homeloan rate revised again

Home Loan Interest Rate FAQs

1. What is home loan interest rate?

Home loan interest rate is the percentage of the principal amount charged by the lender to the borrower for using the principal amount. The interest rate charged by banks and non-financial institutions determine the cost of your home loan. So, when you are paying your home loan EMI (equated monthly instalment), the interest rate charged determines how much you have to pay your lender against your loan every month. Interest rates are usually linked to repo rate and can vary from lender to lender.

2. Which Bank has lowest home loan interest rate?

Though interest rates offered by banks can increase or decrease as per the banks’ discretion, right now the Union Bank of India is offering the lowest home loan interest of 6.40% p.a. to its customers. However, note that this rate is applicable only on home loan for women applicants.

3. How to Get Lowest Home Loan Rates in India?

Home loan interest rates are at a 15-year low, so almost all the banks are offering lower interest rates on home loans compared to what they were offering in the previous financial year. However, to get the lowest home loan interest rates, compare rates offered by lenders. Always use a home loan EMI calculator while comparing rates; it will help you estimate how much you have to pay every month against your loan.

4. How to reduce home loan interest?

Reducing your home loan interest will help ease the EMI burden off your shoulders. There are several ways you can consider that will help reduce your loan interest.

• Choose a shorter tenure – For long term loans, though the EMI is less, the overall cost of the loan drastically increases because you are paying interest for a longer period of time. So, choose shorter tenures as the interest amount will get much lower with time. Use a home loan EMI calculator while comparing long-term and short-term home loans.
• Make regular prepayments – During the first few years of your home loan, you will be paying more towards the interest charged and less towards the principal. Thus, if you make housing loan prepayments, you will eventually bring down your outstanding principal, thereby reducing the interest in the process. However, some banks charge a certain percentage for loan prepayments, especially on fixed rate loans.
• Get a balance transfer – Opt for balance transfer only if you feel that your current lender is charging a higher interest rate than other lenders. Most banks offer home loan balance transfer facilities, through which you can shift your loan account to the concerned bank offering lower rate of interest.