Best Home Loan in India Comparison 2024

Estimated reading time: 13 minutes

Securing your dream home often necessitates a best home loan product, and with numerous banks offering a plethora of home loan products, choosing the right one can be overwhelming.

This article aims to simplify the process by offering a detailed comparison of interest rates, outlining the required documents, explaining the application process, and discussing the eligibility criteria.

Whether you are a first-time homebuyer or looking to invest in another property, understanding these aspects will guide you in making an informed decision.

Home Loan Interest Rates by Top Bank

Interest rates form the foundation of any home loan, significantly influencing the overall cost of your dream home. Below is a comprehensive table displaying the interest rates offered by these banks in India for various applicant categories:

Bank	Up to Rs. 30 Lakh	Above Rs. 30 Lakh to Rs. 75 Lakh	Above Rs. 75 Lakh
SBI Bank	8.5% p.a. onwards	8.5% p.a. onwards	8.5% p.a. onwards
HDFC Bank	8.7% p.a. onwards	8.7% p.a. onwards	8.7% p.a. onwards
LIC Bank	8.50% – 10.35% p.a.	8.50% – 10.55% p.a.	8.50% – 10.75% p.a.
ICICI Bank	8.85% p.a. onwards	8.85% p.a. onwards	8.85% p.a. onwards
Kotak Mahindra Bank	8.70% p.a. onwards	8.70% p.a. onwards	8.70% p.a. onwards
Punjab National Bank	8.40% – 12.10% p.a.	8.40% – 12.10% p.a.	8.40% – 12.10% p.a.
Bank Of Baroda	8.40% – 10.65% p.a.	8.40% – 10.65% p.a.	8.40% – 10.90% p.a.
Bajaj Housing Finance	8.50% p.a. onwards	8.50% p.a. onwards	8.50% p.a. onwards
Axis Bank	8.75%-13.30% p.a.	8.75%-13.30% p.a.	8.75%-9.65% p.a.
Bank of India	8.4% p.a onwards	8.4% p.a onwards	8.4% p.a onwards
TATA Capital	8.75% p.a. onwards	8.75% p.a. onwards	8.75% p.a. onwards

Home Loan Processing Fees charged by Banks

Processing fees are an essential aspect of home loans in India that borrowers should consider. These fees are charged by banks to cover the administrative costs associated with processing your loan application. Here’s an overview of the processing fees charged by the banks in India we’ve examined:

Bank	Processing Fee
Kotak Mahindra Bank	0.25% – 1% of the loan amount
HDFC Bank	Rs 3000 + GST
SBI	Rs 5000 + GST
Bajaj Finance	Rs 10000 + GST
Axis Bank	Rs 5000 + GST
LIC Home Finance	Rs 10000 + GST
TATA Capital	Rs 7500 inclusive of GST on Home Loan Case / 0.25% of loan amount in LAP Cases

It’s important to note that processing fees can significantly impact the overall cost of your home loan in India. Therefore, when comparing loan offers, consider not only the interest rates but also the processing fees to make an informed decision.

Key Features of Best Home Loan in India

Each bank adds its unique touch to their home loan offerings with distinctive features. Here’s a glimpse of some standout features:

• SBI: “SBI MaxGain” home loan allows surplus fund parking in an overdraft account to reduce interest outgo.
• BOI: Offers a diverse range of options, including home loans tailored for NRIs and senior citizens.
• IDFC FIRST Bank: Provides flexible repayment options, including the liberty to skip EMIs.
• Bajaj Finance: Embraces digital convenience with online account management and a 3 EMI holiday feature.
• Kotak Mahindra Bank: Extensive services at your doorstep and flexible tenures.
• LIC HFL: Offers joint applications with close relatives, fostering a sense of togetherness.
• HDFC: Apart from regular home loans, they cater to home improvement, extension, and plot loans.
• Axis Bank: Encompasses convenient features like doorstep document pickup and balance transfer facilities.
• BOB: Empowers women borrowers with interest concessions and diverse home loan products.
• ICICI Bank: Equips borrowers with a top-up loan facility and the choice between fixed and floating interest rates.
• Canara Bank: Unveils the “Canara Budget” home loan, catering to affordable housing aspirations.

Home Loan Products by Banks in India

To gain a deeper understanding, let’s categorize the types of home loan products offered by these banks:

Bank	Home Loan Products Offered
SBI	Regular Home Loan, SBI MaxGain, NRI Home Loan, Flexipay
BOI	Star Diamond Home Loan, Star Smart Home Loan, NRI Home Loan
IDFC FIRST Bank	Home Loans for Salaried, Home Loans for Self-employed, NRI Home Loans
Bajaj Finance	Home Loan, Home Loan Balance Transfer
Kotak Mahindra Bank	Home Loan, Home Improvement Loan, Home Loan Transfer, Pradhan Mantri Awas Yojana, Home Loan for Women
LIC HFL	Home Loan, Griha Siddhi (for women), NRI Home Loans
HDFC	Regular Home Loan, Home Improvement Loan, Home Extension Loan, Plot Loans
Axis Bank	Axis Empower (for women), Asha Home Loan (for low-income), Shubh Aarambh (for first-time buyers)
BOB	Baroda Home Loan, Baroda Home Improvement Loan, Baroda Home Extension Loan
ICICI Bank	Home Loan, Pradhan Mantri Awas Yojana, Top-Up Loan
Canara Bank	Canara Budget, Canara Home Loan, Canara Home Improvement Loan

Credit Scores Requirements to avail Home Loan in India

In the context of home loans in India, credit scores are of paramount importance. Lenders typically evaluate your Credit Information Bureau India Limited (CIBIL) score. While each bank might have slight variations in requirements, a general benchmark is a credit score of 650 or higher. However, some banks may consider applicants with slightly lower scores, depending on factors like income stability and repayment potential.

Document Requirements

When applying for a home loan in India, you’ll need to provide certain documents to the bank as part of the application process. These documents typically include:

• Proof of Identity (Aadhar card, Passport, PAN card, etc.)
• Proof of Address (Utility bills, Aadhar card, Voter ID, etc.)
• Income Proof (Salary slips, IT returns, bank statements, etc.)
• Property-related documents (Title deed, sale agreement, property tax receipts, etc.)
• Passport-size photographs
• Duly filled application form

Eligibility Criteria

Eligibility criteria vary among banks and are influenced by factors such as age, income, employment stability, and credit score. Below, we’ve summarized the key eligibility criteria for each bank:

Bank	Age (Min – Max Years)	Minimum Income (Per Annum)	Employment Stability	Co-applicant Requirement
SBI	18 – 70 (65 for NRIs)	Not specified	Salaried: 2 years in the current job, Self-employed: 5 years in the same line of business	Co-applicant mandatory for all
BOI	21 – 70	Not specified	Salaried: Confirmed employment. Self-employed: IT assesses for the last 2 years	Co-applicant mandatory for all
IDFC FIRST Bank	23 – 65	Not specified	Not specified	Not specified
Bajaj Finance	25 – 62	Salaried: Rs. 3,60,000 (Tier 1), Rs. 2,40,000 (Tier 2) Self-employed: Rs. 6,00,000	Salaried: 2 years, Self-employed: 5 years	Not specified
Kotak Mahindra Bank	21 – 65	Not specified	Salaried: 1 year in the current job, Self-employed: 3 years in the same line of business	Co-applicant mandatory for all
LIC HFL	21 – 60	Salaried: Rs. 1,80,000 Self-employed: Rs. 2,00,000	Not specified	Not specified
HDFC	21 – 65	Not specified	Salaried: 1 year in the current job, Self-employed: 3 years in the same line of business	Co-applicant mandatory for all
Axis Bank	21 – 60	Not specified	Salaried: 1 year in the current job, Self-employed: 3 years in the same line of business	Not specified
BOB	21 – 70	Not specified	Not specified	Not specified
ICICI Bank	21 – 60	Salaried: Rs. 1,20,000 Self-employed: Rs. 2,00,000	Salaried: 2 years in the current job, Self-employed: IT assesses for the last 2 years	Co-applicant mandatory for all
Canara Bank	21 – 70	Not specified	Salaried: Confirmed employment. Self-employed: IT assesses for the last 2 years	Not specified

How to Choose the Best Home Loan for You

Selecting the right home loan is a crucial decision that affects your financial health over the long term. With the multitude of options available in the Indian market, it can be overwhelming to choose the best home loan that suits your financial situation and needs. This section provides a comprehensive guide to help you navigate through the process, ensuring you make an informed choice that aligns with your financial goals.

Assessing Your Financial Health

The first step in choosing the best home loan is to thoroughly assess your financial health. This involves evaluating your income, expenses, savings, and current liabilities. Understanding your financial capacity will help you determine how much you can afford to borrow without straining your finances.

• Calculate Your EMI Affordability: Use online EMI calculators to understand how much you can afford to pay monthly. Your home loan EMI should not exceed 40-50% of your monthly take-home salary.
• Consider Your Down Payment Capacity: The higher the down payment you can make, the lower the loan amount you will need to borrow, which in turn reduces the interest burden.

Understanding Loan Features

Different home loans come with various features and terms. Understanding these will help you choose a loan that best meets your needs.

• Interest Rate Type: Decide between a fixed rate and a floating rate based on your risk tolerance and financial outlook. Fixed rates offer stability, while floating rates may offer savings if interest rates decline.
• Repayment Flexibility: Look for loans that offer flexibility in repayment terms, such as the ability to make prepayments or choose a longer tenure for lower EMIs.
• Loan Tenure: A longer tenure reduces your EMIs but increases the total interest paid. Conversely, a shorter tenure increases EMIs but reduces the total interest burden. Choose a tenure that balances affordability with cost-effectiveness.

Comparing Different Home Loans

Once you understand your financial health and the features you need in a home loan, the next step is to compare different home loans offered by various lenders.

• Interest Rates: Compare the interest rates of different lenders, but also pay attention to how the rates are calculated (MCLR, RLLR, etc.) and any associated conditions.
• Fees and Charges: Look beyond the interest rate and consider other costs associated with the loan, such as processing fees, administrative charges, and penalties for prepayment or late payment.
• Customer Service: Consider the lender’s reputation for customer service, ease of application process, and support throughout the loan tenure. Reading reviews and testimonials can provide insights into the borrower’s experience.

Read the Fine Print

Before finalizing your home loan, carefully read the loan agreement and understand all the terms and conditions. Pay special attention to clauses related to interest rate revision, prepayment penalties, and foreclosure charges.

Negotiate with Lenders

Don’t hesitate to negotiate with lenders for better interest rates or waived charges, especially if you have a good credit score or an existing relationship with the bank. Lenders are often willing to offer favorable terms to eligible borrowers to secure their business.

Consult with Financial Advisors

If you’re unsure about choosing the best home loan, consider consulting with a financial advisor. They can provide personalized advice based on your financial situation and help you navigate the complex landscape of home loans.

Choosing the best home loan requires careful consideration of your financial situation, understanding of loan features, comparison of different options, and negotiation with lenders.

Factors Affecting Home Loan Eligibility Criteria in India

This section elaborates on the key eligibility criteria including age, employment status, income levels, and credit score.

Age and Employment

• Age Limit: The applicant’s age at the time of applying for the loan and at the end of the loan tenure is a critical factor. Typically, lenders require borrowers to be at least 18 years old at the time of application. The maximum age limit at the time of loan maturity varies, usually around 60 years for salaried employees and 70 years for self-employed individuals. This ensures that the loan is fully repaid before or upon reaching retirement age.
• Stable Employment or Business: For salaried employees, lenders look for a stable job history, preferably with a minimum of 2-3 years of work experience, including at least 1 year with the current employer. For self-employed individuals and business owners, lenders examine the stability and profitability of the business. A business that has been operating profitably for at least 3 years is generally considered favorably.

Income Criteria

• Minimum Income Requirements: The applicant’s income is a direct indicator of their ability to repay the loan. Lenders set minimum income requirements that vary based on the city of residence, reflecting the cost of living and real estate prices in different regions. Higher income levels can qualify for larger loan amounts.
• Debt-to-Income Ratio: Lenders evaluate the applicant’s debt-to-income ratio, which is the percentage of an individual’s income that goes towards repaying debts, including the proposed home loan EMI. A lower ratio indicates better financial health and repayment capacity, making the borrower less risky to lenders.

Credit Score Requirements

• Importance of Credit Score: A credit score is a numerical expression based on an analysis of a person’s credit files, representing the creditworthiness of an individual. Lenders use this score to evaluate the risk of lending money. A high credit score (usually 750 and above) is essential for home loan approval and to secure favorable interest rates.
• Improving Your Credit Score: If your credit score is lower than the desired threshold, focus on improving it before applying for a home loan. This can be done by paying off existing debts, maintaining a healthy credit utilization ratio, and ensuring all bills and EMIs are paid on time.

Other Factors

• Property Value and Legal Status: The property’s value and its legal status are also considered in the eligibility criteria. The loan amount is usually a percentage of the property’s market value, often up to 80-90%. Additionally, the property should have a clear legal title and be approved by local governing bodies, ensuring it is free from any legal disputes.
• Co-applicants: Adding a co-applicant can enhance the loan eligibility, especially if the co-applicant has a stable income and a good credit score. Spouses are commonly added as co-applicants, which allows lenders to consider the combined income while assessing the loan application.

How to Apply for Home Loan at Top Bank in India

The home loan application process may seem labyrinthine, but it’s, in fact, a series of systematic steps:

1. Conduct Research: Begin by scrutinising and comparing home loan products from various banks. This will help you pinpoint the one aligning best with your requirements.
2. Check Eligibility: Most banks offer online eligibility calculators that furnish an initial assessment of your eligibility for the loan.
3. Document Collection: Gather the requisite documents as stipulated by the bank’s guidelines.
4. Visit the Bank: Either physically visit the bank branch or opt for the online application process via the bank’s official website.
5. Application Submission: Submit your filled-out application form along with the essential documents.
6. Processing: The bank embarks on reviewing your application and documents, which may also include property valuation.
7. Approval: Upon successful evaluation, the bank issues a sanction letter.
8. Loan Disbursement: After you fulfill all conditions and sign the agreement, the bank disburses the loan amount.
9. Commence Repayment: The repayment phase kicks in, with the repayment structure based on equated monthly instalments (EMIs).

In conclusion, the path to homeownership is laden with choices, and selecting the right home loan in India is a pivotal one. Take into account factors like interest rates, unique features, eligibility criteria, documentation requirements, and processing fees before making your decision. Consulting with a financial advisor or the bank’s representatives is always advisable. Armed with this extensive comparison, you’re now primed to embark on your journey towards owning your dream home.

Frequently Asked Questions