Home Loan in India: Eligibility, Interest Rates & How to Apply

Owning a home is a huge achievement in everyone's lives. Considering today’s competitive and evolved lending models and solutions, one can easily apply for home loan that is affordable and transparent, without letting it affect their lifestyle siginificantly. The most important thing is to understand how interest rates, EMIs, and loan tenures all work.

Why Interest Rates Matter in Home Loans

After you take a home loan, the interest rate is the amount of money you will be paying on top of the initially borrowed amount. Lenders decide this rate based on the repo rate and other market conditions. The current repo rate (as of September 2025) stands at 5.50%. Financial institutions usually add a margin over this while lending you the funds. The smallest change in the interest rate can save you a significant amount of money over the loan period. 

Understanding the Bigger Picture with EMIs

The EMI you’ll be paying on the loan is not just for the amount you borrow; it also includes the interest you’ll be paying on that. A longer tenure may be easier on your budget, but it increases the total repayment towards the end. However, while a shorter tenure means higher monthly EMIs, it helps you become debt-free faster and reduces the total cost of borrowing.

How Prepayments Help Lighten Burden

One of the smartest things you can do is to make prepayments to reduce the overall cost of your home loan. A prepayment is when you pay a lumpsum amount over and above your EMI. People usually consider prepayment when they have extra money, like a bonus, salary hike, or an investment maturity. The earlier you make these prepayments, the bigger the impact because most of the interest on your loan gets charged in the initial tenure of your loan. So, by getting rid of the principal early, you reduce the total interest you’ll pay in the long run.

Steps to Get the Best Home Loan Deal

Steps to keep in mind when you apply for home loan:

1. Compare interest rates- Compare rates from different financial institutions to make sure you’re getting the best deal possible.
   

2. Eligibility- Lenders look at income, age, and credit score. A score above 700 means your chances of getting a loan at favorable interest rates are pretty good.
   

3. Choose the right tenure- You need to balance affordable EMIs with lower overall interest to help sustain the lifestyle you’re currently living in.
   

4. Additional costs-  Costs like processing fees, insurance, and other charges should be part of your calculation when getting a home loan.
   

5. Plan prepayments early- Even small prepayments in the first 3–4 years can save you a lot of money in interest.

Interest rates play a huge role in how affordable your home loan is. A small difference of 0.5% in rates can cost you a lot of money over the loan period, and prepayments, even in small amounts, reduce years off your loan and can help you cut costs. Before you apply for a home loan, compare your financial institutions, check your credit score, and plan a repayment strategy that fits your lifestyle. Choose reputed financial institutions like PNB Housing Finance to ensure that your borrowing and repayment journey is stress-free.