If you’re planning to buy a home with the help of a loan, this could actually be a good time to do so owing to the low interest rates that are currently being offered.
The recent spate of repo rate cuts by the Reserve Bank of India (RBI) has resulted in floating home loan interest rates reaching record lows. The transmission of the lower rates has been quicker in the case of Repo-Rate Linked home loans (RLLR) compared to Marginal Cost of Lending Rate (MCLR) loans and Base Linked Rate (BLR) loans.
The RBI directed the banks in October 2019 to introduce an external benchmark-linked loan regime for faster transmission of the rate cut benefit to its customers. As a result, whenever the central bank revises the key policy rate, the repo-linked loans see a quick and proportional revision in the loan interest rates. Such revisions also impact the MCLR and BLR loan rates. However, loan subscribers have to wait much longer to enjoy the revised rate-cut benefits, according to BankBazaar.
So, if you’re planning to buy a home with the help of a loan, this could actually be a good time to do so owing to the low interest rates that are currently being offered. Also, if you’ve been servicing an MCLR or a BLR loan, you could consider moving to a repo-linked loan to enjoy lower EMIs whenever the central bank announces a cut in the key policy rate. Do note, however, that a repo-linked loan would also see a quick uptick in loan interest rates whenever the RBI increases the repo rate in the future. However, moving to a repo-linked loan regime could also lessen tens of EMIs, reduce the overall loan burden, and lead to faster clearing of debt.
That being said, do factor in loan transferring charges like the processing fee in your calculations. Also, “currently the repo-linked loans are only being offered by banks and not the housing finance companies. Most importantly, since the repo-linked loan rates also include a customer-risk spread, ensure you do not miss a single loan EMI or credit card payment to ensure you continue to enjoy the lowest offered rates,” informs BankBazaar.
Now, comparing your options lie at the heart of finding the best loan rates to reduce the overall interest component in a loan and saving more in the process. If you’re planning to take the plunge, you’ll find the below list of top 10 banks, including SBI and HDFC Bank, with the lowest home loan interest rates this week extremely useful:
Top 10 Banks With Lowest Interest Rates on Home Loans (%) This Week