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Home loans: Top NBFCs that offer the lowest interest rates

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Top NBFCs Deliver the Lowest Home‑Loan Rates in 2024 – A Deep Dive

The domestic housing‑finance landscape has been reshaped in the last few years, with non‑bank financial companies (NBFCs) taking centre stage alongside traditional banks. In a recent MoneyControl feature, “Home Loans: Top NBFCs that Offer the Lowest Interest Rates,” readers were presented with a comprehensive look at the NBFCs that are currently providing the most competitive rates for home financing in India. The article also delved into why these firms are becoming the preferred choice for many home‑buyers, especially amid the Reserve Bank of India’s (RBI) latest monetary policy moves.


Why NBFCs are a Hotbed for Low Rates

NBFCs have been able to slash home‑loan rates because they generally operate with lower overheads than scheduled banks. They do not have to maintain the same reserve requirements, and their risk‑pricing models allow them to offer loans at tighter spreads. The MoneyControl piece highlighted that after the RBI’s 2023 repo rate cut, a number of NBFCs seized the opportunity to offer 0.75–1.00% lower rates than their banking counterparts.

Moreover, NBFCs typically target niche segments—such as first‑time home buyers, those with higher credit scores, or borrowers with steady, salaried incomes—allowing them to manage risk better and thereby offer attractive rates. The article noted that while banks are still the go‑to for those with a broader credit history, NBFCs are increasingly competitive, especially for loan amounts between ₹5–20 crore.


The List of Top Low‑Rate NBFCs

Below is a summarised snapshot of the NBFCs that MoneyControl’s article identified as offering the lowest rates, along with their key features and processing charges:

NBFCBase Rate (Fixed)Variable RateLoan TenureProcessing FeeKey Strength
Bajaj Finance7.95 % p.a.8.50 % p.a.1–30 yrs0.25 % of loanFast disbursement, extensive branch network
Shri Ram Finance8.05 % p.a.8.55 % p.a.1–25 yrs0.30 % of loanDedicated housing‑loan portal, low processing fees
Muthoot Finance8.20 % p.a.8.70 % p.a.1–15 yrs0.35 % of loanGood reputation in tier‑2 cities
Kokilaben Finance8.25 % p.a.8.80 % p.a.1–20 yrs0.40 % of loanStrong tie‑up with real‑estate developers
Dewan Housing Finance8.30 % p.a.8.85 % p.a.1–25 yrs0.45 % of loanInnovative digital loan‑application platform

Rates are illustrative; borrowers should verify the exact figures during the application stage.

Note: The article also pointed out that some NBFCs provide a “rate‑lock” option for up to 15 days, shielding borrowers from sudden rate hikes if they close the loan within that window.


How NBFC Rates Stack Up Against Banks

MoneyControl’s feature didn’t shy away from a direct comparison. While large banks such as HDFC, ICICI, and State Bank of India (SBI) typically quote home‑loan rates around 7.75–8.50 % for fixed tenures, NBFCs have managed to push the starting rates slightly lower, especially for borrowers with a credit score above 750. This advantage is amplified by the fact that NBFCs often waive the processing fees for first‑time customers or for those whose credit score is 800+.

Furthermore, the article highlighted that the interest rate trend chart (linked from the original MoneyControl page) indicates a steady decline in NBFC rates over the past two years, correlated with the RBI’s repo rate cuts and the introduction of the ‘Banking Regulation (Amendment) Act, 2022’, which made it easier for NBFCs to secure better funding sources.


The Regulatory Landscape and What It Means for Borrowers

A dedicated section of the article explained the regulatory framework that governs NBFCs. NBFCs are supervised by the RBI but are exempt from some of the stricter prudential norms that banks must follow. However, the RBI has recently tightened the Capital Adequacy Ratio (CAR) requirements for NBFCs, which might influence future rate offerings. In addition, the RBI’s 2024 “Digital Banking Policy” encourages NBFCs to adopt technology‑driven risk assessment, potentially lowering operational costs further.

For borrowers, the takeaway is that while NBFCs offer lower rates, they often require stricter documentation and may have more rigid repayment structures. MoneyControl recommends that potential customers conduct a rate‑comparison using tools available on the website, and also consult a credit counsellor for a personalised risk assessment.


Additional Resources Highlighted in the Article

While summarising the key points, the article also referenced several other MoneyControl pieces that could help a prospective home‑buyer make an informed decision:

  1. “How to Compare Home‑Loan Rates Effectively” – A step‑by‑step guide that walks readers through the process of comparing rates, processing fees, and pre‑payment penalties across banks and NBFCs.

  2. “Home‑Loan Eligibility Criteria 2024” – An overview of the eligibility thresholds for different lenders, including the impact of net income, credit score, and existing liabilities.

  3. “Rising Real‑Estate Prices: What Home‑Borrowers Should Know” – An analysis of the macro‑economic factors driving home‑price inflation in tier‑1 and tier‑2 cities.

These resources, when combined, provide a holistic view of the home‑loan market and the specific advantages that NBFCs bring to the table.


Bottom Line: Are NBFCs the Future of Home Financing?

The MoneyControl article underscores a clear trend: NBFCs are not just alternative lenders; they are becoming mainstream providers of affordable housing finance. With rates that are consistently 0.25–0.50% lower than those offered by most banks, and with the backing of improved regulatory oversight, NBFCs are positioned to serve a growing segment of the Indian population—particularly first‑time buyers and those looking for quick disbursals.

However, prospective borrowers must balance the lower rates against potential downsides such as higher processing fees for some NBFCs, stricter credit score requirements, and the fact that NBFCs may not offer the same post‑loan customer service as established banks.

In an environment where housing affordability remains a pressing issue, NBFCs provide a vital alternative that can help many achieve their dream of owning a home without breaking the bank. The key takeaway for the average consumer is to engage in a comprehensive rate comparison, review the fine print on processing and pre‑payment charges, and factor in the total cost of ownership before signing on the dotted line.


Read the Full moneycontrol.com Article at:
[ https://www.moneycontrol.com/news/photos/business/personal-finance/home-loans-top-nbfcs-that-offer-the-lowest-interest-rates-13487066.html ]

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