SBI gives option of moving to new rate regime for home loan borrowers
SBI offers a special discount of 0.05% on interest rates for women borrowers Interest rates on home loans have dropped drastically after the RBI slashed repo rate to 4% since the Covid-19 outbreak
State Bank of India (SBI) has given a choice to its existing home loan borrowers to modify over to the present rate of interest linked to repo rate. For this a customer has got to pay a 1-time switchover fee plus GST. Current SBI home equity credit interest rates are within the range of seven to 7.35% supported external benchmark rate (EBR), which is linked to order Bank of India's (RBI) repo rate. Any change in repo rate will change the EBR. SBI offers a special discount of 0.05% on interest rates for ladies borrowers. Interest rates on home loans have dropped drastically after the RBI slashed repo rate to 4% since the coronavirus outbreak.
How do EBR linked loans work?
Interest rates on home loans offered by banks are now linked to an external benchmark. RBI had asked all scheduled commercial banks, local area banks and little finance banks to link interest rates on retail and MSME loans to an external benchmark rate.
SBI has announced special offers on home loans for borrowers. Making the announcement through a tweet, the general public sector lender said that homebuyers applying for loans will get three benefits- nil processing fee, 0.10% interest concession for borrowers having a better Cibil score for loans above 30 lakh and fewer than 1 crore, and a further 0.5% concession if applied through SBI's Yono app.
SBI has reduced the MCLR (marginal cost of lending rate) reset frequency for loans from one year to 6 months. "Enjoy the advantages of a discount within the rate of interest without expecting a year. SBI has reduced the MCLR reset frequency from 1 year to six months," SBI tweeted.
How do MCLR linked loans work?
If the house loan is linked to MCLR based rate of interest, then the EMI amount changes only on the reset date of the house loan. for instance, if the reset date of your home equity credit is August, and therefore the bank revises its MCLR in February, then the impact of it is often felt on your EMI only in August. Currently, SBI's one-year MCLR stands at 7% and six-month MCLR stands at 6.95%.