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Home Loan

Banks and Housing Finance Companies (HFCs) offer home loans of up to 75% to 90% of the property’s value depending on the credit profiles of their loan applicant, subject to the caps on the LTV ratios set by the lenders and the RBI. Home loan tenures can go up to 30 years with Bajaj Housing Finance offering maximum tenure of up to 40 years. At FinIndia24x7, we help you compare housing loan interest rates and other features offered by top banks and HFCs and apply online for the best option available on your credit profile.

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Key Highlights of Home Loan

Interest Rates Starting from 8.35% p.a.
Loan Amount Varies on case-to-case basis
LTV Ratio Up to 90% of the property value
Tenure Up to 30 years with some lenders extending till 40 years
Processing Fee 1% to 2% of the loan amount (may vary across lenders)

Interest Rate

Starting from 8.35% Pa

Loan Amount

Varies on case-to-case basis

LTV Ratio

Up to 90% of the property value

Tenure

Up to 30 years with some lenders extending till 40 years

Processing Fee

1% to 2% of the loan amount (may vary across lenders)

Home Loan Interest Rates

Home loan interest rates offered to the applicants would depend on their credit scores, monthly income, loan amount, LTV ratio, job profile, employer’s profile, etc.

Home Loan offered by Top Banks & HFCs in India

Here are the interest rates on home loans offered by top banks and HFCs.

Name of LenderInterest Rate (p.a.) Apply
State Bank of India8.50% – 9.85%Apply Now
HDFC Bank8.70% onwardsApply Now
ICICI Bank8.75% onwardsApply Now
Bank of Baroda8.40% – 10.90%Apply Now
Punjab National Bank8.40% – 10.25%Apply Now
Axis Bank8.75% – 13.30%Apply Now
Kotak Mahindra Bank8.70% onwardsApply Now
LIC Housing Finance8.50% – 10.75%Apply Now
Federal Bank8.80% onwardsApply Now
Bajaj Housing Finance8.50% onwardsApply Now
IDFC First Bank8.85% onwardsApply Now
PNB Housing Finance8.50% – 14.50%Apply Now
Tata Capital Housing Finance8.75% onwardsApply Now
L&T Finance Limited8.65% onwardsApply Now
Standard Chartered Bank8.85% onwardsApply Now
Godrej Housing Finance8.55% onwardsApply Now

Home Loan Rates offered by Other Banks & HFCs

Name of LenderInterest Rate (p.a.)
Canara Bank8.40% – 11.25%
Bank of India8.40% – 10.85%
Indian Overseas Bank8.40% – 10.60%
Bank of Maharashtra8.35% – 11.15%
Union Bank of India8.35% – 10.90%
UCO Bank8.45% – 10.30%
Bandhan Bank9.16% – 15.00%
Punjab & Sind Bank8.50% – 10.00%
South Indian Bank8.70% – 11.70%
RBL Bank8.90% onwards
Karnataka Bank8.50% – 10.62%
Indiabulls Housing Finance8.75% onwards
Karur Vysya Bank9.00% – 11.05%
Dhanlaxmi Bank9.35% – 10.50%
Tamilnad Mercantile Bank8.60% – 9.95%
Repco Home Finance10.00% onwards
GIC Housing Finance8.80% onwards
Aditya Birla Capital8.60% onwards
ICICI Home Finance9.20% onwards
HSBC8.50% onwards

Types of Home Loans

  • Home Purchase Loan is offered for buying ready-to-move-in properties, under-construction properties and pre-owned homes/resale properties helps you buy a residential plot and build a house on it within a given time frame
  • Composite Loan can be availed for buying a plot and building a house on it. The first disbursement in composite loan is made towards plot purchase. Subsequent payments depend on the stages of construction of the house.
  • Home Construction Loan is offered to individuals for house construction. The disbursements depend on the stages of construction of the house.
  • Home Renovation/ Improvement Loan is for meeting home renovation costs of an existing house. The interest rate for a home renovation/improvement loan and a regular home loan are usually same.
  • Home Extension Loan is for those requiring funds to extend or add more space to their existing house. In this, lenders usually lend 75% – 90% of the construction estimate, depending on the loan amount and LTV ratio.
  • Bridge Loan is a short-term home loan suitable for individuals planning to buy a new house with the sale proceeds of their existing house.
  • Interest Saver Loan is a home loan overdraft wherein the borrowers’ home loan account is linked to their bank account. Any amount deposited in the bank account over and above the EMI is considered as a prepayment towards the loan, thus, saving on the interest amount.
  • Step Up Loan allows borrowers to pay lower EMIs during the initial years of the loan tenure and have the provision of increasing the EMI amount over time. This makes the loan affordable for young professionals who have just started their career.

Home Loan Eligibility Criteria

Home loan eligibility differs across lending institutions and home loan schemes. However, a common set of housing loan eligibility criteria is given below:

  • Nationality: Indian Residents, Non-Resident Indians (NRIs), and Persons of Indian Origin (PIOs)
  • Credit Score: Preferably 750 and above
  • Minimum Age: 18 years with some lenders setting the minimum age of 21 years
  • Maximum Age: Usually 70 years at the time of loan maturity with some lenders extending the tenure till 75 years of age
  • Work Experience: At least 2 years (for salaried)
  • Business Continuity: At least 3 years (for self-employed)
  • Minimum Salary: At least Rs. 25,000 per month (varies across lenders & locations)
  • Loan Amount: Up to 90% of property value

Note: Apart from the above parameters, your home loan eligibility also depends on the property you are buying and the location of the property.

Also Check: Top 10 Tips to Consider before Availing a Home Loan

Documents Required for Home Loan

Lenders require documents from their home loan applicants as a proof to establish their identity, place of residence, income and repayment capacity. These documents may vary across lenders based on the individual credit profile, property type, home loan type, etc. Given below are the key home loan documents that an applicant will need to furnish when applying for the loan.

Identity Proof Documents: Copy of any one (PAN Card, Passport, Aadhaar Card, Voter’s ID Card, and Driving License)

Age Proof Documents: Copy of any one (Aadhaar Card, PAN Card, Passport, Birth Certificate, 10th Class Mark-sheet, Bank Passbook, and Driving License)

Address Proof Documents: Copy of anyone (Bank Passbook, Voter’s ID, Ration Card. Passport, Utility Bills (Telephone Bill, Electricity Bill, Water Bill, Gas Bill) and LIC Policy Receipt

Income Proof Documents:

Income Documents for SalariedIncome Documents for Self Employed
Copy of Form 16Business License Details
Latest PayslipsProof of Business Address
IT returns (ITR) of past 3 yearsITR of last 3 years
Investment Proofs (if any)Balance Sheet and Profit & Loss Account Statement of the Company/Firm

Property-related Documents: NOC from Society/Builder, detailed estimate of the cost of construction of the house, registered sale deed, allotment letter, and an approved copy of the building plan.

Documents Required for Non Resident Indian (NRI) Applicants

Proof of Identity: Passport with VISA stamps / PIO Card

Proof of Address: Government document mentioning the current overseas address

Proof of Income Documents:

Income Documents for SalariedIncome Documents for Self-Employed
Salary Certificate/ Latest Payslips (in English)Latest ITR, Bank Statements of Overseas Account and Balance Sheets and P&L Accounts audited or certified by a C.A.
Latest bank statements showing salary credits NRE / NRO account (if any)A copy of Continuous Discharge Certificate (CDC) for applicants employed in the merchant navy
Work Permit/ Employment Contract / Appointment Letter / Offer Letter (Duly attested by employer/ Consulate / foreign office / embassy in case it is in any other language)Business License & Address Proof / License of Professional Practice (for Doctors, Consultants, etc.)
Form P60/P45 and latest employment contract (for salaried)Registration Certificate of Establishment (For Shops, Factories & Other Establishments)

Property Documents:

  • Original title deeds tracing the title of the property
  • Encumbrance Certificate
  • Agreement for sale/ sale deed/ detailed cost estimate from the Architect/ Engineer for property to be purchased/ constructed/ extended/ improved
  • A copy of approved drawings of proposed construction/ purchase/ extension
  • Receipts for payments made for buying the dwelling unit
  • ULC clearance/ conversion order, etc.
  • Receipts for investing the margin money through normal banking channels from the NRE /NRO account(s) in India
  • Latest tax paid receipt
  • Allotment letter from the co-operative society/ association of apartment owners

Other Documents:

  • If any previous loan from other Banks/Lenders, then Loan A/C statement for the last 1 year

Note: The above list is indicative and your lender might ask for additional documents.

Home Loan Processing Fees & Other Charges

The processing fees and charges of housing loan may vary widely based on lenders and credit profiles of loan applicants. To give a fair idea of the home loan fees and charges, read the table below:

ParticularsCharges
Processing Fee1% – 2% of loan amount
Foreclosure/Prepayment ChargesFor floating rate: Nil
For fixed rate: Around 2% – 4% on the principal outstanding
Overdue Charges on EMI2% per month of the unpaid EMI
EMI Bounce ChargesAround Rs 400
Legal FeeAs per Actuals

Check home loan processing fees and other charges of top banks and HFCs.

Why should I avail home loans from FinIndia24x7?

Home loan features such as interest rates, loan amount, tenure and processing fees can vary widely across lenders depending on their cost of funds and credit risk assessment of their loan applicants. Thus, visiting FinIndia24*7 will allow you to compare home loan offers by its 20+ partner banks and HFCs based on your monthly income, repayment capacity, credit score, occupation profile, employer’s profile and other applicable eligibility criteria.

How to Apply for Home Loan Online at FinIndia24x7?

At FinIndia24x7, you can compare and apply for home loan offers in three simple steps:

Step 1- Share Your Details

Enter personal information as well as the details related to your loan requirements.

Step 2- View Offers

As per the details shared, a list of eligible home loan offers will appear. Compare interest rate, processing fee, and eligible loan amount from the list of eligible housing loan offers.

Step 3- Submit the Application

Apply for the home loan offer that suits your loan requirements the best.

Once your application is successfully submitted, you will get a confirmation of your home loan application along with a reference number for future reference. Next, our loan expert will get in touch within 24 hours to take this application forward.

Tax Benefits on Home Loans

House loan borrowers can avail tax benefits under various sections of the Income Tax Act. These home loan tax benefits help borrowers save a substantial amount of money every year. Below are the tax benefits that you can get on your home loan EMI payments:

Section of Income Tax ActNature of Home Loan Tax DeductionMax. Tax Deductible Amt.
Section 24(b)Interest paidRs. 2 lakh
Section 80CPrincipal (including stamp duty and registration fee)Rs. 1.5 lakh

Dos & Don’ts Before Applying for Home Loan

Dos

Don’ts

Keep your credit score at 750 or aboveApply for home loan without checking your credit score
Limit your total EMI obligations within 50-60% of your net monthly incomeUse emergency fund for making higher down payment
Compare home loan offers from various lendersApply with multiple lenders within a short span
Try making larger down payment to reduce LTV ratioForgo existing investments for making higher down payment
Add a co-applicant for higher loan eligibilityPlan EMI payments without considering the monthly contributions you need to make towards your crucial financial goals

 

What to do if your home loan application is rejected?

If your home loan application was rejected, follow these tips to improve your chances of approval next time you apply or a home loan:

  • Build/maintain your credit score at 750 or above
  • Check for any inaccuracies in your credit report
  • Add an earning member of your family as a co-applicant
  • Contribute more towards home down payment
  • Compare housing loan offers of various banks and HFCs before making the loan deal
  • Avoid making multiple loan applications within a short span of time
  • Ensure your total EMI obligations (including the proposed home loan EMI) are within 55-60% of your net monthly income

How to improve your chances of getting a home loan?

You can improve your chances of availing home loan by practicing these tips:

  • Keep your credit score at least at 750
  • Add an earning family member as co-applicant
  • Opt for lower LTV ratio
  • Compare home loan offers of multiple banks and HFCs to find the right loan offer
  • Maintain your total EMIs, including the proposed home loan EMI, within 55-60% of your net salary

FAQs on Home Loan

Home loan is a secured loan facility, which banks and HFCs offer for purchasing, constructing, renovating, repairing and extending an existing/ new residential property. The loan is backed by the underlying property till the loan repayment. In case of default by the borrower, the lender has the legal right to take the concerned property into possession and then auction the property to recover the unpaid loan amount.

Home loan lenders offer home loans to all resident and non-resident Indians. They can be salaried or self-employed professional/non-professional.

Consumers can avail home loans directly from the banks and HFCs. As many home loan lenders now-a-days facilitate online home loan application processes, consumers can consider applying for them through such lender’s official websites, mobile apps or internet banking platforms. Alternatively, consumers can also get a housing loan through online financial marketplaces to fetch home loan offers from multiple lenders from a single platform, depending on the consumers’ credit profiles.

Home loan interest rates start from 8.35% p.a. The final interest rate at which the bank or HFC will offer a home loan will depend on the applicant’s credit score, loan amount, employment profile, employer’s profile, LTV ratio, etc.

Home loan lenders decide an applicant’s eligible home loan amount on the basis of EMI/NMI Ratio and LTV Ratio. As these ratios vary across lenders depending on their credit risk policy, consumers should visit the website of their lenders and use their home loan eligibility calculator to determine the estimated home loan amount offered by their respective lenders. Alternatively, they can also visit online financial marketplaces like Paisabazaar to get the maximum home loan amount offered by various lenders.

The property documents required to avail home loans may vary on a case-to-case basis. The documents for home loans availed for buying a new house will vary from the documents for home loans availed for house construction. For a detailed home loan document list.

For most consumers, a lender offering the lowest home loan interest rate would be the best as it will help them save on the overall interest cost. However, besides considering home loan rates, parameters such as the loan tenure, loan amount, LTV ratio, processing fees and time taken for loan approval and disbursal must also be looked into while searching for the best bank for home loan. Instead of visiting the websites of respective home loan lenders, consumers can make their search easier by visiting online financial marketplaces like Paisabazaar.com to check and compare home loan rates and other loan features such as tenure, processing fees and other related costs from various banks and HFCs.

No, you cannot get a home loan for the entire property value as the Reserve Bank of India (RBI) has capped the Loan-to-Value (LTV) ratio of housing loans. As per the RBI guidelines, the LTV ratio can go up to 90% of the property value for loan amounts up to Rs 30 lakh; for loan amounts above Rs 30 lakh and up to Rs 75 lakh, the LTV ratio limit is up to 80% of the property value and for loan amounts above Rs 75 lakh, the LTV ratio can go up to 75% of the property value. This implies that at least 10% of the remaining value must be shelled out by the borrower as down payment.

Subject to the caps set by the RBI on LTV ratios, banks/HFCs further fix the LTV ratio on the basis of the risk assessment and credit profile of the loan applicant. Those with lower creditworthiness are usually offered lower LTV ratio.

Some lenders use the Multiplier Method for determining your maximum home loan eligibility, wherein the eligible loan amount is calculated based on a predetermined multiple of an applicant’s net monthly income. They usually offer loan amounts of up to 72 times of an applicant’s gross monthly income or 6 times of their gross annual income (in case of applicants other than salaried). Others use the EMI/NMI Ratio, wherein the total EMI obligations of the applicant should be within a predetermined proportion, usually 50-55% of the applicant’s income. Some lenders also use a combination of both of these methods to find the loan amount eligible of the applicant.

Lenders consider the repayment capacity of home loan applicants while evaluating their loan application and loan amount eligibility. house loan lenders usually prefer lending to home loan applicants having total EMIs, including EMI of the proposed home loan, to be within 50-60% of their monthly income. Hence, home loan applicants can use online home loan EMI calculator to find out the optimum house loan amount and tenure based on their repayment capacity.

It is difficult to say which home loan you will get with a low credit score as different lenders have different credit risk policies. Hence, consumers with poor credit scores should visit online marketplaces like Paisabazaar.com to check and compare housing loan rates and other loan features such as tenure, processing fees and other related costs from various banks and HFCs.

Lenders prefer sanctioning housing loans to applicants having credit scores of 750 and above as such high credit scores reflect responsible credit behavior and reduce credit risk for lenders. This is also the reason why many lenders offer lower home loan rates to applicants having high credit scores. However, some lenders offer home loan to applicants having low credit score at higher interest rates. Therefore, one must check their credit scores at regular intervals.

EMI calculation for a Rs. 20 lakh home loan would depend on the interest rate and tenure. Let’s assume the interest rate and tenure on your Rs. 20 lakh home loan is 8.50% p.a. and 20 years, respectively. In such a case, your home loan EMI would be Rs. 17,356. For calculating EMI based on other tenure and interest rate values, you can use a home loan EMI calculator.

Your spouse or blood relatives such as your father, mother, siblings and children can co-sign a home loan with you. Also, all co-owners of the property must be co-applicants in housing loan.

In the case of floating rate home loans, lenders don’t charge a pre-payment penalty as per RBI directives. However, lenders may levy prepayment penalty in case of prepayment of fixed rate home loans.

Home loan balance transfer allows existing home loan borrowers to transfer their outstanding home loans to a new lender at lower interest rates and/or better loan terms. This facility is especially helpful for those borrowers who had availed housing loans at higher interest rates but are now eligible for lower interest rates due to their improved credit profile or reduction in market interest rates.

Yes, if the lender of your second home loan is satisfied with your repayment capacity, credit profile and the characteristics of the pledged property, you can avail a second house loan for another property.

Usually, it takes 1 to 2 weeks for lenders to sanction a housing loan. However, it may significantly vary depending on banks/HFCs loan approval process, credit profile of the applicant and the features of the property to be purchased/ constructed.

In a fixed rate home loan, the rate of interest applicable at the time of loan disbursal remains same throughout the loan period. As the interest rates remain the same throughout the loan tenure, you will be shielded from interest rates increases during the loan tenure. However, at any time during the loan tenure, if the lending rates fall, the fixed interest rates will remain unchanged, giving you no benefit of the reduced EMIs.

In case of floating rate home loans, the interest rates are subject to change as per the changes in the linked benchmark rates used by the lenders. Floating interest rate home loans are usually cheaper than the fixed interest rate home loans and the RBI mandates no prepayment or foreclosure charges for individuals borrowing a floating rate home loan.

Yes, you can prepay your home loan. If you have floating rate home loans, no prepayment charges will be levied. However, in case of fixed rate home loans, lenders might levy around 2% to 4% of the prepayment charges.

Yes. The repayment of principal amount would qualify for tax deductions under Section 80C of Income Tax Act. The repayment of interest component would qualify for tax deduction under Section 24(b) of the IT Act.

Yes, most lenders offering home loans at both fixed and floating rates allow their existing home loan borrowers to convert their fixed rate loans into floating rate loans and vice versa, on the payment of conversion or switching fee.

Under Pradhan Mantri Awas Yojana-Gramin scheme, beneficiaries can avail a maximum home loan amount of up to Rs 70,000.

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