IndusInd Bank Home Loan Interest Rates
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Loan Tenure

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Lowest EMI Per Lakh

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Prepayment Charges

Nil charges for floating rates loans

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About IndusInd Bank

IndusInd Bank was promoted in 1994 by a group of Non-resident Indians (NRI). After a series of mergers, acquisitions, and amalgamations, IndusInd Bank has become a mid-sized bank catering to various clients spread all over the country. One of the strengths of IndusInd Bank has been its positive approach towards technological development. IndusInd Bank has won numerous prizes and awards for introducing innovative technological products. The most recent award is the Times Now India Digital Awards 2019 for presenting the most innovative money transfer service/product in India.

IndusInd Bank Home Loans

IndusInd Bank offers a variety of loan products such as Home Loans, loans against property, personal loans, agricultural loans, and so on. IndusInd Bank Home Loan is a popular product in the banking circles in India. One of the salient features of IndusInd Bank Home Loans that attract customers is its transparency in delivery. The bank offers competitive rates of interest and has a solution for every housing requirement. IndusInd Bank provides PMAY loans to eligible borrowers.

IndusInd Bank Home Loans Interest Rate Concept

IndusInd Bank has not yet adapted to the external benchmark-linked lending rate as directed by Reserve Bank of India (RBI). It follows the existing MCLR, Base Rate, and BPLR interest structure.

External Benchmark Linked Lending Rate

RBI observed that banks were not prompt in passing on the benefits of the market rate cuts to the customers. It defeated the purpose of linking lending rates with the market rates. Therefore, it came up with a declaration that all banks in India should connect their advances interest rates with any one of the three external benchmark rates.

These rates are as follows:

  • Repo rates: Repo rate is the rate at which banks borrow from the RBI to meet its short-term liquidity concerns. It can be an overnight lending rate or a rate that could stretch for a short period.
  • Government three-month or six-month Treasury Bill rates published by FBIL (Financial Benchmarks India Pvt Ltd).
  • Any other benchmark rate published by FBIL

Some banks have already adapted to the 3-month T-bill rate from as early as January 2018. Indian commercial banks prefer to go with the repo rates because of their low volatility. It can serve as a benchmark rate for deposits, as well.

RBI has suggested that banks should switch over to the external benchmark linked lending rates by October 01, 2019. IndusInd Bank has yet to respond to this RBI directive.

Marginal Cost of Funds linked Lending Rate (MCLR)

IndusInd Bank follows the MCLR interest rate structure that is in force with effect from April 01, 2016. MCLR is also a market-related rate concept but has a tedious computation procedure.

It considers various factors like:

  • Marginal cost of funds
  • Tenor premium
  • Operating cost
  • CRR negative carry

Thus, MCLR is a combination of internal and external forces. The customer gets the benefit of market fluctuations. However, the drawback is that the banks do not reset the MCLR-linked rate of interest accordingly. Some of the banks reset the MCLR once a year. Under such circumstances, the customers do not enjoy the benefits if the MCLR decreases during the year.

Base Rate - BR

Banks followed the Base Rate concept before the introduction of the MCLR in 2016. The Base Rate was in force from July 01, 2010. The Base Rate is also a market-related rate but with various limitations.

Benchmark Prime Lending Rate - BPLR

Before the Base Rate concept, banks were following the BPLR rate structure. The BPLR was more of an internal rate structure mechanism. There could still be some accounts in IndusInd Bank in the BPLR regime. Therefore, IndusInd Bank announces its BPLR at regular intervals.

IndusInd Bank Home Loan Interest Rate Structure

  • BPLR of IndusInd Bank is 20.60% with effect from October 19, 2015
  • Base Rate of IndusInd Bank is 10.80% with effect from November 17, 2018
  • MCLR of IndusInd Bank is subject to change every month. The last revision in force is with effect from August 22, 2019:
Tenor Overnight 1-month 3-month 6-month 1-year 2-year 3-year

MCLR

9.10%

9.15%

9.45%

9.60%

9.65%

9.70%

9.75%

IndusInd Bank links its Home Loan and other loan interest rates with its 1-year MCLR. The rate applicable to individual borrowers depends on different factors like an internal and external credit rating. The occupation of the borrower is also a crucial factor that decides the rate of interest. Other factors include the loan amount, nature of security, and repaying capacity of the borrower.

  • The MCLR-linked interest rates for the regular Home Loan range between 1-year MCLR and 15% (between 9.65% and 15%)
  • The rate of interest for top-up facility ranges between 1-year MCLR and 17% (between 9.65% and 17%)

IndusInd Bank Home Loan - Schedule of Charges

Parameters Charges as applicable

Processing fees (Non refundable)

2% of the loan amount with a minimum amount of 5,000.

Stamp charges (Non refundable)

Applicable as per the Stamp Act and depends on the state laws.

Loan cancellation charges (Non refundable)

1,500 per case

Overdue interest

Up to 24% per annum compounded monthly

Collection charges in case of cheque returned

Local visit: 100 per instance

Upcountry visit: 250 per instance

No PDC/ Part PDC/ Collection/ Pull out/ Outstation PDC/ Bank Account Clousure, etc. - Collection charges

300 per instance

Charges for repayment dishonour - ECS/ Cheque/ SI

500 per instance

Swapping of PDC or repayment mode

500 per instance

Foreclosure charges

Floating rate loans: Nil

Other loans: 2% to 5% of the principal outstanding amount.

Duplicate NOC issuance charges

500 per NOC per instance

Statement of account charges

  • Statement of account: 200 per statement
  • Prepayment statement charges: 100 per statement.

IndusInd Bank Home Loan Interest - Repayment Mode

The ideal mode of repaying your IndusInd Bank Home Loan is the EMI or Equated Monthly Instalment.

One can pay the EMI in various ways:

  • Submitting post-dated cheques
  • Setting up an ECS mandate
  • Paying by cheque every month
  • Set up a standing instruction with IndusInd Bank
  • Internet banking

IndusInd Bank Home Loan Interest - Method of Calculation

IndusInd Bank calculates Home Loan interest on the daily reducing balance or the diminishing method. This method is the ideal one for the customer, as it gives credit for the EMI as and when the borrower pays the same.

IndusInd Bank Home Loan - PMAY Home Loan

IndusInd Bank is one of the member lending institutions under PMAY. The rate of interest of PMAY Home Loans is the same as applicable to other Home Loans. However, there is a concept of an upfront interest subsidy in eligible PMAY accounts. The bank credits the subsidy amount to the borrower's Home Loan account immediately on its receipt. Thus, the loan liability of the borrower reduces considerably. The EMI on the PMAY Home Loan is calculated on the principal loan amount outstanding after accounting for the subsidy.

Calculation of PMAY Subsidy

Every PMAY account is eligible for a subsidy. The subsidy amount depends on various factors.

Category of the Borrower

Each borrower is categorised into four groups depending on the annual family income level:

  • Economically Weaker Section: Annual family income up to 3 Lakhs
  • Low-Income Group: Annual family income in the range of above 3 Lakhs and up to 6 Lakhs
  • Middle-Income Group-I: Families having annual income more than 6 Lakhs and up to 12 Lakhs qualify as MIG-I.
  • Middle-Income Group-II: It comprises of families having yearly income higher than 12 Lakhs and up to 18 Lakhs.

Loan Amount Eligible for PMAY Subsidy

There is a difference between the loan eligibility of the borrower and the loan amount eligible for PMAY subsidy. The loan eligibility of the borrower depends on factors like income, obligations, and credit history. The loan amount available for PMAY subsidy has a restriction for each category of borrower.

  • EWS and LIG borrowers: 6 Lakhs
  • MIG-I and MIG-II borrowers: 9 Lakhs and 12 Lakhs respectively

The concept is such that this ceiling is the maximum amount of Home Loan up to which subsidy is calculated. Any loan over this amount is an unsubsidised loan.

The subsidy calculation is a complicated process. It involves calculating the Net Present Value (NPV) of interest method. One way of calculating the NPV is to use the MS Excel formulas. You would need the amortisation schedule of the Home Loan at the notional interest rate of 9% for calculating the subsidy. The schedule should be at least 20 years. Using this data, you can calculate the NPV of the future interest with the help of MS Excel formula. Alternatively, the ideal method to determine the subsidy amount is to use the PMAY subsidy calculator available on the official webpage of PMAY-Urban.

The Maximum Amount of Subsidy

The subsidy amount depends on the category of the borrower and the rate of allowance:

  • EWS and LIG: Rate of subsidy is 6.5% with a maximum of 2.67 Lakhs
  • MIG-I: Subsidy rate is 4%, and the maximum subsidy amount is 2.35 Lakhs
  • MIG-II: The rate of subsidy is 3%, and the maximum eligible subsidy amount is 2.30 Lakhs

Treatment of PMAY Subsidy

PMAY subsidy is an upfront subsidy that is to be credited to the loan account immediately on receiving the same from the Government. As a result, the principal liability of the borrower reduces considerably. It also results in the reduction in the EMI for the Home Loan. However, the bank charges interest on the Home Loan at the contracted rate on the outstanding amount.

IndusInd Bank Home Loan - Calculation of EMI

IndusInd Bank has an EMI Calculator on its website. Access the calculator and provide information like your loan amount, the rate of interest, and the loan repayment tenure. The EMI is available in an instant.

MyMoneyMantra helps you calculate your Home Loan EMI similarly.

IndusInd Bank Home Loan Interest Rates - Frequently Asked Questions

What is the interest rate spread on the IndusInd Bank Home Loan?

The interest rate spread on the IndusInd Bank Home Loan is in the range of 1-year MCLR to 15% for the regular Home Loan. In the case of a top-up loan, the range is between 1-year MCLR and 17%.

What are the factors that affect the individual Home Loan interest rate in an IndusInd Bank Home Loan?

The minimum interest rate applicable to any individual is the 1-year MCLR. IndusInd Bank has an internal credit rating mechanism to determine credit risk. It also calls for external credit reports from agencies like CIBIL. The occupation of the borrower and the regularity of income is another critical aspect that decides the rate of interest. These factors determine the spread on the interest rate.

Does IndusInd Bank offer a fixed or floating rate of interest on Home Loans?

IndusInd Bank offers both fixed and floating rates of interest on Home Loans. The customer can choose the mode at the time of loan approval. This aspect is also a defining one to determine the applicable rate of interest on the Home Loan. The fixed rate of interest is invariably more than the floating rate of interest at the time of deciding the same.

Does a salaried person have a benefit over the self-employed individual as far as Home Loan interest rates are concerned?

The occupation of the borrower is a crucial factor in deciding the interest rates. The salaried person has a regular source of income, whereas the self-employed individual has a fluctuating income. Therefore, risk perception is higher in the case of a self-employed person. It affects the premium over the 1-year MCLR. Hence, the interest rate for an independent person is higher than that of a salaried individual.

Do all salaried persons have the same rate of interest?

No, the interest rate for an individual loan depends on other factors such as credit rating and repaying capacity. The nature of the property and the loan amount is also a crucial aspect. Therefore, all salaried persons do not get the same rate of interest.

Is it possible to switch over from a fixed rate of interest to a floating rate and vice versa?

It is possible to switch from a fixed rate of interest to a floating rate on the payment of a conversion fee. The reverse switch is also permissible. Switching over from the BR and BPLR mode of interest calculation to the MCLR structure is also allowed. However, borrowers cannot switch over from the MCLR to the BR and BPLR.

Is there any penalty for foreclosure of my Home Loan with IndusInd Bank?

Individual borrowers who opt for the floating rate of interest on Home Loans can foreclose their Home Loans without incurring any penalty. Non-individuals are liable to pay penal charges in the range of 2% to 5% of the foreclosure amount. All borrowers in the fixed rate of interest category must pay a penalty of 2% to 5% of the principal amount outstanding on loan.

What are the different ways of charging interest on a Home Loan?

IndusInd Bank charges Home Loan interest on the diminishing balances. Thus, it follows the daily reducing balance method. Some of the private HFCs charge interest on the monthly reducing balances.

Which of the two methods is beneficial to the borrower?

The mode of charging interest on daily reducing balance method is beneficial as it accounts for all the credit that you make in the month. The monthly reducing balance does not account for the present month EMI as it calculates interest for the month based on the closing balance of the previous month.

Will IndusInd Bank opt for the external benchmark-linked interest rate for Home Loans?

Reserve Bank of India has confirmed that switching over to an external benchmark-linked rate of interest is compulsory for all banks before October 01, 2019. IndusInd Bank will introduce a housing loan product linked to such an external benchmark interest rate.  

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