New Delhi: For many people, buying a house is the biggest dream of life. There are several benefits of buying a house. A house not only provides a roof over the head but is also an asset. Most home buyers purchase a home by taking a home loan. Apart from the loan, there are other expenses involved in buying a home. Banks do not finance the entire cost of the house. For this, the Reserve Bank has fixed the Loan to Value Ratio (LTV) i.e. what percentage of the property price you will get as loan. If the value of the property is Rs 30 lakh and less, 90 percent of the property value will be considered; if the property value is between Rs 30 to 75 lakh, 80 per cent is eligible. However, if the property value is more than Rs 75 lakh, a home loan can be up to 75 percent.
In the case of loan, apart from LTV ratio, many other factors like the person’s income, repayment capacity i.e. ability to repay the loan, age, job stability and credit score etc. are also considered. Let’s take a look as the home loan interest rate of State Bank of India (SBI), Punjab National Bank (PNB), and Bank of Baroda (BoB).
SBI home loan interest rate
SBI offers home loan interest rates ranging from 9.15% to 9.75% based on the borrower’s CIBIL score.
Bank of Baroda home loan interest rate
Bank of Baroda provides home loan interest rates in the range of 8.40% to 10.90%.
PNB home loan interest rate
PNB home loan interest rates range from 9.4% to 11.6% depending on factors such as the borrower’s CIBIL score, loan amount, and tenure. For example, the lowest rate of 9.4% is offered to borrowers with a CIBIL score of 800 and above for loans exceeding Rs 30 lakh with a tenure of up to 10 years.
These varying interest rate options allow borrowers to choose between stability and potential savings based on their financial preferences and market conditions.
Types of Home Loan Interest Rates
In India, there are three primary types of home loan interest rates, though the first two are most commonly used.
1. Fixed Interest Rate:
This type of interest rate remains unchanged throughout the loan tenure, ensuring stability in monthly payments. It provides predictability, shielding borrowers from fluctuations in interest rates and financial uncertainties in case of rate increases. However, if market interest rates decrease, borrowers do not benefit as their fixed interest rate remains constant.
2. Floating Interest Rate:
Under this arrangement, the home loan interest rate fluctuates according to the prevailing market rates set by the bank. This rate is influenced by factors such as the Reserve Bank of India’s monetary policy, changes in interest rates, and the bank’s response to these factors. Opting for a floating rate allows borrowers to potentially benefit from lower interest rates if they decrease. Conversely, in cases of rate hikes, borrowers may face higher interest costs.
3. Base Rate/MCLR Linked:
This is another type where the home loan interest rate is linked to the bank’s Base Rate or Marginal Cost of Funds Based Lending Rate (MCLR). However, these are less prevalent now with the introduction of external benchmark-linked rates mandated by the RBI.
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SBI, PNB, Bank of Baroda Home Loan rate: In the case of loan, apart from LTV ratio, many other factors like the person’s income, repayment capacity i.e. ability to repay the loan, age, job stability and credit score etc. are also considered. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
