Answers ( 3 )

  1. This answer is edited.

    Hello,

    There are various banks that have lower interest rates on home loans. These are usually the public sector banks like SBI, Union Bank, Central Bank of India and so on. Here are a few banks with lower interest rate that you can opt for:

    1. SBI – 6.95-7.6

    2. Union Bank – 6.7-7.15

    3. Bank of India – 6.85-7.75

    4. Central Bank – 6.85-7.30

    5. Canara Bank – 6.90-8.90

    6. ICICI Bank – 6.95-8.05

    Hope this helped you!

  2. There are several public sector banks and a few private banks like SBI, BOI, Central Bank, ICICI and so on. The lowest interest is offered by SBI which is 6.65%.

    Apart from this, recently, the government has come up with Pradhan Mantri Awas Yojana-Urban or PMAY (U) scheme where you can avail a subsidy (discount) on interest if you fit in the criteria mentioned by the government. This scheme is beneficial if your income is lower than 18 lakhs per year. Apart from that, the eligibility criteria are:

    a. The beneficiary family should not own a pucca house in his/her or in the name of any member of his/her family in any part of India

    b. In case of married couple, either of the spouse or both together in joint ownership will be eligible for a single subsidy

    c. The beneficiary family should not have availed of central assistance under any housing scheme from Government of India or any benefit under any scheme in PMAY

    Now, if you are eligible, there are three categories for interest subsidy viz EWS & LIG, MIG I and MIG II. Here, EWS and LIG stands for Economically Weaker section and Low Income Group while MIG stands for Middle Income Group. If your income is below 6 lakhs/annum then you will be eligible for EWS and LIG subsidy; if your income is between 6 to 12 lakh, you are eligible for MIG I subsidy and if your income is 12 to 18 lakh, you are eligible for MIG II subsidy and you should qualify the above criteria as well.

    So, for EWS and LIG group, the interest subsidy is 6.50%, for MIG I, the interest subsidy is 4.00% and for MIG II, the interest subsidy is 3.00%.

    Speaking about the interest subsidy, the amount isn’t the differential of interest amount (of actual and subsided rate). Rather, it is the net present value (NPV) of the interest subsidy amount.

    To simplify, let’s take an example

    1. Suppose, you come under the MIG II category and you have a loan of 12 lakhs and the EMI is 10,414 and the total interest for 20 years is 12,99,331.

    2. Now, you will get an interest subsidy of 3% (NPV) as you come under MIG II category.

    3. This NPV would be 2,30,000 and the loan now will be 9,70,000.

    4. The new EMI would be 8,418 and the total interest for 20 years would be 10,50,292.

    5. So, you would be saving 1,996 per month and totally, you will save 2,49,039.

    This is an example for the MIG II category, the savings would be higher for MIG I and highest for EWS and LIG category.

  3. There are many banks such as SBI, Canara Bank, Bank of India, Central Bank and so on which offer a lower ROI. While you can easily find this information, here are a few tips that will help you get a lower interest rate:

    a. Generally, the interest rates are lower for higher amounts. In short, the bigger the home loan, the lower the interest rate.

    b. You can get a better deal if you make a bigger down payment. A loan below 80% of the total amount will do the job.

    c. You should always consider a fixed type of interest rate rather than a floater rate.

    d. Do thorough research, speak to other banks and get their lowest rate of interest. This will help you in negotiating with your bank.

    e. Opt for a longer repayment tenure. The rate of interest is normally lower as the tenure increases.

    f. Lastly, present yourself as an ideal borrower. This means, keep a good credit score and do not miss out any credit payments. It is a plus if you can show that you have steady employment.

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