What is Home Loan EMI?
Before getting to know about the Home Loan EMI calculator, it’s important to have basic information about what is home loan EMI because if you don’t know the thing that you’re calculating then it will be a total wastage of time to learn about the calculator. EMI, the short form for Equated Monthly Installments, is a fixed monthly amount that you pay every month in order to return the borrowed amount from the lender. Since a lot of individuals cannot pay the full amount in one go to buy their dream home, they opt for the easy EMI facility which is a flexible repayment option.
Your home loan EMI is basically made up of two parts – principal and interest. The portion of these two parts can differ based on the floating interest rate offered by the lender. You also need to remember that, in case of longer tenure (which is mostly the case in a Home Loan facility), say 15 to 20 years, the interest portion tends to have a higher portion in the EMI amount as compared to the principal amount for the few initial 10 years and after these years, principal amount starts to possess higher proportion than interest.
Compare All Banks Home Loan Interest Rates in India December 2023
Below is the table showing the interest rates and processing fee of home loans offered by several lenders.
| List of Banks/NBFCs | Home Loan Interest Rates | Processing Fees |
|---|---|---|
| Allahabad Bank | 8.75% – 9.90% | Up to 0.40% of the loan amount to a max INR 50,000 |
| Andhra Bank | 8.60% – 11.20% | 0.50 % of loan amount subject to maximum of INR 10,000 + GST |
| Axis Bank | 8.75% – 9.15% | Up to 1% of the Loan amount subject to minimum of INR 10,000 Upfront processing fee of INR 2,500 + GST |
| Bandhan Bank | 8.65% – 13.00% | 1% of Loan Amount , Min INR 5,000 + GST |
| Bank of Baroda | 8.50% – 10.60% | Up to 0.50% of the loan amount or a maximum of INR 7,500 + GST |
| Bank of India | 8.85% onwards | 0.25% of the loan amount + GST |
| Bank of Maharashtra | 8.60% – 10.80% | As applicable |
| Canara Bank | 8.85% – 11.25% | 0.5% of the loan amount + GST |
| Central Bank of India | 8.55% – 9.10% | 0.50% of the loan amount subject to maximum INR 20,000 + GST |
| Citibank | 8.45% Onwards | Up to 0.40% of the loan amount + GST |
| Corporation Bank | 8.60% – 11.20% | 0.50% of loan amount. Max INR 50,000 + GST |
| Dena Bank | 8.50% – 10.60% | As applicable |
| Federal Bank | 10.15% – 10.30% | 0.50% of the loan amount to a maximum of INR 7,500 + GST |
| Fullerton India | 9.50% – 10.50% | 3% of the loan amount + GST |
| HDFC Limited | 8.50% – 9.40% | Up to 0.50% of the loan amount or INR 3,000 whichever is higher, plus applicable taxes. |
| HSBC | 8.75% – 9.10% | 1% of the loan amount + GST |
| ICICI Bank | 9.00% – 10.05% | Up to 1.00% of the loan amount + GST |
| IDBI Bank | 8.80% – 12.25% | 0.50% of loan amount to a maximum of INR 2,500 + GST |
| IDFC First Bank | 8.85% – 9.25% | Upto INR 10,000 + GST |
| IndusInd Bank | 8.40% – 9.75% | INR 10,000 + GST |
| Indiabulls Housing Finance | 9.30% Onwards | 0.50% of the loan amount to a maximum of INR 15,000 + GST |
| Jammu & Kashmir Bank | 9.10% Onwards | 0.25% of the loan amount to a maximum of INR 10,000 + GST |
| Karnataka Bank | 9.08% – 10.35% | 0.50% of the loan amount + GST |
| Karur Vysya Bank | 9.23% – 12.13% | Up to INR 7,500 + GST |
| Kotak Mahindra Bank | 8.70% onwards | Zero processing fee for online application (Upto 1.25% of Loan amount for offline application) |
| LIC Housing Finance (LIC HFL) | 8.50% – 10.75% | Loan Amount Upto INR 50 Lakh: – NILLoan Amount More than INR 50 Lakh to Upto INR 1 Crore – 50% of 0.25% of the loan amount + GST or 50% of INR 10,000 + GST, whichever is lowerLoans more than INR 1 Cr to Upto INR 5 Cr – 50% of INR 25000 + GST |
| Lakshmi Vilas Bank | 8.25% Onwards | As applicable |
| Nainital Bank | 10.50% Onwards | As applicable |
| Oriental Bank of Commerce | 8.60% – 9.95% | 0.50% of the loan amount to a maximum of INR 20,000/- + GST |
| Punjab National Bank (PNB) | 8.60% – 9.95% | 0.35% of the loan amount, subject to a minimum and maximum of INR 2,500 and INR 15,000 respectively |
| PNB Housing Finance (PNBHFL) | 8.50% – 11.95% | INR 10,000 + GST |
| Punjab & Sind Bank | 8.85% – 9.95% | Up to 0.25% of the loan amount to a maximum of INR 15,000 + GST |
| Reliance Home Finance | 9.75% – 13.00% | Up to 0.75% of the loan amount + GST |
| RBL Bank | 9.10% – 11.55% | INR 5,000 – INR 15,000 of the loan amount + GST |
| State Bank of India (SBI) | 9.15% – 11.30% | 0.35 % of loan amount and maximum INR 10,000 +GST |
| Standard Chartered Bank | Starting at 8.65%* | INR 10,000 + GST |
| Syndicate Bank | 8.85% – 11.25% | 0.125% of loan amount or a maximum of INR 5,000 + GST |
| Tata Capital | 8.95% – 12.00% | As applicable |
| UCO Bank | 8.85% – 10.40% | 0.5% of the loan amount, to a maximum INR 15,000 + GST |
| United Bank of India | 8.60% – 9.95% | As applicable |
| Vijaya Bank | 8.50% – 10.60% | INR 4,000 + GST |
| YES BANK | 9.15% – 11.25% | 0.5% of the loan amount or a maximum of INR 10,000 + GST |
Note: As per RBI guidelines, prepayment of home loans linked to floating rate of interest attracts no prepayment charges.
How to Get Lowest Home Loan Interest Rates?
There are certain factors based on which a home loan interest rate is offered which are as follows:
- Property in a good location – Property in a approved society has more chance of getting loan amount up to 75-90% of the property value.
- Make use of your good credit score – You must have CIBIL score of 650 or above to get approval for it.
- Apply at existing bank – A good understanding with the bank help you avail a high loan amount and that too at competitive rate of interest on your home loan without any hassle.
- High Income – A person earning high income has more chances of getting lower rate and higher amount.
- Keep all property related documents – It is very important to maintain and keep all the property documents with you. As it helps the lender identify your property and its worth properly and thus trust your profile.
- Make sure you have income proof – Many people do not know that your loan application may be rejected. If you do not have a income proof or salary slip. Only a few NBFCs accept such cases but then they give high rates.
- Apply at young age – If you age at the time of applying is in early 30s or late 20s. You are more eligible for a higher loan amount as you have less financial liabilities.
- Transfer your home loan to a lower EMI – You can transfer your existing home loan to a lender offering a lower rate on your home loan to save your money.
How to calculate your Home Loan EMI?
A home loan EMI calculator is used for checking monthly installments on a housing loan. You have to mention housing loan interest rate, total loan amount and tenure. The formula used for the calculation is as follows:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
where,
EMI = Equated Monthly Installment
P = Principal Loan Amount
R = Monthly Interest Rate
N = Number of Monthly Installments
How Can You Make the Most of Lower Home Loan Interest Rates?
If you are eligible for lower interest rates, not only should you grab it at the earliest. But also make sure the loan tenure is optimized to save you more. An optimized tenure means neither too short nor too long. An example below can help you understand it better.
Example – You are earning INR 80,000 (Net) in a month. A lender has come with a loan offer of INR 40 lakh at 7.60% per annum. Now, you are looking for a 20-year deal. But what if you curtail it to 15 years? Let’s check out the table below to know the differences of payment between these two tenure options.
| Tenure Options | EMI | Interest Outgo |
|---|---|---|
| 20 Years | INR 32,469 | INR 37,92,453 |
| 15 Years | INR 37,308 | INR 27,15,497 |
So, you can see a savings of around INR 10,76,956 (37,92,453-27,15,497) on reducing the tenure to 15 years instead of continuing it for 20 years. Yes, the EMI will rise by around INR 4,839 (37,308-32,469) when you choose a tenure of 15 years. Despite that, the EMI constitutes below 50% of your net monthly income. The lender can approve such a repayment tenure if you don’t have any other obligation.
Do Lenders Give You the Interest Rate Conversion Facility on a Home Loan?
Home loans are offered at both fixed and floating interest rates. Fixed rate loans come with the same rate of interest throughout the tenure. Whereas floating rate loans will see changes in the interest rate as and when changes take place in the market. Even with rate changes, floating rate home loans have lesser interest obligations for borrowers than what could be the case with fixed rate loans. So, if your home loan is on a fixed rate. You can get it converted into a floating rate and save on the interest. However, banks can charge on the conversion. Check out the table below to know the conversion fee applicable to changing from a fixed rate to a floating rate.
| Lenders | Conversion Charges |
|---|---|
| State Bank of India (SBI) | INR 5,000 |
| HDFC Limited | As Applicable |
| ICICI Bank | 1.75% of the principal outstanding |
| LIC Housing Finance (LIC HFL) | INR 10,000 |
| Punjab National Bank (PNB) | As Applicable |
| PNB Housing Finance (PNBHFL) | 0.50% of the principal outstanding |
| Axis Bank | 2% on the drawing power |
| Kotak Mahindra Bank | 0.50% of the principal outstanding |
| YES BANK | 0.50% of the principal outstanding |
Is the Conversion Allowed Within a Floating Rate Home Loan?
While switching from a fixed rate to a floating rate means considerable benefits for borrowers in terms of interest savings. You can further enhance your savings by switching to the most cost-efficient floating interest rate benchmark. Presently, there are base rate, the marginal cost of lending rate (MCLR) and repo-linked lending rate (RLLR) benchmarks. Of these, the RLLR is an external benchmark and is more transparent to the rate changes made by the Reserve Bank of India (RBI) than the other benchmarks. If you compare well. You’ll find that RLLR-based home loans come with an interest rate lower than the MCLR-based one by at least 0.30%-0.40% on average. So, if you’re in the base rate or MCLR and want to get into an RLLR-based home loan. The conversion fee will apply. Want to see the fee? Check out the table below.
| Lenders | Conversion Charges |
|---|---|
| State Bank of India (SBI) | INR 5,000 |
| ICICI Bank | If prepayment charges are not applicable, INR 1,000 will be debited If prepayment charges are applicable, the bank will levy a charge at 0.50% of the principal outstanding |
| Punjab National Bank (PNB) | As Applicable |
| Bank of Baroda | INR 2,000 |
| Axis Bank | 0.50% on the drawing power, subject to a minimum of INR 10,000 |
| Kotak Mahindra Bank | As Applicable |
| YES BANK | NIL |
What Should You Do if the RLLR-based Home Loan Rate of Your Bank is Higher than the Prevailing Market Rate?
In case your home loan interest rate despite RLLR is higher than the average market rate, maybe you should do a balance transfer to another lender at a lower rate. The immediate benefit can be in the form of a lower EMI. This will go on to reduce your interest obligation substantially over time, provided the new rate is at least 0.25%-0.50% lower than the existing rate and there’s quite a lot of time left for the loan repayment.
The balance transfer will come with a switchover fee. Which can be a flat amount or a percentage of the transferred balance. Some lenders can also give you a waiver on the balance transfer fee. However, such offers don’t last forever as they are valid for a specific period. So, if your home loan rate is quite high and you see a lender giving you the balance transfer facility at a lower rate, grab it at the earliest. If that comes with a fee waiver too, you will only gain more from this transaction.
Frequently Asked Questions
1. What is the Home Loan Interest Rate?
The percentage of the principal amount that banks charge from the borrower for using the principal amount known as the interest rate. The interest rate charged by banks and non-financial institutions determine the cost of your home loan.
2. How do Banks Calculate Home Loan Interest Rate?
Banks consider the market conditions as well as the internal policies before determining your home loan interest rate.
3. How can I reduce the interest rate burden on my Home Loan?
Making prepayments towards your home loan, increasing your home loan EMIs, making larger down payments towards the home loan, etc are some of the ways by which you can reduce the interest rate burden on your home loan.
4. What are the factors that determine the rate of interest on my home loan application?
Applicant’s CIBIL score, loan amount, employment type, income levels as well as the gender of the applicant are some of the factors that determine the rate of interest on your home loan application.
5. How can I calculate my payable home loan interest amount?
You can calculate your home loan interest rate using the home loan EMI calculator, which mainly calculates the EMI amount but also displays the total interest payable on your home loan.
6. Is Home Loan Balance Transfer a good option?
Yes, if another bank is offering you a lower rate of interest on your existing home loan, then you can opt for a home loan balance transfer. However, it is important to check with your bank whether it offers a home loan balance transfer facility or not.
7. What are the documents required to apply for a home loan?
Proof of Identity, address, income, age, property, etc are required to apply for a home loan.
8. How does Repo Rate affect the interest rate on home loans?
The rate at which banks borrow money from RBI is termed as the Repo rate. As the repo rate increases, the banks borrow money from RBI at higher interest rates and vice versa. This results in an increase in the home loan interest rates for individual borrowers.
9. Is a low interest home loan the best option to apply for?
A low interest rate home loan can be the best option to apply for. However, it is important to check other factors like the loan processing fee charged by the bank, prepayment or foreclosure option and charges, if the bank offers a home loan balance transfer facility, etc before applying for a home loan.
10. Which Home Loan interest rate is better – Fixed or Floating?
While the interest rate remains the same throughout the loan tenure in a fixed interest rate, the applicant can easily repay the loan. However, in case of floating interest rate you can take advantage of the lower interest rates during the loan tenure.