Lowest Home Loan Interest Rates Overview

Lowest Home Loan Interest Rates

What is Home Loan Interest Rates:-

Everyone wants to build the palace of their dreams. But not everyone has enough money to fulfill these dreams. In such a situation, home loan helps them. Currently, the home loan rate in the country is at a decade low. Buying a house is a profitable deal at this time. Along with cheap home loans, developers are also offering various concessions to increase their sales. In such a situation, you have a good chance to build your dream home.

If you are taking a home loan, its interest rate is a major factor that affects the total cost of your home. Since the home loan amount is high and the tenure of the home loan is also long, home loan interest can have long-term financial implications. Getting a lower interest rate for a home loan will not only result in lower EMIs but also lower interest payments. If we talk about the interest rate, then the lowest interest rate till date is 6.40%*. Hence, home loan borrowers should try to get a home loan at the lowest possible interest rate.

Here you can compare the Rate of interest from bank to bank:-

Public sector banks. Rate of interest

Bank of Baroda 6.50%*

Punjab National Bank 6.55%*

Punjab & Sind 6.40%*

State Bank of India 6.70%*

IDBI Bank* 6.75%*

Union Bank of India 6.40%*

Indian Bank 6.80%*

Central Bank of India 6.85%*

Bank of India 6.50%*

UCO Bank 6.90%*

Bank of Maharashtra 6.80%*

Canara Bank 6.90%*

Indian Overseas Bank 7.05%*

Private sector banks Rate of interest

Kotak Mahindra Bank 6.50%*

ICICI Bank 6.70%*

Axis Bank 6.75%*

Karur Vysya Bank 7.15%*

South Indian Bank 7.25%*

Karnataka Bank 7.50%*

Federal Bank 7.65%*

Dhanlaxmi Bank 7.85%*

RBL Bank 10.20%*

(HFCs) Rate of interest

LIC Housing Finance 6.66%*

HDFC Ltd. 6.70%*

Tata Capital 6.70%*

Bajaj Finserv 6.70%*

PNB Housing Finance 7.20%*

Repo Home Finance 7.50%*

GIC Housing Finance 7.90%*

India bulls 8.65%*

Aditya Birla Capital 9.00%*

Reliance Home Finance 9.75%*

Which factors affect home loan interest rates?

Repayment capabilities- Your home loan interest rate directly affects how affordable the loan is and the ease with which you can repay it. Your repayment is in the form of EMI, which includes both interest and principal. Low interest rate home loan lowers your EMI.

Credit score- If your credit score will be good i.e. between 750 to 900 then you can get loan at the lowest interest rate. If you don't have a good credit score, it could increase your interest.

Employment status- People who do permanent jobs, the banks or other financial institutions, they get loans at very reasonable interest rates, because the repayment risk is less with job professions than the self employed.

Type of interest rates- Your rate of interest also depends on your selection of interest rate.

There are two types of interest rates:-

Fixed interest rate- In fixed interest rate, there is no increase or reduction in your EMI, it remains the same for the entire tenure.
Floating interest rates- It changes in floating rate, in this your interest rate can increase or decrease.

Types of Interest Rates in Home Loan:-

There are two types of interest rates offered by any bank or financial institutions.

Fixed interest rates.
Floating interest rates.

1.Fixed interest rates:-

On a fixed rate loan, your EMI does not change for the entire loan tenure.

Advantages- Fixed rate home loans can prove beneficial only if the Reserve Bank of India (RBI) hikes the repo rate in the coming years. You can save your money if the bank will hike their interest rates.

Disadvantages- If RBI will announce to decrease rate of interest of all banks so, you will have pay your EMIs on your old and fixed interest rates and you will be not applicable to take advantages of the decrease interest rates.

Floating interest rates:-

In floating rate, the interest rate of your home loan is decided on the basis of the floating rate along with the base rate. In such a situation, the fluctuation of the base rate has an effect on the EMI. In the case of floating interest rates there are chances to increase or decrease interest rates.

Advantages- This is beneficial when interest rates are expected to come down in the future. It can be too helpful in decreasing your monthly EMIs and save your money too.

Disadvantages- In the rare cases, if the standard rates will increase, then the loan will also increase and the borrower has pay his loan at a higher rate of interest.

How to calculate your interest rates:-

There are 2 ways to calculate your interest rates:-

Interest rate calculator- You can check your interest rate with the help of EMI calculator, which is provided by banks on every site you wish to visit. With the help of this calculator you will be applicable to calculate your whole interest rate of your loan amount. You just only have to fill your some information regarding the loan, like:-

Loan amount
Loan tenure &
Interest rates

After filling these details you have to click on calculate button to get all details regarding to your loan. This calculator will not only tell your interest rates even it calculates your monthly repayment schedules also.

Interest rate calculation formula- Alternatively, you can also use the formula below to calculate your EMI & interest rate liability for your home loan-

Interest rate= [P x R x (1+r)^n]/[(1+r)^n-1]

With the help of this formula you may able to calculate your interest on you principal amount.

How to reduce the interest burden of home loan and get benefits:-

Go for balance transfer to reduce the interest on your existing home loan.
Keep your monthly EMI large to reduce the total interest payable.
Take advantage of prepayment to save on interest and reduce EMIs

Frequently Asked Questions

1.What is home loan interest rates?

Nowadays, if we want to buy or buy anything in the world, then we have to pay the price for that thing. Home loan interest rate is also an example of this. Whatever loan we take from the bank or moneylender, they take some money from us in return for that loan which we know by the name of interest rate.

We pay this amount in small monthly installments with principal amount+ interest amount. Home loan interest rate is determined according to our loan amount.

2.How many types of Rates of Interest are there?

There are two main types of interest rates:-

Fixed Interest Rates :- On a fixed rate loan, your EMI does not change for the entire loan tenure.In fixed rate, banks fix the interest rate of the loan at the very beginning. This rate is applicable for the entire tenure of the loan. While taking the loan, it is known that how much installment you will have to pay every month.
Floating Interest Rates :- In floating rate, the interest rate of your home loan is decided on the basis of the floating rate along with the base rate. In such a situation, the fluctuation of the base rate has an effect on the EMI.

3.Which type of Interest Rates are better?

There is a huge difference in both interest rates. In the case of floating interest rates there are chances to increase or decrease interest rates but it is lower than the fixed interest rates.

In fixed rate, banks fix the interest rate of the loan at the beginning. This rate is applicable for the entire tenure of the loan. At the time of taking the loan, it is known that how much installment will you have to pay every month. Fixed rate home loans can prove beneficial only if the Reserve Bank of India (RBI) hikes the repo rate in the coming years. You can save your money if the bank will hike their interest rates. This is helpful to deciding your fixed EMI from starting and you can easily plan your monthly budget.

3.How do Interest Rates works?

Interest is a charge that is made for a loan asset (loan). it is the value of the money borrowed by any borrower.

For example- if you borrower ₹10000 at 10% of interest from bank, then you have to repay ₹11000 to the bank as Repayment of your loan. The bank will get benifit of ₹1000 from your loan.

In the market there are many types of loans available for borrowers and every loan has its own decided interest rates. So whenever you think of taking a loan, first of all compare the interest rate of every bank and decide to take a loan from where you get benefits and provide good facilities.

4.How Interest Rates are calculated?

Calculate your interest rates is not a difficult deal. Knowing your interest rates can be helpful to you it can solve your wage problems and can save your money while taking any investment decision.

There are two ways to calculate your interest rates:-

Interest rate calculator- with the help of this calculator you can find your whole interest rate on your principal amount, you just only have to fill some of your information- loan amount, loan tenure and interest rates. After filling these details click on calculate and you'll get all the details regarding to your loan interest. This will also calculate your monthly EMIs.
Interest rate calculation formula In the second way you can calculate your interest rate with the help of this formula:-

Interest rate= [P x R x (1+r)^n]/[(1+r)^n-1]

With this formula you'll be able to calculate you interest rates as well as EMI too.

5.What causes increase in interest rates?

Interest rates are always changing time to time, and different types of loans offer different interest rates. It is depending on bank to bank also. There are many factors that can be effect on your interest rates and can be causes of increment in rates also.

Credit score- if your credit score will not maintained then your interest rate will be higher than the other borrower's.
Repayment capabilities- if you will not pay your all EMIs timely then bank can take extra charges from you and can increase your interest rates on your principal amount for remain tenure.
Type of interest rate- your interest rate decision can also be a reason of increasing your EMI. If you decided to take your loan at floating interest rates then there can be rare chances to increase interest rates in future, if it will increase by RBI then your loan will also effect from this and can be expensive.

6.How can I reduce my Home Loan Interest Rate and get benefits?

There are many ways to reduce your interest rates to get benefits in your monthly EMIs
Go for balance transfer to reduce the interest on your existing home loan.
Keep your monthly EMI large to reduce the total interest payable.
Take advantage of prepayment to save on interest and reduce EMIs.
Maintain your cibil score by paying your all loan at time, this will help you to get next loan at very lowest interest rate.

7.What is today's Interest Rate?

Today's lowest interest rate is 6.50% which is offered by Kotak Mahindra Bank. Other banks such as HDFC, Citibank, Bank of Baroda and Union Bank have also cut their interest rates.

8.Which bank has lowest home loan Interest Rates?

The interest rates offered by banks can be increase or decrease at any time. It's all UpTo the bank. This time the union bank of India is offering the lowest interest rates on home loans at 6.40%* p.a. to their customers.