Owning a home is high on the wish list of many. Thankfully, home loans help fulfill the dream of homeownership. Home loans can be classified into different types based on parameters such as interest rates, tenure of the loan, and processing fees. However, it is hard to choose one when there are so many home loan products available in the market. We have curated a list of the best home loans in India to make your task easier.
A home loan, also called a housing loan, is the bulk amount that a home buyer avails from a bank or a housing finance institution. One can pay back the loan amount, often referred to as principal, with interest by way of equated monthly installments (EMIs) during the tenure of the loan which can typically range from 10 years up to 30 years.
Top banks offering home loans in India
Here is a list of the 10 banks in India that offer the best housing loans in India.
HDFC Bank
HDFC Bank is India’s largest private lender. The Mumbai-headquartered bank provides home loans at a rate of interest ranging from 9.4 to 9.95 percent per year.
Bank of Baroda
As per the Bank of Baroda’s website, the bank’s floating interest rate for home loans range from 8.40% to 10.60%. Fixed rate home loans are offered in the range of 10.15% to 11.50%. The bank gives loans of up to Rs. 10 crores to individual applicants, and the term of the loan can go up to 30 years.
State Bank of India
State Bank of India, the country’s largest PSU bank, offers housing loans at a rate of interest ranging from 9.15% to 9.75%. SBI Home Loans is the largest mortgage lender in India. As per the bank’s website, there are no prepayment penalties and it makes home loan available as an overdraft. SBI offers loan tenures up to 30 years.
Axis Bank
Axis Bank offers home loans starting as low as Rs. 3 lakh up to Rs. 5 crore. The bank’s floating interest rate ranges from 8.75% to 9.15%, while fixed rate home loans are offered at 14%. The bank charges processing fee up to 1% of the loan amount plus GST. The repayment period can go up to 30 years.
Kotak Mahindra Bank
Kotak Mahindra Bank is considered one of the best home loan banks. For salaried employees, the bank offers home loans starting from 8.70% interest rate, while for self-employed, it starts from 8.75%. The bank offers 50% reduction in processing fees for all digital applications, while the repayment tenure is usually 25 years, as per the website.
LIC Housing Finance
LIC Housing Finance provides loans for buying a home, building one, fixing one, buying a piece of land, adding on to an existing home, and remodeling. It also gives customers the option of top-up loans. The loan term can be up to 30 years and the interest rate starts at 8.50%. The housing finance institution offers loans up to Rs. 5 crore.
PNB Housing Finance
PNB Housing Finance categorizes home loan borrowers broadly into two. While salaried individuals with a specified CIBIL score get a rate of between 8.5% to 9%, non-salaried can avail home loans in the range of 8.8% to 9.3%.
ICICI Bank
Mortgage loans from ICICI Bank come with competitive housing loan interest rates in India. Generally speaking, the private sector lender offers home loans at interest rates ranging from 9.40% to 10.05%. Essentially, salaried individuals get a better rate than self-employed, and the rate of interest also varies based on the amount of loan availed. The bank does not levy pre-payment charges on floating home loan interest rates, while the loan tenure can go up to 30 years.
Bajaj Housing Finance
Bajaj Housing Finance offers attractive housing loan interest rates in India. The interest rate for salaried applicants is 8.50% per annum, and the repayment tenure can extend up to 40 years. The processing fee is up to 4% of the loan amount, plus GST.
Karnataka Bank
Karnataka Bank offers home loans at interest rate starting at 8.75% per annum. The repayment tenure can go up to 30 years.
Factors to consider while applying for a home loan
You should carefully consider the tenure while selecting the best home loans in India, as it will have a significant impact on your financial security. The amount of your home loan tells you how long you have to pay it back. This affects your regular payments, the total amount of interest you have to pay, and how you plan your finances in general. We have listed out a few other factors to look out for while you apply for a home loan.
Total EMI amount
EMI stands for Equated Monthly Installment. This is the amount you have to repay every month to the loan provider. Essentially, you’ll pay back both the principal amount and the interest on the loan balance. An idea called pre-EMI is used for homes that are still being built.
It is common practice to have you pay only the interest on the amount of the loan that has already been issued, which is known as the pre-EMI interest. You can break down the loan into several parts and start making payments on the total amount issued if you want to start paying back the debt right away.
Duration
The total amount of interest that needs to be paid over the life of the loan is an essential factor in repayment. Conversely, opting for a lengthier term can result in reduced monthly payments, but it also means paying more interest throughout the loan’s duration. But if you have a home loan with a minimum term, your monthly payments will be higher, but your overall interest costs will be lower. Use a home loan calculator to compare different loan terms to determine the repayment period that works best for you.
Rate of interest
The loan term and interest rates offered are essential factors to consider. This can have a significant effect on how much your home loan costs altogether. In addition to the loan amount, you will also have to pay back interest. Before you decide, make sure you look at the interest rates that different home loans in India offer.
Initial payment or down payment
A down payment is the amount a person puts down when they buy something expensive, like a house. It’s a portion of the total price, and the rest is generally paid for with a loan. Making a larger down payment can reduce the amount borrowers owe the lender, the interest they pay over the loan’s life, and the amount they pay each month.
Mortgage insurance
Like any insurance, mortgage insurance protects the lender in case the borrower defaults on repayment for any reason, including the death of the borrower. But the borrower pays the cost of insurance.
Additional fees
When deciding if a home is right for you, you should factor in how much the loan will cost overall. Besides interest payments, a loan comes with other charges such as processing fees, management fees, fines, and other expenses.
Ensure that there are no hidden charges when you are looking for the best home loans in India. Lenders must clearly mention information about fees, according to the regulations.
Best bank for home loan in India: An overview
By now, you would have gathered a fair idea about the best home loan banks in India and how to choose the best home loan in India. Remember, not every loan product is suitable for everyone. So, you need to carefully study them before you apply for a home loan. Choose the right home loan by looking at your loan requirement, your ability to pay back the loan, and your cash flow.
Conclusion
Choosing the best home loan in India is an extensive process, and your ability to do so depends on a number of factors. Your credit score, income level, down payment amount, and other debt you have are all important factors.
To improve your chances of getting a loan, you should work on keeping your credit score high, make sure your income stays stable, save up for a big down payment, and properly handle your outstanding debt. If you are diligent about these things, you can improve your chances of getting a home loan.
