Home Loan Interest Rates March 2023

Home is where love resides, memories are created, friends are welcomed and family is forever so if you seeking such a thing then there are banks and other financial institution that is offering loans to buy/construct/renovate/extend your house.

A home loan is a kind of secured loan which is taken against the property and if you fail to pay it back, the lender can take your property and can sell it to another to recover the dues.

The lender will see the applicant’s income, credit history, property value and location before lending him/her the loan.

Banks Offering Lowest Home Loan Interest Rates March 2023

In India, the top most banks offering the lowest home loan. Check and compare before applying for home loan.

State Bank of India (SBI) 

Home Loan Interest Rate	Processing Fee
9.15%-10.05%	Ø  0.35% of the loan amount + GST Ø  Minimum 2000 + GST Ø  Maximum of 10000 + GST Advocate & Valuer fee  – actual expenses will be realized separately.

LIC Housing Finance (LIC HFL)  

Home Loan Interest Rate	Processing Fee
8.65% – 10.25%	Ø  For loan amount below INR 1 Crore – 0.25% of the loan amount + AT or INR 10,000 + AT. whichever is lower Ø  Loan Amount Above INR 1 Crore to Up to INR 15 Crore – INR 20,000 + AT

HDFC Ltd 

Home Loan Interest Rate	Processing Fee
8.50% – 9.60%	Ø  Salaried & Self-employed Professionals – INR 3,000,  + Taxes Ø  Self-employed Non-professionals – INR 5,000 + Taxes

PNB Housing Finance Ltd (PNBHFL)

Home Loan Interest Rate	Processing Fee
8.50% – 10.35%	INR 10,000 + GST

ICICI Bank 

Home Loan Interest Rate	Processing Fee
9.00% – 9.85%	INR 3,000 + GST

India Shelter Finance Corporation

Home Loan Interest Rate	Processing Fee
13.00%-20%	2%-3% of the loan amount (Including GST)

Axis Bank  

Home Loan Interest Rate	Processing Fee
8.75% – 14.00%	Up to 1.00% of the Loan amount subject to minimum of INR 10,000 + GST

Bank of Baroda 

Home Loan Interest Rate	Processing Fee
8.90% – 10.60%	Upto 0.50% of the loan amount or Max INR 7,500 + GST

Bank of India 

Home Loan Interest Rate	Processing Fee
8.85% – 9.15%	0.25% of the loan amount, subject to a minimum and maximum of INR 1,500 and INR 20,000, respectively

Citibank 

Home Loan Interest Rate	Processing Fee
8.45% onwards	Up to 0.40% of the loan amount + GST

IDBI Bank

Home Loan Interest Rate	Processing Fee
8.80% – 12.25%	Ø  Up to INR 5,000 + GST Ø  For inward BT irrespective of the amount & PMAY proposals – Nil

Kotak Mahindra Bank   

Home Loan Interest Rate	Processing Fee
8.85% – 9.40%	Ø  For Salarired – INR 10,000 + GST Ø  For Self-Employed/Professional – 0.25% + GST on loan amount

Piramal Capital & Housing Finance (PCHF)

Home Loan Interest Rate	Processing Fee
11% Onwards	0.10% – 0.25% of the loan amount + GST

Punjab National Bank (PNB)

Home Loan Interest Rate	Processing Fee
8.80% – 9.45%	0.35% of the loan amount, subject to a minimum and maximum of INR 2,500 and INR 15,000, respectively

Tata Capital 

Home Loan Interest Rate	Processing Fee
8.95% onwards	0.50% of the loan amount + GST

Godrej Housing Finance (GHF) 

Home Loan Interest Rate	Processing Fee
8.64% – 9.14%	Ø  Salaried – INR 999 + GST at the time of Login Ø  Self-Employed – 0.25% of the loan amount

How to Apply for a Home Loan Online?

The following are the steps to apply for the home loan

You can visit the official website of the bank.

Enter the preferred loan amount

Select your employment status and mention your  monthly income

Full name, city name, date of birth, contact number and email ID

Accept terms and conditions

Click on ‘Get Quotes’

Features & Benefits of Home Loan

The interest rate will begin from 6.70% per annum

Special rates for women borrowers

Fixed EMI for the entire loan tenure

Interest subsidy available via PMAY CLSS system

Tax exemptions up to INR 1.5 lakhs and INR 2 lakhs on the principal and interest part, respectively, throughout the loan, even if the money is used for home renovation/extension/reconstruction.

The following is a choice to  take top-up loan for the above purposes

Home loan balance transfer facility

The maximum tenure is up to 30 years

The loan amount will depend upon the outstanding balance of the existing home loan subject to LTV ratio

Processing Fee – 0.35% of the loan amount plus GST onwards

Availability of substitute income documents – ITR or annual turn over

Additional income in loan eligibility

Co-borrowers of the loan can also avail tax benefit if they are co-owners of the property.

Types of Home Loans

You can apply for different types of housing loans

Home Purchase Loan

Land Purchase Loans/Plot Loan

Home Edifice Loan

Home Improvement Loan

Home Conversion Loan

Home Extension Loan

Eligibility criteria for Home Loans

Home loan eligibility is based on income, age, credit score, property value and location, etc. The table shows general eligibility criteria at all banks/NBFCs follows.

Parameters	Salaried	Self-employed
Age	Should be between 21-60 years	Must be between 21-65 years
Income	Minimum income of INR 1, 80,000 p.a.	Minimum income of INR 1, 80,000 p.a.
Current Experience	2-3 years of current job stability	3 years of current business stability
CIBIL Score	720 or above	720 or above

With the above table you can yourself check the home loan eligibility to know whether you are eligible or not. Your CIBIL score income, age and skilled stability, property location is vital. The lender will demand a CIBIL score and if your score is above 720, the property against which you are taking loan can be approved. However, if your credit score is below CIBIL scores 720, then some NBFCs will approve your loan but will provide at high rate of interest.

Based on your salary, how much loan amount can you get?

Based on your salary, you can calculate the maximum loan amount category. Only 50% of your salary is taken to calculate your eligibility for home loan, if your salary is higher, you can apply for higher loan. If a home loan applicant is already paying an EMI, that will be deducted from 50% of the salary and the remaining amount would decide your maximum loan amount eligibility.

Lenders will calculate Fixed Obligations to Income Ratio (FOIR) based on your existing EMIs and net monthly income. The percentage of FOIR should be 75% or less. For instance, if your in-hand salary per month is Rs1,00,000 and you are currently paying a car loan EMI of INR 6000 and personal loan EMI of INR 10,000 and you want to know how much loan amount you can get for a home loan, your FOIR would be:

Your disposable income for a new loan is: INR 50,000 – INR 6,000 – INR 10,000 = INR 34,000

FOIR = Sum of existing obligations/Net take home salary*100

= ((INR 6000 + INR 10,000)/ INR 1,00,000) * 100

= (INR 16,000/ INR 1,00,000)*100

= 16%

So, lenders will approve the loan amount having monthly installment of INR 34,000 or less even for the longest tenure. Other factors such as your credit score will also help you to obtain a better agreement from the lender.

Loan to Value Ratio

Borrowers should fully aware of the loan they likely to get on their property. Most lenders especially banks follow the Loan to value ratio as given in below table

Loan Quantum	LTV
Up to INR 30 Lakh	Up to 90% of the property cost
Above INR 30 Lakh – 75 Lakh	Up to 80% of the property cost
Above INR 75 Lakh	Up to 75% of the property cost

Documents required for a home loan

Documents that are required for a home loan differ for employed and self-employed applicants. The following is the list of documents that need to be submitted along with the loan application form.

Documents required for Salaried applicants

• Identity Proof- Aadhaar Card/ Passport /PAN Card/ Voter ID Card /Driving License
• Address Proof – Passport/Aadhaar Card /Utility Bill
• Residence Ownership Proof – Property Documents/Maintenance Bill/Electricity Bill
• Income Proof – Latest 3 months Salary Slips and Form 16
• Job Continuity Proof – Current Employment Certificate /Current Job Appointment letter (if more than 2 years)/Experience Certificate (including your previous job certificate or appointment and relieving letter)
• Bank Statements – the Latest 1 year statement where your salary is getting credited
• Property Documents – Copy of agreement carry out / Sale Deed, Share Certificate, Latest Maintenance Bill, List of documents & sanction letter given by Existing Banker (If applicable)
• Advance Processing Cheque
• Investment Proof – Fixed Deposit/Shares/Fixed Assets, etc.
• Passport size photograph/s

Documents required for Self-Employed Applicants (Professionals and Non-Professionals)

• Identity Proof – Aadhaar Card/ Passport /PAN Card/ Voter ID Card /Driving License
• Address Proof – Passport/Aadhaar Card /Utility Bill
• Residence Ownership Proof – Property Documents/Maintenance Bill/Electricity Bill
• Income Proof – Latest 3 years of Income Tax Returns including Computation of Income, Profit and Loss Account, Balance Sheet, Audit Report, etc.,
• Business Existence Proof – 3 years old Saral Copy /Shop Establishment Act /Any Tax Registration Copy /Company Registration license
• Bank Statement -1 year bank statement both current and savings.
• Property Documents – Copy of agreement executed / Sale deed, Share certificate, Latest maintenance bill, list of documents & sanction letter given by existing banker (If applicable)
• Advance processing cheque
• Investment Proof – Fixed Deposit/Shares/Fixed Assets, etc.
• Passport size photograph/s

Note: Income proof is a vital document to apply for a home loan. If you do not get a salary in the bank, you cannot apply for a home loan but some NBFCs can consider your application and will provide you with the loan at a higher rate of interest. Even, recently the Union Cabinet declared a 10 per cent reservation for economically weaker upper castes and now the ministry might bring in another surprise for the middle-class people of India. The finance ministry might increase the tax exemption limit under Section 80C of the Income Tax Act.

Frequently Asked Questions (FAQs)

Will the EMI Change with the Change in Home Loan Interest Rates?

The Equated Monthly Installment (EMI) will remain almost certainly with alter in home loan interest rates. The rate change mainly ensures a change in the proportion of interest and principal over the years. The EMI interest rate will only increase if the lender raises the interest rate but the principal portion will decrease in such a case and vice-versa.

 What are the Benchmarks Used by Lenders to Price Home Loans?

From October 2019, banks have to follow the benchmark i.e. Repo-linked Lending Rate (RLLR) to price floating rate home loans. So, whenever the Reserve Bank of India (RBI) makes any changes to the Repo Rate, the rate at which the central bank lends to commercial banks will also change in same proportion. A spread will be charged over the external benchmark rate and will remain fixed throughout the loan tenure. Since October 2019, the RBI has cut  the repo rate by as much as 140 basis points (1.40%), including the latest 40 basis point reduction on May 22, 2020.

What is a Teaser Home Loan and how toApply for it?

It is kind of home loan where the rate of interest will remain fixed for first few years before the floating rates are applied to the outstanding loan balance. So, choosing a teaser home loan will decode enormous interest payments that can be avoided using the repo-linked floating rate home loan.

Will the Interest Rate Change Whenever the Lender Changes the MCLR?

If the lender changes the MCLR, there will be no change in the interest rate. For example, if the lender has provided you with a loan for 1-year MCLR, the rate will be subject to change after a year from the date of home loan approval. The same pattern will follow later too.

What is Pre-EMI Interest on Home Loans?

The Pre-EMI interest is only valid to partially pay out home loans. A borrower has to pay the interest portion of the loan till the time it is fully pay out.

What is a Plot Loan?

It is a loan given by the bank and NBFCs to those applicants who want to purchase the plot to construct their home.

What are the Documents Needed to Buy a Property?

The following are the documents needed to submit

Title Deed

Sale Deed

Approved Building plans

Completion Certificate (For Newly constructed property)

Commencement Certificate (For Under-construction property)

Conversion Certificate( If agricultural land is converted to non-agricultural)

Encumbrance Certificate

Latest Tax Receipts

Occupancy Certificate

How Much Loan Can I Get to Buy a Home?

The home loan amount will depend on factors like income, age, property value, location etc.

What is Loan to Value Ratio?

It means the sum of the home loan you can get on the total value of the property. Loans up to 30 lakh can be financed at up to 90% of the property value. Loans above 30 lakh to 75 lakh can be granted at up to 80% of the property value. Loans above 75 lakh can be offered at 75% of the property value.

Can I Avail Home Loan Balance Transfer?

Yes, you can avail of the home loan balance transfer facility to save on the in general interest outgo.

How Much Tax Can I Save on a Home Loan?

Home loans come with tax benefits for borrowers to take advantage of it. The tax benefits apply to both principal and interest repayments. You can get a maximum tax savings of up to 1.5 lakh on principal reimbursement in a financial year under Section 80C of the Income Tax Act. On the other hand, you can get a maximum tax savings of up to 2 lakh on interest repayment in a financial year under Section 24 of the IT Act.

When Should You Make a Home Loan Balance Transfer?

A home loan balance transfer will be idyllic when there’s a lot of time for the refund to be over. More refund period means the scope for huge interest payments.

How Will the Home Loan Repayment Change Post Balance Transfer?

The balance transfer will result in a summary EMI that you need to pay every month. This will also reduce the overall interest on the expenditure on a home loan.