Sbi Home Loan: You get these interest rates according to your credit history

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Home loans are flexible, less onerous than the need to accumulate excess cash, and are time-based too. In addition, there are also tax benefits in repaying home loans. Remember, investing in a home is like investing in an asset that could have one of the highest future rates of appreciation.

Earlier this week, SBI said via its Twitter account: “#GoAhead, #GoBig. Get your dream home with SBI Home Loans.”

SBI offers home loan interest rates as low as 6.65%. However, home loan interest rates depend on the borrower’s creditworthiness. Female borrowers will be the largest beneficiaries of SBI’s home loans.

SBI has introduced a credit-related interest rate for home loans. In addition, the interest rates are variable and linked to the repo rate.

From April 1, 2022, SBI will offer different types of home loans at interest rates ranging from 6.65% to a maximum of 8.60%. But the biggest beneficiaries are regular home loans.

However, as mentioned earlier, how much EMI you pay on your home loans depends on your credit rating.

Here’s how your credit score affects your EMIs on SBI’s regular home loans.

CIBIL score:

Less than or equal to 800 Credit Score: SBI offers the lowest interest rate of 6.65% on regular home loans at this CIBIL score. The maximum profit is up to 7.05%.

750-799 credit rating: The lender offers an interest rate of 6.75% as a term loan while the maximum gain is up to 7.15%.

700-749 Credit Score: The regular home loan interest rate here starts at 6.85% while the maximum yield is 7.25%.

650-699 credit rating: The bank gives 6.95% as a term loan, with a maximum return of 7.35%.

550-649 credit rating: The bank gives an interest rate of 7.15% on regular home loans, while the maximum return is 7.35%.

No CIBIL Score: Then the regular home loan interest rate at SBI is 6.85%, while the maximum gain is 7.25%.

From the above, it can be said that a higher credit rating means better odds of getting the lowest home loan interest rates and therefore cheaper EMIs.

There are many benefits that SBI offers for its home loans as well.

First, the bank grants 5 basis points to female borrowers, subject to a maximum EBR of 6.65%.

Second, the bank adds a 10 basis point premium to the card deck for loans up to 30 lakh for LTV > 80% and

Third, top-up loans are not eligible under the overdraft category below 20 lakhs and up 2 crores. Also, the interest rate on a top-up loan should not be less than the interest charges on the underlying home loan.

SBI offers interest rates ranging from 7.05% to 7.65% for top-up loans, while overdraft rates in this category range from 7.35% to 7.95%.

In addition, it must be noted that the maximum winning opportunity is only available for properties that are ready to move into.

Also, Privilege & Shaurya HL & Apon Ghar HL offers a 5 base point discount if the payroll account is held at SBI as part of the payroll package.

Loans linked to repo rates:

Simply put, repo-rate linked lending means that any decision by the RBI on India’s political repo rate impacts the cost of borrowing for homebuyers.

If the benchmark interest rate is raised, this could lead to a rise in home loan interest rates or vice versa. However, it depends on the banks whether they pass on the change in interest rates to borrowers. There is also the possibility that banks will not necessarily adjust lending rates to the exact extent of the repo rate change.

The repo rate can be referred to as the “buyback option” or “interest rate” that a bank must pay to borrow from the central bank. Just as borrowers have to pay interest on their loan amount to banks, banks also pay interest on drawing funds to the RBI. Banks park their Treasury bills or gold with the central bank for overnight credit during the liquidity crunch period.

In the first bimonthly monetary policy, the RBI left the repo rate unchanged at 4% for the 11th consecutive month. The MPC also decided to remain accommodative while focusing on unaccommodating to ensure future inflation remains on target while supporting growth.

ICRA said in its April 2022 monetary policy research note: “We continue to expect the change in stance to be followed by a flat rate hike cycle, with the repo rate increasing by 25 basis points in August and September 2022. Annual G-sec yield broke 7.1% following the political announcement. We expect it to rise to as much as 7.4% in the first half of fiscal 2023 as market views on the number and timing of rate hikes emerge.”

What is a credit score?

Creditworthiness is crucial for the loan approval. They are a three-digit scoreboard that provides a clear view of a borrower’s credit-related health.

The CIBIL score provides information about how well a borrower is handling their loan. This also gives a clear understanding of borrowers’ ability to make credit decision-making decisions.

Simply put, a credit score helps to understand whether you’re a reliable or a risky borrower, and banks penalize loans to those borrowers accordingly.

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