LIC, HDFC, PNB, Tata Capital: Home loans at 6.9% offered by Housing Finance Companies

If you’re planning to take a home loan from a housing finance company, you’ll be glad to know that as per the latest trends, the difference between the lowest advertised home loan interest rates offered by banks and HFCs have shrunk to just 50 basis points.

In fact, Bank of India and Central Bank are currently offering the lowest home loans in the country starting at 6.85% p.a. while LIC Housing Finance is offering home loans starting at 6.90% p.a. Moreover, there are five housing finance companies which are currently offering home loans starting at under 8% p.a.

Many home loan borrowers prefer housing financing companies over banks as the former could offer a higher loan quantum and involve relatively relaxed norms when it comes to the borrowers’ credit scores. As a result, they often become the preferred lender for those borrowers who have a poor credit score. Also, HFCs are NBFCs which specialise in home loan products while banks have multiple credit products. HFCs are also known for hassle-free paperwork, but their loan interest rates are usually higher than those offered by banks, according to BankBazaar.

Also, borrowers must realise that HFCs offer home loans pegged to the prime lending rates while banks are now offering these loans linked to an external benchmark like the repo rate. Repo-linked loans from banks usually involve quick and proportionate transmission of rate cut benefits to the borrowers and the best rates are often reserved for borrowers with stellar credit scores above 750-800. Since these repo-linked loans also involve a credit risk margin, the borrower could see a spike in applicable rates whenever his credit score dips over the tenure of the loan.

That being said, borrowers should keep in mind that the actual interest rate applicable to them is ascertained by the lender based on a number of factors like home loan amount, loan-to-value ratio, home size, age, gender and credit score of the borrower, among any other parameter set by the lender, informs BankBazaar.

If you’re looking for a home loan from a housing finance company, here are the lowest advertised rates currently being offered by the HFCs in the country.

HFCs Currently Offering the Lowest Interest Rates on Floating Rate Home Loans

Compiled by BankBazaar.com. Rates as advertised by the lender on October 29, 2020. The list is not exhaustive. Lenders not advertising their rates have not been considered. The lowest rates are provided to eligible borrowers only. Interest rates depend on the loan size, loan-to-value ratio, gender, source of income, credit history, and other parameters set by the lender.