The cheapest home loans: Kotak Mahindra, Union Bank offer the lowest rates
SBI, HDFC and ICICI Bank offer home loan rates starting at 6.9 percent
November 12, 2020 / 11:25 AM IST
It’s raining concessional interest rates and processing fee discounts at the home loan counter this festive season, bringing the rates to a 15-year-low.
As Moneycontrol pointed out earlier, whether you are looking to buy a new house or transfer your outstanding loan to another lender, this is the right time to execute your resolution. Moreover, the transparency assured by the external benchmark-linked loan regime is another encouraging parameter.
Public sector banks ahead of others
Last week, Kotak Mahindra Bank upped the game further, lowering its interest rate to 6.75 percent. So far, it’s the public sector banks that have claimed the top slots in the ‘cheapest loans’ list across categories. They, however, continue to dominate the list. Union Bank of India is a close second with interest rates starting at 6.8 percent. Other banks and housing finance companies are not far behind. Bank of Baroda (BoB), Bank of India (BoI) and Central Bank of India’s home loan rates start at 6.85 percent. In fact, interest rates from all ten lenders on the list are below 7 percent, as per data from Bankbazaar.com.
India’s largest bank – the State Bank of India (SBI) – offers interest rates starting at 6.9 percent. It has also announced an interest rate concession of 25 basis points for loans over Rs 75 lakh. The country’s largest mortgage lender – HDFC – also charges 6.9 percent interest on its home loans, as is the case with ICICI Bank and LIC Housing Finance.
While home loan interest rates are at extremely attractive levels, you might have to pay higher rates depending on your credit score, loan amount and even profession. For example, SBI’s non-salaried borrowers have to pay 15 bps more compared to their salaried counterparts. Similarly, BOI’s borrowers with credit scores of over 760 get a concession of 15-20 bps on home loan interest rates.
You would also do well to enquire with your bank on how the credit risk component – which can change if there is a significant change in your credit assessment, thus impacting your interest rate – will be treated. A bank that transparently quantifies how credit risk will be assessed through the life of the loan is your best bet.