Latest Home Loan Rates In 2023 – Forbes Advisor INDIA

Home loans provided by banks to salaried and self-employed individuals for buying a plot of land to construct a house, purchase constructed residences, or refurbish existing ones, come with an added rate of interest (ROI) on the premium amount when the equated monthly installment (EMI) begins.

Added interest rates on the lump sum advance of funds are crucial to determine if you can afford to take a home loan. Your income, credit score, along with repayment tenure, loan amount as well as relationship with the bank play a crucial role in getting an attractive rate on the borrowed sum.

Since the continued pause in rate hikes by the Reserve Bank of India (RBI) at 6.50%, and as retail inflation prices rise, most Indian banks have altered their rates for new home loan to salaried and self-employed consumers..

Here’s a list of interest rates applied by major banks of India.

Home Loan Interest Rates in November 2023

The rate of interest on home loans also depends on the application applied with or without security, guarantor or co-applicant, as well as down payment of the margin, collaterals, your current income and debt, etc. Most banks also provide concessions to women borrowers, and senior citizens.

Here’s the latest rate of interest on new home loans provided to general citizens (employed and self-employed) by major banks of India as of Oct. 31, 2023.

Bank of Baroda

Bank of India

Bank of Maharashtra

Canara Bank

Indian Overseas Bank

Punjab & Sind Bank

State Bank of India

Union Bank of India

Axis Bank

Bandhan Bank

CSB Bank

DCB Bank

HDFC Bank

ICICI Bank

Jammu and Kashmir Bank

Karnataka Bank

Karur Vysya Bank

Kotak Mahindra Bank

Tamilnad Mercantile Bank

Yes Bank

IDBI Bank

Home loan interest rates are accurate as of Oct. 31, 2023.

How do Banks Calculate Interest Rate on Home Loans?

Interest rates for home loans provided by banks in India are usually floating, though fixed rate is also available. A fixed rate of interest on loans is fixed for the overall duration of the loan. With a floating rate, the ROI on your EMI is calculated as per the “base rate” (standard lending rate of the bank), or the lender’s repo-linked loan rate (RLLR) or marginal cost of fund-based lending rate (MCLR), plus the spread (difference in interest rates that a bank pays to a depositor and receives from loan borrowed to a customer).

The RoI on the floating rate on home loans for every bank changes as per the RBI’s change in repo rate (the rate at which the apex bank lends money to public and private banks). In the floating rate, the change is, however, reflected after the “reset period” when the interest rate on your EMI is subjected to revisions.

How to Increase Home Loan Eligibility in 2023

Home loan eligibility determines the maximum amount a bank can borrow to an applicant. Here are some factors to consider:

CIBIL or Credit Score

An applicant with an excellent credit score, with good repayment history has more chances to obtain a maximum home loan amount. Most bBanks provide home loans even to people with low scores, however, 750 and above is considered a good one.

Joint Home Loan

If you opt for a co-borrower, usually spouse, with a good credit score for a joint home loan, it considerably boosts your eligibility chances as well as divides repayment burden.

Longer Tenure

It helps you lower the EMI amount while choosing a longer repayment period.

Clear Existing Debts

An applicant opting for a home loan may consider clearing the existing debt or ongoing EMIs to boost their eligibility.

Higher Down Payment

Banks provide 75% to 90% of the property value, and the remaining has to be paid by an applicant. Consider raising the down payment to avoid higher interest payout when the EMI begins.

How to Select the Best Home Loan

It is important to understand the various aspects of the loan to select the best home loan that suits for financial needs. Factors that influence your selection of home loan includes:

Rate of Interest
The RoI is an important factor that determines how much you will pay when the EMI begins. Remember, most banks offer women borrowers a 50 bps discount on regular rates. 

Maximum Loan Amount
Depending upon other eligibility factors, the maximum amount one can borrow depends upon the cost of the property and your income levels. Banks fund 77% to 90% of the value of the property based factories including co-applicant, guarantor, security over and above basic eligibility criterias.

Processing Charges
This charge is levied by the bank to process your application. While some banks do not charge any processing fee for a certain loan period and amount, the processing fee starts from 0.25% up to 3% of the loan amount. For salaried and women borrowers, charges are usually lower, whereas this fee for government employees are mostly waived.

Prepayment Charges
The charge is levied when you decide to close the loan before the maturity date, which varies among banks.

Moratorium Period on Home Loans
Home renovation loans come with a moratorium period starting three to six months.

What the Market is Offering
It is mandatory for banks to display all relevant information on customer care service, interest rates, charges, and others in their website, apps, flyers, etc. The above table will help you understand the bank’s offer before you visit the websites or physical branch of the lenders.

Tax Benefits

Home loans come with tax exemptions and deductions for borrowers under Section 24, Section 80C, Section 80EE under the Income Tax Act, for those who have opted for the old tax regime.

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