Best Home Loans 2019

Finding the most affordable housing loan can save you a significant amount of money. In order to help facilitate this process, we researched and analysed loans and 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.

Interest Rates for Fixed Rate Home Loans

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 Rate RangeDuration of Fixed Rate
Citibank8.75% - 9.15%1 year
ICICI Bank9.25% - 9.45%2 - 3 years
HDFC9.30% - 10.05%2 years
ICICI Bank9.40% - 9.55%5 - 10 years
IDBI10.25% - 10.25%3 years
IDBI10.50% - 10.50%3+ years
ICICI Bank9.90% - 10.30%Full loan tenure
* Rates updated November 2018
BankInterest Rate RangeDuration of Fixed Rate
Citibank8.75% - 9.15%1 year
ICICI Bank9.25% - 9.45%2 - 3 years
HDFC9.30% - 10.05%2 years
ICICI Bank9.40% - 9.55%5 - 10 years
IDBI10.25% - 10.25%3 years
IDBI10.50% - 10.50%3+ years
ICICI Bank9.90% - 10.30%Full loan tenure
* Rates updated November 2018

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).

BankLowest Advertised RateEst. Monthly Payment
DCB Bank8.50%Rs. 24,157
LIC Housing Finance8.50%Rs. 24,157
Aditya Birla Capital8.55%Rs. 24,258
Allahabad Bank8.60%Rs. 24,359
Central Bank of India8.60%Rs. 24,359
Dena Bank8.60%Rs. 24,359
Federal Bank8.60%Rs. 24,359
Bank of Baroda8.65%Rs. 24,461
IDBI Bank8.65%Rs. 24,461
UCO Bank8.65%Rs. 24,461
* Rates updated November 2018
BankLowest Advertised Interest RateEstimated Monthly Payment
DCB Bank8.50%Rs. 24,157
LIC Housing Finance8.50%Rs. 24,157
Aditya Birla Capital8.55%Rs. 24,258
Allahabad Bank8.60%Rs. 24,359
Central Bank of India8.60%Rs. 24,359
Dena Bank8.60%Rs. 24,359
Federal Bank8.60%Rs. 24,359
* Rates updated November 2018

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.

BankRange of Advertised Interest Rates
DCB Bank8.70% - 20.60%
HDFC9.65% - 11.65%
HSBC9.96% - 11.20%
Aavas Financiers Limited10.00% - 19.00%
IDBI10.20% - 10.85%
SBI10.35% - 11.80%
* Rates updated November 2018
BankRange of Advertised Interest Rates
DCB Bank8.70% - 20.60%
HDFC9.65% - 11.65%
HSBC9.96% - 11.20%
Aavas Financiers Limited10.00% - 19.00%
IDBI10.20% - 10.85%
SBI10.35% - 11.80%
* Rates updated November 2018

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.

Home Loan Balance Transfer Interest Rates

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. Our calculations assume a 25-year loan of Rs. 30 lakh.

BankInterest RateEstimated Monthly Payment*
SBI8.70% - 9.25%Rs. 24,562
IndiaBulls8.80% - 11.05%Rs. 24,766
Bajaj Finserv8.85% - 11.15%Rs. 24,868
ICICI Bank9.90% - 10.30%Rs. 25,176
* Based on lowest advertised rate, rates updated November 2018
BankInterest RateEstimated Monthly Payment*
SBI8.70% - 9.25%Rs. 24,562
IndiaBulls8.80% - 11.05%Rs. 24,766
Bajaj Finserv8.85% - 11.15%Rs. 24,868
ICICI Bank9.90% - 10.30%Rs. 25,176
* Based on lowest advertised rate, rates updated November 2018

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.

Home Loan Top Up 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. Our calculations assume a 25-year loan of Rs. 30 lakh.

BankInterest Rate RangeEstimated Monthly Payment*
HDFC8.85% - 10.30%Rs. 24,868
SBI8.95% - 10.10%Rs. 25,073
ICICI Bank9.00% - 10.30%Rs. 25,176
Bank of Baroda9.15% - 10.15%Rs. 25,485
Citibank9.25%Rs. 25,691
Oriental Bank of Commerce9.25% - 9.75%Rs. 25,691
* Based on lowest advertised rate, rates updated November 2018
BankInterest Rate RangeEstimated Monthly Payment*
HDFC8.85% - 10.30%Rs. 24,868
SBI8.95% - 10.10%Rs. 25,073
ICICI Bank9.00% - 10.30%Rs. 25,176
Bank of Baroda9.15% - 10.15%Rs. 25,485
Citibank9.25%Rs. 25,691
* Based on lowest advertised rate, rates updated November 2018

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.

BankRange of Advertised Interest Rates
Dena Bank8.65% - 8.75%
Bank of Baroda8.65% - 9.65%
Karnataka Bank8.70% - 9.00%
Canara Bank8.75% - 8.95%
IOB8.90% - 9.05%
* Rates updated November 2018
BankRange of Advertised Interest Rates
Dena Bank8.65% - 8.75%
Bank of Baroda8.65% - 9.65%
Karnataka Bank8.70% - 9.00%
Canara Bank8.75% - 8.95%
IOB8.90% - 9.05%
* Rates updated November 2018

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 CapitalAllahabad BankAndhra Bank
Axis BankBajaj FinservBank of BarodaBank of India (BOI)
Bank of MaharashtraCanara BankCentral Bank of IndiaCitibank
Corporation BankDBSDCB BankDena Bank
Deutsche BankDhanlaxmi BankDHFLEdelweiss
Federal BankGIC Housing FinanceHDFCHSBC
ICICI BankIDBI BankIDFC BankIIFL
India Overseas Bank (IOB)India Shelter Finance CorporationIndiaBullsIndusInd Bank
J&K BankKarnataka BankKarur Vysya BankKotak Bank
Lakshmi Vilas BankLIC Housing FinanceOriental Bank of CommercePNB Housing Finance
Punjab and Sind BankRBL BankReliance Home FinanceSBI
SIBStandard CharteredSundaram BNP Paribas Home FinanceTamilnad Mercantile Bank
Tata CapitalUCO BankUnion Bank of IndiaYES Bank
William Hofmann

William is a Senior Research Analyst at ValueChampion Singapore, focusing on banking and SMEs. He previously was an Economic Consultant at Industrial Economics Inc.