Lowest home loan EMI: These non-bank companies offer home loan interest rates starting at just 8%

Since the beginning of 2025, the Reserve Bank of India (RBI) has cut the repo rate by 1% (100 basis points), bringing cheer to home loan borrowers as the reduction has led to lower interest rates. Historically, banks have been the go-to option for housing loans, thanks to their strong reputation and established presence in the financial sector. However, in recent years, housing finance companies (HFCs) have emerged as notable competitors, demonstrating adaptability and reliability in lending practices. Individuals who are self-employed or have non-traditional income sources may find it difficult to meet the stringent requirements of banks. As a result, they are often attracted to HFCs, which typically offer more flexible eligibility criteria compared to traditional banks.

What are Housing Finance Companies (HFCs)?

According to Kotak Mahindra Bank’s website, “HFCs primary focus is providing housing loans or financing through various direct or indirect means. While they were initially regulated by the National Housing Bank (NHB), the responsibility of handling HFCs was transferred to the Reserve Bank of India (RBI) in 2019. However, certain regulatory powers remain with the NHB.

Also read: Home loan EMIs continue to fall: 7 banks cut home loan interest rates after RBI repo rate cut in June

Currently, housing finance companies in the country offer interest rates between 7.99% and 10% on home loans. These rates depend on factors such as the lender, credit score, and loan amount, among others.

Documents required to apply for home loan

Here are some basic documents to keep handy before applying for home loans, according to LIC Housing Finance’s website.
KYC documents

• PAN Card
• Aadhar card
• Proof of Residence
• For NRIs: You’ll also need to provide your passport

Income Documents

• For salaried applicants: Provide your salary slips and Form No. 16.
• For all applicants: Submit your bank statements for the last 6 to 12 months.
• For self-employed or professionals: Include your income tax returns for the last 3 years along with your financial statements.

Property documents

• Proof of Ownership: Documents showing that you own the property.
• For Flats: An allotment letter from the builder or society.
• Tax Receipt An up-to-date tax paid receipt for the property.

Public vs private banks: Which of these offers the cheapest home loans now after RBI’s 50 bps repo rate cut?

Important FAQs from PNB Housing every home loan borrower should know:

How do I benefit if the interest is calculated on the daily reducing balance method?
On the annual reducing balance method, you will continue to pay interest on amounts you repay during the coming one year as the interest for the year is determined on the basis of the balance outstanding at the beginning of the year.

In the case of the daily reducing balance, which is the methodology we employ, your interest is calculated only on the outstanding loan amount, which reduces every time you pay off your EMIs or make any prepayments. This, in essence, lowers your effective rate of interest significantly.

Can I get an in-principle approval and actually avail myself of the loan later?
Before you choose the house that you want to buy, we give you an in-principle approval based on your income and repayment capacity.
This makes the entire process of identifying and buying a house easier and more flexible. You won’t be under pressure to identify a house, as you know how much funds the bank would make available to you.

And how long is this approval valid?
This in-principle approval is valid for 6 months, giving you sufficient time to choose a flat/house of your choice.

What will be the repayment period of housing loan?
For construction/additions of house/flat/purchase of ready built house/ flat: The loan, along with interest, is to be repaid in equated monthly instalments (EMIs) within a period of 30 years inclusive of the moratorium period.
For carrying out repairs/renovation/alterations to the house/flat: The loan, along with interest, is to be repaid in equated monthly instalments within a period of 15 years, inclusive of the moratorium period, if any