How to Find the Best Home Loan Interest Rate?

Home Loan Interest Rate

Home Loan Interest RateYou’ve likely heard many horror stories about getting a mortgage. However, while some of these stories may be exaggerated, they are completely real. The most common scenario that homeowners face is that they get a high interest rate on their mortgage loan. This can result from several factors, but the end result is the same for almost everyone: It’s too high! So how do you find the best interest rate for your situation? Here are some things to keep in mind if you want to lower your current mortgage rate as much as possible:

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Don’t Overpay For A Mortgage

Some people believe that they can get a better rate by overpaying for their mortgage. While it’s certainly worth speaking with your loan officer to understand your specific circumstances, it’s also important to remember that lenders are looking for profit, too. The key here is to find a lender who is willing to offer a lower rate. Don’t be shy about contacting lenders to see if they could lower your interest rate. Ask if they can do a “cash-out” on your mortgage, or allow you to walk away from the loan if you choose not to take it. Just make sure you’re not walking into a higher rate by doing so.

Keep an Eye Out For Deals

Dealing with a high interest rate can be a scary thing, especially if you’re on a tight budget. So, you may be tempted to look for lower rates elsewhere, but don’t do this. Doing so could land you in a whole lot of debt. Instead, keep an eye out for deals on your current lender. There are many occasions when you might be able to get a lower interest rate on a longer-term loan. This might be perfect if you want to save for a significant purchase in the future. At the same time, some lenders will offer you a “ jump-start ” rate when you’re first starting out with them. You can call your lender and ask if they’re discussing a “ jump-start ” with other lenders. Some lenders also offer special promotions on longer-term loans, like a “ 0% promotion ”, which might make your short-term interest rate seem like a good deal.

Also Read: Why Does Your Credit Score Matter When Applying For A Home Loan?

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Make Sure you Understand how your Mortgage Works

Before you apply for a loan, make sure you understand the basics about how your mortgage works. This can help you avoid some common mistakes. The most important thing to remember about a mortgage is that it is a financial investment. While it may seem like a good deal at the time you take it out, you will end up having to pay interest on it. interest on your mortgage is charged even when you don’t owe money on it.

The average interest rate currently found on mortgages around the country is about 3%. While this rate may seem low, keep in mind that it’s only for a short period of time and then your interest rate will increase. Some lenders will offer you a lower rate for a longer period of time, like a “ 0% promotion ”, which gives you a short-term lower rate for a limited period of time. Before you consider a 0% promotion a good deal, keep in mind that it probably won’t be around for very long. In some cases, you can lower your home loan interest rates and still get a shorter-term 0% promotion.

In other cases, you might be able to get a longer-term lower rate. It’s important to be honest with yourself about your financial situation. If you find yourself in a situation where you could benefit from a longer-term lower interest rate, ask your lender if they have any special promotions they can offer you. In some cases, you can also ask your lender if they could lower your interest rate if you take out a loan in anticipation of buying a new vehicle. Most lenders will be happy to oblige, but keep in mind that this might affect your credit score. 

Get Pre-approved for the Loan you Want

When you find a lender who you like enough to make a contract with, you have to get pre-approved for the loan you want. This is a chance for the lender to see if you’re a good risk. Ideally, you would have debt-free status and a good credit score, so the lender can see if you make good financial sense for the loan. Some lenders will even pull a report and show you your past credit accounts so you can see if they have any derogatory accounts (like late payments or repossessions) that would affect your score. If your lender does a credit check, make sure it’s done properly. A good lender will verify your identity and address. A bad lender will give you a lower rate and a bad credit score will lead to a higher interest rate.

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Ask your Lender for a Lower Rate

Low Interest Rates

When you get pre-approved for a loan, you have the option to ask for a lower rate. This is actually a really smart thing to do. If the rate you’re offered is too high, it might be because you aren’t a good risk for the lender. A lower rate might be something you qualify for, so take a look at what you could save on a monthly basis.

Home Loan Interest Rates of all Banks

Banks Starting Interest Rate (p.a.) Processing Fees
Kotak Mahindra Bank 7.50% p.a. onwards 0.50%
Citibank 6.65% p.a. onwards Rs. 10,000
Union Bank of India 7.40% p.a. onwards
Bank of Baroda 7.45% p.a. onwards Contact the bank for information
Central Bank of India 7.40% p.a. onwards Rs. 20,000
Bank of India 6.90%
State Bank of India 7.55% p.a. onwards 0.35% onwards
HDFC LTD 7.55%* 0.5% or Rs.3,000 whichever is higher
LIC Housing Finance 7.55% p.a. onwards Rs. 10,000 -Rs. 15,000
Axis Bank 7.60% p.a. onwards Rs. 10,000
Canara Bank 7.05% p.a. to 9.30% p.a. 0.50% of the loan amount subject to a minimum of Rs. 1,500, and a maximum of Rs. 10,000
Punjab and Sind Bank 7.40% p.a. onwards Full Waiver
IDFC First Bank 7.50% p.a. onwards Rs. 5,000 – Rs. 5,000
Bank of Maharashtra 7.30% p.a. onwards Rs. 10,000
Indian Overseas Bank 7.05% p.a. onwards 0.50% (Max Rs. 20,000)
Punjab National Bank 7.40% p.a. onward 0.35% (Max Rs. 15,000)
United Bank of India 6.90% p.a. onwards 0.59% (Rs. 1,180 – Rs. 11,800)
UCO Bank 6.90% 0.15% (Rs. 1,500 – Rs. 15,000)
DBS Bank 7.30% 0.25% (Rs. 10,000)
IDBI Bank 6.75% 0.50% (Rs. 2,500 – Rs.5,000)
HSBC Bank 7.44% 1% (Rs. 10,000)
Karur Vysya Bank 7.15% Rs. 5,000
Saraswat Bank Home Loan 7.50% p.a. onwards Nil
Jammu and Kashmir Bank 7.20% Rs. 500 – Rs. 10,000
South Indian Bank Repo Rate + 3.35% p.a. onwards 0.50% (Rs. 5,000 – Rs. 10,000)
PNB Housing Finance 7.50% Up to 0.50%
Federal Bank 8.55% Rs. 3,000 – Rs. 7,500
Standard Chartered Bank 7.25% 1%
Aavas Financiers 8.00% 1.00%
Karnataka Bank 7.89% Rs. 250
Sundaram Home Finance 6.95% Rs.3,000 (for salaried)
Dhanlaxmi Bank 7.85% Rs. 10,000
Tata Capital 7.75% 0.50%
Tamilnadu Mercantile Bank 7.95% Rs. 15,000
IIFL 10.50% 1.25%
DHFL Housing Finance 8.75% Rs. 2500
Bandhan Bank 6.40% -13.50% 1% (Rs.5,000)
Yes Bank 8.95% 1% (Rs. 10,000)
Hudco Home Loan 9.45% NA
Indiabulls 7.60% 0.50% onwards
Aditya Birla 8.90% 1%
GIC Housing Finance 8.20% Rs. 2,500
Reliance Home Finance 9.75% Rs. 3,000 – Rs. 6,500
Shriram Housing 8.90% NA
India Shelter Finance 12.00% 2.00%

Also Read: A Descriptive Guide On Taking a Home Loan At a Low-Interest Rate


Mostly, finding a home loan interest rates that works best for your situation can be difficult. There are many factors to take into consideration, and it’s likely that different borrowers will have different needs and wants when it comes to interest rates. It’s also important to remember that lenders are trying to make money, too, so they may play a bit on the side with your interest rate. Overall, your best bet is to get in touch with as many lenders as possible and ask about their rates. There are plenty of options out there, and it’s likely that you can get better home loan interest rates than what you’re currently paying.

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