Home loans can be used to purchase a home or apartment, purchase land for a home, or renovate, expand, and maintain your current home. They offer long-term, low-interest financing at a great bargain. Home loans should be paid back through EMIs. The Bank releases its charge on the property upon repayment.
Type of home loan interest rates
According to the IDFC FIRST Bank, “A home loan product is offered in three types of interest rates, and they are floating, fixed and mixed. A floating rate of interest changes depending on the RBI’s policy rate changes. For instance, if the repo rate is reduced, banks reduce the home loan interest rate and vice versa. The fixed rate will have the same rate of interest fixed at the time of the approval of the loan, and will continue until the end of the tenure. The mixed rate will have the fixed rate of interest first and later the floating one.”
Several factors are considered by lenders when deciding the interest rate of your home loan, such as your credit score, loan amount, LTV ratio, job, and type of interest rate.
Choose a lender who offers a competitive interest rate because a home loan is a long-term financial commitment. This is because even a little drop in the interest rate on a home loan can lower the total cost of the loan and enable you to save money.
Here are banks offering best interest rates on home loans for amounts above Rs 75 lakh
| Name of Lender | Above 75 Lakh |
| PUBLIC SECTOR BANKS | |
| State Bank of India | 8.50-9.85 |
| Bank of Baroda | 8.40-10.90 |
| Union Bank of India | 8.35-10.90 |
| Punjab National Bank | 8.40-10.15 |
| Bank of India | 8.40-10.85 |
| Canara Bank | 8.40-11.15 |
| UCO Bank | 8.45-10.30 |
| Bank of Maharashtra | 8.35-11.15 |
| Punjab and Sind Bank | 8.50-10.00 |
| Indian Overseas Bank | 8.40-10.60 |
| Central Bank of India | 8.45-9.80 |
| PRIVATE SECTOR BANKS | |
| Kotak Mahindra Bank | 8.70 onwards |
| ICICI Bank | 8.75 onwards |
| Axis Bank | 8.75-9.65 |
| HSBC Bank | 8.50 onwards |
| South Indian Bank | 8.70-11.70 |
| Karur Vysya Bank | 9.00-11.05 |
| Karnataka Bank | 8.50-10.62 |
| Federal Bank | 8.80 onwards |
| Dhanlaxmi Bank | 9.35-10.50 |
| Tamilnad Mercantile Bank | 8.60-9.95 |
| Bandhan Bank | 9.16-13.33 |
| RBL Bank | 8.90 onwards |
| CSB Bank | 10.49-12.34 |
| HDFC Bank Ltd. | 8.75 onwards |
| City Union Bank | 8.75-10.50 |
Source: Paisabazaar; Interest rates on August 7, 2024.
Tax benefits
There are many tax advantages to a home loan. If you have a house loan, you can deduct interest and principal payments from your taxable income. Under section 24 of the Income Tax Act (ITA), owners of self-occupied or rental properties may deduct up to Rs. 2 lakh in interest from their home loan. The maximum amount that can be exempted from interest is Rs. 2 lakh, or the real interest that a taxpayer has paid on all of their assets.
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