What is Home Loan?

An amount borrowed from banks or housing finance companies for purchase, renovation or construction of the home. It is repaid in regular installments along with interest. A rate of interest is almost uniform among banks and financial companies depend upon the rate of interest offered by RBI.

Home loan covers following categories

  1. Loans for home purchase –loan is taken for purchasing the home.
  2. Loan for land purchase – loan is taken for purchasing the land for construction of a house.
  3. Loans for home construction – loan is taken from the bank for the construction of the house.
  4. Home Improvement Loans – loan is taken for the making improvement in existing house.
  5. Balance transfer loans – the process of transferring your existing home loan account to another bank or NBFC. So people usually opt for this process, if they come across a bank offering a lower rate of interest.
  6. Stamp Duty Loans – stamp duty is a tax placed on legal documents usually in the transfer of assets.
  7. Bridge Loans – it is a loan taken to fill the requirement of cash in between the process of getting long-term loan applied for purchasing home.
  8. RI home loans. – The NRI Home Loan is available to Non – Resident Indians from various Housing Financial Institutions for any of the following activities:
  •  For purchase of a house either under construction or on Resale.
  •  For self-construction of a property on a plot of land.
  •  To finance the purchase of a plot of land allotted by a society/development authority.
  •  So as to renovate/improve an existing property in India.

Eligibility for Home Loan

The eligibility mainly depends upon the paying back capacity of the individual. The repayment capacity is based on one’s monthly disposable/surplus income, which, in turn, is based on factors such as total monthly income/surplus less monthly expenses, and other factors such as spouse’s income, assets, liabilities, the stability of income, etc.

Maximum amount can be borrowed for a housing loan.

Most lenders require 10-20% of the home’s purchase price as a down payment from you. The rest, which is 80-90% of the property value, is financed by the lender (banks). The total financed amount also includes registration, transfer, and stamp duty charges.
One co-applicant is also necessary for home loan India. So, if you are the sole owner of the property, any member of your immediate family can be your co-applicant.

Home Loan, WealthhunterIndia

Interest rates for Home/Housing loan

Here is the list of some banks offering loan up to 20 lakhs for 15-20 years.

Bank NameFloating Interest ratePer lac EMIMCLR Rates
SBI – State Bank Of India8.60% – 8.65% (For Women), 8.65% – 8.70% (For Others)Rs.874 – Rs.877(For Women), Rs.877 – Rs.881(For Others)8.00%
ICICI Bank8.65% – 8.80%(For women) – 8.70% – 8.85%(For Others)Rs.906(For women) – Rs.909(For Others)
HDFC Ltd8.50% – 9.00%Rs.868 – Rs.90016.15%
LIC Housing8.50% – 8.70%Rs.868 – Rs.8818.15%
Bank of Baroda8.35% – 8.55%Rs.858 – Rs.8718.35%
AXIS Bank8.65%Rs.8778.25%
DHFL8.60% – 8.70%Rs.874 – Rs.881
IDBI9.15% – 9.20%Rs.909 – Rs.9138.80%
Union Bank of India8.75% – 8.80%Rs.884 – Rs.8878.50%
Bank of India8.65% – 8.70%Rs.877 – Rs.8818.50%
Indiabulls Housing Finance Limited8.65%(For Women) – 8.70%(For others)Rs.877(For Women) – Rs.881(For others) 0

Mortgage loan

A mortgage is a loan where property or real estate is used as security for a loan. The borrower is obliged to pay back the so amount within the specified time. So mortgage loans are used by individuals and businesses to make large real estate purchases without paying the entire value of the purchase up front. Over a period of many years, the borrower repays the loan, plus interest, until he/she eventually owns the property. Mortgages are also known as “liens against property” or “claims on the property.”  Mortgage loans are usually entered into by home buyers without enough cash on hand to purchase the home. They are also used to borrow cash from a bank for other projects using their house as collateral.

Mortgage loans are considered cheapest option just after home loans and it takes around 7 to 10 working days for approval so in general conditions. In India, Hence Mortgage loans are considered cheapest option just after home loans. It takes around 7 to 10 working days for approval in general conditions.

Interest rate charged on mortgage loan by different Banks / Home loan India

BankRate of InterestProcessing Fees
ICICI Bank11.00% – 12.50%1.00%
Axis Bank11.00% – 12.25%1.00%
Kotak11.00% – 12.25%1.00%
Deutsche Bank10.25% – 12.25%0.75 – 1.00%
DCB Bank11.00% – 13.25%1.00%
HDFC LTD10.70% – 12.25%1.00%
PNB Housing10.90% – 12.25%1.00%
Magma finance12.75% – 14.25%1.00%
L&T Housing10.75% – 12.25%1.00%
DHFL11.00% – 12.50%1.00%
Reliance13.00% – 14.25%1.00%
India Bulls11.00% – 17.00%1.00%

Different ratings given to the banks on Home loan by borrowers as per ICRA (best bank for home loan India)

S.NoBank NameMarket Percentage
1SBI Home Loan25.50%
2HDFC Ltd24.13%
3LIC Housing15.83%
4ICICI Bank13.10%
5PNB Housing Finance6.23%
6IDBI Home Loan4.67%
7Axis Bank4.22%
8Others6.32%