SBI (State Bank of India), India’s largest lender, has reduced its loan interest rates by 0.25%. Following this decrease, SBI home loan interest now starts at 8% annually. This reduction is attributed to lower repo rates, as the RBI announced a cut from 6.7% to 6.0%. Several government-owned banks have already decreased their interest rates on FDs (fixed deposits) and loans. Compared to other banks, SBI offers much cheaper interest rates on home loans. Here is what you need to know.
Interest Rates of Home Loans by 4 Government Banks:
- SBI: Starts from 8.00%
- Bank of India: Starts from 8.10%
- Punjab National Bank: Starts from 8.50%
- Indian Bank: Starts from 8.60%
Interest rates before and after
You may think it’s a fraction of a difference in the interest rate, but a small reduction of just 0.25% can make a noticeable difference in your home loan EMI and total repayment. For a ₹20 lakh loan over 20 years, lowering the interest rate from 8.25% to 8.00% reduces the monthly EMI from ₹17,041 to ₹16,729, saving ₹312 for you every month. Over the entire loan period, this adds up to a total saving of ₹75,003.
In the same way, for a ₹30 lakh loan over the same tenure, the EMI drops from ₹25,562 to ₹25,093 with the same rate cut, resulting in monthly savings for you of ₹469 and a total interest saving of ₹1,12,504.
3 Things to Keep in Mind While Taking a Home Loan:
1. Always check prepayment penalty details
If you want to repay your home loan early for any reason, you need to be aware of penalty charges. Banks are clever; their main goal is to earn interest, regardless of when you repay, so they strategically include penalties in their terms and conditions. If overlooked, you are obliged to pay what’s asked. When signing the papers, read the terms and conditions carefully.
2. A goof CIBIL score
Banks will definitely review your credit history to gain a clear understanding of your financial management and timely loan repayment. This process is necessary if you are taking out personal or home loans. Expert credit profiling agencies determine the CIBIL score of an applicant.
The CIBIL score is calculated from 300 to 900; 700 or above is considered good. Factors such as past loans, credit usage, repayment history, bill payments, or EMIs on time are usually examined to give a score. Get your CIBIL score checked before you seek any loan.
3. Compare offers before deciding
It is important to note that banks run special offers for loan seekers, from time to time. Before finalizing, compare your options from all banks to find the best one for you. Taking a loan in a hurry could cost you more in the long run. Choose wisely after comparing.