If you are thinking of buying a house, there is good news for you. Many banks have reduced the interest rate on home loans. State Bank of India has announced a 0.25% reduction in the external benchmark index in the new year, bringing its home loan rate down from 8.05% to 7.80%. The new rate has come into effect from today.
In Budget 2019, the government had already announced home loan seekers would get Rs 1.5 lakh more of rebate (make it a Rs 3.5 lakh rebate now) in tax on affordable housing loans.
On 1 October 2019, on the instructions of the Reserve Bank (RBI), more and more banks chose the repo rate as an external benchmark. Now onwards, a home loan will become cheaper immediately when the repo rate decreases.
Banks can choose the external benchmark rate to a spread of 2.65% of the repo rate. Currently, the repo rate is 5.15%. A bank offers loans at different interest rates to the salaried class and business people.
|Salaried class||Salaried class||Business class||Business class|
|Bank||RLLR No.||From (%)||To (%)||From (%)||To (%)||With effect from|
|Syndicate Bank||5.15||7.85||8.15||7.85||8.20||1 Nov|
|Punjab National Bank||7.80||7.95||8.70||5 Oct|
|Central Bank of India||8.00||8.00||8.30||10 Oct|
|United Bank of India-EBLR||7.85||8.00||8.15||1 Nov|
|Oriental Bank of Commerce||7.95||8.00||8.55||5 Oct|
|Canara Bank||8.05||8.05||10.05||7 Nov|
|UCO Bank||8.05||8.05||8.05||5 Oct|
|Bank of India||8.00||8.10||8.40||8.10||9.00||10 Oct|
|Corporation Bank||7.90||8.10||8.35||15 Nov|
|Bank of Baroda||8.15||8.15||9.15||1 Dec|
|Andhra Bank||8.10||8.15||9.30||1 Nov|
|United Bank of India-RLLR||7.70||8.15||8.15||1 Nov|
|Union Bank of India||8||8.20||9.35||11 Oct|
|Bank of Maharashtra||8.20||8.20||8 Oct|
|SBI Term Loan||8.05||8.20||8.35||8.55||8.70||1 Oct|
|Indian Overseas Bank||8.00||8.20||8.45||1 Nov|
|Indian Bank||7.95||8.20||8.45||8.30||8.55||1 Nov|
|IDBI Bank||8.25||8.25||8.60||8.35||8.80||12 Oct|
|SBI Max Gain||8.05||8.45||8.80||8.60||8.95||1 Oct|
|Axis Bank||5.15||8,55||9.20||8.65||9.40||2 Nov|
|Federal Bank||5.15||8.55||8.65||8.60||8.70||16 Oct|
|ICICI Bank||5.15||8.60||8.95||8.75||9.10||4 Oct|
|Karur Vysya Bank||7.95||8.65||12.50||7 Oct|
Syndicate Bank, Allahabad Bank, Axis Bank, Federal Bank and ICICI Bank have an RLLR (Repo Linked Lending Rate) of 5.15%.
The RLLR is highest in IDBI Bank (8.25%) followed by Bank of Maharashtra (8.20%), Bank of Baroda (8.15%) and Andhra Bank (8.10%).
|Tenure||5 years||10 years||15 years||20 years||25 years|
|@8%||Rs 2,028||Rs 1,213||Rs 956||Rs 836||Rs 772|
|@10%||Rs 2,125||Rs 1,322||Rs 1,075||Rs 965||Rs 909|
|@12%||Rs 2,224||Rs 1,435||Rs 1,200||Rs 1,101||Rs 1,053|
|@15%||Rs 2,379||Rs 1,613||Rs 1,400||Rs 1,317||Rs 1,281|
Use this table to calculate your loan affordability by multiplying the EMI that applies to the number of lakhs worth of your borrowing. For example, if you seek a loan of Rs 10 lakh, which you will repay in 10 years in 15 years at a rate of interest of 12%, your EMI amount will be 10 x Rs 1,435 = Rs 14,350.
If you are applying for a home loan, an amount of 1 lakh will attract different interests for 5 years, 10 years, 15 years and 20 years. The graph above explains how much annual interest will be charged at different periods according to the different rate of interest on a loan of one lakh.