Home Loan Interest Rates in India 2023 – EMI and Charges

 

With RBI increasing its repo rate to 6.50%, lenders have increased their home loan interest rates too. So, in case you are planning to apply for a home loan, check the latest home loan interest rates in 2023 to compare the rates offered by different lenders. This would help you make an informed decision. We have curated the top 10 home loan interest rates in India and have explained the factors that could affect your home loan interest rate so that you can make an informed decision. Let’s dive in!

Did You Know? On 8 February 2023, the RBI increased its repo rate to 6.50%. This was the 6th time RBI hiked the repo rate in a span of less than 1 year. The move was attributed to combating inflation.

Table of Contents

Current Home Loan Interest Rates in India (2023)

Refer to the table below to know the latest housing loan interest rates.

Lender Interest Rate (p.a.) Processing Fee
Navi Home Loan 8.45% onwards No Processing Fee
LIC Housing Finance 8.65% onwards Up to 0.5% of the loan amount
Federal Bank 10.15% onwards Up to 0.5% of the loan amount
Tata Capital 8.95% onwards 0.50% of the home loan amount
HDFC Home Loan 8.45% onwards* 0.50% of the loan amount
Indian Overseas Bank 9.55% onwards 0.50% of the loan amount
IDBI 8.80% onwards 0.50% of the loan amount
HSBC 8.69% onwards 1% of the loan amount
SBI 9.15% onwards 0.35% of the loan amount and above
PNB Housing Finance 8.50% onwards 0.50% of the loan amount

*Data valid as of 30 March 2023. Navi Home Loan interest rates are pegged to the RBI repo rate and are subject to change as per RBI’s key policy changes.

Check Your Home Loan Eligibility

Loan Amount

Rate of Interest (P.a)

%

Loan Tenure (Years)

Years

 

Interest Amount

Principal Amount

Monthly EMI

₹ 20,752

Total Interest

₹ 25,80,449

Total Amount

₹ 49,80,449

Detailed Overview of Home Loan Interest Rates 2023

1. Navi Home Loan

Navi offers instant approval on home loans up to ₹5 crore at attractive interest rates. You can get up to 90% of the property value as a home loan with Navi. The best part is the application process is 100% paperless. All you need to do is download the Navi app, enter personnel and property details to check your pre-approved offer.

  • Interest Rate: 8.45% p.a. onwards
  • Eligibility Criteria
    • Age: 25 – 62
    • Nationality: Indian resident
    • Type of Employment: Salaried
  • Processing Fee: Nil
  • Loan Tenure: Up to 30 years

2. LIC Housing Finance

LIC Housing Finance is an HFC (Housing Finance Company) that deals with a slew of home loan products, including regular home loan, plot loan, home improvement loan, and home loan for NRI, among others. LIC HF also offers balance transfer facilities through which you can transfer your existing loan account to LIC Housing Finance.

  • Interest Rate for Salaried: 8.65% p.a. onwards
  • Interest Rate for Self-employed: 8.75% p.a. onwards
  • Eligibility Criteria
    • Age: 21 – 65
    • Nationality: Indian resident
    • Type of Employment: Salaried or self-employed
  • Processing Fee: Up to 0.50% of the loan amount
  • Loan Tenure: Up to 30 years

3. Federal Bank Home Loan

Federal Bank offers home loans up to 85% of the actual property value. The bank also offers loans via overdraft facilities. In case you need money for home-related or personal use, you can take a top up home loan with Federal Bank – top up home loans don’t come with any end-use restrictions.

  • Interest Rate for Salaried: 10.15% p.a. onwards
  • Interest Rate for Self-employed: 10.20% p.a. onwards
  • Eligibility Criteria
    • Age: 21 – 65
    • Nationality: Indian resident
    • Type of Employment: Salaried or self-employed
  • Processing Fee: Up to 0.50% of the loan amount
  • Loan Tenure: Up to 30 years

4. Tata Capital Home Loan

Tata Capital offers home loans up to ₹5 crore at competitive interest rates. The NBFC (Non Banking Financial Company) claims to provide instant approval on home loans with minimal documentation.

  • Interest Rate for Salaried: 8.95% p.a. onwards
  • Interest Rate for Self-employed: 8.95% p.a. onwards
  • Eligibility Criteria
    • Age: 24 – 65
    • Nationality: Indian resident
    • Type of Employment: Salaried or self-employed
    • Minimum Salary: ₹30,000 (for salaried)
  • Processing Fee: Up to 1% of the loan amount
  • Loan Tenure: Up to 30 years

5. HDFC Home Loan

HDFC Ltd. is one of the leading housing finance companies in India offering a wide variety of home loan products. HDFC is also known to roll out special home loan offers from time to time. You can get home loans up to 90% of the property value with HDFC.

  • Interest Rate for Salaried: 8.45% p.a. onwards (limited period offer)
  • Interest Rate for Self-employed: 8.45% p.a. onwards(limited period offer)
  • Eligibility Criteria
    • Age: 21 – 65
    • Nationality: Indian resident
    • Type of Employment: Salaried or self-employed
  • Processing Fee: Up to 0.5% of the loan amount
  • Loan Tenure: Up to 30 years

6. Indian Overseas Bank Home Loan

Indian Overseas Bank offers Subha Gruha – a home loan product foraspiring homebuyers. You can get home loans of 75% to 90% of the property value with IOB. Currently, the bank is running a zero processing fee limited period offer.

  • Interest Rate for Salaried: 9.55% p.a. onwards
  • Interest Rate for Self-employed: 9.55% p.a. onwards
  • Concessional Interest Rate for Women:8.60% p.a. onwards (valid till 31 March 2023)
  • Eligibility Criteria
    • Age: 21 – 55 (could be extended to 60 in special cases)
    • Nationality: Indian resident
    • Type of Employment: Salaried or self-employed
  • Processing Fee: Up to 0.5% of the loan amount (waived off till 31 March 2023)
  • Loan Tenure: Up to 30 years

7. IDBI Home Loan

IDBI offers home loans ranging from 75% to 90% of the property value. However, though the repayment tenure is up to 30 years for salaried professionals, the repayment tenure for non-salaried professionals is capped at 20 years.

  • Interest Rate for Salaried: 8.80% p.a. onwards (limited period offer)
  • Interest Rate for Self-employed: 8.80% p.a. onwards (limited period offer)
  • Eligibility Criteria
    • Age: 22 – 70
    • Nationality: Indian resident
    • Type of Employment: Salaried or self-employed
  • Processing Fee: Up to 0.5% of the loan amount
  • Loan Tenure: Up to 30 years

8. HSBC Home Loan

HSBC offers home loans up to ₹40 crore starting at 8.55% p.a. With flexible repayment tenures. The bank also offers home loans for NRIs. You can also avail of balance transfer facilities with HSBC.

  • Interest Rate for Salaried: 8.69% p.a. onwards
  • Interest Rate for Self-employed: 8.79% p.a. onwards
  • Balance Transfer Interest Rate: 8.55% p.a.
  • Eligibility Criteria
    • Age: 21 – 65
    • Nationality: Indian resident
    • Type of Employment: Salaried or self-employed
  • Processing Fee: Up to 1% of the loan amount
  • Loan Tenure: Up to 25 years

9. SBI Home Loan

SBI is one of the biggest players in the home loan sector with 33% market share. The bank also offers 5 bps concession for women applicants. You can also get a home loan as an overdraft with SBI.

  • Interest Rate for Salaried: 9.15% p.a. onwards
  • Interest Rate for Self-employed: 9.15% p.a. onwards
  • Eligibility Criteria
    • Age: 18 – 70
    • Nationality: Indian resident
    • Type of Employment: Salaried or self-employed
  • Processing Fee: Up to 0.35% of the loan amount
  • Loan Tenure: Up to 30 years

10. PNB Housing Finance Home Loan

PNB offers home loans up to 90% of the cost of the property at attractive interest rates. The housing finance company also offers flexible repayment tenure of up to 30 years. You can also avail of other home loan products like Unnati Loan (low income home loan) and plot loan with PNB Housing Finance.

  • Interest Rate for Salaried: 8.50% p.a. onwards
  • Interest Rate for Self-employed Non-Professionals: 8.55% p.a. onwards
  • Eligibility Criteria
    • Age: 21 – 70
    • Nationality: Indian resident
    • Type of Employment: Salaried or self-employed
  • Processing Fee: Up to 0.50% of the loan amount
  • Loan Tenure: Up to 30 years
  •  

Different Types of Home Loan Interest Rates

Generally, there are two types of interest rates offered by lenders – fixed and floating interest rates.

1. Fixed Interest Rates 

For fixed home loan rates, the rate of interest charged on loans remains constant throughout the tenure of the loan. As such, these loans have constant EMIs allowing a borrower to pre-plan his/her repayment.

Fixed interest rates are ideal when you expect market rates to go up in the future. However, if the market interest regime goes down, you may have to pay higher interest, resulting in a higher EMI obligation.

Depending on the type of loan, interest rates may be fixed for the entire tenure or a part of it, as per the lender’s policies.

2. Floating Interest Rates

A loan under a floating regime has a home loan rate that keeps changing over the tenure of the loan. It varies with changes in market conditions and the underlying external benchmarks such as the Reserve Bank of India’s repo rates. When the interest rates rise, so does your loan repayment amount and vice versa.

The floating interest rate is made out of two components: index and spread. The index refers to the measure of interest rates based on the underlying benchmark like the repo rate. On the other hand, the spread is the extra amount charged by a financial institution to cover credit risks and profit markup.

For instance, if the underlying index is 6%  and a financial institution decides on a spread of an additional 2%, the applicable lending rate will be 8%.

Floating interest rates are ideal when the market interest rates are declining. However, if the standard interest rates go up, so do the payable EMIs.

Factors that Affect Home Loan Interest Rates

The final rate offered to you is solely at the discretion of the lender. However, here are a few factors that could affect your interest rate.

1. Benchmark Rate of Lending

Financial institutions can have several types of benchmark lending rates. Most banks follow RBI’s repo rate as an external benchmark while all NBFCs use PLR (Prime Lending Rate) to determine their housing loan interest rates.

2. Credit Score

The credit score allows lenders to study the applicant’s past debt repayment records and overall creditworthiness. Having a high credit score means the borrower is more likely to repay his/her loan in time. Hence, the lender could charge them a lower housing loan interest rate. In case, your credit score is on the lower side of the spectrum, you can still improve your score by following the best practices.

3. Your Income

Lenders assume lower credit risks when their borrowers have a steady source of income. That’s why salaried applicants at a reputable company will often get better interest rates compared to self-employed individuals.

4. Location of Property

The location, age, condition, and available amenities of the property also determine its resale value and, thus, the interest on a mortgage loan. A high resale value makes a property lucrative for lending institutions, often leading them to offer lower interest rates.

How to Calculate Home Loan Interest Rates?

Following are the different methods of calculating the interest rate of a home loan:

1. Flat Rate Method

In this method, one calculates the interest rate on the original principal amount. For example, if one borrows a home loan with a tenure of 20 years, he/she will pay a fixed interest rate for the entire tenure.

With this flat rate method, one could calculate the EMI using the following formula:

  • EMI = (Principal + Total interest)/ loan tenure in months.

2. Reducing Balance Method

This method calculates the interest rate on the outstanding amount only. With the reducing balance method, interest is not charged on the principal component already paid with EMIs. As a result, the outstanding balance reduces with time.

One could calculate the EMI under this reducing balance method with the following formula.

  • EMI = [P x r x (1+r)^n]/[(1+r)^n-1]

Here, P is the principal, r is the rate of interest, and n is the number of instalments.

3. Using a Home Loan Calculator

Financial institutions have their own EMI calculators that facilitate easy calculation of EMIs and a detailed breakdown of interest payments. You can take the help of Navi’s home Loan EMI calculator to calculate your monthly and yearly EMIs. Simply enter the loan amount, interest rate, and tenure, and you will get the EMI value.

4. Using Excel

Calculating home loan interest rates using Excel is simple and easy. You will need a formula and the values of its attributes.

The formula to use in Excel is as follows:

  • = RATE (PMT, NPER, PV)

This is called the RATE function in Excel. Here, Rate stands for the home loan interest rate. NPER stands for the number of instalments, and PV stands for the principal amount or present value.

You need to enter these values to get your result. You should remember to enter the currency symbol when entering the loan value and the percentage symbol while entering the rate of interest. If you are calculating the interest rate, you will get the result in the percentage format.

How to Calculate Effective Interest Rate?

Effective interest rate, also known as effective annual interest rate, is the actual interest rate on a loan after considering the method of compounding. The rate of interest is equally proportionate to the frequency of the compounding period.

Effective Interest Rate Formula:

The following formula is used to compute the effective annual interest rate (EAR) on a loan:

  • EAR= (1 + i/n)n  – 1

where “i” stands for the annual interest rate & “n” is the frequency or number of compounding periods.

Tips to Get Lower Interest Rates on Home Loans

Take a look at some tips and tricks you can follow to avail of lower interest rates on home loans:

  • Maintain a good cibil score, preferably 750 or above, to get the most favourable interest rates.
  • You can avail of a joint home loan with your spouse to get a lower interest rate.
  • If your current lender charges higher interest rates, you can opt for a home loan balance transfer with another lender offering a lower interest rate.

Other Fees and Charges to Consider

Availing of a home loan often involves payment of various fees and charges.

1. Processing Fees

All financial institutions will charge a small processing fee, sometimes called an administrative fee, to process your loan application. This amount usually varies from 0.25% to 2% of the loan amount or up to Rs. 10,000.

2. Other Loan-related Fees

This includes pre-payment charges, application fees, late payment fees, conversion charges or switching fees, collection charges and insurance premiums.

3. Document-related Fees

This can include NOC charges, stamp duty fees, income tax certificate fees, fees for revalidation of NOC, CIBIL Report fees, etc. However, with financial institutions like Navi, you can minimise your cost of borrowing with zero documentation charges.

4. Legal Charges

This will likely include legal expenses, valuation fees, MoD of title deed charges, CERSAI charges, etc.

Final Word

When looking for a home loan, you should consider the lowest home loan interest rates, the least fees and charges, and the ease of the loan process. You should always do a thorough research of the lender, compare different loan offers, and read all the terms and conditions carefully before signing up.

spot_img

More from this stream

Recomended

TechXplore: Unraveling the Future of Technology

Artificial Intelligence (AI)...

CodeCraft: Mastering the Art of Technology

Artificial Intelligence (AI)...

Innovation Unleashed: The Tech Frontier

Artificial Intelligence (AI)...

TechTalk: Conversations Shaping the Future

Artificial Intelligence (AI)...
x