The Reserve Bank of India cut interest rates or repo rates earlier this month. This has led to some banks cutting interest rates on home loans. Accordingly, interest rates on home loans have fallen.
SBI Home Loans
SBI has cut home loans and with effect from April 1, 2016, the home loan interest rates start at 9.40 for women and 9.45 per cent for others. This makes the SBI home loans Best And Cheapest Home Loan Interest Rates In India.
The historically low processing charges also makes the State Bank of India homes loans, amongst the best in the country.
State Bank of India charges a processing fee of just 0.35 per cent, which is much better than peers like ICICI Bank and HDFC.
ICICI Bank Home Loans
For women borrowers the interest on home loans is 9.40 per cent, which is very competitive. For salaried class the floating interest on home loans is 9.45 per cent per annum.
The processing fee remains at 0.50 per cent, with service tax being applicable. For a fixed tenure of 5 and 10 years loans under Rs 30 lkahs, would have an interest rate of 9.40 per cent and for a full tenure it would be 9.7 per cent. This ofcourse, is higher than the market rate, but, just in case interest rates go up, you would be hedged against rising interest rates.
It's a risk that you need to take.
HDFC Home Loans
The Home Loans from HDFC are higher than that offered by the above two. For women customers it is 9.50 per cent, while for others it begins at 9.55 per cent. This is a good 10 basis points over and above that of ICICI Home Loans and SBI Home Loans.
It is important to remember that home loans are not like auto loans. They are large sized loans and a 10 basis points difference can mean a lot.
HDFC charges a processing fee of 0.50 per cent of the home loan amount, which is the same as ICICI Bank. This makes State Bank of India home loan processing charges the best at 0.35 per cent. HDFC Home Loans are not really the cheapest and best home loan rates in India.
India Bulls Home Loans
Indiabulls Home Loans comes at an interest rate of 9.50 per cent, which is pretty competitive to the other players. There are no pre-payment charges on the floating home loan rates for individuals, which makes these home loans a good proposition.
The company claims that it sanctions loans within 48-hours.
The principal component of the home loan, qualifies for tax benefit under Sec 80C of the Income Tax Act. This means you get tax benefit upto Rs 1.5 lakhs on the home loans just.
The interest component also qualifies for tax deduction of upto Rs 2 lakhs. What this means is that if you take a joint home loan, you get a tax break of Rs 3.5 lakhs per annum.
Together, if you have taken a joint home loan, you are entitled to tax benefits of almost Rs 7 lakhs.