Home Loan Interest Rates In 2024

Current Home Loan Interest Rate

Kotak Mahindra Bank offers attractive home loan interest rates in India starting at 8.75% p.a. This lending rate allows you to repay your home loan comfortably at EMI of ₹822/lakh. For a comparison of housing loan rates for both salaried and self-employed individuals, please see the table below:

Customer Type	Effective Rate Of Interest
Floating Category (Repo Rate: 6.50%)
For Salaried & For Self-employed	8.75% onwards

Connect with us to know more about current home loan interest rates and check out low-interest home loans available to you.

How to Calculate Interest on Home Loan?

An error-free and easy way to calculate home loan interest rates and EMIs on a home loan is by the Kotak Home Loan EMI Calculator. Just enter the amount you want to borrow, the tenure you want, and the rate of interest you prefer.
For manually calculating housing loan interest, you can use a mathematical formula:

Formula: EMI = [P x r x (1+r)^n]/[(1+r)^n-1], where P, R, and N are the variables. The EMI value will change each time you change any of the three variables. This way, you can calculate the home loan interest you’ll need to pay.

P = Principal Amount, R = Rate of Interest and N = Number of times interest is compounded per year.

Types of Home Loan Interest Rates

Home loan interest rates in India can be fixed or floating. Find out what this means and how these two types of house loan interest rates differ from one another.

Floating Interest Rate

This is another popular type of home loan interest rate today in India. Floating house loan nterest rates follow the prevalent market rates. When the interest rate drops, your home loan EMI also drops.

Benefits Floating Home Loan Rates

Lower Interest Rates : Floating home loan rates are typically 1% to 2.5% lower than fixed rates (from the same lender). This can help you save money each month on EMIs.
The Possibility for Greater Gains : Borrowers can stand to gain unexpected gains: Borrowers who choose the floating interest rate can benefit from market fluctuations. If the market rates go below the base rate, there will be an even lower home loan rate for the corresponding period.

Setbacks of Floating Home Loan Rates

If the market rates go above the base rate, the borrowers will lose their current home loan interest rates and have to pay a higher interest amount.
The increase in housing loan interest rate may make monthly payments quite steep—even perhaps to the point of becoming unmanageable.
Budgeting cash flow and calculating the long-term costs of borrowing with floating house loan rates is not possible.

Fixed Interest Rate

This type of housing loan interest rate remains constant for the complete tenure of the loan. Fixed home loan rates are set and not subject to change owing to market fluctuations. Also, for certain cases, after paying a fixed housing loan interest rate for a certain time period, it may be possible to convert it into a floating housing loan interest rate depending on loan terms.

Benefits of Fixed Home Loan Interest Rates

The biggest benefit of fixed house loan interest rates is that borrowers know exactly how much they have to pay. Even if the market fluctuates and makes house loan interest rates higher, your set interest remains unaffected.
With fixed home loan interest rates, borrowers know exactly how much they need to budget for, and can align their finances well in advance to pay off their loan.

Setbacks

The flipside of fixed house loan interest rates is that even when the home loan interest rates in India drop, the agreed rate remains the same. Borrowers cannot benefit from lower interest rates on their home loans.
When compared to floating interest rates, fixed home loan rates tend to be higher by about 1-2.5%.

Frequently Asked Questions

What is the Home Loan interest rate?

The Home Loan interest rate is the percentage a lending institution charges on the borrowed principal amount for purchasing or refinancing a home. It dictates the borrowing cost and impacts the Equated Monthly Installment (EMI).

What is the current housing loan interest rate?

The Home Loan interest rate varies depending on factors such as the loan amount, tenure, and applicant's credit profile. The current Home Loan interest rate at Kotak Mahindra Bank starts at 8.75% per annum.

What are the factors that affect Home Loan interest rates?

Several factors influence Home Loan interest rates, including current economic conditions, RBI's monetary policy, and inflation rates. Lenders also consider borrower-specific factors such as credit score, income stability, and loan-to-value ratio when determining the interest rate. Monitoring market trends and economic indicators can empower borrowers to strategically time their Home Loan applications and secure favourable interest rates. The loan amount and tenure also play a role, as longer tenures typically result in higher interest rates.

What are the different ways for calculating interest rate payments?

There are two common ways to calculate interest rate payments.

Manual Calculation: You can use the interest rate formula.

Interest = (Principal Amount x Rate of Interest x Time)/100

However, this method may be time consuming and prone to errors.

Online Home Loan Calculator: You can use the Home Loan EMI Calculator – a free-to-use online tool – on the Kotak Bank website. Just enter your loan amount, interest rate and tenure to get instant results. This automated tool eliminates the possibility of errors and provides quick and accurate results.

What is the pre-EMI interest rate of a Home Loan?

The pre-EMI interest rate of a Home Loan refers to the interest charged on the disbursed loan amount until the full Equated Monthly Installments (EMIs) start. Typically, during the construction phase of a property, borrowers pay only the interest portion of the loan amount. This interim interest rate, the pre-EMI rate, is generally lower than the regular House Loan interest rate. It allows borrowers to manage their finances more comfortably until the property's construction is completed and the regular EMI payments begin.

What is the Annual Percentage Rate (APR) for the Home Loan?

The Annual Percentage Rate (APR) for a Home Loan represents the total cost of borrowing, including interest and fees, expressed as an annual percentage. It provides a detailed view of the loan's true cost, helping borrowers compare loan offers. The APR considers the interest rate and any upfront fees or closing costs associated with the loan. By understanding the APR, borrowers can decide which Home Loan option best suits their financial needs and budget.

How to avail competitive Home Loan interest rate?

To avail a competitive Home Loan interest rate, follow these steps:

Maintain a good credit score.
Compare rates from multiple lending institutions.
Negotiate with your lending institution for lower rates.
Choose a shorter loan tenure.
Make a higher down payment.
Consider government schemes or special offers.
Keep track of market trends and refinancing options.

By implementing these strategies and staying informed, you can increase your chances of securing competitive Home Loan interest rates as per your financial situation.

What options are available for calculating interest rate payments?

Two methods are available for calculating Home Loan interest rate payments. The first method involves using the Kotak Home Loan EMI Calculator, which provides error-free calculations quickly. Simply input the loan amount, tenure, and preferred interest rate to determine the equated monthly installment (EMI) accurately. Alternatively, the manual calculation can be done using a mathematical formula: EMI = [P x r x (1+r)^n]/[(1+r)^n-1], where P, R, and N represent the principal amount, rate of interest, and number of times interest is compounded per year, respectively.

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Disclaimer (Things you should know):

For loans: Credit at the sole discretion of the Bank and subject to guidelines issued by RBI from time to time. Bank may engage the services of marketing agents for the purpose of sourcing loan assets.

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Home Loan Interest Rate