Home Loan Interest Rate 2023

At Bajaj Markets, the home loan interest rate starts at 8.50% p.a.. Get the list of top banks and financial institutions that provide low home loan interest rate in India at Bajaj Markets and apply for Home Loan online.

Current Home Loan Interest Rates - Compare and Apply

Below is a list of the current housing loan interest rates and charges in 2023 for all leading banks/NBFCs of India:

 Interest rates and processing charges are subject to change as per the change in the financial institution’s terms and policies

Types of Home Loan Interest Rates

As of now, three kinds of interest rates exist in the lending market, namely fixed, floating and hybrid rates of interest.

• Fixed Home Loan Interest Rate: It is a predetermined borrowing rate that does not change at any given point during the loan repayment tenure. This form of interest rate paves the path for an easy calculation of the total Home Loan dues that a borrower is supposed to repay.

• Floating Home Loan Interest Rate: It keeps varying and is revised periodically. Hence, computation of the Home Loan due amount with a Floating Housing Loan Interest Rate is somehow difficult, given that one cannot always accurately predict the changes that the Indian economy will undergo in the future.

• Hybrid Home Loan Interest Rate: Certain home loans have a mixed interest rate. These loans are initially fixed rate loans for a certain predefined period of time and then become floating rate loans. You can choose such loans if you are getting a low fixed interest rate but plan to foreclose in the future once they convert into floating rate loans. This is because, as per RBI guidelines, no foreclosure charges are applicable on floating rate loans.

Which is better - fixed interest rate or floating interest rate?

When compared, floating interest rates are cheaper. The floating rate continues to fluctuate as per the market trends. The fixed interest rate is usually 1% to 2% higher. Know the Difference here and Choose b/w Fixed vs Floating Interest Rate

How to Calculate Home Loan Interest Rate

You can calculate your due on House Loan interest amount after determining the rate of borrowing and the principal sum that the lender is giving you. Below mentioned are 3 different methods by which you can calculate your home loan interest:

• Home Loan Interest Rate using Formula: This process requires manual calculation with formula: EMI = [P x R x (1+R)^N]/[(1+R)^N-1]. Where, EMI is Equated Monthly Installment, P is the principal amount, R is the monthly rate of interest, and N is the loan repayment tenure (in months)

• Home Loan Interest Rate using Microsoft Excel: This calculation requires MS Excel via “PMT function”, with Formula: PMT(RATE, NPER, PV, FV, TYPE). Where,‘RATE’ is the interest rate that the bank is willing to lend a Home Loan at, divided by 12, ‘NPER’ is essentially the number of EMIs, and ‘PV’ is the total principal amount. Additionally, it must be noted that both ‘FV’ and ‘TYPE’ should have the value set to 0.

• Home Loan Interest Rate using EMI Calculator: Using an House Loan EMI Calculator is the easiest option to calculate the Interest Rate. User has to fill the ‘Loan Amount’ field, applicable interest rate and choose the repayment tenure. Last, Click on the ‘Calculate’ button in order to get your results. Check Interest rate at Bajaj Markets Housing Loan EMI Calculator to get the appropriate results.

Factors affecting Home Loan Interest Rate

Factors that have a direct impact on the Home Loan Interest Rates are as follows: 

• Type of Interest Rate: One can avail a Home Loan at any of the three types of interest rates. They can either be fixed, floating, or mixed in nature. While fixed rates remain constant throughout the tenure of repayment, floating rates are affected by the changes in the policy rates introduced by the RBI. Thus, one can say that if they choose to go for a type of interest rate that changes due to extraneous factors, they may be subjected to varying rates of interest over the course of the loan repayment tenure.

• Benchmark Rate of Lending: Benchmark lending rates can either be the Marginal Cost of Funds-based Lending Rate (MCLR) or the Repo-Linked Lending Rate (RLLR). Financial institutions tend to decide a reset period for MCLR for durations such as 3 months, 6 months, 1 or 2 years throughout the home loan tenure and interest rate levy accordingly. RLLR is directly linked to the RBI’s repo rate and can change almost every quarter.

• Loan to Value Ratio or LTV Ratio: It is the maximum loan amount a lender is willing to extend to Home Loan applicants, which is expressed as a percentage of the property’s market value at the time. Although a high LTV ratio brings in suitable financing value, it also translates into a higher chance that the borrower will default. Thus, banking institutions that offer a high LTV ratio also charge higher rates of interest.

• Tenure of Repayment: The tenure of home loan repayment is directly linked to the risk of lending to the financial institutions and at the time of extending this money in advance. A borrower’s Housing Loan Interest Rate is set to be higher if they are repaying the same over a long period of time, while the loans that are set to be repaid over a shorter span of time attract lower interest rates.

• RBI Policies: Any changes in the policies drafted by the Reserve Bank of India (or RBI) will bring about a change in the rate of interest on your home loan. The recent introduction of the Marginal Cost of Funds Based Lending Rate (MCLR) system, for example, allows you to set a date on which your interest rate will be reset. With this, you can benefit from any drop in interest rates. Learn more about Home Loan RBI policies.

How to Get a Low Home Loan Interest Rate

Some of the ways in which you can get a home loan at a low interest rate are:

• Improve your credit score: Your credit score is a three digit numerical representation of your creditworthiness that stays within the range of 300-900. The higher your credit score is, the better are your chances of being approved for a home loan with the lower interest rate. If your credit score is more than 750, you can get a home loan at a fairly low interest rate.

• Improve your income and employment situation: Another thing that determines your home loan interest rate is your annual income and the reputation of your employer in the sector it operates in. The higher your income will be, the more confidence a lender will have in your repayment ability, and this confidence can translate into low interest rates for you. So, to get a home loan at low interest rates, you can always improve your income by securing annual increments and working towards promotions. Alternatively, you can even consider switching a company and joining a more reputed firm to stand a chance of securing a home loan at low interest rates.

• Go for a low home loan amount: The size of your home loan amount also determines the interest rate applicable to you. A high loan amount would translate into a high home loan interest rate for you and vice-versa. So, if you want to reduce the interest burden, you can always consider going for a relatively inexpensive home or making a large down payment to reduce your borrowed principal amount.

• Get a Joint Home Loan: If you want to secure a home loan at a low interest rate, consider applying for a joint home loan and make your working wife the primary borrower. You must consider doing so because women get concessions on home loan interest rates of anywhere between 0.05-0.1%.

Check How much home loan can I get based on my salary?

Other Banks Home Loan Interest Rates

Below is a list of the home loan interest rate offered by various banks of India:

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