Buying a house is one of the biggest financial decisions, and the first thing we ask ourselves is how to finance it. Home loans are one of the best options to fund your home purchase, and a low-interest home loan is what all applicants look for while applying. There are many factors affecting home loan interest rates, and credit score is one of the most important factors that can impact the interest rate. Certain banks offer home loans based on credit scores.
Impact of Credit Scores on Home Loan Interest Rates
Many lenders consider credit score as an important factor while deciding the interest rate for the applicant. They consider it as a benchmark for the future repayment capability of the applicant. Let’s look at the impact of credit scores on home loan interest rates.
Higher credit scores can get a low rate of interest however there are other factors that affect the calculation of home loan interest rates. One should always try to maintain a higher credit score to get an attractive interest rate.
Top Banks and Home Loan Interest Rates Based on Credit Scores
Below is a diagram that explains the interest rates offered by different banks in a nutshell. We will then look at the offerings by each bank in detail based on credit scores.
HDFC Bank Home Loan Interest Rates
| HDFC Bank Special Home Loan Rates | |
| Adjustable home loan rates | |
| Loan slab | Interest rate |
| Credit score 800+ | 8.20% |
| Rest | 8.40%-8.90% |
| HDFC Bank Standard Home Loan Rates | |
| Adjustable home loan rates | |
| Loan slab | Interest rate |
| Women (up to 30 lakhs) | 8.60%-9.10% |
| Rest (up to 30 lakhs) | 8.65%-9.15% |
| Women (up to 30.01 lakhs to 75 lakhs) | 8.85%-9.35% |
| Rest (up to 30.01 lakhs to 75 lakhs) | 8.90%-9.40% |
| Women (75.01 lakhs and above) | 8.95%-9.45% |
| Rest (75.01 lakhs and above) | 9.00%-9.50% |
ICICI Bank Home Loan Interest Rates
| ICICI Bank Festive Home Loan Rates | ||
| Adjustable home loan rates | ||
| Loan slab | Interest rate for Salaried | Interest rate for Self-employed |
| Credit score 800+ | 8.75% | 8.75% |
| Credit score 750-800 | 8.75% | 8.85% |
| ICICI Bank Standard Home Loan Rates | ||
| Adjustable home loan rates | ||
| Loan slab | Interest rate for Salaried | Interest rate for Self-employed |
| Up to 35 lakhs | 9.70% | 9.85% |
| 35 lakhs to 75 lakhs | 9.70% | 9.85% |
| Above 75 lakhs | 9.70% | 9.85% |
SBI Home Loan Interest Rates
| SBI Standard Home Loan Rates | |
| Adjustable home loan rates | |
| Credit Score | Interest rate |
| 800+ | 8.55% |
| 750-799 | 8.65% |
| 700-749 | 8.75% |
| 650-699 | 8.85% |
| 550-649 | 9.05% |
| No CIBIL Score | 8.75% |
LIC Housing Finance Home Loan Interest Rates
| LIC Housing Finance Home Loan Rates | |
| Adjustable home loan rates | |
| Credit score | Interest rate |
| 800+ (Up to 15 crores) | 8.30% |
| 750-799 (Up to 15 crores) | 8.40%-8.60% |
| 700-749 (Up to 15 crores) | 8.70%-8.90% |
| 600-699 (Up to 15 crores) | 8.95%-9.30% |
| Less than 600 | 9.40%-9.80% |
PNB Housing Finance Home Loan Interest Rates
| PNB Housing Finance Home Loan Rates | ||
| Adjustable loan rates | ||
| Credit Score | Interest rate for Salaried | Interest rate for Self-employed |
| 800+ | 8.75%-9.25% | 8.99%-9.49% |
| 775-799 | 8.80%-9.30% | 9.25%-9.75% |
| 750-775 | 8.95%-9.45% | 9.40%-9.90% |
| 725-750 | 9.25%-9.75% | 9.85%-10.35% |
| 700-725 | 9.55%-10.05% | 10.15%-10.65% |
| 650-700 | 10.65%-11.15% | 11.25%-11.75% |
| up to 650 | 10.85%-11.35% | 11.45%-11.95% |
| CIBILTM > 170 | 10.90%-11.40% | 11.45%-11.95% |
| CIBILTM <=170 | 10.20%-10.70% | 10.80%-11.30% |
Bank Of Maharashtra Home Loan Interest Rates
| Bank of Maharashtra Home Loan Rates | ||
| Adjustable home loan rates | ||
| Credit Score | Interest rate for Salaried | Interest rate for Self-employed |
| For loans up to 30 lakhs | ||
| 800+ | 8.00% | 8.20% |
| 750-799 | 8.40%0 | 8.65% |
| 700-749 | 8.70% | 8.75% |
| 650-699 | 9.00% | 9.10% |
| 600-649 | 9.05% | 9.35% |
| Below 600 | 9.50% | 9.85% |
| -1 to 05 | 8.90% | 9.15% |
| For loans above 30 lakhs | ||
| 800+ | 8.00% | 8.20% |
| 750-799 | 8.40% | 8.65% |
| 700-749 | 8.70% | 8.85% |
| 650-699 | 9.05% | 9.20% |
| 600-649 | 9.10% | 9.50% |
| Below 600 | 9.70% | 10.20% |
| -1 to 05 | 9.05% | 9.50% |
Punjab National Bank Home Loan Interest Rates
| Punjab National Bank Home Loan Rates | ||
| Adjustable home loan rates | ||
| Credit Score | Interest rate for Salaried | Interest rate for Self-employed |
| For loans up to 30 lakhs | ||
| 800+ | 8.70% | 8.70% |
| 750-799 | 8.70% | 8.70% |
| 700-749 | 8.85% | 8.85% |
| 600-699 | 9.20% | 9.20% |
| For loans above 30 lakhs | ||
| 800+ | 8.55% | 8.55% |
| 750-799 | 8.60% | 8.60% |
| 700-749 | 8.75% | 8.75% |
| 650-699 | 9.10% | 9.10% |
Kotak Bank Home Loan Interest Rates
| Kotak Bank Standard Home Loan Rates | ||
| Adjustable home loan rates | ||
| Loan slab | Interest rate for Salaried | Interest rate for Self-employed |
| Up to 5 crores | 8.30% – 9.00% | 8.41% – 9.10% |
Citi Bank Home Loan Interest Rates
| Citi Bank Standard Home Loan Rates | ||
| Adjustable home loan rates | ||
| Loan slab | Interest rate for Salaried | Interest rate for Self-employed |
| Up to 10 crores | 8.00% onwards | 8.00% onwards |
IDFC Bank Home Loan Interest Rates
| IDFC Bank Standard Home Loan Rates | ||
| Adjustable home loan rates | ||
| Loan slab | Interest rate for Salaried | Interest rate for Self-employed |
| Up to 5 crores | 8.75% onwards | 9.00% onwards |
Home Loan EMI Calculator
Before you take a home loan, know how much EMI you are going to pay. Even though the interest rate is low, the EMIs may be high. You must be able to repay your EMIs on time. Else, your credit score will be impacted negatively. You can use a home loan EMI calculator to compute the EMI with ease.
Home loan calculation needs three inputs –
- Loan amount
- Loan tenure
- interest rate
EMI is: EMI = P × r × (1 + r)n/((1 + r)n – 1) where P= Principal amount, r= rate of interest, n=Tenure (in months)
For e.g., if P = 75,00,000, R = 12%, T = 10 Years, the calculation will be as below:
7500000 × 0.01 × (1 + 0.01)120/ ((1 + 0.01)120 – 1)
EMI for this example will be Rs. 1,07,603 per month
Types of Interest Rates in Home Loans
The bank can charge a Fixed or Floating rate of interest on home loans.
Fixed Interest Rate – In the fixed interest rate method, the interest rate remains the same throughout the tenure of the loan. The advantage is the interest rate and your outflow of money doesn’t change. You also do not pay more if the rate of interest goes up.
Floating Interest Rate – In the floating interest rate method, the interest rate changes with the current lending rates of the bank. The benefit, in this case, is if the interest rates go down, your outflow of money will also go down.
Factors that Determine the Calculation of Home Loan Interest Rates
- Credit Score – A higher credit score can get you a low-interest rate. A good credit history also means that your financial discipline is good and you will more likely repay the loan within time.
- Income – A stable and sufficient income definitely gives more confidence to the lender in your repayment ability. Working for a good organization also means that you have job security and hence a steady income.
- Loan Amount – The higher the loan amount is, the lower the rate of interest should be. Of course, it is affected by other factors as well.
- Employment Type – Banks have different interest rates for salaried and self-employed people.
- Tenure of the loan – The longer the tenure of the loan is, the lower the interest rate should be.
- Geographical location of the property – If the property is located in a prime location, the value of the property ought to be high. In such cases, the rate of interest offered by the bank will be low.
Conclusion
The rate of interest for home loans depends on many factors. A good credit score can definitely help get a lower interest rate, all other factors being constant. One should try to maintain a good credit score in order to enjoy a lower interest rate.