The public sector banks, PSUs as they are lovingly known now, have finally taken the bait.

Interest rates on home loans up to Rs 5 lakh have been reduced to 8.5 per cent and rates on home loans ranging between Rs 5 lakh and Rs 20 lakh have been reduced to 9.25 per cent.

What's more, to make these loans even more attractive these PSUs have decided to waive off pre-payment charges, in case you want to repay the entire loan in small amounts every year.

Additionally, they will not charge you any processing fees on your home loan application and life insurance will come free for loans ranging between Rs 5 lakh and Rs 20 lakh.

Also, you will be required to bring in only 10 per cent down payment if you are going for a home loan of less than Rs 5 lakh and 15 per cent if you are taking a loan of less than Rs 20 lakh.

However, enquiries done by rediff.com with PSUs like Bank of India and Bank of Baroda's customer care executives revealed that these banks will take a couple of days before the new interest rate regime will set in.

Nevertheless, here's a lowdown on how the provisions above will change your home loan calculations.