Home Loan
Home loan is a secured loan offered by Banks, NBFCs and HFCs to help you buy a residential property. In this, the property you are buying is mortgaged to the lender as security till the full repayment of the home loan.
Currently, home loan interest rate starts as low as 6.40% per annum. Lenders usually sanction 75% to 90% of the property value as loan, which can be repaid in EMIs over flexible tenure usually up to 30 years. Other benefits that come with a housing loan include annual tax benefits, balance transfer facility and top-up loan facility.
With multiple lenders offering a home loan, finding the best home loan offer can be challenging. At Paisabazaar.com, we help you compare, select and apply for the best home loan from India’s largest Banks, NBFCs, and Housing Finance Companies (HFCs). We provide comprehensive information on home loans along with the convenience to apply for a home loan online in just a few steps.
Banks & HFCs Offering Lowest Home Loan Interest Rates in India
nterest rate can significantly influence the total cost of a housing loan. As home loans are usually of higher value and longer tenure, even a slight difference in its rate of interest can lead to long-term financial implications. Therefore, when looking for a home loan, you should choose the lowest rate on offer. Getting a housing loan at a lower rate of interest will not only reduce your outgoing EMIs but also the overall home loan interest payout.
Here is the list of top 10 lenders that offer the cheapest home loans in India:
| Lenders |
Interest Rate (p.a.) |
Processing Fees |
| HDFC Bank |
6.70% - 8.70% |
Up to 1% plus statutory dues |
| ICICI Bank |
6.70% - 7.55% |
0.50% – 2.00% or Rs. 1,500 (Rs. 2,000 for Mumbai, Delhi & Bangalore), whichever is higher |
| PNB Housing Finanace |
6.66% - 8.05% |
As applicable |
| Indian Bank |
6.50% - 8.35% |
No processing charges up to 31.12.2021 |
| Canara Bank |
6.50% - 8.35% |
No processing charges up to 31.12.2021 |
Home Loan Tax Benefits
The Government of India offers tax benefits on home loans under the Income Tax Act of 1961. These home loan tax benefits help borrowers save a substantial amount of money every year. Below are the tax benefits that you can get on your home loan EMI paymen
Home Loan Tax Benefit 2021-22
| Section of Income Tax Act |
Nature of Home Loan Tax Deduction |
Max. Tax Deductible Amt. |
| Section 24(b) |
Interest paid |
Rs. 2 lakh |
| Section 80C |
Principal (including stamp duty and registration fee) |
Rs. 1.5 lakh |
| Section 80EE |
Additional interest (for first-time homebuyers) |
Rs. 50,000 |
| Section 80EEA |
Additional interest (for affordable housing) |
Rs. 1.5 lakh |
NOTE : In addition to Section 24(b) of the IT Act, you can claim tax benefit on home loan interest either under Section 80EEA or Section 80EE.
Documents Required to Apply for a Home Loan
Proof of Identity : Copy of any one (PAN Card, Passport, Aadhaar Card, Voter’s ID Card, and Driving License)
Proof of Age : Copy of any one (Aadhaar Card, PAN Card, Passport, Birth Certificate, 10th Class Mark-sheet, Bank Passbook, and Driving License)
Proof of Residence : Copy of anyone (Bank Passbook, Voter’s ID, Ration Card. Passport, Utility Bills (Telephone Bill, Electricity Bill, Water Bill, Gas Bill) and LIC Policy Receipt
Proof of Income for Salaried : Copy of Form 16, latest payslips, IT returns (ITR) of past 3 years, and investment proofs (if any)
Proof of Income for Self Employed : Details of ITR of last 3 years, Balance Sheet and Profit & Loss Account Statement of the Company/Firm, Business License Details, and Proof of Business Address
Property-related Documents : NOC from Society/Builder, detailed estimate of the cost of construction of the house, registered sale deed, allotment letter, and an approved copy of the building plan
Note : The above list is indicative and your lender might ask for additional documents.
FAQs
Q. Can I get a home loan for the entire property value?
Ans : No. Banks usually keep a 20% margin when providing individuals with a home loan. This means that the lender may agree to provide you with 80% of the property value as a home loan, while you will have to shell out the remaining 20% by yourself. In some cases, the lender may agree to provide you with up to 90% of the property value as a home loan, depending on multiple factors such as your repayment capacity, age, credit score, and property-related details such as its location, age, and market value.
Q. For what purposes can you avail of a home loan?
Ans : Following are a few of the reasons to avail of a home loan -
1. To buy a new house/plot
2. To construct a house
3. To renovate or repair damages to your home
4. To add a new room to your already existing home, or to expand the space in your house in some other way
Q. Which bank is the best for home loans?
Ans : Some of the most popular banks offering home loans in India are HDFC Bank, SBI, PNB, ICICI Bank, Bank of Baroda, Axis Bank, and Canara Bank. However, the best home loan for you would be the one that matches your loan requirements. Therefore, to get the best bank for a home loan first analyse your requirements. Also, when comparing home loan offers don’t jump for the offer that offers the lowest interest rate, rather check on the entire deal. Besides the interest rate, pay attention to other parameters such as processing fees and the loan repayment and prepayment policies.
Q. How much credit score should I have to get a home loan?
Ans : Credit score is a number between 300 and 900 that reflects how you handled your credit in the past. It not only affects the chances of your loan approval but also the interest rate at which you can borrow a sum. Most lending institutions offer the lowest rates to borrowers who have a credit score of 800 or above. Otherwise, a credit score between 750 and 900 is considered good by lending institutions. Remember, the higher the credit score, the greater are the chances of getting your home loan approved and getting a lower preferential interest rate. Even if your credit score is low, you can improve it by paying credit card bills on time, decreasing your outstanding debt, and maintaining old credit card accounts in good standing.
Who can cosign a home loan with me? Can my friend cosign a home loan for a flat?
Ans : Your family members like father, mother, siblings, etc. can co-sign a home loan with you. Other than that your spouse or adult children can also be co-signatories in case you are applying for a home loan. In India, as per existing rules, your friend cannot co-sign a loan as he/she is not a blood relative or otherwise related to you.Your family members like father, mother, siblings, etc. can co-sign a home loan with you. Other than that your spouse or adult children can also be co-signatories in case you are applying for a home loan. In India, as per existing rules, your friend cannot co-sign a loan as he/she is not a blood relative or otherwise related to you.
Q. Can I get a home loan for the entire property value?
Ans : At present, up to 7 people can cosign a home with the primary applicant. However, all of them need to be blood- relatives of the family member.
Q. Can I get a home loan for the entire property value?
Ans : Factors that can play a crucial role in home loan rejection are mentioned below :
1. Low credit score
2. Incorrect personal details in the credit report
3. Frequent credit rejections by other lenders
4. Unstable or insufficient income
5. Age factor
6. Location of the property
Q. Are there any prepayment charges in case of a home loan?
Ans : In the case of a floating rate home loan, lenders don't charge a pre-payment penalty as per RBI directives however a penalty may be applied in case of prepayment of a fixed-rate home loan.
