HDFC Ltd continues to provide the lowest rates on home loans by the largest home finance companies. HDFC pegs its lowest rate on home loans at 6.95%, which compares favourably with the lowest home rates being offered by banks. As of August 27, around 10 large banks offer home loans at rates which are at 7.00 or lower. However, HDFC is the only large non-banking or home finance company offering a rate under 7% to the eligible borrowers.
In the table, we can see some of the lowest rates from home finance companies. The best rates are currently under 9% while only two lenders provide home loans under 8%. These rates are the lowest rates only which are reserved for eligible borrowers, according to BankBazaar.
To be eligible for the lowest home loan rates, the borrower must meet the lender’s eligibility criteria which consists of parameters such as home size, loan-to-value ratio, gender, source of income, age, credit score, and any other parameter decided by the lender.
While banks offer a large variety of credit products, home finance companies focus largely on providing home loans. They often become the go-to option for borrowers for various reasons. Home finance companies are known for easier and hassle-free paperwork, providing higher loan-to-value to borrowers, and having relaxed norms on credit scores which allow borrowers with lower scores an opportunity to seek home finance, informs BankBazaar.
Home loans from HFCs are normally linked to the Prime Lending Rate whereas it’s now the repo rate which is the preferred home loan benchmark rate for banks. Currently, PLR-linked rates are seen to be higher than repo-linked rates. Therefore, borrowers with good credit scores and income eligibility may be better off seeking the lowest available rates. Borrowers with higher loan-to-value requirements can approach non-banking lenders.
