Home loan interest rates can impact your ability to repay your home loan, which is a big financial commitment. Due to market fluctuations, home loan interest rates constantly change, causing banks to adjust their lending rates. Different banks have different rates, so it is essential to compare other home loans and choose which option fits your financial needs. 

This guide will help you by providing the latest home loan interest rates for March 2025 and the processing fees charged by various banks.

Highlights of Home Loan Interest Rates 2025

Home Loan Interest Rates All Banks 2025

The following table shows the home loan interest rates for all banks in 2025:

How to Calculate Home Loan Interest Rate?

You can calculate your current home loan interest rates by following any of the below methods:

1. Manual Calculation Using EMI Formula

Banks and financial institutions use a standard formula to determine your home loan EMI:

[P X r X {(1+r)^n}] / [{(1+r)^n} - 1]

Where:

• P = Loan amount/Principal
• r = Interest rate
• n = Loan tenure

This formula can help you manually calculate your EMIs, but it requires consideration.

2. EMI Calculator for Quick Estimation

You can use an online home loan interest rate calculator on most bank websites for a hassle-free approach by providing the following information:

• Interest rate
• Loan amount
• Repayment tenure

The calculator instantly provides your monthly EMI, total interest payable, and overall repayment amount, making it easier to plan your finances.

How to Calculate the Effective Interest Rate?

Your home loan interest rate comprises two key elements: the base rate and the markup rate. Together, these determine the final interest rate you will pay on your loan.

1. Base Rate

The bank’s standard lending rate applies to all retail loans. It fluctuates based on various economic factors and regulatory changes.

2. Markup Rate

A small percentage is added to the base rate to calculate the Effective Interest Rate (EIR) for specific types of home loans. The markup varies depending on the loan type.

Effective Interest Rate (EIR) = Base Rate + Markup

In April 2016, the Reserve Bank of India (RBI) introduced the Marginal Cost of Funds-based Lending Rate (MCLR) to replace the base rate system. This method ensures banks set interest rates more transparently by considering factors like the repo rate, deposit rates, and borrowing risks. The MCLR-based rates are generally lower than the previous base rate system, making home loans more affordable.

Types of Interest Rates in Home Loan

When applying for a home loan, you can choose between two types of home loan interest rates in India. Understanding how each interest rate works will help you make an informed decision.

Fixed Interest Rate

With a fixed interest rate, the loan's interest remains unchanged throughout the tenure. This makes it easier to calculate your total repayment amount and plan your finances accordingly.

Opting for a fixed rate is beneficial when interest rates rise in the future. However, if the market trends indicate a drop in interest rates, a fixed rate might not be the best choice, as you will not benefit from potential reductions.

Floating Interest Rate

Unlike fixed rates, floating interest rates fluctuate based on the market. The benchmark rates set by housing finance lenders are based on the RBI's repo rate. Your EMIs may increase or decrease depending on these changes.

Choosing a floating rate can be a great option when interest rates are expected to decline. However, the market is highly unpredictable, and you might face the risk of rising interest rates, leading to higher repayment amounts over time.

How to Apply for a Home Loan?

Here is a step-by-step guide to applying for a home loan:

Step 1: Submit the Home Loan Application

The first step is to complete the home loan application form. You need to provide the following details:

• Your personal information, such as your name, contact details, etc.
• Current residential address
• Your monthly income
• Educational qualifications
• Employment history (current and previous)
• Details of the property you wish to purchase
• Estimated property cost
• Method to finance the home

You must make sure all details are accurate to avoid delays or rejection.

Step 2: Verification and Processing

Once you submit the application and the required documents, the bank will process your request. They will review your credit score and, depending on your credit history, assess your eligibility. Any inaccurate or false information can result in the rejection of your application. You should review your information and documents to ensure they are current and accurate. The process can last up to two days. An in-person meeting may be required so the bank can assess your financial capabilities before approving the loan. 

Step 4: Legal and Technical Assessment

Before disbursing the loan, the bank conducts legal and technical evaluations of the property.

• If the property is under construction, they will check the progress and quality of construction.
• They will assess its condition, age, and maintenance history if it is a resale property.
• The bank will also verify ownership details and check if the property has any existing mortgage or disputes.

Step 5: Pay the Processing Fee

After completing all verifications, you must pay the home loan processing fee. This fee helps cover administrative costs and varies between 0.25% and 0.50% of the loan amount.

For example, if you apply for a ₹15 lakh loan:

• At 0.25%, the fee will be ₹3,750
• At 0.50%, the fee will be ₹7,500

Step 6: Loan Disbursement

Once you meet the bank's requirements, they will issue a formal agreement letter. After signing the agreement, your loan amount will be credited to your bank account. You will also receive an email with a detailed EMI schedule outlining your repayment plan.

Factors Affecting Your Home Loan Interest Rate

Lenders evaluate multiple factors when applying for a home loan to determine your eligibility and applicable interest rate. Understanding these factors can help you improve your chances of securing a loan at a lower rate.

1. Credit Score

Your credit score reflects your financial discipline and repayment history. Lenders prefer applicants with a score of 750 or above, as it signals responsible credit behaviour, including timely EMI and bill payments and lower credit usage.

A higher credit score can help you secure better interest rates, while a low or nonexistent score may lead to higher rates or loan rejection. If you have a low credit score, using a secured credit card can help you rebuild it over time.

2. Interest Rate Type

Your choice of interest rate impacts your repayment costs. Fixed-rate loans have fixed EMIs but usually come at a higher price. Floating rates fluctuate with the market, potentially lowering costs but carrying the risk of rising EMIs. Choose based on your financial stability and risk preference. 

3. Income and Employment Stability

Lenders will evaluate your income level, employment stability, and employer's reputation to determine your capacity to repay a loan. Those who work in PSUs, government offices, and established private companies are usually provided with lower interest rates because their income is stable. Those with an irregular income or self-employed individuals tend to be scrutinized more strictly and charged higher interest rates.

4. Loan Amount

The amount you borrow directly impacts the interest rate. Loans up to ₹30 lakh usually have lower interest rates than higher loan amounts. A larger down payment can reduce your loan requirement, lowering your overall interest burden.

5. Loan-to-Value (LTV) Ratio

LTV represents the percentage of a property’s market value that a lender is willing to finance. A higher LTV means a bigger loan, increasing the lender’s risk and leading to a higher interest rate. To secure a lower rate, consider making a larger down payment and reducing the loan amount.

6. Property Location and Condition

Your property's location, age, and amenities influence its resale value. A well-maintained home in a prime area has better resale potential, making lenders more likely to offer lower interest rates. Older properties or those in less desirable locations may attract higher rates.

7. Repayment Tenure

The length of your loan term affects both EMIs and interest rates. A shorter tenure means higher EMIs but lower total interest costs, while a longer tenure reduces monthly payments but increases overall interest costs. Lenders often charge higher rates for extended repayment periods due to increased risk.

Understanding the home loan interest rate is crucial before applying for a loan. Knowing the factors that impact your interest rate can help you decide whether you opt for a fixed or floating rate. With the help of our EMI calculator can also simplify financial planning, giving you a precise estimate of your monthly debt obligations. Check the additional charges and the lender's reputation before applying for a home loan.