A look at home loan rates offered by top banks

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LIC Housing Finance, the mortgage financing arm of Life Insurance Corporation (LIC), recently slashed the interest rates on home loans to 6.66% for homes worth up to Rs 50 lakh. For new borrowers availing a home loan of Rs 50 lakh and tenure 30 years, the EMI would come out to be Rs 32,131 at a new interest rate of 6.66% p.a compared to Rs 32,930 for the earlier applicable interest rate of 6.90% p.a.

For the same loan amount, if the tenure chosen is 15 years or 20 years instead of 30 years, the EMI would be Rs 43,996 and Rs 37,751 respectively for the new interest rate of 6.66% p.a., vis-a-vis Rs 44,662 and Rs 38,465 for the earlier applicable interest rate of 6.90% p.a.

Hence, according to Paisabazaar, for these varying tenures of 15, 20, and 30 years, the home loan borrower’s EMI would be lower by Rs 666-799 per month vis-a-vis the EMIs for an earlier interest rate of 6.90% p.a., amounting to Rs 1.19 lakh, Rs 1.71 lakh, and Rs 2.87 lakh over the entire tenure of 15, 20 and 30 years.

Housing finance vs Bank rates

NBFCs rates are fixed as per Prime Lending Rate, which in turn gives the flexibility to negotiate with the lender for a higher sanctioned amount. On the other hand, banks work under the strict purview of the Reserve Bank of India and they offer home loan rates based on the external benchmark which in turn are governed by the policy changes.

NBFCs have comparatively relaxed policies and appeal to people who want to borrow a larger amount of people with low credit scores but they usually offer high-interest rates.

Having said that one needs to look beyond interest rates while selecting a lender. NBFCs offer flexibility which might need to be taken into consideration while making the final choice.