Interest rates on home loans are provided by public and private sector banks as well as housing finance companies as listed on National Housing Bank’s website Banks and HFCs are based on interest rate i.e., bank/HFC offering the lowest lowest home loan rates (Loan amount= Rs 75 lakh) is placed at the top and highest at the bottom. is calculated on the interest rate mentioned in the table for a Rs 75-lakh loan with a tenure of 20 years. For example: In public sector banks, Punjab & Sind, Punjab National Bank, UCO Bank, Indian Bank, Bank of Baroda, and Bank of India offer an interest rate of 6.5 percent to their home loan borrowers. The EMI for these banks’ home loan borrowers will amount to Rs 55,918. This is for a Rs 75-lakh loan with a tenure of 20 years. Kotak Mahindra Bank is the sole private sector lender on a list of 10 cheapest home loan providers. Its lowest home loan rate on offer is 6.55 percent and the EMI works out to Rs 56,139. Other private banks also provide home loans at various interest rates to borrowers.
There are mainly two types of home loan interest rates charged by most of the banks.
1. Fixed Interest Rate:
The fixed home loan interest rate is constant throughout the loan tenure. There will be no change in the interest charges since the rate remains fixed. Depending on the offer, you may be allowed to switch over to the floating rate system after completing a certain duration of the loan tenure. A fixed interest rate decides how much interest you are paying on the amount. Your loan will be shielded from frequent rate fluctuations and save money eventually if there is a hike in lending rates. But, If the standard lending rates fall, you will not benefit since the interest component remains frozen.
2. Floating Interest Rate:
The interest charges on your home loan are subject to the current most lending rates of the bank. The rate is linked to the latest published rate of the bank which in turn depends on multiple factors such as RBIs (Reserve Bank of India) monetary policy and lending rate revisions, the bank’s response to the revision etc. Fixed interest rates are usually 1- 2.5% higher than floating interest rates.