In the present times, for most individuals, purchasing a residential property is not possible without availing a Home Loan. The need to apply for a home loan is necessitated due to the soaring prices of residential real estate across the country. In order to cater to the increasing demands for Home Loans, many financial institutions have started offering housing loans at attractive interest rates.

With multiple options available in the market, it can be a little confusing to shortlist on a suitable Home Loan offer. Therefore, it becomes necessary for you to evaluate various essential factors before finalising on a suitable lender for your Home Loan requirement. One of the most important factors that can have a significant impact on your decision is the interest rate you pay on your principal loan amount.

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Importance of interest rate as a deciding factor for a Home Loan

Apart from the repayment tenor and the loan amount, one of the most important factors to be considered while applying for a Home Loan is the Home Loan Interest Rates. The interest rates charged by the lenders can vary according to their individual credit policies, but as per an RBI directive, from 1st April 2016 onwards all Home Loan interest rates will be linked to the MCLR, i.e. Marginal cost of funds based lending rate. Below this rate, banks are not allowed to lend to the customers.

However, there have been quite an opacity behind the setting up a bank’s MCLR. Each bank has its own MCLR rate, based on which they used to set home loan rate. However, according to the latest mandate by the RBI, Indian banks will link all floating rates with external benchmarks such as repo rate or treasury bills rate from October 1. This will result in direct fluctuation in the rates linked to the benchmark lending rates. For instance, in past one year the repo rate has reduced by 1.10 % while the MCLR is reduced in range od 20 to 30 bps by most banks.

Going forward, any rise or fall in the repo rate will directly impact the interest rate charged against home loans. However this would be application to new loans borrowed as external benchmark linked loan. The old customers either would need to apply for a switch or continue repaying as per the MCLR regime.

Compare deals & rates
It is advisable to always compare the interest rates offered by various financial institutions against Home Loans before applying for one. This will give you a clear idea regarding which lender offers the best and the lowest Home Loan interest rate. Also, this will make your EMIs more affordable, helping you plan your finances better. Three financial products that are regarded as the leaders in the Home Loan market are SBI Home Loan, HDFC Home Loan and ICICI Bank Home Loan. If you are contemplating applying for a Home Loan from either of these lenders, here is a comparison of Home Loan interest rates offered by these premium banks:

ICICI Home Loan Interest Rates

ICICI Bank, a private sector entity, offers a wide range of Home Loan schemes to meet the customer’s requirements at attractive interest rates. ICICI Bank categorises the borrowers into two categories, salaried borrower and self-employed borrower. The interest rates vary for both categories.

ICICI Home Loan Interest Rates for salaried borrowers for amounts up to Rs. 35 Lakh is 8.80%, for loan amount between Rs. 35 lakhs to Rs. 75 lakhs interest rate is 9.05%, and for loan amounts above Rs. 75 lakhs, the interest rate is 9.10%.

ICICI Home Loan interest rates for self-employed borrowers for loan amounts up to Rs. 35 Lakh is 9.10%, for amounts between Rs. 35 lakhs to Rs. 75 lakhs it is 9.20%, and for loan amounts above Rs. 75 lakhs, the interest rate is 9.25%.

One year MCLR at ICICI Bank is 8.55%, and the processing fee for Home Loans at ICICI Bank is 0.1% of the loan amount plus applicable taxes.

 

HDFC Home loan Interest Rates

HDFC Bank is a known name in the Indian banking sector. It has a wide network of more than 3,000 branches across India. HDFC Bank offers various types of Home Loans that are suitable for customer needs.

HDFC Bank offers interest rates of 8.35% to 8.85% for women and 8.40% to 8.90% for others on home loans up to Rs. 30 lakhs. The interest rates for a Home Loan between Rs. 30.01 Lakhs to 75 Lakhs for women are 8.65% to 9.15% and 8.70% to 9.20% for others in the same slab. For women borrowers with loan amounts of more than Rs. 75 lakhs, the interest rate is 8.70% to 9.20%, and for other applicants, in the same slab, the applicable interest rate ranges between 8.75% to 9.25%.

One year MCLR at HDFC Bank is 8.45%, and the processing fee for home loans at HDFC Bank is 0.50% of the loan amount plus applicable taxes.

SBI Home Loan Interest rates

State Bank of India is the largest mortgage lender in the country and has the lowest interest rates on Home Loans than any other bank or NBFC. SBI offers a wide range of Home Loan schemes for its customers.

SBI Home Loan interest rates are divided into two categories, salaried and self-employed, separately for men and women. In case of Home Loan up to Rs. 30 Lakhs, SBI charges interest rate between 8.25% to 8.35% for salaried women and for self-employed the interest rates range between 8.40% to 8.50%. For loans above Rs. 30 Lakhs and up to Rs. 75 lakhs, salaried women get an interest rate ranging between 8.50% to 8.60% while self-employed women get an interest rate between 8.65to 8.75%. For home loans above Rs. 75 lakhs, salaried women are charged an interest rate between 8.60% to 8.70% and for self-employed women, the rate of interest applicable ranges between 8.75% – 8.85%.

In case of other applicants in the salaried category, the interest rates for a loan up toRs. 30 Lakh will range from 8.30% to 8.40% and 8.45% to 8.55% for others in the non-salaried category. For loans ranging from Rs. 30 lakhs to Rs. 75 lakhs, other applicants in the salaried category can get an interest rate between 8.55% to 8.65%, and for the non-salaried category, the applicable interest rate is 8.70% to 8.80%. For home loans above Rs. 75 lakhs, other applicants  in the salaried category can get an interest rate between 8.65% to 8.75% and for the non-salaried category applicants, interest rate applicable ranges between 8.80% to 8.95%.

One year MCLR at SBI Bank is 8.15%, and the processing fee for SBI Home Loans is 0.35% of the loan amount plus applicable taxes.

Out of the above three lenders, SBI offers the lowest interest rates for its customers. Though, it is advisable to compare other factors along with interest rates before choosing the one for you. It can reduce the burden on loan repayment and make the EMIs for affordable.