January 2021
Best home loan bank: 6
HDFC
Established in 1977, HDFC has helped over 80 lakh people purchase their homes till date. It is important to note here that HDFC, a Mumbai-headquartered housing finance company (HFC), should not be confused with HDFC Bank, even though the two entities are part of the same HDFC Group.
HDFC home loan interest rate
| Rate of interest on home loans | Best rate* | Highest rate* |
| For salaried individuals | 6.70% | 7.40% |
| For self-employed individuals | 6.70% | 7.85% |
*Rate applicability valid from September 20, 2021 till October 31, 2021.
Maximum tenure: 30 years
Processing fees: Up to 0.50% of the loan amount or Rs 3,000, whichever is higher.
Affordability scale: High
Advantages: HDFC is also among the first HFCs to reduce rates after the RBI announces rate cuts. As part of a highly successful group, the HFC also has great scope to offer benefits to its customers.
Disadvantages: The best rates by HDFC are available to borrowers with a credit score of at least 750. You will not be able to get these rates in case of lower scores.
Best home loan bank: 7
ICICI Bank
ICICI Bank, the country’s second-largest private lender by market-capitalisation, was originally promoted in 1994 by ICICI Limited and was its wholly-owned subsidiary. ICICI Bank currently has a network of 5,288 branches across India.
ICICI Bank home loan interest rate
| Rate of interest on home loans | Best rate* | Highest rate* |
| For salaried individuals | 6.70% | 7.40% |
| For self-employed individuals | 6.80% | 7.55% |
*Rate applicability from October 1, 2021.
Maximum tenure: 30 years
Processing fees: 0.50% of the home loan amount, starting from Rs 1,100.
Affordability scale: High
Advantages: One of the most customer-friendly banks, ICICI Bank is also quick in offering rate transmission benefits. The ease of conducting business on its various online platforms is also remarkably easy, unlike some other banks.
Disadvantages: Since the bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its group companies, you could expect a lot of cold calls.
Best home loan bank: 8
LIC Housing Finance
A subsidiary of LIC, the company has so far approved over 3.35 lakh home loans.
LIC Housing Finance home loan interest rate
| Rate of interest on home loans | Best rate | Highest rate |
| For salaried individuals | 6.66%* | 7.80% |
| For self-employed individuals | 6.66%* | 7.90% |
Maximum tenure: 30 years
Processing fees: 0.25% of the loan amount, with the upper limit capped at Rs. 10,000.
Affordability scale: Average
Advantages: LIC HFL offers 90% of the property value as home loan.
Disadvantages: Interest rates are not as low as some of the leading Indian banks.
*To cash in on the festive season in 2021, LICHF has expanded its best rate to home loans of up to Rs 2 crores, in case the loan is sanctioned from September 22, 2021 to November 30, 2021. The new rate is available to all categories of home buyers. The processing fee for this festive offer has also been capped at Rs 10,000 or 0.25% of the loan amount, whichever is lower.
Best home loan bank: 9
Canara Bank
Founded in July 1906 at Mangalore, Karnataka, Canara Bank was nationalised in 1969. This bank which is over a century old, has its headquarters in Bengaluru and operates over 10,391 branches across India. Last year, Canara Bank became the fourth-largest state-owned bank by assets after its merger with Syndicate Bank assuming a business size of over Rs 16 trillion.
Canara Bank home loan interest rate
| Rate of interest on home loans | Best rate | Highest rate |
| For salaried individuals | 6.90% | 8.90% |
| For self-employed individuals | 6.90% | 8.90% |
Maximum tenure: 30 years
Processing fees: 0.50% of the loan amount with the minimum and the upper limit capped at Rs 1,500 and Rs 10,000, respectively.
Affordability scale: Average
Advantages: You could repay your loan till you attain the age of 75 years. This means people purchasing their home in their middle ages, will find this bank more fitting.
Disadvantages: For a higher loan size, you will have to make a contribution of up to 25% of the property’s value. Unlike most banks, Canara Bank also charges a processing fee on home loans even now.
Best home loan bank: 10
HDFC Bank
Those who find it more comfortable to stick with a bank rather than a HFC could apply for a home loan at HDFC Bank, the baking subsidiary of the HFC, HDFC. Incorporated in 1994, the bank has a nationwide network of 5,430 branches.
HDFC Bank home loan interest rate
| Rate of interest on home loans | Best rate | Highest rate |
| For salaried individuals | 6.80% | 7.85% |
| For self-employed individuals | 6.80% | 7.85% |
Maximum tenure: 30 years
Processing fees: Up to 0.50% of the loan amount or Rs 3,000, whichever is higher.
Affordability scale: Average
Advantages: The bank is comparatively fast in transmitting benefits of policy rate cuts.
Disadvantages: The process to get your loan approved may be longer, considering that the bank would demand a great deal of documents and carry out several checks, to avoid bad loans. This has been instrumental in keeping the bank’s financial health in check, even during the worst of the financial crisis.
Best home loan bank: 11
Axis Bank
A leading private sector bank established in 1993, Axis Bank currently runs around 4,500 branches in India and abroad.
Axis home loan interest rate
| Rate of interest on home loans | Best rate | Highest rate |
| For salaried individuals | 6.90% | 8.40% |
| For self-employed individuals | 7% | 8.55% |
Maximum tenure: 30 years
Processing fees: Up to 1% of the loan amount, with the minimum amount capped at Rs 10,000.
Affordability scale: Average
Advantages: The bank is a pioneer in terms of rewarding credit-worthy individuals and has been among the first to offer them lower rates of interest.
Disadvantages: While most banks offered a processing fee waiver in view of the festive season and the Coronavirus pandemic starting October 2020, Axis Bank continues to charge this duty. Also, the processing fee of this bank is comparatively higher than what is charged by other banks.
Important rules to follow when deciding on best bank for home loan
Banks versus HFCs
Banks are faster in passing on the rate cut benefits to customers, as compared to NBFCs and HFCs.
Salaried versus self-employed borrower
Salaried individuals can get a better deal from a bank, if their credit score is good. Banks will be willing to negotiate a sweeter deal, if you are a bankable customer.
Fixed rate or negotiable?
Banks are not averse to negotiating even though it might not appear so. After all they are selling a product like any other company.
Nothing like one-size-fits-all
Each bank is different and offers different benefits. Select a bank, based on your own individual requirement.
Home loan interest rate all banks in 2021: Things to keep in mind
- Amid increasing delinquency rates, almost all banks now offer their best interest rates only to applicants with good credit scores. As mentioned earlier, a credit score above 700 qualifies as a good credit score.
- Changes in the repo rate will not immediately reflect in your home loan EMI payments. Rates are reset by banks at fixed intervals.
- Be mindful that banks cannot charge a penalty for prepayment of home loans linked with the floating rate of interest.
Source: housing.com
Also read: Best Banks to Get Your Home Loan in 2022 Part 1
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