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Home Loan Interest Rates And Charges

What is the Interest Rate on a Home Loan?

Usually expressed as a percentage, home loan interest rate is the rate at which interest is charged on the principal home loan amount over a specified tenure.

Tata Capital offers among the most competitive home loan interest rate in India, starting at just 6.90%*.

Why are Interest Rates on Home Loan so Important?

Home loan interest rates are a vital part of a home loan. The home loan interest calculation lets you know in advance the amount that you’d need to pay over and above the principal home loan amount. Given that home loans are generally long-term loans, extending up to 15 to even 30 years, the total interest can become a considerable sum over time. Even a slight percentile difference in housing loan interest rate can be significant over years. Plus, home loan interest will also rise with an increase in tenure. Therefore, it is important to check and compare home loan interest rates and choose a lender offering competitive home loan interest rates in India.

How is Your Home Loan Interest Rate Calculated?

Housing loan interest is usually calculated on the outstanding principal amount at the end of each day and charged on a monthly basis. The lending institution takes the outstanding loan amount per day and multiplies it by the latest home loan interest rate that has been assigned for housing loan interest calculation.

Housing loan rates do not remain constant. They are subject to change, primarily in accordance with the monetary policy set by the Reserve Bank of India (RBI), which includes the base lending rate and MCLR. Your home loan interest rate is also calculated based on your credit rating and varies across lenders, depending on how much an institution can lend. 

What is MCLR?

In 2016, the RBI announced a new set of guidelines for lending called the Marginal Cost of Funds-Based Lending Rate (MCLR). The MCLR was introduced for all loans granted after April 1, 2016 and has replaced the older base rate regime.

If you took out a home loan before this date, you can switch to MCLR depending on the cost of your loan, since some conversion charges are applicable.

What are Fixed and Floating Home Loan Interest Rates?

Lenders primarily offer two kinds of home loan interest rates – fixed and floating interest rate.

Fixed interest rate is one wherein the interest rate on the home loan will never change no matter how volatile the market scenario gets. People who have opted to repay their home loan through fixed rate need to pay equally divided fixed monthly instalments over a pre-determined tenure with no unexpected changes in the middle.

Alternatively, floating home loan interest rate is one which is volatile and keeps changing as per the market scenario. Since floating interest rate is dependent upon the floating or alterable base rate offered by lenders, it gets revised automatically and in proportion to a change in the base rate.

What is Repo Rate Linked Lending Rate?

The repo rate is the rate at which the RBI lends money to other commercial banks. This rate is reviewed once every two months. The repo-rate linked lending rate is the rate of interest set according to the repo rate and is directly affected by a change in the repo rate. For instance, if the RBI reduces the repo rate, the home loan interest rates will also go down for the borrowers.

Under repo-rate linked lending rates, a home loan borrower is not dependent upon the respective lending institution to decide the lending rate. It is automatically updated (on the first day of the month after the change) to be in line with the repo rate.

Salaried & Self Employed Interest Rate Table

Home Loan

Salaried Any Amount 6.90%* onwards
Self Employed Any Amount 6.90%* onwards

Home Equity

Salaried/Self Employed Any Amount 10.10% onwards

*Final ROI may vary based on credit checks, property & other parameters

 Searching the market for getting the right home loan interest rate is essential for reducing your costs. Housing loan interest rates will vary based on the different home loan schemes available for individual buyers, joint buyers, women, etc. You can use a free online home loan emi calculator to get a fair idea of the amount you are eligible to borrow as loan principal

Tata Capital Housing Finance Limited - Prime Lending Rates (PLR)

January 1st, 2019 17.45%
October 1st, 2018 17.15%
July 1st, 2018 16.85%
May 1st, 2018 16.65%
November 1st, 2015 16.50%
May 1st, 2015 16.65%
December 10th, 2013 16.75%
September 1st, 2013 16.65%
March 1st, 2013 16.40%
October 1st, 2011 16.50%
July 1st, 2011 16.00%
April 1st, 2011 15.50%
December 20th, 2010 14.75%
November 15th, 2010 14.25%
January 1st, 2009 13.75%

Home Loan Charges

If you’re considering taking a home loan to fund the purchase of your dream home, it’s important to be aware of basic terminologies and terms. Additionally, you must also learn about various loan charges such as processing fee, home loan prepayment charges, legal charges, etc. before you apply for a home loan. 

Processing Fee

Processing fee refers to the one-time charge levied by Tata Capital on borrowers for processing their home loan applications. The processing fee at Tata Capital is charged at the rate of 0.5% of the loan amount onwards + GST.


Foreclosure means repaying your loan EMI in a lump sum rather than in instalments. A borrower at times ends up repaying their loan amount before the end of their prescribed time limit. In such cases, home loan foreclosure or pre-closure charges will be levied by Tata Capital as a penalty for repaying the loan before the end of its term. No charges will be levied when you prematurely pay off your home loan with your own funds. However, if you pay off your home loan prematurely using someone else’s funds, Tata Capital will charge home loan foreclosure charges.

Delayed EMI Payments

Missing or defaulting on your home loan monthly instalments or EMIs will lead to EMI delay. This generally happens due to insufficiency of funds in your loan account. Delaying EMI payments can lead to penalties and will severely hamper your credit rating, in turn, causing trouble in all your future dealings and borrowings with other lending institutions.

In case of delayed EMI payments, a charge at the rate of 2% over the prevailing rate of interest will be applicable for the period of delay.

There could be cases where the entire principal home loan amount is transferred to another bank extending lower home loan interest rates. In case of such balance transfers, home loan transfer charges will be levied. 


Collection Agency

Tata Capital may hire organisations that specialise in pursuing payments owed by businesses and individuals on actuals. Debt collectors operate on behalf of the party that is owed money and in return charge a fee which is usually a percentage of the total amount owed; this fee is usually charged on actuals. 

Legal Charges

Once a borrower submits the relevant property documents required for loan sanction on actuals, these documents are sent for legal verification. T