Home Loan Interest Rates

What Are Home Loan Interest Rates?

The home loan interest rate is the percentage added to the main loan amount. These rates vary depending on the lender, the borrower's profile, the loan amount & duration. The recent cuts to the RBI repo rate and changes to MCLR mean that current rates are better for borrowers.

Regions on Focus: Delhi & Kerala

• Home loan interest rate in Delhi: Known Banks like SBI, HDFC, ICICI, and Canara Bank offer rates starting between 7.50% and 7.75% per annum.
• Home loan interest rate in Kerala: Similarly competitive, lenders often start at 7.35% to 7.75% per annum, depending on local branch policies and property profile.

Types of Home Loan Interest Rates

When you apply for a home loan, the interest rate structure you choose directly impacts your monthly EMIs and overall repayment. In India, lenders generally offer two primary types of home loan interest rates:

1. Fixed Interest Rate

A fixed interest rate stays constant throughout the loan tenure.

• Your EMI remains the same every month.
• It offers stability and is ideal if you expect interest rates to rise in the future.
• Useful for borrowers who prefer predictable longterm budgeting.

2. Floating Interest Rate

A floating interest rate changes based on the lender's benchmark (like MCLR, EBLR, or repolinked rates).

• Your EMI may increase or decrease depending on market movements.
• Often it starts lower than at a fixed rate, which can reduce your overall interest rate if market rates fall.
• Ideal for borrowers comfortable with some level of risk.

3. Mixed or Hybrid Interest Rate (Optional)

Some banks also offer hybrid home loan interest rates, where the loan starts with a fixed rate for a few years and then switches to a floating rate.

• Offers short-term stability and long-term flexibility.
• Popular with borrowers expecting future rate reductions.

Some Tips to Lower Your Home Loan Interest Rate

Finding ways to get a lower home loan interest rate can help you save a big amount over the life of your loan. Many homeowners don't realize that a few simple steps can reduce their monthly EMI and overall interest.

Choose a Shorter Loan Tenure

A shorter repayment period means your EMIs will be higher, but you'll finish the loan sooner and pay far less interest overall.

Go for a Home Loan Balance Transfer

If another bank is offering a better home loan rate, you can transfer your existing loan to them.
This frequently results in more appealing rates and reduced processing fees. Your EMI and total interest load can be reduced right away with a balance transfer .

Make Prepayments Frequently

The majority of your EMI is used for interest during the first few years of your loan. The principal is directly lowered by any additional payments you make. You can close your loan more quickly if you have a smaller principal because you will pay less interest in the future.

Choose the appropriate EMI Calculation Method.

When calculating EMI, banks typically employ two methods:

Flat Rate Method: A higher total interest rate results from charging interest on the entire loan amount for the duration of the loan.

Reducing Balance Method: Interest is calculated on the remaining principal each month. As your loan balance goes down, so does your interest cost. Most borrowers save more with the reducing balance method, so confirm with your lender before signing the agreement.

Current Interest Rates by Major Lenders

Note: Rates are subject to credit scores, lender policy, and loan terms. Public sector banks recently reduced rates following a 50-bps repo cut by RBI in June 2025.

All banks' home loan interest rates have improved as of July 2025; the top PSUs and NBFCs now offer rates ranging from 7.35% to 8.75% annually. To maximize savings, compare rates , use EMI calculators and home loan interest rate calculator, and look into options for balance transfers or prepayment. Lender websites offer customized offers specifically for home loan interest rates in Delhi or Kerala.

Home Loan Eligibility Criteria

Smart Tips to Lower Your Home Loan Interest Rate in 2025

Lowering your home loan interest rate is one of the easiest ways to reduce your EMI and save on total interest. Banks in India are updating their lending rates after the recent RBI repo rate cut in June 2025. This is a great time to review your home loan. Below are expert backed, easy to apply strategies to get a better home loan deal whether you're in Delhi, Kerala, or anywhere in India.

Select a Shorter Repayment Tenure

If your budget allows, then choose a shorter repayment term.
A shorter tenure means a higher EMI but lower overall interest.
Use a home loan EMI calculator 2025 to compare scenarios before planning.

Transfer Your Loan to a Lower Rate Lender

Many borrowers are saving money by transfer their loans. A home loan balance transfer lets you move your existing loan to a bank with a lower rate. After recent rate changes, public sector banks like Union Bank of India (7.35% p.a.) & SBI (7.50% p.a.) are offering competitive deals for balance transfers. Check the processing fees and ask about any special offers for salaried or government employees.

Make Regular Prepayments on Principal

Every extra rupee you pay toward your principal reduces future interest. In the early years of a loan, EMIs mostly go toward interest. Prepaying even small amounts can shorten your loan term and lead to significant savings. Many lenders allow partial prepayments without penalty; check this with your bank. Make sure that many lenders in 2025 permit partial prepayments without penalties.

Select the Right EMI Calculation Method

Understand how your bank calculates interest:
Flat Rate Method: Interest is charged on the original loan amount throughout the tenure,
leading to a higher total cost.
Reducing Balance Method: Interest rate is calculated on the remaining principal of each month, which reduces the interest you pay overtime.

The leading banks, including HDFC (offering home loans starting at 8.15% p.a.) and ICICI (from 8.75% p.a.), use the reducing balance method for transparency and savings. Current Home Loan Interest Rate Trends (July 2025)

Copmplete Documents Required for a Home Loan

Although applying for a home loan can seem stressful, you can save time, money, and stress by being ready with the list of all the documents that lenders require. This checklist will help you expedite the approval process whether you are applying with SBI, HDFC, or any other major bank.

The answers to frequently asked questions, such as "Home loan documents List SBI," "What are the property documents required for home loan?" and "Specific lists for both self-employed and salaried applicants," are also included in this guide.

Important documents for applying for a Home Loan

You will receive approval more quickly if you have these fundamental documents ready:

• - A completed application for a home loan.
• - To prevent rejections, accurately fill out every detail.
• - Recent passport-sized photos of each applicant.

Identity Proof (any of the following):

• - Voter ID card
• - Passport
• - driver's license
• - Aadhar Card

Any of the following can be used as proof of age:

• - A bank passbook
• - Passport
• - Birth certificate
• - Address verification letter

Income Documents

1. Documents required for home loan for salaried person

   • - Last 3 months' salary slips
   • - Latest Form 16 and Income Tax Returns
   • - Bank statements showing regular salary credits

2. Home loan documents required for self-employed

   • - Business License or Registration Certificate
   • - Last 3 years' IT Returns
   • - CA-attested Balance Sheet and Profit & Loss Statements
   • - Professional License (Doctors, Lawyers, etc.)
   • - Proof of Business Address

Property Documents Required for Home Loan

Many first-time buyers ask, what are the required property documents required for home loan?

Here is the list

1. Occupancy Certificate:

   Proof that the property is ready for occupancy.

2. Occupancy Certificate:

   Confirms property is ready for use.

3. NOC from Builder or Society:

   A must before disbursement.

4. Registered Sale Deed or Allotment Letter:

   Original documents only.

5. Construction Cost Estimate:

   If loan is for building a home.

6. Payment Receipts:

   Showing payments to builder or seller.

7. Land Tax or Property Tax Receipts:

   Updated receipts required.

8. Maintenance and Utility Bills:

   Electricity and water bills.

9. Approved Building Plan or Floor Plan:

   Sanctioned by the local authority.

If you are an HDFC customer searching for Property documents required for Home Loan HDFC, these are the same papers they typically ask for, with occasional extra approvals for underconstruction projects.

Bank-Specific Checklists

Home loan documents list SBI

State Bank of India provides an official checklist and an SBI Home Loan documents LIST on their website. Download it to double-check before visiting your branch.

HDFC Home Loan

HDFC follows RBI guidelines, but their executive might ask for additional approvals depending on the property type.

Use a Home Loan Calculator for Better Planning

• Before submitting your documents, use a home loan calculator to:
• Estimate your monthly EMIs
• Check how changing your tenure affects your interest
• Plan prepayments in advance

Quick Tips for a Hassle-Free Home Loan Process

Keep originals and photocopies ready; banks may verify both.

Cross-check the lender's specific checklist, as SBI, HDFC, and others may have minor variations.

Stay updated, as interest rates and processing fees can change.

By preparing these documents in advance, you can enjoy a smoother, faster loan approval process—whether you are salaried, selfemployed, or applying with SBI or HDFC.

Home Loan Prepayment Calculatpor

Make Early Home Loan Payments to Lower Interest

One of the best ways to reduce interest costs and shorten your loan term is to pay off your home loan early. The benefits of using a home loan prepayment calculator are clear before you make any further payments, regardless of whether you are with SBI, HDFC, Axis Bank, ICICI, or another lender.

Home Loan Prepayment: What Is It?

Home loan prepayment is the practice of making larger principal payments than your regular EMIs.

You can choose to pay all at once or in multiple installments.

Prepayments reduce your long-term interest rate by lowering your principal right away.

Many banks, including SBI, HDFC, and Axis Bank, do not charge penalties for partial or full prepayments.

Why Use a Home Loan Prepayment Calculator?

• Determine the total amount of interest you will save.
• After tenure or prepayment, find out if your bank will reduce your EMI.
• To compare different scenarios, enter different prepayment amounts.

The official Home Loan Prepayment Calculator, which is accessible online from banks such as HDFC, allows you to play around with different figures. Similarly, SBI provides a home loan prepayment calculator that shows how your EMIs or tenure will change after a prepayment.

Advantages of Using a Home Loan Prepayment Calculator

• Reduce Interest Costs: Each prepayment reduces the principal balance, which directly cuts down on interest.
• Plan Early Closure: By prepaying periodically, you can close your loan years earlier.
• Flexible Financial Management: Decide whether to reduce your EMI or your loan tenure based on your cash flow.
• Multiple Options: Tools like the Home Loan Prepayment Calculator – reduce tenure, or EMI – or Excel-based calculators, give a clear picture of different repayment strategies.

How to Use the Calculator

• Enter your outstanding loan amount, current interest rate, and remaining tenure.
• Enter the prepayment amount you plan to make.
• Choose whether you want to reduce your EMI or your tenure.
• Click calculate to view updated schedules.

Prepaying your home loan is a smart step toward financial freedom. With tools like the home loan prepayment calculator, you can easily plan how much to pay, when to pay, and whether to reduce your EMI or your tenure.