Home Loan Interest Rates

Due to market changes, interest rates constantly fluctuate, and banks will have to adjust their interest rates because of that. As a future homeowner, it’s essential to find out the best home loan fitting your needs. In this article, we will cover the interest rates among different banks, along with their processing fees.

We will also get into:

• How to calculate your home loans interest amount
• The types of home loans interest rates 
• How to apply for a home loan 
• Factors affecting your interest rates

Highlights of Home Loan Interest Rates 2025

Current Home Loan Interest Rates 2025

How to Calculate Home Loan Interest

To calculate the home loan interest, you can use our Home Loan EMI Calculator.

Our Home Loan EMI calculator is an online tool that a borrower can use to check accurate estimation of the equated monthly installments (EMIs) payable for a specific amount of loan. With the loan amount, interest rate(provided by the bank), and the loan tenure, the EMI calculator will compute the EMI payable, payable amount, your total interest and loan amount.

Types of Interest Rates in Home Loan

Banks usually charge two types of interest rates:

• Floating Interest Rates
• Fixed Interest Rates

1. Floating Interest Rates:

Floating interest rates are interest rates that fluctuate over the tenure of your loan based on the changes in the market or an external benchmark rate. When interest rates increase, emi reduces, and vice versa. When compared to fixed interest rates, its more cost effective in the long term.

2. Fixed Interest Rates:

Fixed interest rates are interest rates that remain the same over the tenure of your loan, despite any external or market changes. Your EMI will also stay steady, helping you plan your payments accordingly. Fixed interest rates lead to a higher overall cost in the long run compared to floating interest rates but will ensure your stability. 

How to Apply for a Home Loan?

Step 1: Fill out the Home Loan Application Form

You can visit your nearest home loan bank branch and request a home loan application form, or visit the home loan form page of the bank’s website and download it.

You will then have to fill out the application form with the following details:

• Basic information of the applicant
• Current residential address
• Monthly income
• Educational background
• Current and previous employment details
• Details of the property for which the loan is sought
• Estimated property cost
• Current method of financing a home

Step 2: Verification and Processing

Submit the required forms and documents along with your application form. The bank will review your application and thoroughly look into and investigate your credit score. A good credit score improves your chances of approval.

Step 3: Loan Sanction

Once any pending paperwork/in-person verification is completed and the submitted documents are verified, the bank will then proceed to approve your loan. Overall. This process takes about one to two days.

Step 4: Technical and Legal Check

The bank representatives will perform technical and legal checks on the property for which the loan is requested:

• For under-construction properties: They will inspect the property under construction for their progress and quality.
• For resale properties: The bank will review the property's age, condition, previous mortgages, and ownership rights.

This will prove that the property meets legal and technical standards.

Step 5: Payment of Home Loan Processing fee 

After the verification of documents and the legal check, the applicant is required to pay the processing fee to the bank. This fee is charged to cover the administrative costs of maintaining the loan account and processing the application. 

Step 6: Disbursing the Loan Amount

Once all eligibility criteria are fulfilled, the applicant will receive an agreement letter detailing the loan terms. After signing the agreement, the loan amount will be disbursed. The applicant will also receive an EMI schedule to ensure timely repayments.

Factors Affecting Your Home Loan Interest Rate

• Credit Score

The credit/CIBIL score score will represent the applicant’s credit history. The more positive your credit score (750+) is, the more likely your chances of getting a housing loan are. Some banks provide lower interest rates to applicants with higher credit scores. 

• Income and Employment

Banks will investigate your salary, employer profile and type of employment to determine if you are eligible for a home loan.

• Loan Amount

The interest rates can be affected depending on the amount of money you take for your loan. Smaller home loans have cheaper interest rates compared to larger loans.

• Interest Rate Concession for Women Borrowers

Some banks offer a concession for women. If the woman is appointed as the primary applicant, the interest rate can be lower. It also increases eligibility and provides tax benefits.

• Type of Interest Rate

Fixed interest rates remain the same throughout the loan tenure, whereas floating interest rates fluctuate depending on the market. Fixed interest rates are usually higher due to a lower risk rate.