The interest rate attached to a home loan plays a decisive role in shaping both monthly EMI outgoings and the overall borrowing cost, making a lower rate critical for achieving meaningful savings over time. Borrowers have the flexibility to select a home loan tenure suited to their repayment capacity, allowing for structured instalments over time. That said, the interest rate is influenced by several parameters such as credit score, Loan-to-Value (LTV) ratio, income, loan duration and the broader interest rate environment.
Creditworthiness remains a pivotal factor in home loan pricing, as applicants with robust credit scores are more likely to secure loans at reduced interest rates and on better overall terms.
ALSO READ: Can You Take A Loan Against Your PPF? Check Eligibility, Interest, And Repayment Timeline
Here is a look at the home loan interest rates charged by some of the major banks in the country currently:
| Bank Name | Interest Rate |
| Bank of India | 7.1% to 10% |
| Bank of Maharashtra | 7.1% to 9.65% |
| UCO Bank | 7.15% to 9.25% |
| Punjab National Bank | 7.25% onwards |
| State Bank of India | 7.25% to 8.45% |
| ICICI Bank | 8.5% to 9.8% |
| HDFC Bank | 7.75% onwards |
| Axis Bank | 8% to 9.1% |
| Canara Bank | 7.15% onwards |
Home loan borrowers can avail tax relief on interest payments of up to Rs 2 lakh for self-occupied properties. In a bid to boost affordable housing, the tax framework also permits an extra deduction of up to Rs 1.5 lakh on interest for loans taken before March 31, 2020, to purchase homes valued at Rs 45 lakh or less. Meanwhile, repayments towards the principal fall under Section 80C benefits, capped at Rs 1.5 lakh annually.
Banks usually determine home loan eligibility by examining the relationship between proposed EMIs and the borrower's net monthly income, or take-home salary. The permissible EMI-to-income ratio varies widely, typically between 20% and 70%, across different income brackets. Adding a co-borrower can help increase the sanctioned amount.
Timely repayment of debt should remain a priority for borrowers, as lapses can have enduring repercussions. Old dues, including those written off by lenders, may still feature in credit histories, while even a single missed EMI can weaken credit scores and limit future borrowing opportunities.
For many borrowers, loan documents can be daunting, packed with complex legal jargon in small print. Despite this, a careful review of the terms is essential to prevent complications down the line. Where clarity is lacking, consulting a financial expert or chartered accountant is a prudent step.
ALSO READ: ATM, UPI Access To PF Under EPFO 3.0: What Portion Of Your Savings Can Be Available Instantly?
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
