Home Loan Interest Rates 2023
Bajaj Housing Finance comes with attractive Home Loan interest rates starting from 8.45%* p.a. for salaried individuals. Borrowers also have the advantage of availing of a sizeable sanction with minimal documentation, quick processing, and instant approval.
The rate of interest offered to you depends on several factors. Two of the key factors are your eligibility, and credibility as a borrower. With the right profile, you can take advantage of a low interest rate and better lending terms. While these are the most essential considerations in availing of a Home Loan, several other aspects hold considerable weightage too.
For instance, disclosure of additional fees and charges, such as the loan processing fee, can have a big impact on your borrowing decision and experience. With us, you are assured of complete transparency in terms of how much you pay, when, and why.
Current Home Loan Interest Rates for Salaried and Self-Employed Individuals
For salaried and self-employed borrowers, there are different interest rates on housing loans. To determine your eligibility for a Home Loan, your credit score, income, and employment history is evaluated. By fulfilling requirements and displaying a solid credit history, applicants can obtain best loan rates from Bajaj Housing Finance.
Interest Rates for Salaried Applicants
Salaried Floating Reference Rate: 15.40%*
Home Loan Interest Rate (Floating)
| Loan Type | Effective ROI (p.a.) |
|---|---|
| Home Loan | 8.45%* to 15.00%* |
| Home Loan (Balance Transfer) | 8.60%* to 15.00%* |
| Top Up | 9.80%* to 18.00%* |
Interest Rates for Self-Employed Applicants
Self-Employed Floating Reference Rate: 15.85%*
Home Loan Interest Rate (Floating)
| Loan Type | Effective ROI (p.a.) |
|---|---|
| Home Loan | 9.10%* to 15.00%* |
| Home Loan (Balance Transfer) | 9.50%* to 15.00%* |
| Top Up | 10.00%* to 18.00%* |
Salaried individuals and self-employed professionals can also avail of repo rate linked Home Loans.
For a complete list of interest rates, please click here.
- Bajaj Housing Finance charges an additional rate, called ‘spread,’ over the benchmark rate to arrive at the final lending rate. The spread varies on the basis of various parameters, including the bureau score, profile, segments, and approval from competent authorities, among others.
- BHFL may grant loans below or above the documented rate of interest (up to 100 basis points) in deserving cases on exceptional basis under the powers of the competent authority, vested with them.
- The above benchmark rates are subject to change. Bajaj Housing Finance will update the current benchmark rates on this website in the event of a change.
Other Fees and Charges
| Type of Fee | Charges Applicable |
|---|---|
| Processing Fee | Up to 7% of the loan amount + GST as applicable |
| EMI Bounce Charges | Up to Rs.10,000* (refer to the table provided below for the full break-up) |
| Penal Interest | 24% per annum in addition to the applicable interest rate on the overdue amount |
*Applicable following the first EMI clearance.
| Loan Amount (in Rs.) | Charges (in Rs.) |
|---|---|
| Up to Rs. 15 Lakh | 500 |
| 15,00,001 – 30,00,000 | 1,000 |
| 30,00,001 – 50,00,000 | 1,500 |
| 50,00,001 – 1,00,00,000 | 2,000 |
| 1,00,00,001 – 5,00,00,000 | 3,000 |
| 5,00,00,001 – 10,00,00,000 | 5,000 |
| More than 10 Crore | 10,000 |
Prepayment and Foreclosure Charges
Individuals with Home Loans linked to floating interest rates pay no additional charges on the prepayment or foreclosure of the housing loan amount. However, this may change for non-individual borrowers and borrowers who have loans for business purposes.
For individual and non-individual borrowers with floating interest rate loans for non-business purposes:
| Particulars | Term Loan | Flexi Term Loan | Flexi Hybrid Loan |
|---|---|---|---|
| Time Period (in months) | >1 | >1 | >1 |
| Part-prepayment Charges | Nil | Nil | Nil |
| Full Prepayment Charges | Nil | Nil | Nil |
For individual and non-individual borrowers with floating interest rate loans for business purposes and all borrowers with fixed interest rate loans:
| Particulars | Term Loan | Flexi Term Loan | Flexi Hybrid Loan |
|---|---|---|---|
| Time Period (in months) | >1 | >1 | >1 |
| Part-Prepayment Charges | 2%* on part payment | Nil | Nil |
| Full Prepayment Charges | 4%* on Principal Outstanding | 4%* on the available Flexi Loan Limit | 4%* on Sanctioned Amount during Flexi Interest Only Loan Repayment tenure; and 4%* on the available Flexi Loan Limit during Flexi Term Loan Tenure |
*GST as applicable will be payable by the borrower in addition to the Prepayment Charges
**Nil for Home Loans closed by borrowers out of their own sources. Own sources refer to any source, other than borrowing from a bank/NBFC/HFC and/or a financial institution.
Purpose of Loan
The following loans shall be classified as loans for business purpose:
- Lease Rental Discounting Loans
- Loans Against any Property availed for Business Purpose, i.e., working capital, debt consolidation, repayment of business loan, expansion of business, acquisition of business assets or any similar end usage of funds.
- Loan for purchase of Non-Residential Properties.
- Loan against security of Non-Residential Property.
- Top up Loans for business purpose, i.e., working capital, debt consolidation, repayment of business loan, expansion of business, acquisition of business assets or any similar end usage of funds.
Types of Home Loan Interest Rates in India
Lenders offer loans at two main types of interest rates. The Housing Loan interest rate is either fixed or floating.
Fixed Interest Rate
The fixed interest rate remains the same throughout the repayment tenor. It is not affected by market changes and stays constant. The major advantage of a fixed interest rate is that it helps borrowers plan their loan repayment in advance and manage finances efficiently as the EMIs remain unchanged throughout the tenor. However, lenders, at times, do add a reset date, which allows them to change the rate after a certain period to match market conditions.
It is best to opt for this type of interest rate when current rates are expected to increase. This way, you avail of a housing loan at the lowest possible interest rate. However, it is not suitable to go for a fixed rate Home Loan when there is a possibility of a rate decrease in the future, as this increases your payable interest. However, lenders usually allow you to change from a fixed rate to a floating rate during the repayment period.
Floating Interest Rate
Of the two types of Home Loan rates in India, floating rates are more popular as they are lower than fixed rates at the onset. Generally, floating interest rates are 1-2.5% lower than fixed interest rates. A floating loan interest rate is variable and changes during the tenor based on market fluctuations and benchmark rates, which means your interest outflow keeps changing. Typically, lenders account for the change in the interest outflow by keeping the EMIs the same but changing the tenor to match the difference.
It is better to opt for floating interest rates when the existing interest rates are expected to fall. The main advantage of choosing a Home Loan with a floating rate as an individual borrower is that there are no charges on part-prepayment and foreclosure, as per the RBI mandate.
There is also a third option of mixed interest rates, where interest is levied at a fixed rate at the beginning and then converted into a floating rate after a set period.
Different Methods to Calculate Home Loan Interest Rates
Looking to calculate Home Loan Interest? When taking out a Home Loan, it's important to understand the Home Loan interest you will be paying over the long term. Here are two methods to calculate your overall interest liability:
Method 1: EMI Calculator
You can simply calculate the interest amount on your home loan by using a home Loan EMI Calculator. Input the following information into the calculator's fields:
- Home Loan amount
- Loan repayment tenure
- Rate of interest
Once you have entered these details, click 'Calculate' to get a detailed breakup of your loan, including the amount payable towards interest.
Method 2: EMI Calculation Formula
Alternatively, use this formula to calculate your EMI liability:
EMI = [P x r x (1+r)^n]/[(1+r)^n-1]
where P is the principal, r is the rate of interest, and n is the number of instalments or loan tenure in months.
Understanding Effective Interest Rate
The interest rate on a Home Loan has two components: the base rate and markup rate. The combination of these two determines the interest rate you'll be paying. Here's a breakdown of the components:
Base Rate: This is the standard lending rate of the bank applicable for all retail loans. It changes frequently based on various factors.
Markup: This component of a small percentage is added to the base rate to arrive at the effective interest rate (EIR) for a specific type of Home Loan. It varies from one type of loan to another.
Effective Interest Rate (EIR) = Base Rate + Markup
Since April 2016, the Reserve Bank of India (RBI) has mandated a new method for computing lending rates called the Marginal Cost of Funds based Lending Rate (MCLR). This method replaces the base rate system and takes into account various factors such as repo rate and deposits to determine the lending rate. This MCLR-based computation is slightly lower than the base rate.
Factors That Impact Your Home Loan Interest Rate
There are many factors that affect Housing Loan interest rate, including external market conditions, such as the repo rate and inflation. Some of the other factors that affect Home Loan interest are in your control. These depend on your eligibility for the loan and aspects such as your income, credit score, and more. Apart from these, the LTV and tenor you choose are also important factors that affect the Home Loan interest rate offered to you. Take a look at important ones that can help you save more during repayment.
Interest Rate Type
The type of interest rate you opt for impacts your overall interest rate outflow. Fixed rates are normally higher than floating rates by 1–2%.
CIBIL Score and Financial Stability
Your credit score depicts your creditworthiness. A high score of 750+ positions you as a reliable borrower. This can help you get a more competitive interest rate as the lender’s risk of default during repayment is reduced. Your job/work security, income, or salary are also factors that affect the Home Loan interest rate offered to you. They affect your repayment ability, and lenders offer a competitive rate to borrowers who have a higher ability to repay on time.
Home Loan Amount and Type
Loan-to-value ratio (LTV) is the percentage of the property’s market value the lender offers as a loan. In India, this varies between 75–90% as per RBI mandate. However, you can choose to pay a higher down payment to reduce the loan amount. Doing this can help enhance your eligibility, as the lender’s risk is reduced. Apart from this, interest rates are affected by the type of Home Loan you choose, be it for purchase, renovation, or construction.
Property Location and Condition
Property value is another factor that affects Home Loan interest rates. The location of the property, surrounding infrastructure, age of the property, and amenities available are all considered to evaluate its worth. If a property is considered valuable, lenders charge a more competitive interest. However, if a property is old or has a location that is not in demand, they may charge higher interest.
How to Reduce Your Home Loan Interest Burden?
Every borrower wonders how to get low-interest Home Loan as this decreases the cost of borrowing and makes repayment stress-free. Getting a low Home Loan interest in India is simply a matter of improving your eligibility for the loan and showcasing disciplined credit behaviour. Read on for some tips.
Compare Lenders Before Applying
One of the most important things to do before taking a Home Loan is to compare lenders for lower interest rates. While this is not the only criteria you should look for, this can help you get the lowest rate among all the options if you meet the lender’s eligibility terms. Bajaj Housing Finance offers competitive interest rates starting at just 8.45%* p.a. for salaried applicants.
Maintain a High Credit Score
The easiest way to secure the lowest possible Home Loan interest rate is to have a high CIBIL score. This is because a high score reflects a good credit history with various credit types in terms of your repayment track record and credit utilisation.
Consider a Home Loan Balance Transfer
If you are wondering how to get a low-interest Home Loan while repaying your loan, consider transferring it to another lender offering a lower rate.
This is known as a Home Loan Balance Transfer, which can help you plan your finances better and save money. However, you should consider the fees and charges associated with switching your loan, and only proceed if you are saving more despite these charges.
*Terms and conditions apply
Home Loan Interest Rate FAQs
We offer sizeable loans at competitive interest rates with the benefit of flexible repayment over a long tenor. You are also assured of added convenience with the option to apply for a Home Loan online and avail of doorstep service for document collection. Salaried applicants can apply for a fresh Home Loan today and pay EMIs as low as Rs.729/Lakh*.
The current interest rates applicable to Home Loans differ based on borrower type. Self-employed applicants can avail of a Home Loan with Bajaj Housing Finance with floating interest rates starting from 9.10%* p.a. On the other hand, salaried individuals and professionals can avail of a Home Loan with interest rates starting from 8.45%* p.a.
Which of the two is better depends on market conditions. Typically, a fixed rate of interest benefits you when the interest rates are on an upward trend, and a floating rate of interest benefits you when the interest rates are on a downward trend.
A ‘floating’ rate of interest refers to a rate that varies over time. It is linked to a lender's internal benchmark or an external benchmark, such as the RBI repo rate. In other words, the interest rate increases or decreases in tandem with the linked benchmark rate. Thus, under favourable market conditions, a reduced benchmark rate will lower the interest amount payable.
On the other hand, a fixed interest rate remains the same throughout the repayment tenor or till a reset date. Such a rate can be beneficial when the interest rates are on an upward trend.
Before you choose an interest rate type, use a Home Loan Interest Calculator to assess the difference in the total amount payable with a fixed rate versus a floating rate to make an informed decision.
When applying for a Home Loan with us, applicants are required to pay a processing fee of up to 7% of the total loan amount with GST as applicable. Bajaj Housing Finance keeps its Home Loan processing fees nominal and affordable, ensuring minimum strain on the borrower’s finances when availing of the advance
There are three ways to reduce your Home Loan Interest Rates.
Boost your credit score :In India, credit scores range from 300 to 900, with a score of 750 or higher being considered good. The higher your score, the lower your interest rates are likely to be. This can even help you qualify for the best Home Loan rates offered by lenders.
Consider a balance transfer :If you're currently paying high interest rates to your lender, you might want to explore the option of transferring your balance to Bajaj Housing Finance with the Home Loan Balance Transfer feature. This can potentially lower your interest rates and offer you better loan terms.
Negotiate with your lenders :If you have a good credit score and a history of making timely EMI payments, you may have more leverage to negotiate with lenders and reduce Home Loan interest rate. Lenders may be willing to offer you a better interest rate if you can demonstrate a history of responsible financial behavior. Don't be afraid to ask for better terms and rates!
