Bank vs. HFCs: Find Out The Lowest Mortgage Rates On Loans Over Rs 75 lakh

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If you are planning on taking out a home loan above Rs 75 lakh most lenders will offer you their best services, but it will be hard work for you to get the lowest interest rate possible. Finding the lowest possible interest rate on a home loan, especially one that is over Rs 75 lakh, bodes well for the borrower as it can result in huge savings.

Even if you are an existing borrower with an outstanding high quality home loan over Rs 75 lakh and you are paying a higher interest rate, you may very well find a new lender with a much lower interest rate and defer your loan to save a good amount on the interest outflow.

Here’s how to get the best possible interest rate on your home loan.

How your interest rate depends on the loan size and loan-to-value (LTV)

With a higher down payment, you can lower the loan-to-value ratio and thus the interest rate. The LTV on a home loan is the percentage of the real estate cost that the bank will fund while the rest must be funded by the borrower. Typically, to get the lowest interest rate, a borrower must make a down payment of at least 20% in order for the LTV ratio to be 80% or less.

In addition, due to the larger ticket size, i.e. more than Rs 75 lakh, you may have to pay a higher interest payment compared to a low value loan. Most lenders charge a higher interest rate on home loans.

“Many home loan lenders have started taking loan amount, loan-to-value ratio, and borrower profile into account when setting their interest rates. Because a larger loan and higher loan-to-value ratio increase credit risk for lenders, they typically charge higher interest rates from those who take up a larger loan amount and higher LTV ratios, “says Ratan Chaudhary, Head of Home Loans, Paisabazaar. com.

To address this difference, in 2020 the Reserve Bank of India (RBI) paved the way for uniform loan pricing based on LTV rather than loan size by assigning risk weights based only on the LTV ratio. The higher the risk weights, the more capital a bank will need to hold to maintain its equity ratio, and therefore less credit will be left to it. Since uninformed risk weights do not require higher capital for larger ticket size loans, it was expected that banks would charge a uniform rate of interest.

However, banks have yet to tighten their lending rates and charge a uniform interest rate for the same LTV. As a result, most banks still charge a higher interest rate on their highest quality home loans. For example, as of May 2021, SBI has the lowest interest rate (6.8%) on loans up to Rs 30 lakh, while it charges 7.05% on loans over Rs 30 lakh to Rs 75 lakh. When it comes to the highest category of home loan, it offers the lowest interest rate of 7.15%. So everything else stays the same, compared to a small-ticket loan, a borrower of a high-quality loan ends up paying 0.35% additional interest.

Home loan over Rs 75 lakh

PUBLIC SECTOR BANKS
Lender name Interest (%)
Punjab & Sind Bank 6.65-7.60
Bank of Baroda 6.75-8.60
Punjab National Bank 6.80-8.00
Central Bank of India 6.85-7.30
UCO Bank 6.90-7.25
Union Bank of India 6.90-7.65
Bank of Maharashtra 6.90-8.40
Canara Bank 6.90-8.90
IDBI bank * 6.95-10.05
Bank of India 6.95-8.35
State Bank of India 7.05-7.75
Indian Bank ** 7.20-7.40
Indian overseas bank 7.3
BANKS IN THE PRIVATE SECTOR
Lender name Interest (%)
Kotak Mahindra Bank ^ 6.65-7.30
Axis bench 6.90-8.55
ICICI bank 7.10-7.55
HSBC bank 7.20-7.75
Karur Vysya Bank 7.20-9.55
Karnataka Bank 7.50-8.85
Bundesbank 7.75-7.80
Dhanlaxmi Bank 7.85-9.00
South Indian Bank 7.95-9.45
Tamilnad Mercantile Bank 8.25
Bandhan bench
(GRUH home loan)
8.75-11.25
RBL bank 9.50-10.00
Housing Financiers (HFCs)
Lender name Interest (%)
Bajaj Finserv > = 6.75
Tata capital > = 6.90
LIC housing 6.90-8.05
HDFC Ltd. *** 7.10-7.80
PNB housing 7.70-9.55
GIC home finance > = 7.45
Repco Home Finance > = 7.75
Indiabulls housing > = 8.65
Aditya Birla capital 9.00-12.50
Fund trust at home 9.75-11.00

* 10 bps concession for female borrowers as part of a time-limited offer. Conditions apply.

** Interest rate of 6.85% -7.00% pa as part of the IND AWAS program

*** Special rates available in the limited time offer. Valid for withdrawals until June 30th, 2021

^ Special HLBT rates from 6.65% pa for each loan amount.

Prices as of May 24th, 2021

Source: Paisabazaar.com

Lower interest rate based on creditworthiness and other factors

The lowest interest rate is often given to a borrower who meets very specific criteria for which few borrowers are eligible.

For example, LICHFL only gives you the lowest interest rate of 6.9% if your credit score is above 700. In addition, you must also meet profile-related criteria as this lowest rate is only offered if you are an employee or a professional. If you do not meet these profile criteria, ie you are self-employed, you will have to pay a higher rate of 7%.

In addition, as already mentioned, the loan amount also plays a role. For example, if you have a credit rating in the 650-699 range, the lowest interest rate you can get is 7.40% on a loan of Rs 75 lakh to Rs 1 crore of LICHFL. However, if you want a loan above Rs 1 core to Rs 3 crore with a similar credit rating, the interest rate rises to 7.50% and for a higher loan amount up to Rs 15 crore the lowest interest rate rises to 7.60%.

There are also other factors that can be crucial in deciding the final interest rate that you will get on the loan. Your job matters as employees often get the best pay while others pay higher. A single or joint borrower also helps to lower the interest rate, usually by 0.05%.

So make sure to do your inquiries and check out all the terms necessary to get the lowest price possible. Good credit and a larger down payment are the most important factors that can help you get the best interest rate.

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