Home Loan Interest Rates in May 2024
The interest rate on home loans also depends on the application, whether with or without security, guarantor, or co-applicant, down payment of the margin, collateral, current income and debt, etc. Most banks also provide concessions to women borrowers and senior citizens.
Here’s the latest rate of interest on new home loans provided to general citizens (employed and self-employed) by major banks of India as of May. 6, 2024.
How do Banks Calculate Interest Rate on Home Loans?
Interest rates for home loans provided by banks in India are usually floating, though fixed rate is also available. A fixed rate of interest on loans is fixed for the overall duration of the loan. With a floating rate, the ROI on your EMI is calculated as per the “base rate” (standard lending rate of the bank), or the lender’s repo-linked loan rate (RLLR) or marginal cost of fund-based lending rate (MCLR), plus the spread (difference in interest rates that a bank pays to a depositor and receives from loan borrowed to a customer).
The RoI on the floating rate on home loans for every bank changes as per the RBI’s change in repo rate (the rate at which the apex bank lends money to public and private banks). In the floating rate, the change is, however, reflected after the “reset period” when the interest rate on your EMI is subjected to revisions.
How to Increase Home Loan Eligibility in 2024
Home loan eligibility determines the maximum amount a bank can borrow to an applicant. Here are some factors to consider:
CIBIL or Credit Score
An applicant with an excellent credit score, with good repayment history has more chances to obtain a maximum home loan amount. Most bBanks provide home loans even to people with low scores, however, 750 and above is considered a good one.
Joint Home Loan
If you opt for a co-borrower, usually spouse, with a good credit score for a
joint home loan, it considerably boosts your eligibility chances as well as divides repayment burden.
Longer Tenure
It helps you lower the EMI amount while choosing a longer repayment period.
Clear Existing Debts
An applicant opting for a home loan may consider clearing the existing debt or ongoing EMIs to boost their eligibility.
Higher Down Payment
Banks provide 75% to 90% of the property value, and the remaining has to be paid by an applicant. Consider raising the down payment to avoid higher interest payout when the EMI begins.
How to Select the Best Home Loan
It is important to understand the various aspects of the loan to
select the best home loan that suits for financial needs. Factors that influence your selection of home loan includes:
Rate of Interest
The RoI is an important factor that determines how much you will pay when the EMI begins. Remember, most banks offer women borrowers a 50 bps discount on regular rates.
Maximum Loan Amount
Depending upon other eligibility factors, the maximum amount one can borrow depends upon the cost of the property and your income levels. Banks fund 77% to 90% of the value of the property based factories including co-applicant, guarantor, security over and above basic eligibility criterias.
Processing Charges
This charge is levied by the bank to process your application. While some banks do not charge any processing fee for a certain loan period and amount, the processing fee starts from 0.25% up to 3% of the loan amount. For salaried and women borrowers, charges are usually lower, whereas this fee for government employees are mostly waived.
Prepayment Charges
The charge is levied when you decide to close the loan before the maturity date, which varies among banks.
Moratorium Period on Home Loans
Home renovation loans come with a moratorium period starting three to six months.
What the Market is Offering
It is mandatory for banks to display all relevant information on customer care service, interest rates, charges, and others in their website, apps, flyers, etc. The above table will help you understand the bank’s offer before you visit the websites or physical branch of the lenders.
Tax Benefits
Home loans come with tax exemptions and deductions for borrowers under Section 24, Section 80C, Section 80EE under the Income Tax Act, for those who have opted for the old tax regime.
