As of now many banks have further reduced their home loan interest rates to lure borrowers, with the Reserve Bank of India (RBI) holding the repo rate unchanged at a low of 4%. Undoubtedly, most of the banks are currently providing home loans with floating interest rates starting at less than 7% annually. Because of the current low interest rate climate, now is an excellent time for potential homebuyers to achieve their dream of owning a home. Additionally, prospective homebuyers should be aware that these bank loans are benchmarked to the repo rate, which means that any adjustment in the key policy rate will result in a rapid and relative increase in the relevant rate of interest. Homebuyers must, though, make sure that they have satisfactory income to keep their debt load under balance and pay off their loan on or before the deadline. They must also keep in mind that the best home loan interest rates are normally reserved for borrowers with excellent credit ratings with a minimum of 750. If your credit score is low, you can strive to strengthen it before considering a home loan. We have listed here top leading banks of India that are offering the cheapest interest rates on home loans. Please keep in mind that the table below only includes floating-rate home loans of banks. Also, based on different terms and conditions imposed by your lender, your interest rate may vary.
7 tips to avail the best home loan scheme
When it comes to purchasing your dream house, there are many obstacles to overcome. Choosing the best home loan scheme and lender seems to be the first and most difficult challenge. Since there are several banks and financial institutions willing to approve your loan application and give you the loan, you can preferably do extensive analysis and look for the right option that satisfies all the conditions and suits your funding. To assist you in your process, here are some main considerations to keep in mind when selecting the best home loan bid.
Tip 1: The interest rate is the most important aspect in determining your willingness to repay the loan and how easy it would be to do so?. A higher interest rate can prevent you from accepting a larger loan or require you to choose a longer repayment period. A low rate of interest, on the other hand, allows you to take out a higher loan and raises the likelihood of quick prepayment. Financial institutions and housing finance companies provide various interest rates, which fluctuate over time. The rate may be floating (i.e., it varies over time) or fixed (i.e., it stays the same over the loan term).
Tip 2: For determining the eligibility of borrowers for a home loan, banks or financial institutions have a set of standards. These criteria vary by lender, but it generally covers age, income stream, credit history, and so on.
Tip 3: It could be tough to receive a home loan if you have a poor credit score or a poor credit history. A decent credit score demonstrates to your lender that you are a responsible borrower who can reimburse the loan on time. Identifying your credit score allows you to take appropriate steps to boost it before applying for a home loan. A poor credit score will cause your home loan application to be rejected, even if it is approved, you may carry a higher interest rate.
Tip 4: The majority of banks and financial institutions have undisclosed fees that are not revealed to borrowers in advance. Before agreeing for a home loan, it's a good idea to check into hidden charges and evaluate processing fees, prepayment fees and so on.
Tip 5: A home loan scheme has a number of important terms and conditions that can affect loan approval and repayment. As a result, carefully reading all the terms and conditions before choosing a lender is strongly advised.
Tip 6: Explore the lenders' loan approval and disbursement period. Choose the loan with the fastest processing and disbursement periods. A bank or financial institution typically takes 10-15 working days to approve a home loan application, with another 3-5 days for the loan to be disbursed. This period, however, differs from one lender to the next.
Tip 7: When you've mapped a few lenders, go to their branch office to talk about your choices and ask for the best deal. Often, a bank in which you already have a relationship as a customer can be ready to offer you a better deal than what is currently available in the sector. As a result, it is recommended that some considerable effort be made ahead of time in order to ensure a smooth and hassle-free potential.
Tax benefit on home loan
For principal repayments made within the financial year, you can deduct up to Rs 1.50 lakh under Section 80C. For the accrual and payment of interest on a home loan, you can deduct up to Rs 2 lakh under section 24B. You can deduct up to Rs 1.50 lakh in interest payments made on a home loan during the financial year under Section 80EEA. If you take out a home loan during the financial year 2016-17, you can claim an exemption of up to Rs 50,000 for interest payments. If your property is self-occupied, you can claim up to Rs 2 lakh. In the case of an under-development property, the overall cap of Rs 2 lakh is applicable only if the construction is completed within 5 years of the fiscal year in which the loan is taken out. The applicable deduction is restricted to Rs 30,000 if this is not the case. Under section 24(b), the tax gain available for interest on a home loan for a self-occupied property is limited to Rs 2 lakh, while for rented or considered to be lent out the property, the deduction is unrestricted. Additional deduction of Rs 1.50 lakh for interest on home loans taken out to buy affordable houses worth up to Rs 45 lakh until March 2020. The gain is valid until March 31, 2021.
The government has authorised many income tax exemptions in the Union Budget 2021. The former interest tax deduction for subsidised housing has been maintained for the next year. In addition, the Finance Ministry has approved a tax deduction for migrant workers who live in subsidised homes that have been approved by the government.
ICICI Bank cut home loan interest rates to 6.7 per cent on March 5-2021, the private sector lender announced on March 5. The bank's adjusted interest rate is the lowest in ten years. This interest rate is available for home loans of up to Rs 75 lakh. Interest rates on loans above Rs 75 lakh are set at 6.75 per cent. These new rates will be valid until March 31, 2021, according to the bank. Last week, a slew of banks, including the country's largest lender, State Bank of India (SBI), Kotak Mahindra Bank, and HDFC, lowered home loan rates. SBI and HDFC lowered their home loan rates to 6.7 per cent and 6.75 per cent, respectively, while Kotak Mahindra lowered the rate to 6.65 per cent. HDFC, a mortgage lender, announced on March 3 that it had lowered home loan rates for all retail customers by five basis points, starting on March 4. In a tweet, HDFC said it had cut its Retail Prime Lending Rate (RPLR), on which its Adjustable Rate Home Loans are based, by 5 basis points. SBI has lowered the interest rate on home loans to 6.70 per cent. Customers were also exempt from paying a processing fee. Kotak Mahindra Bank, a private sector bank, recently lowered its lending rates as well. Interest rates on SBI home loans start at 6.70 per cent for loans up to Rs 75 lakh and 6.75 per cent for loans above Rs 75 lakh, according to the bank. Banks have been urged by the Reserve Bank of India (RBI) to lower their lending rates. After February 2019, the central bank has lowered its primary lending rate, repo, by 250 basis points.
Cheapest Home Loan Rates
List of banks providing the cheapest floating-rate home loan rates:
|Sr No.||Banks||ROI in % p.a.|
|1||Kotak Mahindra Bank||6.65|
|2||State Bank of India||6.70|
|5||Union Bank of India||6.80|
|6||Punjab National Bank||6.80|
|8||Bank of Baroda||6.85|
|10||Punjab & Sind Bank||6.90|
|11||Bank of Maharashtra||6.90|
|15||Bank of India||6.95|
|17||Indian Overseas Bank||7.05|
|18||Jammu & Kashmir Bank||7.20|
|20||Karur Vysya Bank||7.45|