Best Banks and NBFCs for Home Loans in India – Interest Rates and Eligibility
If you are planning to buy a home, you must start comparing the interest rates and loan repayment tenure of the best housing loan banks in India. Many banks and NBFCs (Non-Banking Financial Company) offer home loans at competitive interest rates. Moreover, many lenders do not charge processing fees and foreclosure charges on home loans.
This article lists 9 of the top housing loan banks and NBFCs in India. Compare the processing fees and other fees/charges, check eligibility, documents required, and know how EMIs are calculated before you make the final call. Read on!
9 Best Housing Loan Banks in India (2023)
The following table lists the best lenders for home loans in India.
| Name of the Financial Institution | Interest Rates (p.a.) | Processing Fees* | Other Charges* |
| Navi | Starting at 8.60% | Nil | Prepayment charges: Nil |
| HDFC Bank | Starting at8.45%** **Limited-period offer | 0.5% of the loan amount or Rs. 3000 (whichever higher) plus taxes | Prepayment charges for individuals: 2% for fixed rates and none for floating-rate loans.Re-appraisal charges- up to Rs. 2,000 plus taxes |
| Axis Bank | Starting at 8.75% | 1% of the loan amount, subject to a minimum up front fee of ₹10,000 | No prepayment charges (for floating rates)2% of the amount prepaid or outstanding1% of the outstanding loan amount when switching from floating to fixed and 2% of the balance amount when switching from fixed to floating, subject to conditionsPenalty on loan overdue- 2% per month |
| ICICI Bank | Standard: Starting at 9.25%Festival offer: Starting at 9.00% valid until 28th February, 2023 | Standard: 0.50% to 2% or ₹3,000 (whichever is higher) plus statutory chargesFestival pricing: ₹2,999 only till 28th February, 2023 | Prepayment charges for home loans: Floating interest – NILFixed interest – 2%, if loan closed in full during the last one year from date of final prepaymentCharges for late payment: 1.5% of the balance amount, subject to a minimum of ₹500 |
| Kotak Mahindra Bank | Starting at 8.65%**Limited period offer | 0.5% for salaried and 1% for self-employed, subject to a minimum of ₹5,000 | No prepayment charges for individual borrowersSwitching fee: 0.5% of the outstanding principal amount plus any undisbursed amount, subject to a maximum of ₹10,000Late payment: 2% per month |
| Bank of Baroda | Starting at 8.90% | Up to ₹50 Lakh: 0.50% of the home loan amount, subject to a minimum of ₹8,500Over ₹50 Lakh: 0.25% of the home loan amount, subject to a minimum of ₹8,500 | Nil |
| Punjab National Bank | Starting at 8.50% | Standard:0.35% of the loan amount, subject to a maximum of ₹15,000Special festive offer: Nil until 31st March, 2023 | No prepayment charges on fixed or floating loans.Standard documentation charges: ₹1,350Special offer: Nil until 31st March, 2023 |
| Union Bank of India | Starting at 8.60% | 0.50% of the loan amount, capped at ₹15,000 | No prepayment charges or balance transfer penalty for both fixed- and floating-rate options |
| IDFC First Bank | Starting at 8.85% | Up to 3% of the total loan approved | Cancellation charges: 1% of the loan amount plus interest from the date of disbursal to the date of cancellationRebooking charges: Same as above |
Check Your Home Loan Eligibility
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Detailed Overview Best Housing Loan Banks
If you’re looking for instant approval, superfast disbursal, a list of pre-approved projects to choose your dream home from, and flexible payment options, Navi home loan could be an option for you. An end-to-end digital experience and minimum documentation are some of the other advantages. Based on your eligibility, you could get approval for up to ₹5 Crore. The following are some interesting details about the loan:
- Interest rates for salaried employees: Starting from 8.60% p.a.
- Interest rates for self-employed: Starting from 8.60% p.a.
- Eligibility criteria:
- You are an Indian resident
- You are aged between 25 years and 62 years
- You are either salaried or self-employed
- Processing fee: Nil
- Loan tenure: Up to 30 years
- Foreclosure charges: Nil
2. HDFC Bank
Still ‘dreaming’ about your dream home? The right home loan can make your dream a reality sooner. Take home loans from HDFC for example. This lender offers a wide variety of mortgage loans – from regular home loans to home improvement loans to home extension loans and more. Customised offers, a wealth of lending experience, and special counselling services for new homebuyers makes HDFC Bank one of the possible options for any prospective home loan applicant. Some other important details are as follows:
- Interest rates for salaried employees: Starting from 8.45% p.a. (limited-period offer)
- Interest rates for self-employed: Starting from 8.45% p.a. (limited-period offer)
- Eligibility criteria:
- You are aged between 21 years and 65 years
- Your minimum income is ₹10,000 per month (salaried) or ₹2 Lakh per annum (self-employed)
- Processing fee: 0.5% of the loan amount, subject to a minimum of ₹3,000
- Loan tenure: Up to 30 years
- Foreclosure charges: Nil (floating rate) and 2% (fixed rate)
3. Axis Bank
Home loans for different budgets and profiles? Axis Bank home loans could easily fit the description. This bank approves home loans as small as ₹3 Lakh (Minimum loan amount) and as large as ₹5 Crore (Maximum loan amount). Based on your requirements and preference, you can also choose from fixed and floating interest rates. Important details about this home loan are as follows:
- Interest rates for salaried employees: Starting from 8.75% p.a.
- Interest rates for self-employed: Starting from 8.75% p.a.
- Eligibility criteria:
- Salaried: You should be at least 21 years of age at the time of application and no more than 60 years of age at the time of loan maturity (or superannuation, whichever is earlier)
- Self-employed: You should be at least 21 years of age at the time of application and no more than 65 years of age at the time of maturity
- You file your income tax returns regularly.
- Processing fee: Up to 1% of the loan amount, capped at ₹10,000
- Loan tenure: Up to 30 years
- Foreclosure charges: Nil (floating rate) and 2% of the loan amount prepaid or the outstanding principal (fixed rate)
4. ICICI Bank
You could consider getting an ICICI Bank home loan, whether you are planning to buy your dream home or build it. It offers both fixed-rate and floating-rate (linked to repo rate) options. This lender charges no fees on part prepayment and offers low EMI options, minimal documentation, and quick loan sanction for pre-approved borrowers. Some interesting details are:
- Interest rates for salaried employees: Starting from 9.25% p.a. (Standard) and 9% (limited-period offer)
- Interest rates for self-employed: Starting from 9.25% p.a. (Standard) and 9% (limited-period offer)
- Eligibility criteria:
- Age of main applicant should be at least 21 years at the time of application and no more than 65 years at the time of loan maturity (or age of superannuation for salaried individuals)
- Age of a co-applicant can’t be less than 18 years
- You must be salaried or self-employed and provide proof of regular income
- Processing fee: 0.5% – 2%, subject to a minimum of ₹3,000 (Standard). However, until 28th February 2023, you can avail of an ICICI Bank home loan with a processing fee of just ₹2,999
- Loan tenure: Up to 30 years
- Foreclosure charges: Nil (floating rate) and 2% on the amount prepaid (fixed rate)
5. Kotak Mahindra Bank
Shortlisted your dream home already? The next step is to finalise a home loan that offers a seamless borrowing experience, affordability, minimal documentation, easy KYC, and fast approval. Kotak Mahindra Bank home loans check all these boxes. Hence, it could be an option that you might want to consider, if you’re on the lookout for home financing options. It also offers doorstep services. Some of the other important details are:
- Interest rates for salaried employees: Starting from 8.90% p.a.
- Interest rates for self-employed: Starting from 9.00% p.a.
- Eligibility criteria:
- Aged between 18 years and 60 years (salaried)
- Aged between 18 years and 65 years (self-employed)
- Minimum monthly income of ₹20,000 for residents of Pune, Mumbai, Bangalore, Delhi, and Chennai
- Minimum monthly income of ₹15,000 for the residents of other cities
- Processing fee: 0.5% plus applicable taxes
- Loan tenure: Up to 30 years
- Foreclosure charges: Nil
6. Bank of Baroda
Found your new home but still waiting for your home loan approval? Maybe, you could consider a home loan from Bank of Baroda as an alternative. You could get a loan from this bank with minimal documentation, a simple KYC process, and instant approval within 30 minutes (could be subject to specified conditions, do refer to the bank’s website for more information). Other interesting details about this loan are:
- Interest rates for salaried employees: Starting from 8.90% p.a.
- Interest rates for non-salaried individuals: Starting from 8.95% p.a.
- Eligibility criteria:
- The applicant should be at least 21 years of age
- The co-applicant should be at least 18 years of age
- The applicant should be salaried or self-employed
- They might also evaluate your CIBIL score and existing liabilities, if any
- Processing fee: 0.35% on loans up to ₹20 Lakh and 0.40% on loans above ₹20 Lakh
- Loan tenure: Up to 30 years
- Foreclosure charges: Nil
7. Punjab National Bank (PNB)
Looking to purchase or build your new home? Or maybe renovate your old one? Well, if you need home financing, you could consider getting a loan from Punjab National Bank. Borrowing from its three-decade old lending experience, PNB has devised ways to make your journey as smooth and painless as possible. It offers both floating- and fixed-rate options, flexible tenures, and home loans for multiple purposes:
- Interest rates for salaried employees: Starting from 8.90% p.a.
- Interest rates for non-salaried individuals: Starting from 8.95% p.a.
- Eligibility criteria:
- Aged between 21 year and 65 years
- Salaried or self-employed
- Processing fee: 0.35% of the loan amount, subject to a maximum of ₹15,000 and a minimum of ₹2,500
- Loan tenure: Up to 30 years
- Foreclosure charges: No charges on both floating and fixed interest-rate options. However, in case of loan takeover (fixed rate loan), the bank will levy a charge of 2%
- Union Bank of India: Think home loans are too complex? Well, here’s a loan that might change your perception. That’s because Union Bank home loans require minimal paperwork, low EMIs, starting at just ₹652, and other benefits, such as no legal and valuation charges for loan takeover. The bank will also assign you a relationship executive to assess your specific requirements, help you through the application process, provide doorstep services, and speed up your loan disbursal.
- Interest rates for salaried employees: Starting from 8.60% p.a.
- Interest rates for non-salaried individuals: Starting from 8.60% p.a.
- Eligibility criteria:
- Indian residents or NRIs
- Minimum age at the time of application to be 18 years and maximum age at the time of maturity to be 75 years
- Option to apply alone or with other eligible co-applicant(s)
- Processing fee: 0.50% not exceeding ₹15,000+taxes
- Loan tenure: Up to 30 years in case of purchase or construction of a home and up to 15 years in case of repair or renovation
- Foreclosure charges: Nil (on both floating and fixed rate options for individuals). But, the bank will levy a charge of 2% on takeover of a loan by another lender, in case of the fixed-rate option
9. IDFC First Bank
From as low as ₹1 Lakh to as high as ₹5 Crore, IDFC First Bank offers home loans that cater to a wide range of customers. Moreover, their loans can be used for a number of purposes, including top-up and balance transfer. With this loan, you can get up to 90% of the value of your property. Additionally, it requires minimal documentation. Other important details are:
- Interest rates for salaried employees: Starting from 8.85% p.a.
- Interest rates for non-salaried individuals: Starting from 9.25% p.a.
- Eligibility criteria for self-employed individuals:
- Only Indian residents can apply
- Aged between 23 years and 70 years
- Minimum income of ₹1.5 Lakh per annum
- Must demonstrate 4 years of business continuity
- Eligibility criteria for salaried individuals:
- Both Indian residents and NRIs
- Aged between 21 years and 60 years
- Minimum income of ₹1 Lakh per annum
- Minimum 3 years of work experience
- Processing fee: Up to 3% of the loan amount
- Loan tenure: Up to 30 years for salaried and up to 25 years for self-employed
- Foreclosure charges: 1% of the loan amount plus interests as applicable on loan cancellation
Types of Interest Rates for Home Loans
1. Fixed Interest Rate
With these loans, the interest rate remains constant throughout the loan repayment period. Some lenders allow you to switch over to a floating rate system after some time into the loan tenure.
A fixed-rate will shield your loan from frequent rate fluctuations saving more money in the long run. This will make your loan repayment easier, so you can manage your finances more efficiently.
2. Floating Interest Rates
In a loan with floating rates, interest rates are variable and subjected to change due to factors like repo rates and T-bill rates. As such, your home loan EMIs may increase or decrease depending on the state of the market.
Floating interest rates are usually 1% to 2.5% lower than fixed rates. Moreover, they give you the advantage of getting billed as per the latest rates. Its only disadvantage is that it does not perform well during high market volatility.
How is the Interest Rate of a Home Loan Calculated?
You can calculate the home loan interest by:
1. Manually using the given formula
Where,
- ‘P’ refers to the principal loan amount
- ‘R’ is the rate of interest per annum
- ‘n’ is the loan repayment tenure in months
2. Using a home loan EMI calculator
You can use the home loan EMI calculator on a bank’s website to figure out the overall interest liability. Simply enter the following details and click on the ‘calculate’ button.
- Rate of interest per annum
- Amount of money borrowed
- Repayment period
Home Loan Eligibility
Here’s a list to check if you are eligible to apply for a home loan:
1. CIBIL Score
Your CIBIL score (or credit score) must be 750 and above so that you are eligible for a home loan at a lower interest rate.
2. Employment
Salaried and self-employed individuals are eligible for applying for a home loan. However, salaried applicants may get a home loan approval at a lower interest rate.
3. Age
Between 21-40 years of age, it is easier to get a home loan. After the age of 40, you may still qualify for a home loan till the age of 65.
4. Salary
If you are a salaried employee, your minimum salary must be Rs. 10,000 (may vary from lender to lender) and for self-employed individuals, the minimum business turnover should be Rs. 2 lakh p.a.
5. Existing Loans
Check if you have existing loans (car loan, credit card debt, etc.) and if your monthly income would be enough to cover the home loan repayments.
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How to Improve Home Loan Eligibility?
Let’s say, you have a low credit score. Or do not check some other box, which is preventing you from availing a home loan. In that case, here’s what you should do:
1. Take a Joint Home Loan
Joining home loans have many advantages starting from reducing your EMI repayment burden and improving your chances of getting a home loan depending on the co-applicant’s credit score.
2. Improve Your Credit Score
There are many ways to improve your credit score – the most important one being repaying your existing loans before the due date. Also, reduce the number of loans you take in order to start improving your credit score over a period of time.
3. Get Credit Report Errors Corrected
Keep an eye on your credit report. Sometimes the credit reports could have errors which could negatively affect your credit score. Get the errors corrected to increase your eligibility score for a home loan.
Show details of extra income. Whether you are a salaried employee or a self-employed individual, show your other sources of income to the lender to increase the chances of getting a home loan.
Have a steady stream of income. Salaried employees have a steady stream of income. However, if you are a housewife or a self-employed individual, you can also have a steady income through investments and savings. Visit Navi Mutual Fund to start investing now!
*Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
Documents Required to Get a Home Loan
Here’s a list of documents required to get a home loan:
- Identity proof – Aadhaar card, driving license, voter ID or passport.
- Address proof – Aadhaar card, passport, etc.
- Income proof – 6 months bank statements
- Employment proof – Salary slips/certificate
- Form 16 for the past 2 years (for salaried employees)
- Assessment orders of past 3 years (for self-employed individuals)
- Proof of business (for self-employed individuals)
- Proof of Advance Tax payment (for self-employed individuals)
- Property detail documents
- Loan application form
- 3 recent passport-size photographs
Factors Affecting the Home Loan Interest and EMIs
1. Your Income
The reputation of your employer and the industry you work in decide the payable interest and EMIs. Having a stable income that is sufficient to afford the home loan will result in a lower interest rate.
2. Credit Score
When you apply for a home loan, the bank will examine your credit score before deciding the loan terms. Having a good credit score will get you more competitive rates.
3. Benchmark Rate of Lending
Most financial institutions base their lending rates on Repo-linked lending rates or RLLR. Thus, a change in RBI’s repo rates will have an immediate effect on home loan interest.
4. Location of the Property
If your property is located at a prime location or is being sold by a reputable builder/agency, it will lower the payable EMIs.
Important Rules to Follow While Deciding on Best Banks for Home Loans
As compared to NBFCs, banks pass their rate cut benefits to their customers at a faster pace.
If you are a salaried individual, you can avail a better deal from a bank.
Banks cannot charge a penalty for repayment of a taken bank loan associated with a floating rate of interest.
Factors to Consider Before Getting a Home Loan
1. The Lender’s Reputation
Before getting a loan, you should make sure that it is not from an unknown or untrusted lender. You may want to look online for the best bank for home loans and check out their reviews before getting a loan.
2. Fees and Charges
Check and compare the fees and charges from different banks online. Choosing a bank with low processing fees, late payment fees, legal charges etc., can save a lot of money in the long run.
3. Loan Tenure Offered
You may want to choose a bank that offers flexible loan repayment tenure. Opt for a long tenure if you cannot afford the higher EMIs or a short tenure to reduce the payable interest. Navi Home Loans offer a flexible EMI plan with a tenure of up to 25 years. Download the Navi app on Android or iOS and apply for a loan in a few simple steps.
4. Turnaround Time
The best home loan providers will take as little time to process and disburse a loan. They should also be known for a low turnaround time and good customer service after disbursal.
Final Word
Since each bank is different and offers different benefits, it is advised to do an adequate research and choose the best housing loan bank that caters to your requirement. Just like interest rates and processing fees that are important while considering for a home loan, so is repayment. Hence it is also advised to check for other factors like fees and charges, eligibility criteria, prepayment terms etc., to make an informed decision.
FAQs
No. As per RBI’s (Reserve Bank of India) guidelines, lenders cannot offer 100% value of the property as a loan.
Yes. Most banks offer a home improvement loan to provide funds to renovate or repair a house.
If you are not happy with the current service/rates of your current home loan, you can opt for a balance transfer involving the transfer of your loan to another bank. Most banks offer lower interest rates and top-up loan facilities for a balance transfer.
Yes. You can claim tax deductions of up to Rs. 1.5 lakhs for principal repayments and Rs. 2 lakhs for interest repayment.
You can choose to take a shorter loan or increase your current income to increase home loan eligibility.
Navi’s home loans start at 7.39%. The application process is also hassle-free with minimal documentation and 24/7 customer assistance. All you have to do is download the Navi app and get instant home loan approval.
Before you go…
Are you looking to buy that house you’ve been eyeing 🏠 and you need a loan of up to ₹5 crore. Install the Navi app now and get instant in-principle approval right away! Interest rates starting at 8.60% p.a.
Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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