A day after the Reserve Bank of India announces its monetary policy, SBI, the biggest bank of the country decided to cut down its interest rates. Hence, its home loans get cheaper and will not weigh down heavily on the borrowers. The revised interest rates on home loans will take effect on February 10, 2020. Notably this is the ninth time the bank is cutting down on the lending rates in this fiscal year.
Why do home loan interests come down?
The central bank of the country is the primary lender that lends money to different banks across the nation. In order to give room for more liquidity under a tight economy, the central bank’s interest rates come down. Also, the cutting down on the repo rates will see a cut in the rates of lending by different banks in the country. This situation brings in cheers for the borrowers as the burden of higher interest rate weighing on them will come down a bit when they subscribe to home loans.
Comparative rates of Home Loan Interests By Different Banks In February 2020
|Bank||Home Loan Interest Rates||Processing Fees Charged on Home loans|
|State Bank Of India||7.90% – 8.55% p.a.||Rs.2,000 – Rs.10,000|
|HDFC Limited||8% – 8.30% p.a||Up to 0.50%|
|ICICI Bank||8.60% – 9.40% p.a.||0.50% to 1%|
|PNB Housing Finance Ltd.||7.95% – 8.70% p.a.||Up to 1%|
|LIC Housing Finance Limited||8.40% – 8.50% p.a.||Rs. 10,000- Rs.15,000|
|Bandhan Bank||8.75% – 14.50% p.a.||1% of Loan Amount|
|Kotak Mahindra Bank||8.60% – 9.40% p.a.||up to Rs.10,000|
|Central Bank of India||8.00% – 8.55% p.a.||1%|
|Tata Capital||9.25% p.a.||2%|
|Indian Overseas Bank||8.20% – 10.95% p.a.||0.50%|
|Bank of India||8.10% – 8.40% p.a.||0.25%|
Home loans – what to know before borrowing
In February 2020, the RBI has kept the Repo rates unchanged and hence the repo rate continues to remain at 5.15%. Home loans re given on home purchase, home construction and home renovation. The property price and the repayment capacity will decide if you are eligible for a home loan.
As per the general practice, the builders sell their project under two categories namely time linked plans (TLP), construction linked plan (CLP). Usually, the banks come forward to fund the projects only under the CLP. Some housing finance companies fund projects under TLP and subversions schemes also. The maximum tenure of most home loans is 30 years. Statistics show that people pay back their home loans in an average period of 8 years.