Home loan interest rate is a crucial factor in the structure of your home loan. It is a primary contributor to your monthly EMI and the cost of your loan. Getting a low interest rate on a housing loan is a progressive step towards healthy financial planning. When it comes to home loan interest rates you should invest your time, do adequate research, and select the best fit for you.
Table of Contents
- Home Loan Comparison with Different Products
- Types of Interest Rates on Housing Loans
- Calculate House Loan Interest Rates
- How to Reduce Home Loan Interest Rates?
- Factors Affecting the House Loan Interest Rates
- How Can You Get Lowest Home Loan Interest Rate?
- Current Home Loan Interest Rates from SMFG Grihashakti
- Determining Factors for Your Home Loan Interest Rate
- FAQs for Interest Rates on Housing Loans
Home Loan Comparison with Different Products
As compared to loans against property, commercial property loans, and other similar products, interest rates on house loans are lower. If an applicant fulfils the requirements, then the applicant can avail of an affordable home loan at the best possible interest rate.
Types of Interest Rates on Housing Loans
Interest rates on house loans can be of 2 types – fixed and floating. The type of home loan interest rate depends on your selection. You need to assess your suitability and choose.
a) Fixed Interest Rates for Loans
A fixed loan interest rate for a home is a type of interest rate on a housing loan wherein your interest rate is locked for the entire tenure of your loan. During the total tenure, your home loan interest rate remains fixed. This means that your EMI will not change even if there are market changes.
b) Floating Interest Rates for Loans
A floating loan interest rate for a home is one in which the interest rate on a housing loan is subject to revision every quarter. The home loan interest will be pegged to the base rate. When the base rate changes due to the RBI’s policy as per market changes, the interest rate on housing loans charged may also vary. However, this will also depend on the lender’s policy and their rate adjustments, thus it would be prudent to have a conversation with your lender to understand how market changes may (or may not) affect your home loan interest rates. A loan with a floating interest rate is also called a variable-rate mortgage.
Calculate House Loan Interest Rates
You can input the interest rate on a housing loan that may be applicable to your loan on our EMI calculator and know your EMI for a given loan amount and tenure. This has multiple benefits like having the flexibility of choosing your tenure and more efficient financial planning. House loan interest rate for a home loan is calculated by a lender based on several factors such as:
- Market conditions
- Risk policy of the lender
- Your Income
- Your age
- Credit score and history
- Existing debts
- Nature and value of the property
- Your location
- Nature of employment
SMFG Grihashakti offers floating rates of interest on home loans that are linked to the Retail Prime Lending Rate. We offer attractive interest rates on house loans depending on the applicant’s eligibility and our policy at the time of loan application. To know more, get in touch with us today.
How to Reduce Home Loan Interest Rates?
You can try to reduce your interest rate on a housing loan by following a few simple steps:
1. Lengthen Your Repayment Tenure
When you opt for a longer repayment tenure, the payable interest on your housing loan is lower. You can use our EMI calculator to select a tenure so that your monthly EMI can easily fit into your budget. However, it is important to know that a longer tenure means that you will be paying a higher home loan interest amount over the tenure of the loan.
2. Opt for a Down Payment
It is highly advisable to maximise your down payment at the time of availing the loan so that your required loan amount is lower. If your repayment capacity (monthly income minus existing EMIs) is good, then the lender may consider lowering your home loan interest rate.
3. Consolidate Your Loans
If you have more than one loan, it would make sense to consolidate all in one. This will help you in managing your debt and most importantly it will lower your EMI. Similarly, before applying for a home loan, it is highly advised to keep your existing EMIs as low as possible, so that your repayment capacity is excellent.
A few other factors include maintaining an excellent credit score and history, showing extra income (if any) to the lender before applying, and adding a co-applicant with an excellent credit score and a stable income.
Factors Affecting the House Loan Interest Rates
Factors like employment, income, loan amount, credit score, and type of interest rate affect not only your loan eligibility but also the final interest rate you will get. It is essential to check all the eligibility criteria and mortgage rates carefully before applying for a home loan. Let us look at the factors affecting interest rates on housing loans in detail:
A stable employment history and consistent income increase lenders’ confidence in your ability to meet the monthly payments to repay the loan. Your salary and type of employment (salaried or self-employed) are all scrutinised by the lenders before determining loan eligibility and the current interest rate on the housing loan.
Whether the interest rate on a house loan is fixed or floating can affect how soon you can repay your loan. While the EMI will remain unchanged throughout the loan term with a fixed interest rate, it will be subject to change with the floating rate. The floating rate itself is influenced by lending rates, such as the Repo Linked Lending Rate (RLLR). Fixed-rate mortgages or home loans may have higher interest rates due to the higher risk associated with these types of loans.
3. Loan Amount
Higher loan amounts may lead to higher interest rates as well since it can be viewed as a greater credit risk.
4. Credit Score
Credit score or CIBIL score is one of the most important factors that affect your loan eligibility and interest calculation. Generally, credit scores of 700 and above are viewed favourably by lenders as they denote strong creditworthiness and responsible repayment behaviour.
How Can You Get Lowest Home Loan Interest Rate?
Selecting a short repayment tenor, adding a co-applicant, etc. can help you lower your overall interest costs. Let us have a look at these and a few more strategies in detail.
- Select a short tenure for repayment
When you have a short repayment tenor, you can save on interest costs as the rate is applied for a lesser number of years. Additionally, lenders may also grant you a lower interest rate to start with when you opt for a shorter tenor. However, shorter repayment can increase your monthly payment. It is important to consider both sides carefully and select the option that best fits your needs and budget.
- Opt for a balance transfer facility
With a home loan balance transfer, you can transfer your existing home loan to another lender who can offer you lower interest rates on house loans. It is important to check all the included fees, charges, and your potential savings before you opt for a balance transfer. The home loan balance transfer will also be subject to your eligibility.
- Request annual EMI revisions
A higher EMI means that you can pay off the outstanding balance quicker and save on interest costs. You can opt for annual revisions of EMI if you have received a salary hike or an increase in your income. Generally, every 10% increment in income can be accompanied by a 5% EMI increase.
- Prepay with surplus funds available
You can consider prepayment if you have come into additional funds such as a bonus on your salary or a return on an investment. This will help you reduce interest costs. However, it is important to consider that some lenders charge prepayment charges.
Current Home Loan Interest Rates from SMFG Grihashakti
At SMFG Grihashakti, the current interest rates on housing loans are reasonably priced, depending on the eligibility and other applicable criteria of the borrower.
| Loan Slab |
Home Loan Interest Rates (p.a.) |
| Salaried |
10% Onwards* |
| Self-Employee |
11% Onwards* |
* The final offered rate will depend on the income level and property being offered as security
The table below is an example for your understanding
|
Loan amount
|
INR 1,00,000
|
|
Home loan interest rate
|
10% per annum
|
|
Maximum tenure
|
30 years
|
|
Your monthly EMI per lakh
|
₹ 878
|
Please note that the above table is only for your understanding and that the EMI amount does not take into account other components such as insurance. Home Loans provided by SMFG Grihashakti are subject to the borrower’s eligibility and SMFG Grihashakti’s policy at the time of loan application. Please click hereto learn more about the applicable fees on home loans.
Determining Factors for Your Home Loan Interest Rate
When applying for a home loan, several factors influence the best house loan interest rate you're eligible for. Understanding these factors can help you negotiate a better rate and save on interest over the loan tenure. Understanding how they influence your home loan interest rate can help you make more informed decisions when choosing a loan. Here are some key factors:
Credit Score
Your credit score plays a crucial role in determining your home loan interest rate. A higher credit score indicates a lower credit risk, leading to a lower interest rate. Lenders typically offer better rates to borrowers with scores above 750.
Income and Employment
Lenders consider your income stability and employment history when determining your interest rate on a housing loan. A steady income and long-term employment can help you secure a lower rate.
Loan Amount
The loan amount relative to the property value (Loan-to-value ratio) can impact your interest rate. A lower LTV ratio may result in a lower rate.
Type of Interest Rate
The type of interest rate you choose can impact your rate. Fixed interest rates for loans lock in your interest rate for the entire loan tenure, ensuring that your EMI remains constant despite market fluctuations. On the other hand, floating interest rates for loans are subject to periodic revisions based on market changes and are pegged to the base rate, potentially leading to fluctuations in your housing loan interest rate. It is advisable to communicate with your lender to know how market variations could impact your home loan interest rates under a floating rate scheme.
SMFG Grihashakti provides home loans with floating interest rates tied to the Retail Prime Lending Rate. Our competitive loan interest rates are determined based on the applicant's eligibility and our current policy at the time of application.