Bank Loans

What are the Best Home Loan Rates Available in India?

So your quest for the best bank for home loan brought you to our blog, right?

For many ambitious homeowners, taking a home loan is a big deal – it’s the greatest risk they will ever take in their entire life. Typically, a home loan has a 10-20 year tenure, and a person has to pay EMI each month without any fail, if he/she wants to keep their profile clean with the bank.

Applying for a home loan also involves much hassle as you have to furnish a lot of documents, put just as many signatures, and not to say, visit the bank multiple times.

Let’s face it – this is exactly why everybody looks for the “best bank” – the one that makes it easy for you to sanction your home loan application and offer the lowest interest rate which is not subject to the market risk.

However, whether you like it or not, there are no such banks that fulfil all the criteria of every home loan seeker.

Rather, as a home loan seeker, you need to shop around several home loan products and compare them to find the one that satisfies more of the criteria on checklist.

This brings me to my first point – understand the several home loan products offered by banks.

But, before we move on, let’s answer one of the most frequently asked questions about home loan products in India.

Should I Go with PSU Banks vs Private Banks?

The best answer is it depends.

More often than not, we form our opinion based on the experiences of other customers.

It may be possible we may hear bad reviews about a particular bank and change our mind. However, it’s also possible we may never have to go through their experience in our case.

So is taking a home loan from a PSU bank almost always better than taking one from a private bank?

You can answer this yourself based on the following parameters.

Pre-loan Experience vs Post-loan Experience: Every loan seeker wants a seamless process, both in pre-loan and post-loan period.

However, generally, this may vary from bank to bank. Based on the general experience, it is believed dealing with private banks is a breeze when it comes to getting your loan sanctioned and payment disbursed. Some will even go out of their way to get it done for you.

Well, that’s because they have a commission on it, and not because they are committed customer satisfaction.

But, the real problem starts in the post-loan phase. It’s hard to get the same response when it comes resolving an issue you’re facing with your home loan product.

On contrary, PSU Banks can cause you must frustration during the application process; but once the loan is sanctioned and funds are disbursed, your experience with them is much better.

Interest Rates: When it comes home loan interest rate, PSU banks are a better choice over private banks.

PUS banks not only offer a lower interest rate on bank loans, but they are very transparent about it, especially with regards to RBI guidelines.

When the interest rates go down, you can be sure that PSU banks immediately implement it in the best interests of the customers. However, th private banks usually play a wait-and-watch game.

Not just the interest rates, the private banks increase prepayment charges arbitrarily and increase levy heavy conversion charges if you want to move down to a lower interest rate.

Recommended Reading5 Traps for Your Home Loan Prepayment (How to Avoid Them)

Moreover, there have been some cases of fraud in private banks when an executive tries to be very aggressive to meet their sales targets. For example, a sales executive may try to sell a home insurance or other financial product along with a home loan product.

However, these scenarios don’t really exist in PSU banks.

Now that you have got some ideas about the home loan scenarios in India, you can take a better decision on whether to approach a private bank or PSU bank.

So, it’s time to move on to our next question – which are most customer-friendly banks when it comes to taking a home loan?

As per a survey conducted by Jago Investor, the SBI is wins the poll by a huge margin. The SBI got over 42% of the total votes in the survey which was taken by 1500 people.


Popular Banks in India for Home Loans

SBI: The State Bank of India is the most preferred destination for home loan in India at the moment. Currently, the SBI charges an annual interest rate of 9.35% for women borrower and 9.40% for others.

Home Loans Interest Rates With Effect From 01.05.2016 SBI Corporate Website

If you want to find out why the SBI is popular among the home loan borrowers in India, follow this thread.

HDFC: The HDFC bank is another popular bank with the Indian home seekers. However, as per the survey, customers have had a mixed feedback about their experience with the HDFC. Currently, the HDFC charges an annual interest of 9.40% for women borrower and a higher interest rate for others. (Please, see the screenshot below)

Instant Home Loan Best Lowest Home Loan Rates Interest On Housing Loan

LIC Housing Finance: The LIC is considered a better option for home loan after the SBI. Even though its interest rates are not as great as those of the SBI, their documentation processing is easy on applicants. Moreover, they allow borrowers to fix their interest rates for five years.

If you are an existing LIC policy holder, you can get a .25% reduction in home loan interest, providing the sum assured of all policies collectively is more than 15, 00,000 and that all policies are under your name only.

The LIC Housing Finance currently charges an interest rate of 10.25%; however, it’s based on reducing balance rather than the primary loan amount.

LIC HFL LIC Housing Finance Ltd

Axis Bank: The Axis Bank is more popular among Indian home loan borrowers than the ICICI bank. The best thing about the Axis Bank home loan is that they have NIL charges on any prepayments.

Currently, the Axis Bank charges an annual interest rate of 9.45% on home loan for women borrower.

Desctop screenshot

ICICI Bank: The ICICI is known to be quite fast in terms of processing your home loan application and getting the fund reimbursed swiftly. However, many customers complain about its change of attributed in the post-loan scenario. Its rates of interest are also said to be higher than other banks.

Currently, the ICICI bank charges an annual interest rate of 9.40% for women home loan borrower.

Home Loan Rate Home Loan Interest Rates Housing Loan Interest Rates – ICICI Bank

Final Answer:

Based on the survey results, and considering all parameters of a home loan, the SBI seems to be the winner all the way.


  1. Prasanta

    The blog is very useful for home loan seeker.

    1. it’s absolutely true,, SBI is always the best option for home loan

    2. SBI has very Good options for pre-payment settlement of loan unlike other bank.

    3. Taking a Homeloan from some private bank is worse than not having a loan at all.

    4.most bank consider 40% of loan applicant’s salary before qualify a loan amount.

    However, loan seeker must keep limit of EMI as 20% of salary

    5. It’s advisable
    That the Loan applicants must know regarding the requirements of loan transfer from one bank to other better bank in advance

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