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Best Home Loan In India - Home Loan Interest Rates Comparison

Written By Business Desk | Mumbai | Published:

Hack:

  • Republic provides you the lowest home loan interest available in the market and how to apply for a home loan
  • Also, find comparison between home loan interest rates offered by various banks

Owning a home is one of your biggest life goals. You may easily achieve this dream even if you do not have the entire amount needed to acquire a home. Most banks and non-banking financial institutions (NBFCs) offer home loans to enable you to become a homeowner.
Because there are a large number of financial institutions that offer such loans, making the right decision may seem complicated. However, you may compare the interest rates and other terms and conditions online to make an informed decision.
When you compare different institutions to find the best home loans, here are some things to bear in mind:
•    Rate of interest
•    Turnaround time
•    Loan to value (LTV) ratio
•    Processing fees
However, you need to understand all the aforementioned factors and compare in totality. In most instances, if a particular financial institution offers a low rate of interest, it is likely that the processing fees may be higher.
One of the most important factors you consider when looking for the best bank for a home loan is the rate of interest. This directly affects the Equated Monthly Installment (EMI) and the total amount you will repay over the entire loan duration. It is recommended you try to find an institution that offers a lower rate of interest especially if you want a longer loan duration. Here are the interest rates offered by various financial institutions: 
 

Financial institution

Rate of interest

State Bank of India

8.70% - 9.50%

Bank of Baroda

8.50%

DHFL

8.70%

Punjab National Bank

8.65% - 8.75%

HDFC Ltd.

8.80% - 9.15%

IDBI Bank

8.90%

LIC Housing

8.85% - 9.05%

Axis Bank

8.50% - 8.70%

ICICI Bank

8.70% - 8.95%

Here are the market shares of lenders that offer the best home loan interest rates and are among the most preferred by potential borrowers:

Financial institution

Market share

State Bank of India

 25.50%

HDFC Ltd.

 24.13%

LIC Housing

 15.83%

ICICI Bank

 13.10%

PNB Housing Finance

 6.23%

IDBI Home Loan

 4.67%

Axis Bank

 4.22%

Others

 6.32%

Home loans comprise almost 11% of the total bank lending. During the fiscal year 2018, the size of the home loan industry is INR 13.5 lakh crore. Let us look at the outstanding loan amount and market share for the top lenders that provide the best home loan offers:

Financial institution

Market share

Outstanding loan (INR crore)

HDFC Ltd.

16.60%

176,000

State Bank of India

16.20%

170,899

ICICI Bank

9.40%

99,237

Axis Bank

5.40%

57,335

DHFL

3.70%

38,964

Can Fin

0.90%

9,278

GIC Housing

0.70%

7,224

LIC Housing

-

114,069

India Bulls

-

58,224

When you are looking for the best bank to take home loan, it is advisable to first check your eligibility. It is common that you may first find the prospective home and then apply for a loan. However, there is a chance that you may not be eligible for the amount you would like to borrow. Therefore, it is recommended you determine your home loan eligibility and also check if a loan will be sanctioned on the prospective property to avoid disappointment.

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Although the eligibility criteria may differ for each institution, there are certain parameters that may be the same. Some of these factors are listed below:

Eligibility Factors

Eligibility criteria

Age

Minimum age: 18 years

Maximum age: 70 years

Type of property

Affects loan eligibility

Employment stability

At least one year in current job or business

At least two years total experience

Employment type

Salaried, homemaker, self-employed professional, salaried professional, student, self-employed business, or retired

Current residence

At least one year stay

Residence type

Ownership or rental

Credit rating

Should be high from a recognized credit rating agency

Minimum net annual income

Depends on the type of your employment; generally, lenders offer up to 50% of your net income as the EMI

In addition to looking for the best home loan rates, you must consider the processing fees and pre-payment penalties. Here is the list of such charges applied by different institutions:

Financial institution

Pre-payment penalties

Processing fees

ICICI Bank

Nil

Higher of INR 1,500 or 0.50%-1.00% of the loan amount

Bank of Baroda

NA

0.25% of the loan amount; maximum of INR 20,000

HDFC Ltd.

Nil

Higher of INR 10,000 or 0.50%

Punjab National Bank

Nil

Nil

SBI Home Loan

Nil

0% (until 31st December 2018)

Syndicate Bank

NA

0.12% of the loan amount capped to a maximum of INR 5,000

Axis Bank

Nil

Up to 1% of the loan amount; minimum of INR 10,000

Citibank

Nil

Application fee of INR 5,000

LIC Housing

Nil

INR 10,000 for the loan amount of up to INR 1 crore

INR 25,000 for loan amount exceeding INR 1 crore

IDBI Home Loan

Nil

Nil

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Applying for a home loan is not as difficult as it may appear. However, it may be more time consuming when compared to other types of loans. You need to submit some documents when you apply for a home loan, which are as listed below:
•    Identity proof
•    Check for processing fees
•    Residence proof
•    Property related documents
•    Proof of income
•    Employment proof
•    Tax returns
It is recommended that you take some time in researching different options. Alternatively, you may take help from an experienced professional. You may also apply through a reputed online portal to make the entire procedure quick and seamless.

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