LIC Housing Finance Offers Cheaper Home Loan Than SBI: Check How Much You Can Save on EMI
With interest rates gradually easing, home loan borrowers have a fresh reason to cheer. After the Reserve Bank of India (RBI) reduced the repo rate by 0.25 percent on December 5, 2025, banks and housing finance companies across the country have started passing on the benefit to customers. Joining this list, LIC Housing Finance Limited has announced a reduction in its home loan interest rates, making its offer cheaper than even the country’s largest public sector bank, State Bank of India (SBI).
LIC Housing Finance Cuts Home Loan Interest Rates
LIC Housing Finance, a subsidiary of Life Insurance Corporation of India (LIC), has reduced its home loan interest rates to start from 7.15 percent. These revised rates came into effect from December 22, 2025. With this move, LIC Housing Finance is now offering one of the most competitive home loan rates in the Indian market, especially for borrowers with strong credit profiles.
This reduction comes at a time when demand for home loans is expected to rise, supported by lower interest rates and improving affordability. For many homebuyers, even a small difference in interest rates can translate into significant savings over a long loan tenure.
LIC vs SBI: How Big Is the Difference?
Currently, SBI is offering home loans starting at an interest rate of 7.25 percent, effective from December 15, 2025. Compared to this, LIC Housing Finance’s starting rate of 7.15 percent is lower by 0.10 percent.
At first glance, a difference of 0.10 percent may appear negligible. However, when applied to large loan amounts and long tenures, this gap can lead to meaningful savings in both monthly EMI and total interest paid over the loan period.
EMI Comparison on a ₹50 Lakh Home Loan
To understand the real impact, let’s compare the EMI and total repayment for a ₹50 lakh home loan taken for 20 years.
If a borrower takes a ₹50 lakh loan from LIC Housing Finance at an interest rate of 7.15 percent for 20 years, the monthly EMI would be approximately ₹39,216. Over the full tenure, the total interest payable would be around ₹44.11 lakh, taking the total repayment amount to about ₹94.11 lakh.
On the other hand, if the same loan is taken from SBI at an interest rate of 7.25 percent for 20 years, the monthly EMI would increase to roughly ₹39,519. In this case, the total interest paid over 20 years would be close to ₹44.84 lakh, and the total repayment would rise to around ₹94.84 lakh.
This means that by choosing LIC Housing Finance over SBI, a borrower can save about ₹303 every month on EMI. Annually, this saving comes to approximately ₹3,636, and over the entire 20-year tenure, the total saving adds up to nearly ₹72,720.
Small EMI Savings Can Create a Big Fund
What makes this saving even more interesting is its potential when invested wisely. If a borrower invests the monthly EMI saving of ₹303 in a Systematic Investment Plan (SIP) with an assumed annual return of 12 percent, the results can be impressive over the long term.
Over 20 years, the total invested amount would be ₹72,720. With compounding, the estimated returns could be around ₹2.05 lakh, taking the maturity value to approximately ₹2.78 lakh. This shows how small, consistent savings generated from a lower home loan EMI can grow into a substantial corpus over time.
Who Will Get the Lowest Interest Rate?
It is important to note that the starting interest rate of 7.15 percent is not applicable to all borrowers. LIC Housing Finance offers its lowest rates primarily to customers with a strong credit profile. Borrowers with a high CIBIL score, stable income, and sound repayment history are more likely to qualify for the best rates.
Applicants with lower credit scores or weaker income profiles may be offered higher interest rates. Therefore, before finalising a home loan, borrowers should carefully check their eligibility, credit score, and income documents.
Compare Before You Borrow
While LIC Housing Finance currently offers a cheaper home loan than SBI, experts advise borrowers to compare multiple lenders before taking a final decision. Apart from interest rates, factors such as processing fees, loan tenure flexibility, prepayment charges, customer service, and total loan cost should also be considered.
A well-informed comparison can help borrowers reduce their EMI burden and save several lakhs of rupees over the long term. With interest rates becoming more competitive, this could be an ideal time for homebuyers to secure a cost-effective home loan and plan their finances smartly.
