Lowest Home Loan Interest Rates from Top Banks

At present the lowest home loan interest rates are provided by the Union Bank of India, Bank of Maharashtra, and South Indian Bank at 8.35% p.a. Bank of Baroda, Bank of India, Canara Bank, and Punjab National Bank provide home loans at 8.40% p.a.

Many factors affect the interest rate applied to home loans, including the applicant's occupation, credit score, loan amount, tenure, etc. 

When it comes to home loans, even small differences in the interest rates could cost the borrower a lot. This is why it is important to compare interest rates before you choose where you get your home loan.

List of Lowest Home Loan Interest Rates

These banks and institutions give home loans for the lowest interest rates. You can compare and choose your home loan according to your requirements.

*Interest rates valid as of 27 September 2024

Type of Home Loans

In India, lenders usually offer three types of home loan interest rates: fixed interest rates, floating interest rates, and hybrid interest rates. Each has its pros and cons depending on the borrower's financial situation and risk tolerance.

Fixed Interest Rates

• The interest rate remains fixed for a specified period or the entire duration of the loan.

• Repayment rates are predictable as the monthly payment amount does not change.

• Borrowers with fixed rates are not affected if the market rates rise or fall.

Floating (Variable) Interest Rates

• The interest rate can change at any time as per the market rates.

• Monthly payments can vary which makes budgeting difficult.

• Borrowers may benefit as the rates decrease but may have to pay higher monthly payments as the rates increase.

Hybrid (Split-rate) Interest Rates

• Hybrid home loans combine the elements of fixed and floating rates.

• For a specified period the rates will be charged at a fixed rate after which floating interest rates will apply.

• This type of home loan gives you the balance between a predetermined monthly repayment amount and the flexibility of floating rates.

Home Loan Interest Calculation

Interest rates for loans are calculated using a standard formula that takes into account the principal amount, the loan tenure, and the interest. The formula to calculate EMI for home loans is:

EMI = P x R x (1+R)^N / [(1+R)^N-1]

Where:

P = loan principal amount

R = monthly interest rate

N = number of monthly instalments (loan tenure)

Alternatively, you can use the Moneyview Home Loan EMI Calculator to do the math for you.

Tips to Get Lower Home Loan Rates

There are proven strategies to improve your chances of getting better interest rates on your home loan. Here are a few tips on how to get a lower interest rate on your home loan.

1. Improve your CIBIL score: Your CIBIL score is an important factor that banks will use to determine the interest rates on your home loan. The higher your score, the lower your interest rate will be.

2. Choose the right loan tenure: A longer tenure means your EMI will be low but the interest will end up paying will be higher. You can use the Moneyview Home Loan EMI Calculator to choose the right loan tenure.

3. Get a home loan balance transfer: If other lenders are offering a lesser interest rate you can opt for a balance transfer. Just remember to calculate all charges and related fees to understand how much you will save with a balance transfer.

4. Pay more as a down payment: If you pay a larger down payment, the loan amount will be less. This will reduce the interest you will have to pay. 

5. Consider getting a joint home loan: Adding an earning co-applicant will help you get a higher amount at lower interest rates. Especially, if the co-applicant is a woman, you may be able to get lower rates, as banks have special interest rates for women applicants.

Securing a lower interest rate can make a significant difference for borrowers. Lenders may offer very low interest rates but it is also important to consider other factors such as service charges, lender’s reputation, additional charges, etc.

Ultimately a combination of good credit score, smart loan tenure selection, and strategic down payments can help you obtain the most advantageous home loan package.

You can also apply for a home loan on the Moneyview website or app which has interest rates starting at 8.50% p.a.