Muthoot Finance Home Loan Interest Rate

Muthoot Finance home loan interest rate varies for different types of applicants and starts from just 12.5% p.a. The interest rate differs for salaried, self-employed professionals and self-employed non professionals.


About Muthoot Finance Group

When you talk of gold loans, the first name that usually comes to mind is Muthoot Finance. This financial conglomerate has made a name of itself in the industry on the sheer strength of their dedication, hard work, and commitment towards excellence. The Muthoot Group has a rich family legacy dating back to more than 800 years. The group had extremely modest beginnings when the late Shri Ninan Mathai Muthoot set up a trading business in a nondescript remote village in Kerala. That which started a modest trading house has now blossomed into a financial behemoth providing an array of financial services. It includes home finance, personal loans, gold loans, foreign exchange business, vehicle finance, and so on. The list can go on.

You can also Check for Rs. 35 Lakh Home Loan EMI

Muthoot Finance India Limited

Muthoot Finance India Limited is the housing finance arm of the famous Muthoot Group. It is registered with the National Housing Bank, the regulatory body for home finance companies in India. The company started in Kerala and soon spread to almost all the major cities in India. The company caters to all kinds of individual housing finance requirements. Muthoot Finance India Limited offers Home Loans to salaried persons as well as self-employed individuals. There are products available for purchase and construction of houses and flats. Similarly, Muthoot Finance India Limited provides financial assistance for home improvement, extension, and acquisition of plots, as well.

Additional Info: Also Apply for Home Construction Loan

Why Choose Muthoot Finance India Limited?

Muthoot Finance India Limited (MHIL) prescribes simple home loan eligibility norms and has a well-defined interest rate structure. The terms and conditions are straightforward and transparent. Documentation is easy, and the company offers convenient finances up to 50 Lakhs. The attractive rates of interest make this company one of the most favoured when it comes to home finance company a viable alternative to nationalised and private bank.

Check for 50 lakh home loan EMI and apply easily on MyMoneyMantra.

Muthoot Finance Home Loans Interest Rate

MHIL offers both fixed and floating rates of interest to its Home Loan customers.

Floating Rate of Interest

The floating rate of interest is connected to MHIL Retail Prime Lending Rate (RPLR). The applicable rate of interest on the individual Home Loan will vary because of different factors. They include the loan amount, nature of the property, loan-to-value or LTV ratio, occupation of the borrower, and the credit rating. This rate will vary from time to time, as MHIL revises and resets the RPLR at regular intervals. Every change in the RPLR will bring a corresponding change in the Home Loan interest structure. The MHIL RPLR links to the market rate scenario and may, therefore increase or decrease depending on the interest rates in the market. These rates include the repo rate announced by RBI, the treasury bills rate, and other external benchmark rates. MHIL updates the RPLR on the official website of Muthoot Finance India Limited from time to time.

Fixed-Rate of Interest

As the name suggests, the fixed rate of interest is a scenario where the interest rate on the specific Home Loan does not change for the entire tenure of the loan. This rate considers various factors like the ones discussed above. As it is a fixed rate, it also must account for the fluctuations that the market could experience in the future. Therefore, the fixed-rate comes with a premium over the floating rate of interest. It is invariably higher than the floating rate of interest at the time of entering into a Home Loan contract with the borrower.

Combination Rate of Interest

Muthoot Finance Home Loan offers a combined rate of interest where the interest rate remains fixed for a specific pre-determined period. Subsequently, it converts to a floating rate of interest. Such a scenario is beneficial to the customer, as well as to the company. The customer does not have to be burdened with a high fixed rate of interest when the market trends are favourable. Similarly, the company also benefits if the market rates decide to move up and above the fixed rate of interest.

Option for conversion or switch over

Customers have the option of switching over from one home finance scheme to another by paying a conversion fee.

Additional Info: LIC Housing Finance Home Loan

Muthoot Finance India Limited - Rate of Interest Structure

The floating interest rate structure of Muthoot Finance India Limited begins from 12.5% per annum onwards. Factors that decide the Home Loan interest rate include:

  • The amount of loan
  • The occupation of the borrower
  • The nature of security on offer
  • The value of security
  • The credit history of the borrower

Additional Info: Best Home Loan Interest Rates @8%

Muthoot Finance India Limited - Mode of Interest Calculation

Partially disbursed cases: In the event of partial disbursement of the Home Loan, the interest is calculated on a simple interest basis every month. This interest is referred to as the Pre-EMI. The Pre-EMI is payable every month from the date of the first disbursement up to the commencement of EMI.

Fully disbursed cases: Once the Home Loan disbursement is complete, the borrower must start repaying the loan through equated monthly instalments. The Home Loan interest is calculated on the monthly reducing balance. The EMI comprises of two components, the interest repayment and the principal amount repayment component. The EMIs are usually due for payment between the 5th and the 10th day of every month. The repayment is through post-dated cheques, electronic fund transfers, or the ECS method.

Also Check - Muthoot Finance Home Loan EMI Calculator

Muthoot Finance India Limited - Prepayment charges 

Floating rate of interest Home Loans: The Reserve Bank of India has made it clear that housing finance companies should not charge any foreclosure penalty on floating rate of Home Loans of individual borrowers. Hence MHIL does not charge any penalty on foreclosure or prepayment.

However, in the case of plot loans, the company charges prepayment or foreclosure penalties as detailed below:

  • No prepayment charges if the payment is made within three years from the date of initial disbursement.
  • After three years, any prepayment made into the account entails a penalty of 2% of the amount paid if the borrower has not constructed the house.

A fixed-rate of interest Home Loans: There is no prepayment charge or penalty if the borrower repays the loan from his/her sources. However, if the repayment is through borrowings or balance transfer, there is a prepayment penalty of 2%.

In the case of plot loans, the rules are the same. There is no prepayment penalty on prepayment of plot loans from the own sources of the borrower. Borrowings from third parties will attract a prepayment penalty. In case of prepayment after three years from the date of initial disbursement, prepayment will attract penalty if the borrower does not construct the house.

Additional Info: Also check AnyRoR Gujarat Land Record

Muthoot Finance India Limited - PMAY

MHIL is an active lender in PMAY or Pradhan Mantri Awas Yojana, as it has a sizeable presence and influence in rural pockets of our country, especially in the state of Kerala and the neighbouring southern states. As a prominent member of the National Housing Bank, MHIL is eligible for NHB refinance, as well. Considering the shortfall of housing units in the EWS and LIG category, MHIL focuses on these segments in PMAY. The rates of interest on PMAY Home Loans are the same that apply to the regular Home Loan product. However, there is an element of interest subsidy in PMAY. The treatment of this grant is critical towards determining the EMI amount for the borrower.

Category of borrowerEconomically Weaker SectionLow-Income GroupMiddle Income Group-IMiddle Income Group-II
Maximum annual family income 3 Lakhs 6 Lakhs 12 Lakhs 18 Lakhs
Maximum loan amount eligible for a subsidy 6 Lakhs 6 Lakhs 9 Lakhs 12 Lakhs
Rate of subsidy6.50%6.50%4.00%3.00%
The maximum amount of allowance 2.67 Lakhs 2.67 Lakhs 2.35 Lakhs 2.30 Lakhs

PMAY subsidy is an upfront subsidy that is credited to the loan account of the borrower immediately on receiving it from the Government. It reduces the principal repayment liability, whereby the EMI reduces considerably.

Hence, the borrower benefits in two ways:

  • Reduction in the EMI
  • Upfront credit of subsidy

Additional Info: Also check How to Apply for Pradhan Mantri Awas Yojana

Muthoot Finance India Limited - Home Loan Interest Tax Benefits

The IT Act 1961 (Income Tax Act) allows individuals to avail concessions and benefits in income tax under Sec 24 and Sec 80C.

Interest repayment: Sec 24 of the Act deals with tax concessions available due to repayment of Home Loan interest. Everyone can claim annual income tax exemption up to  2 Lakhs on the repayment of the interest component of his/her Home Loan.

Principal repayment: Sec 80C of the Act provides the individual to claim tax rebates on the repayment of the Home Loan principal amount up to a ceiling of  1.50 Lakhs per annum.

Additional Info: Also check Home Loan Tax Benefit

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Muthoot Finance Home Loan Interest Rates FAQs

✅ How does Muthoot Finance India Limited arrive at the Home Loan interest rate?


Muthoot Finance India Limited links its Home Loan interest rate to its Retail Prime Lending Rate. The RPLR is, in turn, connected to market rates. Therefore, it can pass on the benefits of market fluctuations to its customers.

✅ Does Muthoot Finance India Limited have an MCLR or RLLR concept?


Muthoot Finance India Limited is not a bank. Hence, it does not have the MCLR or RLLR concept. It is a non-banking home financing company. The MHIL RPLR has links with market-related rates.

✅ What are the factors that affect the Muthoot Finance India Limited Home Loan interest rate?


Apart from the market-related rates like the repo rate and the T-bill rates that affect the RPLR, other factors weigh in, as well. These factors include the credit history of the borrower, Home Loan amount, the loan tenure, and the occupation of the borrower.

✅ What types of interest rates does Muthoot Finance India Limited offer?


Muthoot Finance India Limited offers both floating and fixed rate of interest Home Loans. The floating rate of interest on MHIL Home Loans is less than the fixed rate. Muthoot Finance India Limited also offers a combined rate of interest that has fixed rate tenure for a pre-determined period followed by a floating rate.

✅ What are the benefits of a floating rate of interest Home Loan?


A floating rate of interest Home Loan comes with various benefits. The borrower gets the advantage of market rate fluctuations. If the market rates go down, the RPLR decreases, thereby reducing the effective Home Loan interest rate. Secondly, there are no foreclosure or prepayment penalties for borrowers opting for a floating rate of interest on Home Loans.

✅ Are there any demerits of a floating rate of interest Home Loan?


The only demerit is that the effective rate of interest could go up when the market rates move in the reverse direction. It could result in the payment of a higher EMI.

✅ Which of the two rates is beneficial to borrowers, fixed or floating?


The floating rate of interest is considerably higher than the fixed interest rate. Hence, it is beneficial under circumstances where the market rates remain stagnant or move downward. If the market rates move up, the rate of interest increases, as well. Overall, the floating rate is a better option.

✅ Will the EMI increase in the event of the interest rates moving upward?


The EMI should increase with an increase in the Home Loan interest rates. However, Muthoot Finance India Limited prefers to maintain the EMI constant while extending the loan tenure accordingly. It is to reduce the burden of payment of additional EMI on the part of the borrower.

✅ Which is the better choice for the borrower, an increased EMI or an extended loan tenure?


It depends on the disposable income on the hands of the borrower. If the borrower has enough income, the increase in the EMI is a better option. An extended tenure increases the overall payment that you pay throughout the tenure.

✅ How do I check out the EMI stipulated by Muthoot Finance India Limited?


Customers can visit the official webpage of MyMoneyMantra and avail the services of the EMI calculator. On entering the loan amount, the rate of interest, and the repayment tenure, you get the EMI instantly.