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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.
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).
|Bank||Minimum Interest Rate||Equated Monthly Instalment|
|LIC Housing Finance||6.90%||₹21,012|
|Aditya Birla Capital||9.00%||₹25,176|
|Central Bank of India||6.90%||₹21,012|
|Bank of Baroda||6.85%||₹20,917|
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.
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.
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.
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.
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 Tenure||Monthly Payment||Total Interest Cost|
|20 years||Rs. 26,992||Rs. 3,478,027|
|25 years||Rs. 25,176||Rs. 4,552,767|
|30 years||Rs. 24,139||Rs. 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.
You can find the lowest home loan interest rates at banks like ICICI, HDFC and State Bank of India. Some banks like SBI have seasonal promotions where they offer interest rate concessions, as well.
By inputting your home loan interest rate, loan amount and tenure into an EMI calculator, you can calculate your monthly equated monthly instalments. Most banks and housing loan lenders provide EMI calculators on their website.
You can avail a home loan between Rs. 1 lakh and Rs. 30 crore or more depending the lender and your your eligibility. However, most banks and home loan lenders will only cover up to 90% of your total property cost.
Borrowers with a high CIBIL score above 700 can avail the best interest rates on their home loan. However, many banks and home loan lenders offer housing loan options to borrowers without a good credit score history.
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 Limited||Aditya Birla Capital||Axis Bank||Bajaj Finserv|
|Bank of Baroda||Bank of India||Bank of Maharashtra||Canara Bank|
|Central Bank of India||Citibank||DBS||DCB Bank|
|Deutsche Bank||Dhanlaxmi Bank||DHFL||Edelweiss|
|Federal Bank||GIC Housing Finance||HDFC||HSBC|
|ICICI Bank||IDBI Bank||IDFC First Bank||India Infoline|
|India Overseas Bank||India Shelter Finance Corporation||IndiaBulls||IndusInd Bank|
|J&K Bank||Karnataka Bank||Karur Vysya Bank||Kotak Mahindra Bank|
|Lakshmi Vilas Bank||LIC Housing Finance||PNB Housing Finance||Punjab and Sind Bank|
|RBL Bank||Reliance Home Finance||SBI||South Indian Bank|
|Standard Chartered||Sundaram BNP Paribas Home Finance||Tamilnad Mercantile Bank||Tata Capital|
|UCO Bank||Union Bank of India||Yes Bank|