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Banks with Lowest Interest rates for a Home Loan

There are 21 public sector banks, 80 private banks, 1000+ co-operative banks & 10,000+ NBFC’s in India that finance home loans. Thus the market for home loans in India is fiercely competitive. Banks are always willing to extend the loans to borrowers who have proper documentation & good CIBIL records. The banks do a considerable size of business as compared to the NBFC’s as the customers prefer obtaining loans from the bank they have an account with. The public sector banks are amongst the best lenders with the lowest interest rates, while the private banks also offer competitive rates. And the NBFC’s & co-operative banks offer at higher interest rates. The interest rates start from 6% per annum, which may go up to 11-12% per annum. The interest rates on home loans are continuously falling due to the fall in the repo rate of the RBI. The interest rates are about to decline even more in the coming years. Thus it is also recommended that the borrower should opt for floating interest rates rather than availing the fixed interest rates. The banks also offer lower interest rates based on the lower CIBIL score.

The higher the tenure of the loans higher is the interest rates charged by the borrower, while the lower the tenure lower is the interest being charged. Banks also do charge the processing fees on the home loans as a one-time fee to the borrower. The faster repayment of loans can lead to early debt-free and also help save money on interest repayment. Also, against the early repayment borrowers, CIBIL ratings may get improved. The home loans interest rates can be surveyed on the internet about the lowest interest rates being charged by the bank. The banks charging the interest rates are continuously changing according to the increase or decrease in the banks’ interest rates. The interest rates vary according to the lender to the lender and according to an individual to individual depending on their age, income, and duration of service pending & credit score of the borrower. The banks also charge a hefty penalty if the delay or default of payment by an individual. Also, the credit score gets disturbed in case of the borrower not paying the installments on time. Thus payment of installments on time is necessary.

Following are the interest rates charged by the bank:

Kotak Mahindra Bank
Interest rates charged: 6.65% per annum
Fees Charged: 0.50%

CITI Bank
Interest rates charged: 6.75% per annum
Fees Charged: Rs.10,000

Bank of Baroda Bank
Interest rates charged: 6.85% per annum
Fees Charged: Rs.8500-25,000

SBI Bank
Interest rates charged: 6.70% per annum
Fees charged: 0.35%

HDFC Ltd.
Interest rates charged: 6.75% per annum
Fees Charged: Rs.3000-4500

ICICI Bank
Interest rates charged: 6.90% per annum
Fees Charged: Rs.3000

Axis Bank
Interest rates charged: 6.90% per annum
Fees Charged: Rs.10,000

IDBI Bank
Interest rates charged: 6.90% per annum
Fees Charged: Rs.2500-5000

Federal Bank
Interest rates charged: 7.90% per annum
Fees Charged: Rs.3000-7500

Types of Interest rates

Fixed Interest rates:

These are the ones in which the interest rates get freeze while taking the loans. The interest rates do not vary according to the increase or decrease in the interest rates thereafter. The final amount repayable thus can be obtained during the processing of the loans, which remains fixed; there is no fluctuation in it.

Advantages:

Thus the interest rates remain fixed if, in case the interest rates increase, the borrower is least affected due to that. The borrower gets the exact repayment value while applying for the loan, which remains unchanged later.

Disadvantages:

If the interest rates fall drastically, the borrower may be at a loss, as in the case of the fixed interest rates, the interest rates remain the same.

Floating interest rates:

These are the ones in which the interest rates of the borrower vary according to the market fluctuation. Thus the borrower does not get the exact amount to be payable while applying for the loans.

Advantages:

The borrower mainly saves money in the floating interest rates as the interest rates are on a continuous decline. The processing fees charged are also less in the case of the floating rates.

Disadvantages:

In rare cases, if the interest rates go up drastically, then, in that case, the borrower may be charged higher interest, and the repayment value may go up due to an increase in interest rates.

The interest rate charged by every bank keeps on varying continuously; thus, to avail the cheapest interest loans, the borrower should keep the check on the interest rates charged by the lender on the internet before applying for the loans. Also, the terms & conditions regarding the interest rates charged by the borrower, tenure, and penalty charged should be thoroughly be checked by the borrower.