The whole page, in five lines
- Rate = external benchmark + lender's spread. Only the second half responds to anything you do.
- It is floating, so it will change — most lenders adjust your tenure silently rather than your EMI.
- Your score and your down payment move the spread more than anything else.
- Existing borrowers pay more than new ones. Ask what a conversion to the current spread costs.
- 0.25% is not small. On ₹40 lakh over 20 years it is roughly ₹1.5 lakh.
How Your Rate Is Built
Since October 2019 the Reserve Bank has required banks to link new floating-rate retail loans to an external benchmark. For most banks that benchmark is the RBI's repo rate. Housing finance companies, which are regulated by the National Housing Bank rather than as banks, may use their own reference rate instead.
Your rate is that benchmark plus a spread. The benchmark is identical for every borrower at that bank on that day. The spread is where you exist.
| Component | Who sets it | Can you influence it? |
|---|---|---|
| External benchmark | RBI, via the repo rate | No |
| Bank's base spread | The lender, for all borrowers | Only by choosing a different lender |
| Risk premium | The lender, from your profile | Yes — score, LTV, income type |
This is why comparing headline rates across banks is less useful than it looks. Two lenders quoting the same number may be pricing very different risk premiums into it, and the one that looks dearer today may reset better when the repo rate falls.
What Moves Your Spread
| Factor | Effect on the rate | What to do about it |
|---|---|---|
| Credit score | Largest single input; 0.25% – 0.75% across the bands | Repair it before applying, not after |
| Loan to value | Lower LTV often prices finer | Put down 25% instead of 15% if you can |
| Income type | Salaried usually below self-employed | Nothing, but expect it |
| Employer category | Graded employers price better | Ask whether your employer is on the list |
| Loan amount | Some slabs attract finer pricing | Check where the slab boundaries fall |
| Existing relationship | Salary account holders are often quoted better | Ask your own bank first, then compare |
| Woman as primary applicant | Several lenders offer a small concession | Worth structuring the application around |
What a quarter of a percent is actually worth
On a ₹40 lakh loan over 20 years, moving from 8.75% to 8.50% cuts the EMI by about ₹600 a month and the total interest by roughly ₹1.5 lakh. Half a percent is close to ₹3 lakh. That is the return on spending three months repairing a credit score, or on finding another ₹4 lakh of down payment — both of which are usually easier than they sound when the number is put that way.
Floating Means It Will Change — Plan for That
Your rate resets when the benchmark moves, usually every three months. When it rises, lenders face a choice: raise your EMI, or extend your tenure. Almost all of them extend the tenure by default, and many do it without a phone call.
That feels painless and is not. A 20-year loan can quietly become a 26-year one across a few rate cycles, and the extra years are almost entirely interest.
| When the rate rises | Default behaviour | Better option, if you can carry it |
|---|---|---|
| Small increase | Tenure extended silently | Ask for the EMI to rise instead |
| Tenure hits the age ceiling | EMI must rise — you are told then | Have expected it and budgeted |
| Rate falls | Tenure shortened, EMI unchanged | Keep the EMI and let the loan close early |
Two things to do about it. Read your reset letters rather than filing them, and after any rise ask the lender to keep the tenure and adjust the EMI. Most will do it on request; almost none offer.
The Fee Nobody Mentions
Lenders quote new customers a finer spread than they give existing ones. Your rate was fixed against the spread on the day you signed; the bank's offer to a new borrower today may be materially lower.
You do not have to move lenders to get it. Most banks will reset your spread to the current one for a conversion fee — commonly 0.25% to 0.5% of the outstanding.
Do this arithmetic every two years
On ₹35 lakh outstanding, a conversion fee of 0.25% is about ₹8,750. If it moves you 0.4% lower with 15 years to run, the saving is well over ₹3 lakh. The fee is almost always worth paying when the gap is 0.3% or more — but the bank will not call to tell you the gap exists. Ask, in writing, once every couple of years.
Where your own lender will not reset, a balance transfer to another lender does the same job, with fresh legal and valuation costs on top. It makes most sense early in the term, when the interest component of each EMI is largest.
Fixed or Floating
| Floating | Fixed | |
|---|---|---|
| Availability | Standard on almost all home loans | Rare; often fixed for a few years only |
| Starting rate | Lower | Higher, typically by 1% – 2% |
| If rates fall | You benefit | You do not |
| If rates rise | You pay more | You are protected |
| Prepayment charge | Nil for individuals | Usually chargeable |
The prepayment row is the one that settles it for most borrowers. RBI does not permit foreclosure or prepayment charges on floating-rate loans to individuals, which means every spare rupee goes against principal for free. On a fixed-rate loan that flexibility usually costs money — and over thirty years, flexibility is worth more than certainty.
Why there is no bank-by-bank table here
Floating rates move whenever the benchmark or a lender's spread changes, so a table of named banks and specific numbers is stale within weeks — and a wrong rate published against a bank's name is regulated advertising, not a mistake. What lasts is the band and what moves you inside it. For live figures, ask us to run a comparison against your profile or check the lender's own published rate card.
Questions This Page Gets Asked
What is the current home loan interest rate in India?
The market band has generally run from around 8.5% for the strongest profiles to about 11%. Where you fall depends on your credit score, loan-to-value ratio, income type and lender. Because it is floating, whatever you are quoted will change during the loan.
Are home loan rates fixed or floating?
Almost always floating, linked to an external benchmark — for most banks the RBI repo rate — plus the lender's spread. Fixed-rate home loans exist but are uncommon and price higher.
How often does my rate change?
Typically every three months, when the benchmark resets. Your lender must tell you, but the change usually appears as a longer tenure rather than a different EMI.
Why did my tenure increase without my EMI changing?
That is the default response to a rate rise. If you can carry a higher EMI, ask the lender to adjust that instead — it keeps the loan on its original schedule and saves a large amount of interest.
Can I get a lower rate on my existing loan?
Usually yes, for a conversion fee of about 0.25% to 0.5% of the outstanding, which resets you to the spread the lender is offering new customers. Worth doing whenever the gap is 0.3% or more.
Is a woman applicant given a lower rate?
Several lenders offer a small concession, commonly around 0.05%, where a woman is the primary applicant or co-owner. Stamp duty is also lower for women buyers in several states, which is usually the larger of the two savings.
Does a bigger down payment lower my rate?
Often, yes. A lower loan-to-value ratio is less risk to the lender and frequently prices finer, as well as reducing the amount you pay interest on at all.
Are there charges for prepaying?
Not on floating-rate loans to individual borrowers — RBI does not permit them. Fixed-rate loans usually do carry a charge.
Conclusion
Two halves, and only one of them is yours. The benchmark will do what it does; your score, your down payment and your choice of lender decide the spread that sits on top of it — and that spread stays with you for decades unless you go back and ask for it to be changed.
So the two habits worth forming are: fix the score and the down payment before you apply, and once a couple of years, ask your lender what it would cost to move to the rate it is quoting new customers. Almost nobody asks, and it is frequently the cheapest few lakh rupees anyone saves.
How much you can borrow in the first place is on the eligibility page, and the full picture is in the home loan guide.
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Where This Page Sits
This is one page in a larger guide. The pillar covers the whole subject end to end — rates, eligibility, documents and the process — and links to every page in the silo.
Comparing products rather than digging into one? These are the main guides.
Responsible borrowing note
All rates, fees and eligibility figures on this page are indicative market ranges for illustration and are not an offer. Approval, pricing and the sanctioned amount rest entirely with the bank or NBFC. Money Bharti is a loan marketplace, not a lender. Assess your repayment capacity honestly and read the sanction letter in full before signing. This content is general information, not financial advice.