Secure Your Dream Home with home loan at lowest interest

low home loan interest rate

Owning a home is a dream for many, but the thought of high interest rates on home loan can quickly turn that dream into a distant wish. But wait! This might be the perfect time to make your dream a reality, thanks to the current wave of low home loan interest rate.

Imagine affordable monthly payments, financial security, and the joy of building your own haven. But how do you navigate the maze of lenders and offers to find the best low-interest rate?

That’s where this blog comes in! We’ll be your guide, demystifying the process and helping you unlock the door to your dream home.

Get ready to:

  • Uncover the secrets to finding the lowest interest rates in the market.
  • Navigate the different types of loans and choose the one that fits your needs and budget.
  • Crack the code on hidden fees and charges to avoid unnecessary expenses.
  • Learn from expert tips to strengthen your loan application and secure the best deal.
  • Stay informed about market trends and upcoming changes in interest rates.

Whether you’re a first-time homebuyer or looking to refinance, this blog is your one-stop shop for everything you need to know about low home loan interest rates. So, buckle up and get ready to unlock the door to your dream home!

What is home loan interest rate

Think of an interest rate as the rent you pay for using someone else’s money. When you borrow money (like a loan for a car or house), you don’t just pay back the amount you borrowed (principal), you also pay a fee for the privilege of using it. This fee, expressed as a percentage, is the interest rate.

Here’s a breakdown:

  • Principal: The actual amount of money you borrow.
  • Interest: The cost of borrowing that money, expressed as a percentage of the principal.
  • EMI (Equated Monthly Installment): The fixed amount you pay each month to cover both the principal and interest.

Think of it like this:

  • You borrow ₹10,000 with a 10% interest rate for 1 year.
  • The interest you pay is ₹1,000 (10% of ₹10,000).
  • So, you’ll repay a total of ₹11,000 (₹10,000 principal + ₹1,000 interest).
  • Your EMI would depend on the loan term. For example, with a 1-year term, your EMI would be around ₹920.

Different types of interest rates in home loans

There are mainly two types of interest rates: fixed interest rate and variable interest rate. Let us know more about them.

Fixed Interest Rate:
  • Stability: Your interest rate stays the same throughout your loan term, offering peace of mind and predictable monthly payments.
  • Protection: You’re shielded from rising interest rates, potentially saving you money in the long run.
  • Downsides: If rates fall, you won’t benefit, and fixed rates are generally higher than floating rates initially.
Floating Interest Rate:
  • Flexibility: Your interest rate adjusts based on the bank’s current lending rates, offering the potential for lower payments if rates decrease.
  • Savings potential: Enjoy lower starting rates compared to fixed options.
  • Beware of volatility: If rates increase, your EMIs will rise, potentially impacting your budget.
Which one is right for you?
  • Consider your risk tolerance: If you prefer stability and predictability, fixed rates might be ideal. If you’re comfortable with some volatility and potential savings, floating rates could be attractive.
  • Anticipate future rate trends: Analyze market forecasts to gauge if rates are likely to rise or fall.
  • Shop around: Compare rates from different lenders to find the best deal for your situation.

How to determine interest rates on house loan

Accurately determining your home loan interest is crucial for making informed financial decisions throughout the loan journey. Whether you’re currently evaluating loan offers or well into your repayment period, understanding your total interest liability empowers you to manage your finances effectively. Here, we’ll delve into two reliable methods to calculate your home loan interest, equipping you with the knowledge to navigate your loan with confidence.

Method 1: Using Online EMI Calculators

This method offers speed and convenience. Most lenders and financial institutions provide free online EMI calculators. Simply input:

  • Loan Principal: The amount you wish to borrow.
  • Loan Tenure: The desired loan repayment period in years.
  • Interest Rate: The offered annual interest rate (divide by 12 for monthly rate).

The calculator will generate a detailed breakdown of your loan, including the total interest payable throughout the tenure.

Method 2: Employing the EMI Calculation Formula

For individuals comfortable with mathematical calculations, the EMI formula provides a precise alternative:

EMI = [P x r x (1+r)^n]/[(1+r)^n-1]

  • P: Loan Principal
  • r: Monthly interest rate (annual rate divided by 12)
  • n: Total number of monthly instalments

This formula calculates the monthly EMI, and to determine the total interest, multiply the EMI by the number of instalments (n).

Key Considerations:

  • Both methods assume a fixed interest rate. If your rate is variable, the actual interest amount may differ.
  • Online EMI calculators are generally recommended for their user-friendliness and accurate results.

Benefits of Understanding Your Interest Liability:

  • Make informed decisions when comparing loan options and lenders.
  • Effectively plan your budget to accommodate monthly payments.
  • Negotiate potentially better terms with a clear understanding of your financial obligations.

By utilizing these reliable methods, you can demystify your home loan interest and confidently navigate the path towards achieving your dream home.

Top 20 Banks which are offering home loan at lowest interest rate

BANK OF INDIA8.30% p.a. onwards 
UNION BANK OF INDIA8.35% p.a. onwards 
BANK OF MAHARASHTRA8.35% p.a. onwards 
BANK OF BARODA8.40% p.a. onwards
PUNJAB NATIONAL BANK8.40% p.a. onwards
UCO BANK8.45% p.a. onwards 
HSBC BANK8.45% p.a. onwards 
IDBI BANK8.45% p.a. onwards 
CENTRAL BANK OF INDIA8.50% p.a. onwards 
HDFC BANK8.50% p.a. onwards 
SOUTH INDIAN BANK8.50% p.a. onwards 
CANARA BANK8.55% p.a. onwards 
PUNJAB AND SIND BANK8.55% p.a. onwards 
STATE BANK OF INDIA8.60% p.a. onwards 
SARASWAT BANK8.60% p.a. onwards 
TATA CAPITAL8.70% p.a. onwards 
KOTAK MAHINDRA BANK8.70% p.a. onwards 
AXIS BANK8.70% p.a. onwards 

Best tips to obtain home loan at lowest interest rate

1. Boost Your Credit Score

  • A score above 740 unlocks the best rates. Pay off debts, maintain a healthy credit utilization ratio, and watch your score soar.

2. Go for a Shorter Tenure

  • Opt for a shorter loan tenure (10 to 15 years) to reduce the overall interest payable.
  • Use a home loan EMI calculator to visualize the significant reduction in interest for shorter tenures.

3. Prepayments Are a Good Option

  • Make prepayments on floating rate loans without incurring charges.
  • Frequent prepayments reduce the principal amount, lowering the total interest paid.
  • Check for prepayment charges on fixed rate loans and consult with your lender.

4. Compare Interest Rates Online

  • Conduct thorough research and compare interest rates on third-party websites.
  • Evaluate rates and charges from different lenders before making a decision.

5. Home Loan Balance Transfer Can Be an Alternative

  • Consider a balance transfer if your current lender’s interest rate is high.
  • Use balance transfer cautiously, as missed payments can lead to higher penalties.

6. Pay More as Down Payment

  • Contribute a higher amount as a down payment to reduce the loan amount and subsequently, the interest paid.

7. Look for Better Deals

  • Leverage a good credit history to negotiate lower rates with your lender.
  • Keep an eye on festive offers, as banks may lower interest rates during special seasons.

8. Increase your EMI

  • If your financial situation improves, inquire about annual EMI revisions to reduce the loan tenure.
  • Opt for higher EMIs to further decrease the overall interest against your loan.

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