How is the home loan interest calculated?

The interest rate you receive is set by the lender based on internal policies and market conditions. To calculate the total housing loan interest you will need to pay on your home loan, you can use a home loan interest calculator . This helps you compute your EMIs and the total cost of your loan. Here are some pointers on how to calculate interest for a home loan: Know your interest rate : Understand the interest rate set by your lender. This could be a fixed rate or a floating rate linked to a benchmark such as the repo rate or MCLR. Determine the loan amount : Decide on the principal amount you are borrowing for your home loan. This is the initial amount before interest. Select the loan tenure : Choose the duration over which you'll repay the loan. This affects the total interest payable. Longer tenures typically result in higher interest payments. Use an EMI calculator : Utilise a home loan EMI calculator available online or provided by your lender. Input the loan amount, interest rate, and tenure to compute your Equated Monthly Installments (EMIs). Understand EMI composition : Realize that each EMI consists of both principal and interest components. Initially, a larger portion goes towards interest, with the principal repayment gradually increasing over time. Compute total interest payable : Multiply the total number of EMIs by the monthly installment amount to find the total amount repaid over the loan tenure. Then subtract the principal amount borrowed to determine the total interest paid. Consider additional charges : Account for any processing fees, prepayment charges, or other fees associated with the loan. These can impact the overall cost of borrowing. By following these steps and using a reliable home loan interest calculator, you can accurately estimate the total interest payable on your home loan and plan your finances accordingly.

Which other external benchmarks do lenders use to set home loan interest rates?

India’s apex bank – the Reserve Bank of India (RBI), identified the following external benchmarks for commercial banks to follow. RBI policy repo rate Government of India 3-Months Treasury Bill yield published by the Financial Benchmarks India Private Limited (FBIL) Government of India 6-Months Treasury Bill yield published by FBIL Any other benchmark market interest rate published by FBIL

Home Loan Interest Rates: Starting @ 7.99%* p.a. (June 2025)

Bajaj Finserv offers home loans with competitive interest rates starting from 7.49%* p.a., enabling you to secure financing for purchasing, constructing, or renovating your home. With EMIs as low as Rs. 687/lakh*, you can plan your repayments effectively.

Current home loan interest rates

The interest rate for a new home loan is the percentage charged by the lender on the borrowed amount, which can be either fixed, remaining constant over the loan term, or floating, varying with market conditions.

Floating interest rates:

Borrowers Type	Floating Interest Rate
For salaried applicants	7.49%* to 17.00%* p.a.
For self-employed applicants	7.85%* to 17.00%* p.a.

Fixed interest rates:

Borrowers Type	Fixed Interest Rate
For salaried applicants	Starting @ 7.49%* p.a.
For self-employed applicants	Starting @ 7.60%* p.a

Interest rate for home loan top up

The interest rate for a home loan top-up is typically similar to or slightly higher than the original home loan rate, and it can also be either fixed or floating, depending on the terms set by the lender. This rate reflects the cost of borrowing additional funds against the equity in the existing property.

Borrowers Type	Top-up Loan Interest Rate
For salaried applicants	8.55%* to 17.00%* p.a
For self-employed applicants	9.05%* to 17.00%* p.a

* The values in tables are subjected to change. To check the latest applicable interest rates click here.

Apply for a home loan online and get a step closer to fulfilling your dream of owning your house. Below are the floating interest rates for home loans and top up loans.

There are two types of home loan interest rates. Read on to get a detailed insight into both.

1. Fixed rate of interest

A fixed interest rate remains constant for the entire loan tenure. It allows you to estimate the total repayment liability and interest outgo at the beginning of the loan tenure. Availing of a home loan at a fixed rate of interest helps in planning repayment and managing finances efficiently.
A fixed lending rate on home loans is suitable during times when there is a possibility of an increase in interest rate in the future. However, a fixed rate of interest may not be suitable under circumstances that predict a decreasing trend in home loan interest.

2. Floating rate of interest

Unlike fixed rates, floating interest rates are variable and change over the loan tenure. Based on the benchmark rate linked to housing finance, the floating interest rate increases or reduces.

You can opt for a floating interest rate on home loans when the market changes indicate a trend of falling rates. A floating rate of interest, however, may not be suitable during high market volatility as the risk of rising rates exists and can result in increased interest accumulation over time.

Remember, fixed rates are usually 1–2.5% higher than floating interest rates. However, you can also switch from fixed to floating interest rate and vice versa during the loan tenure based on your requirements.

If you are considering purchasing your dream home or refinancing your existing loan to take advantage of better rates, Bajaj Finserv offers competitive home loan options with rates starting from 7.49%* p.a.. Check your eligibility for a Bajaj Housing Finance Home Loan today. You may already be eligible, find out by entering your mobile number and OTP.

Several factors affect the home loan interest, and it is important for you to learn about them as they impact how easily you can repay the loan. These factors also impact your EMIs as any change in interest rate is directly proportional to a change in the instalment amount you pay.

Type of interest rate

Home loan borrowers can opt for a floating rate during trends of falling market rates. Fixed rates, on the other hand, can be suitable when the lending rates are set to rise in the future.
Mixed rates of interest result in interest levied at a fixed rate at the onset of the home loan tenor and converted to floating rates after a set period.

Repo rate and other benchmark rate of lending

Benchmark lending rates can either be Marginal Cost of Funds based Lending Rate (MCLR) or Repo-Linked Lending Rate (RLLR). Financial institutions decide a reset period for MCLR for durations of 3 months, 6 months, 1 year, or 2 years across the home loan tenor and levy interest rates accordingly. RLLR is directly linked to the RBI’s repo rate and bears a quick adjustment with every change in the policy rates.

A reduction in the RBI’s key policy or repo rate and market competition pulls down the housing loan interest rate and vice versa.

The RBI has decided to phase out MCLR-based lending over time to introduce a more transparent and repo rate-receptive RLLR to offer affordability to customers and improve the overall financial system.

LTV or Loan-to-Value ratio

LTV is the maximum loan amount a lender extends to home loan applicants as a percentage of the property’s current market value. A high LTV, while bringing suitable financing value, also translates to a higher loan amount and increased risk of lending. This results in an increased home loan interest. Borrowers can increase their down payment amount to reduce the total loan amount for an affordable housing loan interest rate.

Property’s location and condition

The location of a property, its current condition, and amenities available determine its resale value. The age of a property also commands its resale prospects. A high resale value means a lucrative opportunity for financial institutions, incentivising them to offer lower interest rates to borrowers and vice versa.

Repayment tenure

The repayment duration of home loans is directly linked to the risk of lending for financial institutions and the time value for the money extended as advance. A borrower’s housing loan interest rate is thus set to be higher for a longer tenor and lower for a shorter period of repayment.

Home loan EMIs are inversely related to the repayment term, making instalments dearer for a short tenor, but keeping interest accumulation in check. On the other hand, a long tenor results in easy and affordable EMIs, but higher interest accumulation.

Applicant’s income and employment

The financial profile of an applicant also indicates the margin of risk a financial institution undertakes when lending. Salaried borrowers with a suitable job at a reputed organisation or self-employed individuals with stable income and a high credit score attract competitive interest rates as the risk involved is limited. Such applicants can also negotiate for an affordable interest rate to make repayment more convenient. Interest rates are usually higher for applicants with unstable income or job or a lower credit score as they pose a higher risk.

Credit score

A high credit score indicates a strong credit history and responsible financial behavior. Lenders view individuals with high credit scores as lower-risk borrowers. Consequently, borrowers with high credit scores are often eligible for lower interest rates on their home loans. On the other hand, individuals with lower credit scores may be considered higher risk, and lenders may offer them home loans at higher interest rates to compensate for the perceived risk.

Make sure to consider all these factors before applying for a home loan to secure the best interest rate.

Whether you have an excellent credit score or are working to improve it, Bajaj Finserv evaluates applications holistically to provide competitive home loan offers. With flexible eligibility criteria and attractive interest rates, you could secure favorable financing for your home purchase. Check your loan offers with Bajaj Finserv today. You may already be eligible, find out by entering your mobile number and OTP.

To repay affordably over the tenor of your home loan, you can put certain strategies into action. These will help you lower your interest rate or help you reduce your overall interest payment.

1. Select a short tenure for repayment

A shorter tenure keeps your interest accumulation in check as the interest rate is levied for a fewer number of years. In addition, a shorter repayment timeline helps you get a more affordable interest rate from the lender.

2. Opt for a balance transfer facility

A home loan balance transfer facility allows you to switch your loan to a financial institution offering a reduced home loan interest. This is the easiest way to get a lower rate, but ensure you do a cost-benefit analysis before going ahead and this does include some fees and charges.

The home loan refinancing facility from Bajaj Finserv also comes with high-value top-up loan that you can use without restrictions. If you are currently paying higher interest rates on your existing home loan, transferring to Bajaj Finserv could help you save significantly on interest payments while also accessing additional funds through their top-up facility. Check your eligibility for a home loan balance transfer with Bajaj Finserv. You may already be eligible, find out by entering your mobile number and OTP.

3. Request annual EMI revisions

You can also opt for annual EMI revisions with each increase in income or a salary hike as higher EMIs mean quick reduction of the outstanding loan liability. Early repayment of the principal also cuts down the loan tenor and helps reduce the total interest accumulation. You can ideally increase your EMIs by 5% with every 10% increment in income.

4. Prepay with surplus funds available

Prepayment is another useful facility to utilise for an overall reduction in your interest burden. Part-prepay your home loan at any time before the tenor ends with the amount you have available, be it as a salary bonus or returns on investment. Part-prepaying helps reduce the outstanding loan principal and limits the overall interest accumulation.

5. Adding a female co-applicant

Adding a female co-applicant to your home loan application can reduce the interest burden in several ways. The combined income of both applicants may increase eligibility and lead to better interest rates. It mitigates risk for lenders, especially if both applicants have good credit histories. Government schemes and incentives may favour joint applications, and tax benefits can be maximised with both individuals claiming deductions.

You can also choose to foreclose the loan altogether to cut down on any new interest accumulation on the outstanding principal. Bajaj Finserv extends part and full prepayment facilities on floating rate home loans at nil charges to increase your affordability.

Other ways to limit the interest outgo include making a higher down payment when borrowing, negotiating the rate with the lender, and documenting all sources of income to secure a competitive housing loan interest rate.

With Bajaj Finserv’s customer-friendly policies including zero foreclosure charges and flexible repayment options, you can save more on your home loan journey. Whether you are applying individually or with a co-applicant, our competitive rates and transparent fee structure make homeownership more affordable. Check your eligibility for a Bajaj Housing Finance Home Loan. You may already be eligible, find out by entering your mobile number and OTP.

Why should you choose the Bajaj Finserv Home Loan

Some of the reasons why you should choose Bajaj Finserv Home Loan include:

Interest subsidy under Pradhan Mantri Awas Yojana (PMAY)
High loan amount
Minimal documentation and easy-to-meet eligibility criteria
Long repayment tenures of up to 32 years
Easy refinancing with a substantial top-up
Zero part-prepayment and foreclosure fees
Pre-approved offers for hassle-free financing

Important Links: Home Loan Eligibility Criteria | Documents Required for Home Loan | Home Loan Balance Transfer | Joint Home Loan | Home Loan Tax Benefits

Here’s a step-by-step guide to apply for a home loan:

Click the 'APPLY' button on this page.
Provide your full name, mobile number, and employment type.
Choose the type of loan you want to apply for.
Generate and submit the OTP to verify your phone number.
After OTP verification, enter additional details such as your monthly income, the loan amount you need, and whether you have identified the property.
Next, enter your date of birth, PAN number, and any other details required based on your occupation type.
Click the ‘SUBMIT’ button.

And that’s it! Your application is now submitted. A representative will contact you to guide you through the next steps.

Bajaj Finserv app for all your financial needs and goals

Trusted by 50 million+ customers in India, Bajaj Finserv App is a one-stop solution for all your financial needs and goals.

You can use the Bajaj Finserv App to:

Apply for loans online, such as Instant Personal Loan, Home Loan, Business Loan, Gold Loan, and more.
Invest in fixed deposits and mutual funds on the app.
Choose from multiple insurance for your health, motor and even pocket insurance, from various insurance providers.
Pay and manage your bills and recharges using the BBPS platform. Use Bajaj Pay and Bajaj Wallet for quick and simple money transfers and transactions.
Apply for Insta EMI Card and get a pre-qualified limit on the app. Explore over 1 million products on the app that can be purchased from a partner store on Easy EMIs.
Shop from over 100+ brand partners that offer a diverse range of products and services.
Use specialised tools like EMI calculators, SIP Calculators
Check your credit score, download loan statements and even get quick customer support—all on the app.

Download the Bajaj Finserv App today and experience the convenience of managing your finances on one app.

Disclaimer

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Frequently asked questions

A home loan interest rate is the percentage charged by lenders on the loan amount borrowed to purchase a property. It determines the cost of borrowing and affects the monthly EMI payments. Home loan interest rates can be fixed or floating, impacting repayment schedules and overall loan costs.

The current home loan interest rate offered by Bajaj Finserv for salaried customers starts from 7.49%* p.a. onwards. To get a detail on interest rates, go through the interest rate table mentioned above.

The interest rate you receive is set by the lender based on internal policies and market conditions. To calculate the total housing loan interest you will need to pay on your home loan, you can use a home loan interest calculator. This helps you compute your EMIs and the total cost of your loan.

Here are some pointers on how to calculate interest for a home loan:

Know your interest rate: Understand the interest rate set by your lender. This could be a fixed rate or a floating rate linked to a benchmark such as the repo rate or MCLR.
Determine the loan amount: Decide on the principal amount you are borrowing for your home loan. This is the initial amount before interest.
Select the loan tenure: Choose the duration over which you'll repay the loan. This affects the total interest payable. Longer tenures typically result in higher interest payments.
Use an EMI calculator: Utilise a home loan EMI calculator available online or provided by your lender. Input the loan amount, interest rate, and tenure to compute your Equated Monthly Installments (EMIs).
Understand EMI composition: Realize that each EMI consists of both principal and interest components. Initially, a larger portion goes towards interest, with the principal repayment gradually increasing over time.
Compute total interest payable: Multiply the total number of EMIs by the monthly installment amount to find the total amount repaid over the loan tenure. Then subtract the principal amount borrowed to determine the total interest paid.
Consider additional charges: Account for any processing fees, prepayment charges, or other fees associated with the loan. These can impact the overall cost of borrowing.

By following these steps and using a reliable home loan interest calculator, you can accurately estimate the total interest payable on your home loan and plan your finances accordingly.

Yes. Lenders assess various factors, including your credit score and credit profile, before determining the interest rate against the home loan. This is because banks attach spread and credit risk premium to the EBLR while determining their home loan interest rates. If you have a high credit score, you will be seen as a risk-free borrower, and will be charged a lower credit risk premium. This translates to a lower home loan interest rate.

Yes, a high credit score can help secure a lower housing loan interest rate. Lenders view individuals with high credit scores as lower risk, which often results in more favorable interest rates and better loan terms.

If you have maintained a good credit score and are ready to purchase your home, Bajaj Finserv offers some of the most competitive rates in the market for eligible borrowers. Check your loan offers with Bajaj Finserv today. You may already be eligible, find out by entering your mobile number and OTP.

Lenders generally prefer a CIBIL Score of 725 or above when they are offering a loan. However, this depends on the financial institution and their eligibility criteria for offering the loan. It is advisable to maintain a CIBIL Score of 725 or above to benefit from the low interest rates.

The choice between a floating and fixed interest rate on a home loan depends on market conditions and personal preferences. While fixed rate home loans help you plan repayment more easily, they may not allow you to take advantage of lower interest rates due to market conditions. However, floating rates can also increase during your tenure. One of the main advantages of a floating interest rate is that it comes with zero charges on foreclosure or part-prepayment of your loan. So, borrowers should carefully consider their financial situation and choose whichever option suits them better.

Yes. You can switch from a fixed interest rate to a floating interest rate – and vice versa – during the loan term by paying a conversion fee to the lender. This conversion fee can range from 0.50% to 2% of the outstanding principal.

You can use a home loan EMI calculator to know your monthly EMI and the interest component over the life of the loan.

India’s apex bank – the Reserve Bank of India (RBI), identified the following external benchmarks for commercial banks to follow.

RBI policy repo rate
Government of India 3-Months Treasury Bill yield published by the Financial Benchmarks India Private Limited (FBIL)
Government of India 6-Months Treasury Bill yield published by FBIL
Any other benchmark market interest rate published by FBIL

In certain cases, home loans are disbursed in segments based on the stage of completion of the house’s construction. It might take a while before the lender disburses the entire amount. However, you are required to pay interest on the disbursed loan amount. This is known as the pre-EMI interest, and you must pay pre-EMI interest every month from the date of initial loan disbursement until the EMIs are paid in full.

Effective Interest Rate (EIR) = Base rate + Markup

Note: The Reserve Bank of India (RBI) replaced the base rate system with the Marginal Cost of Funds-based Lending Rate (MCLR) in April 2016. MCLR was brought in to provide more accountability and flexibility to how rates are published by financial institutions in the country. The country’s apex bank mandates commercial banks to analyse the risk factors associated with lending to borrowers before ascertaining interest rates.

MCLR also takes various factors into consideration, such as the repo rate, deposits, etc. The MCLR-based calculations are typically lower than base rate computations.

Home loan interest rates comprise two components – base rate and markup rate. The amount you pay to the lender will be a combination of these two rates. Let us take a closer look at them.

Base rate: The base rate refers to the standard lending rate set by the bank, which is applicable to all retail loans. It can be adjusted periodically by the bank based on various factors such as the cost of funds, operational expenses, and market conditions.
Markup rate: The markup rate is an additional percentage added to the base rate to calculate the effective interest rate (EIR) for a specific type of loan. The markup rate can vary depending on the type of loan, borrower's creditworthiness, and other factors determined by the lending institution.

You can get one of the lowest home loan interest rates in India at Bajaj Housing Finance starting at 7.49%* p.a. for salaried applicants and 7.85%* p.a. for the self-employed.

Yes, adding a co-applicant can potentially help you get a lower interest rate on your home loan. When you apply for a home loan, the lender assesses your creditworthiness based on various factors, including your income, credit score, and repayment capacity. By adding a co-applicant, you effectively combine the financial strength and creditworthiness of both individuals, which can positively impact your loan application.

Whether you are applying individually or with a co-applicant, Bajaj Finserv offers competitive home loan rates and flexible eligibility criteria to help you secure the best possible deal for your home purchase. Check your eligibility for a Bajaj Housing Finance Home Loan today. You may already be eligible, find out by entering your mobile number and OTP.