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Banks Vs HFCs: The Lowest Interest Rates On Home Loans Compared


A serious hit to the Indian economy has been caused by the Covid-19 pandemic, which prompted the Reserve Bank of India to decrease the repo rate to raise lending and credit demand. This has driven banks to reduce repo-linked home loan interest rates, although some housing finance firms have also lowered their prime loan rate rates to provide diverse options. Additionally, though several banks also provide home loans linked to MCLR starting at 8.8 percent p.a. in February 2019, presently there are as many as 13 banks and four Housing Finance Companies that are providing home loans starting at under 7 percent p.a. This is a convenient time for those who wish to purchase a house or make sufficient prepayments to reduce their loan strain.


That being said, monitor your credit score and keep it above 750-800 before finalising your commitment to get the best available rates and also confirm that you have the requisite margin capital and a secure income revenue to be able to reimburse your loan within the deadline. If you are going to avail a loan from a bank, ensure that your credit score remains high during the loan period, as any significant drop could raise the risk gap and lead to higher EMIs. Remember that only banks provide floating rate home loans related to an external index, such as the repo rate, whereas the loans provided by housing finance firms are equivalent to their prime lending rate.

Banks Vs HFCs: The Lowest Interest Rates On Home Loans Compared

If your loan quota criteria is high, you can even apply for a home loan from an HFC. When it comes to the credit score of the debtor, HFCs who specialise in multiple home loan products are often considered to have relatively flexible requirements and frequently require hassle-free documentation. And while their interest rates are generally higher than those provided by banks, the contrast between a bank's lowest home loan interest rate and an HFC has diminished to only 15 basis points at present.

Interest Rates of Floating Rate Home Loans By Banks

Sr No. Banks ROI (p.a.) in %
1 Kotak Mahindra Bank 6.75 to 8.45
2 Union Bank of India 6.80 to 7.40
3 Punjab National Bank 6.80 to 7.75
4 Central Bank 6.85 to 7.30
5 Bank of India 6.85 to 7.75
6 Bank of Baroda 6.85 to 8.20
7 Punjab & Sind Bank 6.90 to 7.60
8 ICICI Bank 6.90 to 8.05
9 Bank of Maharashtra 6.90 to 8.40
10 Axis Bank 6.90 to 8.55
11 Canara Bank 6.90 to 8.90
12 SBI 6.95 to 7.60
13 HDFC Bank 6.95 to 7.85
14 Indian Bank 7.00 to 7.40
15 Indian Overseas Bank 7.05 to 7.30
16 IDBI Bank 7.15 to 7.25
17 UCO Bank 7.15 to 7.25
18 J&K Bank 7.20 to 7.60
19 DBS Bank 7.3
20 Karur Vysya Bank 7.45 to 9.55
21 Federal Bank 7.65 to 7.80
22 South Indian Bank 7.95 to 9.60
23 Karnataka Bank 8.07 to 8.84
24 Tamilnad Mercantile Bank 8.45

Banks Vs HFCs: The Lowest Interest Rates On Home Loans Compared

Interest Rates of Floating Rate Home Loans By HFCs

Sr No. HFCs ROI (p.a.) in %
1 HDFC Ltd. 6.90 to 8.00
2 LIC Housing Finance Ltd. 6.90 to 8.10
3 Bajaj Finserv >=6.90
4 Tata Capital >=6.90
5 PNB Housing 7.50 to 9.70
6 Sundaram Housing Finance >=7.85
7 Dewan Housing >=8.75
8 Indiabulls Housing Finance >=8.99
9 Aditya Birla Housing Finance 9.00 to 12.50
10 GIC Housing Finance Ltd. 9.10 to 12.50
11 Reliance Home Finance 9.75 to 13.00
12 Piramal Cap & Housing Finances >=9.75
13 Central Bank Housing 10.10 to 11.80

Finally, coming to the conclusion if you are planning to avail a home loan the above listed interest rates are currently being provided by the banks and HFCs. Evaluate your alternatives and opt the one that fits your needs better. Remember that depending on your age, gender, salary, credit score, loan amount, property size or all other terms and conditions specified by your lender, the interest rate applicable to you will be calculated.

Read more about: home loan
Story first published: Friday, December 11, 2020, 16:12 [IST]
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