5 Leading Banks Offering Low Home Loan Interest Rates

Buying your own house is undoubtedly one of the biggest achievements in life. It may take you years of hard work and savings before building that perfect home. Nevertheless, with the right home loan plan you can undertake this expensive venture with a lot more ease and a lot less time. So, if you are wondering where to find flexible tenure and low interest rates on home loans, check out this article. We have picked out the popular five banks that are offering low interest rates this year.

Leading  Banks Offering Low Home Loan Interest Rates in 2023

Apart from interest rates, your home loan will also have processing fees and other charges. So, when looking for the right lender, you should also consider these charges along with the tenure they offer.

Here are 5 lenders offering low home loan interest rates:

• State Bank of India : 8.05% to 8.55% per annum
• Axis Bank: 7.60% to 8.05% per annum
• ICICI Bank: 8.40% to 9.45% per annum
• HDFC Bank: 8.60% to 9.50% per annum
• Bank of Baroda: 7.45% to 8.80% per annum

Disclaimer: Note that the banks reserve the sole right to change interest rates at any given time. Therefore, these offers are subject to change.

Types of Home Loan Interest Rates

The type of interest rate you choose will affect your home loan EMI. Here are the three main types:

1. Fixed Home Loan Interest Rate

As the name suggests, a fixed interest rate is a type in which your home loan interest rate remains fixed for the entire tenure. It is calculated and determined at the very start and does not change till the loan period ends. Home loans are generally large-figure credits with lengthy tenure. Therefore, it makes your EMI calculations simpler and gives you an idea of your dues beforehand.

2. Floating Home Loan Interest Rate

Floating interest rates are revised and published at regular intervals. These fluctuations take place every quarter and depend entirely on the market rates, the economy of the country, inflation, etc. Therefore, calculating the exact repayment amount or EMI becomes a challenge. It might be beneficial for those who can predict the economic changes in the country leading to a reduction in home loan rates.

Factors that Affect Your Home Loan Interest Rate

Before you apply for a home loan, you must learn about the following factors that affect its interest rates:

• Interest Rate Type

Based on the market and RBI regulations, the interest rate on home loans may vary. For instance, if you opt for a fixed rate, you will not have to worry about fluctuation throughout your loan tenure. However, if you opt for a floating rate, you may take advantage of the drop in the interest rate or face a higher rate.

• Loan to Value Ratio or LTV Ratio

Loan to value ratio refers to the amount of credit you can receive against the market value of the property, and is represented as a percentage. Therefore, a higher LTV ratio can fetch you more credit, but also increases your risk of defaulting on the higher repayment amount. Therefore, financial firms that provide a high LTV ratio also levy higher interest rates.

• Benchmark Rate of Lending

Lending rates that are considered benchmark rates are of two types, namely, the Repo-Linked Lending Rate (RLLR) or the Marginal Cost of Funds-based Lending Rate (MCLR). The MCLR is reset every 3 months, 6 months, 1 year or 2 years throughout the loan tenure and the interest rate is levied accordingly. On the other hand, the RLLR is closely related to the repo rate set by the RBI and can fluctuate practically every quarter.

• Policies by the RBI

Any changes in the Reserve Bank of India’s (or RBI’s) policy will result in a change in the interest rate on your home loan. For instance, the recently introduced Marginal Cost of Funds Based Lending Rate (MCLR) system lets you specify the day your interest rate will change. With this, any decrease in interest rates will work to your advantage.

• Tenure of Repayment

The duration of time it takes to repay a home loan is closely related to the risk of extending loans to financial institutions and the time it takes to lend this money in advance. Therefore, if a borrower is repaying a home loan over a lengthy period of time, the interest rate will be greater. Conversely, loans that are scheduled to be repaid over a shorter period of time would have lower interest rates.

Steps to Apply for a Home Loan Online

Applying for a loan today is quick and easy. All you have to do is submit the necessary applications and documents online with just a few clicks and wait for the approval.

Follow these simple steps to apply for your home loan:

Step 1: Visit the online portal of your desired lender or an online marketplace offering loans from various lenders.

Step 2: Go to the home loan application form and fill out the necessary details.

Step 3: Choose your preferred lending institution (if you are purchasing from an online marketplace).

Step 4: Get an estimate of your borrowing capability.

Step 5: Enter the mortgage property details.

Step 6: Wait for the loan approval, after which your application will be verified.

After completing the procedure, you will receive a sanction letter. Next, your property value will be estimated, followed by a legal investigation. If all goes well, your loan amount will be transferred to your account in a few days.

Eligibility Criteria for Home Loan

There are several banks that are now offering competitive home loan offers such as the ICICI home loan interest rate. But to vail them, you need to have the basic eligibility criteria to apply:

• Nationality: Indian
• Age: 23 to 62 years (salaried individuals) and 25 to 70 years (self-employed individuals).
• Occupation: Minimum of 3 years of work experience (salaried individuals) and 5 years of running a steady business (self-employed individuals).

Necessary Documents to Apply for Home Loan

Here are the necessary documents required while applying:

• Identity Proof such as PAN Card, Aadhaar Card, Driving Licence, or Voter ID
• Address Proof such as Electricity Bill/Water Bill/Phone Bill, Valid Passport, Aadhaar Card, Driving Licence, etc.
• Income Proof like Income Tax returns of last 3 years, qualification certificate for doctors, CA and other professionals, audited balance sheet from certified CA, etc. (for self-employed individuals) and last 3 months’ salary slips, copy of Form 16 or Income Tax Return (ITR) of last two years (for salaried individuals)

So this was about the 5 banks with low home loan interest rates. That said, you must also be aware of other factors such as processing fees, property value, your eligibility to secure the desired amount, tenure, etc. These factors can affect your overall EMI and other costs. Therefore, before securing a home loan, compare lenders to find the best fit for your purpose.

Disclaimer : The above is a sponsored article and the views expressed are those of the sponsor/author and do not represent the stand and views of The Tribune editorial in any manner.