajaj Housing Finance Ltd offers a range of attractive features and benefits for home loans. With a competitive interest rate starting at 8.60% x  p.a., borrowers can enjoy affordable EMIs as low as Rs.776/Lakh x . The flexibility continues with options like home loan balance transfer, repayment tenor of up to 30 years, the hassle-free application process with doorstep document pick-up, zero part-prepayment and foreclosure charges, and the choice to link the interest rate to an external benchmark. 

• Interest Rates: Bajaj House Finance offers some of the best home loan interest rates in the market.
  • For salaried: Salaried individuals can enjoy an interest rate as low as 8.60% p.a.
  • For self-employed: Start at 9.10% p.a
• Loan Amount:  ₹5 crores or higher
• Loan Tenure: Up to 30 years
• Processing Fees: Bajaj House Finance charges a nominal processing fee of 0.50% of the loan amount, and additional fees may apply for legal and technical evaluations.
• Eligibility Criteria: To be eligible for a home loan from Bajaj House Finance, the borrower must be an Indian national. Salaried individuals should fall within the age group of 23-62 years, while self-employed individuals should be between 25-70 years. Additionally, it is recommended to have a CIBIL score of 750 or higher.

13. Kotak Mahindra

Kotak Mahindra’s home loan offers a range of features and benefits to make your home-buying experience smooth and convenient. They offer attractive interest rates linked to RBI's repo rates, a hassle-free application process with minimal documentation, and a 50% discount on processing fees for digital applications. Customise your repayment tenure up to 25 years for added flexibility. Experience a smooth and convenient home-buying journey with Kotak Mahindra.

• Interest Rates: Kotak Mahindra is one of the lowest home loan interest rate banks,  offering attractive home loan interest rates for both salaried and self-employed individuals in 2024.
  • For salaried: Starts at 8.85% p.a.
  • For self-employed: Begins at 8.90% p.a. 
• Loan Amount: Vary from Rs. 5 lakhs to Rs. 5 crores
• Loan Tenure: Up to 25 years
• Processing Fees: Kotak Mahindra charges a processing fee is 0.5% for salaried individuals and for self-employed people it is 1% of the amount. 
• Eligibility Criteria: The eligibility criteria for a home loan by Kotak Mahindra Bank are as follows: for salaried individuals, the age requirement is between 18 and 60 years, while for self-employed individuals, it is between 18 and 65 years. Indian residents in Delhi, Mumbai, Bangalore, Pune, and Chennai must have a minimum gross income of Rs. 20,000 per month, while residents of other cities should have a minimum income of Rs. 15,000 per month. 

14. Union Bank of India

With Union Bank of India’s doorstep service and e-approval, the loan application process is convenient and hassle-free. Enjoy the flexibility of part-payment options and the convenience of a top-up loan. Kotak Mahindra also provides the advantage of no requirement for a guarantor and the option of balance transfer for existing home loans, ensuring a seamless and rewarding borrowing experience.

• Interest Rates: Union Bank of India’s home loan offers a range of features and benefits to help you finance your dream home.
  • For salaried: Starts at 8.60% p.a.
  • For self-employed: Starts at 8.60% p.a.
• Loan Amount: Ranges from Rs. 1 lac to Rs. 10 crores
• Loan Tenure: Up to 30 years
• Processing Fees: To facilitate the loan process, the bank charges a processing fee of 0.50% of the loan amount, capped at Rs. 15,000+ GST.
• Eligibility Criteria:  Eligibility requirements include a minimum age of 18 years, a maximum age limit of 75 years, and a steady source of income. Additionally, applicants must be Indian citizens or NRIs to qualify for the home loan. 

15. IDBI Bank

IDBI Bank offers a wide spectrum of home loan services designed to meet the unique requirements of prospective homeowners. With their profound industry knowledge and expertise, IDBI Bank guides individuals seamlessly through the intricacies of the home loan process, ensuring transparency and clarity every step of the way. The bank's home loan solutions are characterized by their feature-rich offerings, providing customers with the flexibility and convenience they desire. From takeover facilities to the availability of additional funds and extended loan tenures, IDBI Bank stands as a reliable partner in the journey towards homeownership.

• Interest Rates:
  • For salaried: Starts at 8.64% p.a.
  • For self-employed: Begins at 8.64% p.a.
• Loan Amount: The Maximum Loan Amount offered by IDBI Bank caters to diverse financial needs. For loans up to Rs. 30 lakh, customers can avail of up to 90% of the property's value. For loan amounts ranging from Rs. 30 lakh to Rs. 75 lakh, the bank provides up to 80% of the property's value. In cases where the loan exceeds Rs. 75 lakh, customers can access up to 75% of the property's value. 
• Loan Tenure: Up to 30 years
• Processing Fees: 0.50% of the loan amount (Plus applicable taxes)

Rs 2500(plus applicable taxes) to be collected at login and

balance at the time of sanction

• Eligibility Criteria: Minimum age: 22 years for salaried, 25 years for self-employed. Maximum age (At Loan Maturity): 70/65 years.

16. Indian Bank

The current home loan interest rates today remain competitive, making it an opportune time for prospective buyers to explore their financing options. Indian Bank offers home loans for various needs, with competitive rates starting at 8.45% p.a. They provide flexible loan amounts and tenures to suit your requirements. The application process is hassle-free with minimal fees. Eligibility criteria are broad, with a minimum age of 18. Make your dream home a reality with Indian Bank. 

• Interest Rates:
  • For salaried: Starts at 8.45% p.a.
  • For self-employed: Begins at 9.20% p.a.
• Loan Amount: Varies based on the applicant's profile and income.
• Loan Tenure: Maximum of 30 years for general home loans. The repayment period can be extended for takeover or balance transfer.
• Processing Fees: Varies based on the loan product.
• Eligibility Criteria: Salaried, businessmen, professionals, and pensioners are eligible.
  • Minimum entry age of 18 years.

17. Indiabulls Home Loans

Indiabulls Home Loans offers competitive interest rates and flexible repayment options up to 30 years, making homeownership more affordable and convenient. Benefit from swift approvals and hassle-free processing, with a diverse range of loan products including home purchases, balance transfers, and top-up loans. Trust their excellent customer service, supported by a knowledgeable team, for a seamless home-buying experience.

• Interest Rate:
  • For salaried: Starts at 9.75% p.a.
  • For self-employed: Begins at 9.95% p.a.
• Loan Amount: Up to 90% of the property value.
• Loan Tenure: Up to 30 years.
• Processing Fees: Up to 1% of the loan amount.
• Eligibility Criteria:
  • Minimum age: 21 years
  • Maximum age: 65 years
  • Indian nationality
  • Good credit score
  • Stable income

18. Tata Capital

Tata Capital, a leading financial services company in India, distinguishes itself by offering a wide range of home loan products and services with competitive interest rates, flexible repayment options, and efficient loan processing. Their home loan services include tailored repayment plans for up to 30 years, quick and streamlined processing, and a comprehensive range of loan products, including home purchase loans, balance transfer loans, and top-up loans. Moreover, Tata Capital is renowned for its excellent customer service, boasting a team of experienced and knowledgeable representatives ready to assist customers with their home loan needs.

• Interest Rates:
  • For salaried: Starts at 8.70% p.a.
  • For self-employed: Begins at 8.85% p.a.
• Loan Amount: 5 lakhs to 5 crores
• Loan Tenure: Up to 30 years.
• Processing Fees:
  • Salaried: Starting @ 0.10% of Loan Amount + GST
  • Self-Employed: Starting @ 0.20% of Loan Amount + GST
• Eligibility Criteria:
  • Salaried: Min. salary of Rs. 30,000 with at least 2 years of work experience
  • Self-Employed: 3 years of experience in the same business

19. Federal Bank

Federal Bank offers competitive interest rates and hassle-free solutions for various housing needs. Enjoy maximum funding of up to 85% of the project cost, flexible repayment tenure of up to 360 months, and repayment holidays of up to 36 months. Benefit from streamlined processing with minimal paperwork and speedy loan approval. Avail financial benefits like no pre-closure charges, low processing fees, and the option for funding life insurance. 

• Interest Rates:
  • For Salaried: Starting at 8.80% p.a. (Repo Rate + 2.30)
  • For Self-employed: Beginning at 8.80% p.a. (Repo Rate + 2.30)
• Loan Amount: Avail loans up to Rs. 1500 Lakhs.
• Loan Tenure: Tailored to your requirements, with a maximum of 30 years for resident customers and 20 years for NRI customers.
• Processing Fees: Competitive rates, with a minimum of INR 3,000 + GST and a maximum of INR 7,500 + GST.
• Eligibility Criteria: Housing loans are available to individuals and Persons of Indian Origin (PIO) who provide primary or collateral security of immovable property in India. PIOs should hold a valid PIO Card accompanied by a valid foreign passport, with a close relative residing in India joining as a co-obligate to the loan. The specific documentation requirements may vary based on your employment status and residential status. Please refer to our website for detailed information.

20. IIFL Home Finance Limited

IIFL Home Finance Limited provides hassle-free Home Loans with quick approval, tailored for first-time homebuyers. Their customer-centric approach offers digital loan approval, competitive interest rates, and easy EMIs. Eligibility extends to Indian citizens aged 18 to 75, whether salaried or self-employed, with varying interest rates based on credit scores. You can enjoy flexibility with Floating Interest-based Home Loans.

• Interest Rates:
  • For salaried: Starts at 8.90% p.a.
  • For self-employed: Begins at 8.90% p.a.
• Loan Amount: Varies based on eligibility criteria.
• Loan Tenure: Up to 25 years.
• Processing Fees: Up to 1.75% of the loan amount.
• Eligibility Criteria: Indian citizens aged 18 to 75, both salaried and self-employed, can apply for a Home Loan from IIFL Home Finance Limited. The rate of interest may vary depending on factors such as credit score, borrower profile, loan amount, and property type.

Varieties of Home Loan Rates Offered by Banks

When it comes to home loans, banks offer different types of interest rates to borrowers. The two most common types of interest on housing loans are floating interest rates and fixed interest rates.

Floating Interest Rates

Floating home loan interest rates are dynamic and influenced by market conditions, resulting in fluctuations over the loan duration. Typically tied to reference rates like the MCLR or repo rate, they offer the advantage of potential reductions in interest rates, allowing borrowers to benefit from lower EMIs. However, the downside of this lies in the possibility of home loan rates rising, which could result in higher monthly instalments. It is essential for borrowers to carefully evaluate their risk tolerance and financial goals before opting for a floating interest rate.

Advantages of Floating Interest Rates

• Potential for Lower EMIs: If interest rates decrease, borrowers may enjoy reduced monthly instalments.
• Flexibility: Floating rates often offer more flexibility in terms of prepayment and foreclosure options.
• Initial Cost: Floating interest rates usually have lower initial costs compared to fixed rates.

Disadvantages of Floating Interest Rates:

• Uncertainty: The fluctuating nature of floating rates can make it challenging to plan finances, as the EMI amount may change periodically.
• Risk of Rate Hikes: If interest rates rise, borrowers may experience an increase in monthly instalments, potentially affecting their budget.
• Lack of Stability: Floating rates do not offer the stability and predictability of fixed rates, making long-term financial planning more challenging.

Fixed Interest Rates

Fixed interest rates offer borrowers the advantage of stability and predictability throughout the loan tenure. These housing loan interest rates remain constant and are not influenced by market fluctuations or changes in benchmark rates. 

Although fixed rates provide peace of mind with predictable EMIs, they often come at a slightly higher initial cost compared to floating rates. This ensures that borrowers can budget and plan their finances effectively without worrying about potential changes in interest rates impacting their monthly repayments.

Advantages of Fixed Interest Rates

1. Predictable EMIs: Borrowers can plan their monthly budget with confidence, as the EMI amount remains constant.

2. Protection from Rate Increases: Even if interest rates rise in the market, borrowers with fixed rates are shielded from such hikes.

3. Financial Stability: Fixed rates provide stability and allow for easier financial planning, especially for those with a fixed income.

Disadvantages of Fixed Interest Rates

1. Limited Benefit from Decreasing Rates: If interest rates drop, borrowers with fixed rates are unable to take advantage of the lower rates.
2. Prepayment Charges: Fixed-rate loans may have stricter prepayment penalties compared to floating-rate loans.
3. Higher Initial Cost: Fixed interest rates often come with higher initial costs and may require a larger upfront investment.

Below, find detailed home loan rate comparisons, specifically focusing on the key distinctions between floating and fixed interest rates.

Factor	Floating Interest Rates	Fixed Interest Rates
Interest Rate Fluctuation	Varies with market conditions	Remains constant throughout the loan
Potential for Lower EMIs	Yes	No
Predictable EMIs	No	Yes
Protection from Hikes	No	Yes
Prepayment Flexibility	Generally more flexible	May have stricter penalties

When choosing between floating and fixed interest rates, borrowers must consider their risk appetite, financial goals, and market conditions to make an informed decision that aligns with their long-term financial well-being.

Ways to Calculate Home Loan Interest Rates in 2024

Accurately calculating home loan interest rates is vital for borrowers as it allows them to grasp the financial implications of their borrowing decisions. Among the prevailing interest rate options, fixed and floating rates are the most common. Exploring both types and understanding how to calculate the effective interest rate will enable borrowers to make informed choices and find the best home loan interest rates tailored to their needs.

Fixed Interest Rate Calculation:

With a fixed interest rate, the rate remains constant throughout the loan tenure. To calculate the interest, you can use the following formula–

Interest Amount  = (Loan Amount x Interest Rate x Loan Tenure) / 100

For example, let's consider a home loan amount of INR 50,00,000 with a fixed interest rate of 9% per annum and a loan tenure of 20 years. Applying the formula:

Interest Amount = (50,00,000  x  9  x  20) / 100 = 90,00,000/-

Therefore, the total interest payable over the loan tenure would be INR 90,00,000.

Floating Interest Rate Calculation:

A floating interest rate, commonly referred to as a variable interest rate, changes according to market circumstances. The calculation of the interest amount can be slightly complex due to the varying rates. However, the most common method is the reducing balance method, which recalculates the interest amount each month based on the outstanding principal. The formula is as follows:

Interest Amount = (Outstanding Principal  x  Interest Rate  x  Number of Days) / (365 or 360)

For example, let's consider a personal loan with the following details: 

Outstanding Principal: INR 5,00,000 

Interest Rate: 12% per annum (floating rate) 

Number of Days: 365

To calculate the interest amount using the reducing balance method, we need to determine the outstanding principal for each month. Let's assume that after 3 months, the outstanding principal reduces to INR 4,50,000.

Using the formula:

Interest Amount = (Outstanding Principal  x  Interest Rate  x  Number of Days) / 365

For the first 3 months:

Interest Amount = (5,00,000  x  0.12  x  90) / 365 = INR 14,794.52

For the remaining 9 months (assuming constant outstanding principal of INR 4,50,000): 

Interest Amount = (4,50,000  x  0.12  x  275) / 365 = INR 30,616.44

Total Interest Amount = INR 14,794.52 + INR 30,616.44 = INR 45,410.96

Therefore, the total interest payable over the loan tenure would be INR 45,410.96.

Effective Interest Rates

The effective interest rate includes all applicable charges and fees, and provides a comprehensive understanding of the true cost of borrowing. By factoring in these components, borrowers can make informed decisions to secure the best housing loan interest rate. The formula to calculate the effective interest rate is as follows:

Effective Interest Rate = [(1 + Nominal Interest Rate / n) ^ n] - 1

Here, 'n' represents the number of compounding periods within a year.

By using the effective interest rate formula, borrowers can determine the true cost of their loan, enabling better financial planning and comparison between different loan options.

For example: 

Nominal Interest Rate: 5% per annum 

Number of compounding periods within a year (n): 12

To calculate the effective interest rate:

Effective Interest Rate = [(1 + 5% / 12) ^ 12] - 1

Now, let's substitute the values and perform the calculation:

Effective Interest Rate = [(1 + 0.05 / 12) ^ 12] - 1

Calculating the value within the brackets:

(1 + 0.05 / 12) = 1.0041666667

Raising it to the power of 12:

(1.0041666667) ^ 12 = 1.0511618974

Subtracting 1 from the result:

1.0511618974 - 1 = 0.0511618974

Therefore, the effective interest rate in this example is approximately 5.12%.

By using the formula for the effective interest rate, borrowers can determine the true cost of their loan and compare different loan options accurately, aiding in better financial planning and decision-making.

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What are the Factors Determining the Home Loan Interest Rates?

When considering a home loan, it's essential to understand the factors that determine the interest rates. The latest home loan interest rates offered by lenders play a pivotal role in the overall cost and affordability of the loan. Several key factors come into play when lenders set home loan interest rates, each influencing the borrower's borrowing experience and financial commitments.

MCLR Rates

MCLR rates, an acronym for Marginal Cost of Funds Based Lending Rate, serve as a crucial benchmark rate set by banks. It signifies the minimum lending rate at which banks can provide loans. As MCLR rates fluctuate, they have a direct impact on the prevailing home loan interest rates, influencing the affordability and cost of borrowing for potential homebuyers.

Type of Interest

When it comes to home loans, borrowers have the option to select either fixed or floating interest rates. Opting for a fixed interest rate provides borrowers with stability since it remains consistent throughout the entire loan tenure. In contrast, floating interest rates fluctuate in accordance with market conditions, offering potential flexibility but introducing a higher degree of uncertainty. When deciding between these two interest rate options, borrowers should carefully evaluate their financial preferences and risk tolerance to make an informed choice.

Loan-to-Value (LTV) Ratio

The percentage of a property's worth that can be financed with a mortgage is known as the loan-to-value (LTV) ratio. It is risky for lenders when the LTV ratio is higher, which could result in higher interest rates. In contrast, smaller LTV percentages typically attract lower interest rates, reducing the risk to lenders.

Credit Score

A good credit score demonstrates creditworthiness and financial responsibility. Lenders consider credit scores when determining interest rates. A higher credit score often translates to better interest rates, as it signifies a lower risk profile for the borrower.

Location of the Property

The location of the property can impact home loan interest rates. Lenders may categorize regions based on factors such as market demand, economic stability, and potential risk. Properties in prime locations or cities with high growth potential may attract more favourable interest rates.

Job Profile

The borrower's employment profile and income stability also influence interest rates. Lenders assess factors such as job type, salary consistency, and employment history to gauge the borrower's repayment capacity. Stable employment in reputed organizations may lead to better interest rates.

Tenure of the Loan

The loan tenure, or the duration of the loan, can affect the interest rates. Longer loan tenures may have slightly higher interest rates compared to shorter tenures. This is because longer tenures increase the risk exposure for lenders.

Tips to Get a Home Loan for a Lower Interest Rate

Here are some valuable tips that can help you navigate the process and potentially obtain a more favourable interest rate on your home loan. Whether you are a first-time homebuyer or looking to refinance an existing mortgage, these tips can be beneficial in saving you money and making your dream of owning a home a reality:

Get your Credit Score in Good Shape

Your credit score is one of the most important factors that lenders will consider when determining your interest rate. The better your credit score, the lower the interest rate you will have to pay. You can check your credit score online for free and take steps to improve it if necessary.

Make a Large Down Payment

The more money you put down, the lower your loan amount will be, which will result in a lower interest rate. If you can afford to make a large down payment, it will be well worth it in the long run.

Shop Around for the Best Interest Rate

Don't just go with the first lender you talk to. Compare interest rates from multiple lenders to get the best deal. You can use online tools to compare interest rates from different lenders.

Consider a Fixed-rate or Floating-rate Loan

Fixed-rate loans offer a consistent interest rate throughout the life of the loan, while floating-rate loans have an interest rate that can fluctuate. If you're looking for stability, a fixed-rate loan may be a good option. However, if you're willing to take on some risk, a floating-rate loan could save you money in the long run.

Negotiate with your Lender:

Once you've been pre-approved for a loan, don't be afraid to negotiate with your lender to get a lower interest rate. You may be able to get a better deal if you're willing to shop around or if you have good credit.

Consider Refinancing your Loan:

If you've had your home loan for a while, you may be able to save money by refinancing to a lower interest rate. However, there are fees associated with refinancing, so you'll need to make sure that the savings will outweigh the costs.

How Can NoBroker Help?

Understanding home loan interest rates is essential when embarking on the journey of homeownership. Homebuyers should take the time to research, compare, and negotiate can ensure finding the best possible deal. 

However, the fluctuating nature of floating interest rates can make financial planning more challenging and expose borrowers to the risk of rate hikes.

That's where Nobroker's home loan experts can lend a helping hand. With extensive knowledge and expertise, our specialists can guide you through the complexities of home loan interest rates, helping you make informed decisions and secure the best possible deal for your dream home. Say goodbye to the worries of rate hikes and trust Nobroker Home Loan services to simplify your home loan journey.

Disclaimer

This article is solely for educational purposes. NoBroker doesn't take any responsibility for the information or claims made in the blog.

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