January 2021
As home loans are a long-term commitment, we offer some tips on how to choose a bank that serves you well throughout the loan tenure
With banks competing with one other to offer the most cost-effective home loans during the festive season of 2021, interest rates have now come to a record 10-year low. However, it may also be confusing for those who are wondering which bank would be the best to get your home loan in 2022. Be advised that how cost-effective your home loan would be, largely depends on the bank you choose to get the home loan from. More importantly, the bank offering the lowest interest rate may not be the best bank for you, if you factor in the various other charges that the lenders impose on providing the loan. This means it may be quite confusing for a home buyer to select the best financial institution to borrow the home loan from, while evaluating not only the lowest interest rates but also the overall effectiveness of the bargain. This is why selecting the best bank for home loan is highly subjective and the borrower needs to keep in mind various factors.
Home loan interest rates all banks 2022
To make things easier for borrowers, we list here the best banks to get a home loan from in 2022. Note: As the interest charges will always be the single-biggest influencer in driving the borrower’s decision, we have listed the banks that offer you the most affordable deals, currently. However, while making the list, we have also determined the banks’ loan affordability, by factoring in the fringe charges. Also note that the rates mentioned in this article are with regard to the floating rate of interest, linked with the RBI’s repo rate and not the previous marginal cost of funds-based lending rate (MCLR) regime, or base rate or prime lending rate regimes.
Best home loan bank: 1
Union Bank of India
Mumbai-headquartered Union Bank of India was in the news in 2020 when the government merged Andhra Bank and Corporation Bank with it. Currently, this public lender has a network of over 9,300 domestic branches and more than 11,800 ATMs.
Union Bank home loan interest rate
| Rate of interest on home loans | Best rate* | Highest rate** |
| For salaried individuals | 6.40% | 7.0% |
| For self-employed individuals | 6.45% | 6.80% |
Processing fees: 0.50% of loan amount, subject to a maximum of Rs 15,000, plus GST
Affordability scale: High
Advantages: There is no cap on home loan amount at Union Bank.
Disadvantages: When compared to some public lenders, Union Bank has limited number of branches.
Best home loan bank: 2
Kotak Mahindra Bank
A fast-growing private lender, the Uday Kotak-headed banks has branched over 100 cities in India. At present, Kotak Mahindra if offering the best rate of interest on home loans in the market.
Kotak Mahindra home loan interest rate
| Rate of interest on home loans | Best rate* | Highest rate** |
| For salaried individuals | 6.55% | 7.10% |
| For self-employed individuals | 6.55% | 7.45% |
*Rate applicable from November 9, 2021, to December 9, 2021.
Longest tenure: 30 years
Processing fees: none, right now; 0.5 to 1 % of the loan amount, typically.
Affordability scale: High
Advantages: You can get an instant approval for your home loan through the Kotak Digi Home loan facility. Since the bank has kept the rates at the lowest level in the entire market in the past one year and plans to keep housing finance segment as its key focus, borrowers can expect extended benefits.
Disadvantages: When compared to some public lenders, Kotak Mahindra has less penetration in India. In case of home loans, you always have to make physical visits to the branch for various purposes.
Best home loan bank: 3
Bank of Baroda
The Vadodara-headquartered Bank of Baroda became the third-largest bank in India after SBI, after its merger with Dena Bank and Vijaya Bank in April 2019. Founded by the maharaja of Baroda in 1908, the bank, along with 13 other major commercial banks of India, was nationalised on July 19, 1969, by the government and currently operates more than 10,000 branches in India and abroad.
Bank of Baroda home loan interest rate
| Rate of interest on home loans | Best rate | Highest rate |
| For salaried individuals | 6.5%* | 8.75% |
| For self-employed individuals | 6.75% | 8.75% |
*Effective from October 7, 2021 till December 31, 2021
Maximum tenure: 30 years
Processing fees: None currently
Affordability scale: High
Advantages: The process to get a loan is very easy on the online platform.
Downside: People with poor credit scores will find the cost of borrowing higher and should, thus, focus on getting credit from HFCs or NBFCs. As mentioned earlier, public lenders are highly slow on passing on crucial information to their borrowers.
Best home loan bank: 4
Punjab National Bank
The second-largest public sector bank in India, Punjab National Bank (PNB) is also currently offering home loan interest rates at affordable rates. The New Delhi-headquartered state-owned bank was founded in 1894 and has over 80 million customers and 6,937 branches across 764 cities.
Punjab National Bank home loan interest rate
| Rate of interest on home loans | Best rate | Highest rate |
| For salaried individuals | 6.50% | 7.35% |
| For self-employed individuals | 6.55% | 7.35% |
Maximum tenure: 30 years
Processing fees: None at present. Typically, it is 0.35% of the loan amount, with the lower and upper limit capped at Rs 2,500 and Rs 15,000, respectively.
Affordability scale: High
Advantages: The temporary waiver in processing fee lowers the overall expense for the borrower. People with good credit scores are also invariably rewarded by the bank.
Disadvantages: The bank’s image has suffered major setbacks in the recent past amid a dramatic surge in toxic loans and its alleged involvement in fraud cases. Also, borrowers might find the services much less customer-friendly than most private lenders.
Best home loan bank: 5
State Bank of India (SBI)
The largest mortgage lender in India, government-run State Bank of India (SBI) has assisted over 30 lakh families in their home purchases till date. Established in 1955, the lender also has over 24,000 branches in India and abroad. Note that SBI is the biggest player in the home loan segment, with a book size of Rs 5.05 trillion. On a year-on-year basis, its home loan book has grown by 11% cent in Q1, FY22.
SBI home loan interest rate
| Rate of interest on home loans | Best rate* | Highest rate* |
| For salaried individuals | 6.7% | 7.05% |
| For self-employed individuals | 6.7% | 7.05% |
*Rate applicability from May 1, 2021
Longest tenure: 30 years
Processing fees: 0.40% of the loan amount, subject to a minimum of Rs 10,000 and a maximum of Rs 30,000 with GST. For projects where the bank has a tie-up with the builder, the rate will be 0.40% subject to a maximum of Rs 10,000 plus taxes.
However, if a borrower applies for a home loan between August 1, 2021 and August 31, 2021, SBI will charge no processing fee on home loans under its Monsoon Dhamaka offer. After this period, borrowers will have to pay 0.40% of the home loan amount as the processing fee at SBI.
Affordability scale: High
Advantages: The government-run bank is always among the first ones to reduce its interest rates, in case the RBI lowers the repo rate. It also makes perfect sense to rely on one of the best-performing Indian banks to meet your borrowing needs. The great financial health of the bank also gives borrowers a reason to stick with SBI.
Since SBI has done away with occupation-linked interest penalty recently, it is also now charging same interest from salaried and self-employed professionals.
Disadvantages: The number of documents that applicants have to submit are high considering the bank employs strict due diligence to affirm the creditworthiness of the borrower. The best rate of interest is also offered to borrowers with credit scores of 750 and above.
Public lenders may sometimes be lax in passing on crucial information that can be beneficial for home loan borrowers. This means you will have to continue to track news development related to changes in home loan policies and demand the due benefits from time to time.
Source: housing.com
Also read: 5 Things to Do When Closing a Home Loan
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