Complete Mortgage Guide — India

How Mortgages Work in India

The RBI’s repo rate is the primary benchmark for mortgage rates in India. Since October 2019, all new floating-rate home loans must be linked to an external benchmark — most lenders use the RBI repo rate, making rate transmission more direct. When the RBI cuts the repo rate, home loan rates now adjust within a quarter, unlike the old MCLR/base rate systems where transmission was slower

Use our mortgage calculator to see how different rates and terms affect your monthly repayments.

Types of Mortgages Available

Home loans in India come in floating rate (linked to repo rate, adjusting quarterly), fixed rate (locked for 1-3 years or the full term — less common and typically more expensive), and hybrid/semi-fixed (fixed for 2-5 years then floating). The floating-rate repo-linked home loan is by far the most common product. Home loans can be taken for purchase, construction, renovation, extension, or plot purchase. Balance transfer loans allow switching to a lender offering a better rate

Read our mortgage types comparison for a detailed side-by-side analysis of each product.

How Much Can You Borrow?

Banks assess your EMI-to-income ratio, typically ensuring the proposed EMI plus existing EMIs do not exceed 50-60% of net monthly income. Your CIBIL score (credit score) is critical — a score above 750 gets the best rates, while below 650 may result in rejection. Both salaried and self-employed borrowers are eligible, with different documentation requirements

The maximum loan-to-value in India is Up to 90% for loans up to ₹30 lakh, 80% for ₹30-75 lakh, and 75% for loans above ₹75 lakh (RBI guidelines). Some lenders offer top-up loans in addition to the main home loan. Stamp duty and registration charges must be paid from own funds and are not included in the loan amount. Loan terms extend up to Up to 30 years, with 15-20 years being most common. Maximum term is often limited by the borrower’s age at maturity (typically 60-65 for salaried, 65-70 for self-employed). Longer terms reduce EMI but significantly increase total interest paid.

The Application Process

Start by checking your CIBIL score (free annually from cibil.com). Apply online or at a branch with ID proof (Aadhaar, PAN), address proof, income proof (last 6 months payslips and Form 16 for salaried; last 3 years ITR, P&L, and balance sheet for self-employed), bank statements (last 6-12 months), and property documents. The lender conducts a technical and legal evaluation of the property. Sanction typically takes 1-2 weeks. Disbursement happens at registration

Costs and Fees

Processing fees range from 0.25% to 1% of the loan amount (often negotiable or waived during promotions). Prepayment and foreclosure of floating-rate loans carry zero penalty for individual borrowers (RBI mandate). Fixed-rate loans may carry prepayment penalties of up to 2%. Legal and technical evaluation fees of ₹5,000-15,000 are charged by most lenders. MODT (Memorandum of Deposit of Title Deed) or mortgage registration charges apply depending on the state

What Makes India’s Mortgage Market Unique

India’s home loan market offers significant tax benefits that effectively reduce the cost of borrowing. Section 24(b) provides a deduction of up to ₹2 lakh per year on interest paid for a self-occupied property. Section 80C offers up to ₹1.5 lakh deduction on principal repayment. For first-time buyers, Section 80EEA previously provided additional deductions. The zero prepayment penalty on floating-rate loans (RBI mandated) gives borrowers exceptional flexibility to make extra payments or foreclose early without any cost

Refinancing Your Mortgage

Home loan balance transfer is straightforward and free of penalties for floating-rate loans. If another lender offers a lower rate, you can transfer your outstanding balance at zero cost (the new lender often covers processing fees during promotions). Compare the total savings over the remaining tenure against any switching costs. Even a 0.25-0.50% rate reduction can save lakhs over 15-20 years. Use online comparison platforms like BankBazaar, PaisaBazaar, or MyLoanCare to compare current rates

Read our refinancing guide for a step-by-step walkthrough.

Government Schemes and Support

Pradhan Mantri Awas Yojana (PMAY) provides credit-linked subsidy on home loan interest for economically weaker sections and lower-income groups. The subsidy of up to ₹2.67 lakh is credited upfront to the loan account, reducing the effective EMI. Check eligibility on the PMAY portal. Additionally, state-specific schemes like the Maharashtra Housing and Area Development Authority (MHADA) offer affordable housing through lottery systems

Check our government grants guide for the latest programmes and eligibility details.

Tips for Getting the Best Deal

Always negotiate the processing fee — most banks will reduce or waive it. Maintain a CIBIL score above 750 for the best rates. Use the balance transfer option actively — check competing rates annually and switch if the differential exceeds 0.25%. Choose the shortest tenure you can afford to minimise total interest (a 15-year loan costs roughly half the total interest of a 30-year loan). Make prepayments whenever possible — even ₹50,000-100,000 extra per year can save lakhs in interest and shave years off the term

Next Steps

Use our mortgage calculator to model different scenarios, read our property buying guide for the full purchase process, or browse India FAQs for quick answers.