Best Home Loans in India 2021

Finding the most affordable housing loan can save you a significant amount of money. In order to help you find the best home loan, our financial analysts reviewed and compared loans and interest rates from over 50 lenders in India.

Table of Contents

Our Picks for the Best Home Loans in India

The following home-related loan products represent the best available financing options available to individuals living in India based on our research. In order to compare these loans, we analysed interest rates, processing fees and other features of each loan. Prospective homeowners should try to find a home loan with a low interest cost and an affordable monthly payment.

Best Fixed Rate Housing Loans

Fixed rate interest loans offer borrowers a level of security against rising interest rates. For instance, many of these loans guarantee a set rate for a defined number of years, which can protect borrowers when interest rates rise.

We found that the following banks tend to offer cheaper fixed rates than their competitors in India. For example, these loans can cost thousands of rupees less in terms of monthly payments and save borrowers 15-20% in total interest cost over the loan tenure. Our calculations assume a 25-year loan of Rs. 30 lakh.

BankInterest RatesDuration of Fixed Rate
HDFC7.40% - 8.20%2 years
IDBIFrom 9.85%3 years
IDBIFrom 10.10%3+ years
LIC Housing Finance10.05-10.15%Entire loan tenure.
Axis BankFrom 12.00%Entire loan tenure.
BankInterest RatesDuration of Fixed Rate
HDFC7.40% - 8.20%2 years
IDBI9.85%3 years
IDBI10.10%3+ years
LIC Housing Finance10.05-10.15%Entire loan tenure.
Axis Bank12.00%Entire loan tenure.

Best Floating Rate Housing Loans

On the other hand, most home loan products in India charge floating interest rates. These rates are referred to as "floating" because they are pegged to various reference rates that change, or "float", over time. These floating rates tend to be lower than fixed rates. Most banks peg their home loan rates to their MCLR (marginal cost of funds lending rate).

BankMinimum Interest RateEquated Monthly Instalment
DCB Bank8.75%₹24,664
LIC Housing Finance6.90%₹21,012
Aditya Birla Capital9.00%₹25,176
Central Bank of India6.90%₹21,012
Federal Bank7.65%₹22,463
Bank of Baroda6.85%₹20,917
IDBI Bank7.15%₹21,491
UCO Bank6.90%₹21,012

BankMinimum Interest RateEquated Monthly Instalment
DCB Bank8.75%₹24,664
LIC Housing Finance6.90%₹21,012
Aditya Birla Capital9.00%₹25,176
Central Bank of India6.90%₹21,012
Federal Bank7.65%₹22,463

We found that the banks listed above tend to offer the cheapest floating rate home loans. These loans are significantly cheaper than the average floating home loan and can save borrowers hundreds thousands of rupees over the course of the loan tenure. For example, the cheapest floating rate housing loans tend to be about 5-7% less expensive in terms of total interest cost compared to the average. Our calculations assume a 25-year loan of Rs. 30 lakh.

Best Home Loans Against Property (Mortgage Loans)

A loan against property, also referred to as a mortgage loan, allows homeowners to borrow based on the value of their ownership over their existing property. This can be a useful type of financing for individuals and families that require a large amount of funds and are able to borrow against their current home's value. However, this type of borrower can entail significant risk as the home is typically used as collateral for the loan.

The banks listed below advertise rates significantly lower than other lenders that offer loans against property. If you are able to obtain the lower rates offered, you will realize substantial savings compared to other loans. It is also worth noting that these banks also offer a wide range of rates, so it is important to compare loan offers before choosing a lender.

BankInterest Rates
Aavas Financiers Limited8.00% - 19.00%
ICICI Bank8.35% -9.00%
HDFC Bank8.45% - 10.05%
HSBC BankFrom 8.45%
SBI8.80% - 9.65%
BankInterest Rates
Aavas Financiers Limited8.00% - 19.00%
ICICI Bank8.35% -9.00%
HDFC Bank8.45% - 10.05%
HSBC BankFrom 8.45%
SBI8.80% - 9.65%

Best Home Loan Balance Transfers

Home loan balance transfers allow you to move your existing home loan from your current lender to another lender. By doing so, you may be able to obtain a cheaper interest rate and therefore decrease your monthly payments and total cost of borrowing.

The following lenders offer balance transfers with cheaper than average rates. We found that the cheapest loans offered by these lenders can save you approximately 4-5% or as much as Rs. 2 lakh in total interest over the course of the loan tenure.

BankInterest Rate Range
Bajaj FinservFrom 6.90%
SBI6.95% - 7.70%
IndiaBulls8.80% - 12.00%
ICICI Bank6.90% - 7.50%
BankInterest Rates
Bajaj FinservFrom 6.90%
SBI6.95% - 7.70%
IndiaBulls8.80% - 12.00%
ICICI Bank6.90% - 7.50%

Best Top Up Housing Loans

For individuals that are in critical need of financing on top of their existing home loan, top up loans can be a good option. These loans can be used to finance any expense and can be a good fit for borrowers that need money to pay for medical bills or to consolidate other debt with higher interest rates.

The lenders listed below tend to charge the lowest interest rates for home loan top ups. For example, their lowest rates can save you Rs. 1 lakh to Rs. 2 lakh in terms of total interest cost compared to the average top up loan in India.

BankInterest Rates
HDFC Bank8.30% - 8.80%
SBI7.50% - 9.80%
Bank of Baroda7.85% - 9.20%
Bank of India6.85% - 7.75%
BankInterest Rates
HDFC Bank8.30% - 8.80%
SBI7.50% - 9.80%
Bank of Baroda7.85% - 9.20%
Bank of India6.85% - 7.75%

Best Home Renovation Loans

Many families outgrow their houses and others simply want to improve or repair their home. For these individuals, renovation loans can be a good way to finance the extension of their home. We found that the following lenders tend to offer the best home renovation loan rates. If you are able to obtain the lower rates offered by these banks, you will be able to save a significant amount of money each month in terms of your monthly payments as well as over the entire course of your loan.

BankInterest Rates
Bank of Baroda6.85% - 8.20%
Karnataka Bank8.07% - 8.84%
HDFC Bank6.95% - 7.85%
IOB7.25% - 7.40%

BankInterest Rates
Bank of Baroda6.85% - 8.20%
Karnataka Bank8.07% - 8.84%
HDFC Bank6.95% - 7.85%
Indian Overseas Bank7.25% - 7.40%

How to Find the Best Home Loan

The task of choosing a home loan can be a daunting one. However, by conducting the proper due diligence, you will be able to ensure that you've found the perfect home loan for your circumstances. With that in mind, we've prepared a brief guide to help you prepare for the process of finding a great home loan and ultimately owning your dream home.

Choosing a Home Loan: Interest Rates, Fees and Monthly Payments

Typically, most individuals consider interest rates when deciding on a home loan. This is a great place to start, given that interest rates dictate the vast majority of your housing loan's total cost. Most banks offer lower interest rates to women and salaried individuals. Some also offer cheaper rates to government employees or individuals with CIBIL credit scores of above 700-750. If you fall under one or more of these categories, it is crucial to make sure that you find preferred interest rates when comparing loans.

In addition to comparing interest rates, you should carefully review the fees associated with each loan that you are considering. These fees can add up and significantly impact the relative price of each loan. For example, most banks charge a processing fee of about 1-2% of your loan principal. Other fees to be aware of include charges for early and late repayments. While it is possible and prudent to avoid these fees, you may want to take note of each lender's fee structure in case you suspect that you may need to make early or late payments.

Finally, it is important to consider the required monthly payment of each loan that you choose. For example, while you may find a loan with a very total interest cost, you'll end up accumulating even more debt from late payment fees if you are unable to make regular payments. Generally, a longer home loan with allow you to spread the total cost over a longer period of time and drive down your monthly payment. However, these loans will also cost more in terms of total interest as you will accumulate interest over a longer period of time. For an illustration, please refer to the table below.

Loan TenureMonthly PaymentTotal Interest Cost
20 yearsRs. 26,992Rs. 3,478,027
25 yearsRs. 25,176Rs. 4,552,767
30 yearsRs. 24,139Rs. 5,689,924
* Assuming loan of Rs. 30 lakh with annual interest rate of 9%

How to Choose Between a Fixed and Floating Interest Rate

Savvy loan applicants will often ask whether they should choose a home loan with a fixed or floating interest rate. This is a very difficult decision and is highly dependent on the upcoming trends of interest rates in the country. In times when interest rates are expected to stay somewhat stable or decline, it is best to choose a floating rate housing loan. Floating rates are typically lower than fixed rates because it gives the banks the option to raise your rate if their interest rates increase. On the other hand, in times when interest rates are increasing, you may be better of choosing a loan with a fixed rate in order to lock in your rate for a set period of time.

Methodology

We conducted our review based on information home loan data available online. We reviewed home loan products from more than 50 lenders which are listed below. We analysed data that we believed would be most relevant to potential borrowers including interest rates, tenures, fees, and eligibility requirements.

Lenders Reviewed by ValueChampion
Aavas Finaciers LimitedAditya Birla CapitalAxis BankBajaj Finserv
Bank of BarodaBank of IndiaBank of MaharashtraCanara Bank
Central Bank of IndiaCitibankDBSDCB Bank
Deutsche BankDhanlaxmi BankDHFLEdelweiss
Federal BankGIC Housing FinanceHDFCHSBC
ICICI BankIDBI BankIDFC First BankIndia Infoline
India Overseas BankIndia Shelter Finance CorporationIndiaBullsIndusInd Bank
J&K BankKarnataka BankKarur Vysya BankKotak Mahindra Bank
Lakshmi Vilas BankLIC Housing FinancePNB Housing FinancePunjab and Sind Bank
RBL BankReliance Home FinanceSBISouth Indian Bank
Standard CharteredSundaram BNP Paribas Home FinanceTamilnad Mercantile BankTata Capital
UCO BankUnion Bank of IndiaYes Bank
William Hofmann

William is a Product Manager at ValueChampion Singapore, helping consumers and SMEs find the best banking products through comprehensive analysis of data. He previously was an Economic Consultant at Industrial Economics Inc, where he conducted a variety of research and economic analyses. He graduated from University of Vermont with degrees in Economics and Psychology. His work has been featured on a variety of major media such as the Straits Times, the Business Times, the Edge, DailySocial, the Entrepreneur and more.