A "low interest" loan shouldn't mean you have very little interest in paying it back!
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  • MCLR Rate is Rated as "Great!" by 25853 Users

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    MCLR Rate

    Individuals who have availed loans from lenders or banks before 1 April, 2016 will be paying the base rate and not MCLR. MCLR or marginal cost of funds based lending rate, when compared to the base rate compared, is seen to be lower by 5 to 50 basis points. This happens as the marginal cost of funds based lending rate is closely linked with the repo rate. Thus, there is better transmission of Reserve Bank of India’s rate cut to the borrower.

    MCLR Rates Offered By Top Banks:

    Bank Wise MCLR Rates (In %) -Nov'17
    Banks 3 years 2 years 1 year 6 months 3 months 1 month Overnight
    State Bank of India 8.10% 8.05% 7.95% 7.90% 7.85% 7.80% 7.70%
    HDFC Bank 8.40% 8.20% 8.10% 7.90% 7.85% 7.80% 7.80%
    ICICI Bank NA NA 8.20% 8.15% 7.90% 7.85% 7.85%
    Axis Bank 8.35% 8.30% 8.25% 8.15% 8.00% 7.80% 7.80%
    PNB 830% NA 8.15% 8.10% 8.00% 7.90% 7.75%
    Citibank NA NA 8.10% 8.15% 8.10% 8.10% 7.90%
    Indusind Bank 8.95% 8.90% 8.85% 8.80% 8.55% 8.25% 8.20%
    Kotak 8.60% 8.60% 8.60% 8.30% 8.10% 7.70% 7.70%
    Yes Bank NA NA 8.85% 8.55% 8.25% 7.95% 7.80%
    RBL 9.40% 9.30% 9.25% 9.20% 9.10% 9.05% 8.95%
    DBS NA NA 8.30% 8.10% 8.00% 7.90% 7.90%
    IDFC 8.70% 8.60% 8.50% 8.25% 7.90% 7.90% 7.85%
    Bank of India NA NA 8.30% 8.25% 8.10% 8.00% 7.70%
    Andhra Bank NA NA 8.40% 8.30% 8.20% 8.15% 8.10%
    Allahabad Bank 8.70% 8.65% 8.45% 8.35% 8.25% 8.05% 7.95%
    Nainital Bank 9.00% 8.65% 8.35% 8.20% 8.10% 8.05% 8.05%
    Lakshmi Vilas Bank NA NA 9.30% 9.25% 9.25% 9.25% 9.25%
    Jammu and Kashmir Bank 9.05% 9.00% 8.80% 8.40% 8.05% 7.90% 7.65%
    Bank of Maharashtra NA NA 8.65% 8.55% 8.20% 8.15% 8.10%
    Canara Bank NA NA 8.45% 8.40% 8.30% 8.25% 8.20%
    Central Bank of India NA NA 8.30% 8.25% 8.20% 8.10% 7.80%
    Bandhan Bank 10.74% 10.61% 10.20% 10.12% 10.11% 10.07% 10.05%
    United Bank of India NA NA 8.60% 8.45% 8.20% 7.95% 7.90%
    Union Bank of India 8.30% 8.25% 8.20% 8.05% 7.95% 7.90% 7.70%
    UCO Bank NA NA 8.45% 8.35% 8.15% 8.00% 7.90%
    Punjab and Sind Bank MCLR 8.85% 8.85% 8.40% 8.20% 8.10% 8.00% 8.00%
    Dena Bank NA NA 8.25% 8.20% 8.10% 8.05% 8.05%
    Federal Bank NA NA 8.90% 8.80% 8.70% 8.65% 8.60%
    South Indian Bank NA NA 9.00% 8.45% 8.15% 8.00% 7.90%
    Standard Chartered 9.05% 8.90% 8.55% 8.50% 8.45% 8.40% 8.05%
    Deutsche Bank NA NA 9.25% 9.00% 8.50% 8.00% 7.75%
    BNP Paribas 8.25% 8.00% 8.00% 7.65% 7.30% 7.30% 7.30%
    Corporation Bank NA NA 8.65% 8.60% 8.20% 7.90% 7.90%
    Indian Bank 8.55% NA 8.35% 8.25% 8.15% 8.05% 8.00%
    Karnataka Bank NA NA 8.75% 8.40% 8.35% 8.30% 8.25%
    Dhan Laxmi Bank NA NA 9.80% 9.65% 8.90% 8.85% 8.85%
    DCB Bank NA NA 9.72% 9.52% 9.05% 8.80% 8.60%
    City Union Bank NA NA 9.25% 9.15% 9.10% 9.05% 9.00%
    IDBI Bank 8.70% 8.60% 8.55% 8.35% 8.30% 8.10% 8.00%
    Syndicate Bank NA NA 8.45% 8.25% 8.10% 8.05% 8.00%
    OBC NA NA 8.40% 8.30% 8.25% 8.20% 8.10%
    Indian Overseas Bank 8.60% 8.50% 8.40% 8.20% 8.10% 8.05% 8.00%
    Karur Vysya Bank NA NA 9.00% 8.80% 8.65% 8.65% 8.65%

     

    What Is MCLR?

    MCLR (marginal cost of funds based lending rate) is the lowest interest rate that a bank or lender can offer. Most banks cannot offer HOME LOAN interest rates lower than the marginal cost of funds based lending rate. However, certain exceptions can be made when allowed by the Reserve Bank of India (RBI).

    Difference Between MCLR And Base Rate
    Difference Between MCLR And Base Rate

    The MCLR is a reference rate or internal benchmark for the financial institution. Marginal cost of funds based lending rate defines the process used to determine the minimum home loan rate of interest. The MCLR method was introduced in the Indian financial system by the Reserve Bank of India in the year 2016. The MCLR system has replaced the base rate system that was introduced in the year 2010. Thus, renewal of credit limits and sanctioning of loans is done as per MCLR norms.

    Aims Of MCLR:

    • Improving transmission of the policy rate into lending rates of the banks.
    • Bringing in transparency in the method followed by various banks for the determination of interest rates.
    • Ensuring the availability of bank loan at rates that fair to both lenders and borrowers.
    • Enabling the lenders and banks to be competitive and improve their worth in the long run.

    What Is MCLR Rate In Home Loan?

    MCLR is closely linked with the repo rate and fund costs of the banks. Thus, if there is a change in the repo rate, it will have an impact on your home loan’s floating rate of interest. If a bank brings down the marginal cost of funds based lending rate, the floating rate of interest associated with your home loan also comes down. This will not be affecting your equated monthly instalments but the tenure of the loan will get impacted.

    Difference Between MCLR And Base Rate

    MCLR Base Rate
    • MCLR or marginal cost of funds based lending rate has been introduced so that end borrowers can enjoy the benefits associated with repo rate cuts by the Reserve Bank of India (RBI). This has been implemented to make banking system even more transparent.
    • MCLR depends on factors like CRR (Cash Reserve Ratio), marginal cost of funds, tenor premium, and operating cost.
    • It is dependent on the repo rate changes made by the RBI.
    • Marginal cost of funds based lending rate can be different for different loan tenures.
    • The minimum rate of interest at which banks offer loan to their customers is called the base rate.
    • Base rate depends on different factors like profit, bank deposit rates, bank costs, etc.
    • It is not dependent on the repo rate set by the Reserve Bank of India.
    • Banks can choose to change the base rate quarterly.

    How to calculate MCLR?

    In order to calculate the marginal cost of funds based lending rate, you must consider all the borrowing sources for a bank. A bank borrows from several sources including, fixed deposits, current accounts, savings accounts, etc. The rate of interest in these borrowing sources can be used by you for the calculation of marginal borrowing cost. You must understand that the source of a bank’s funds is not only borrowing, but also the equity (retained or infused earnings). Thus, return on equity can also be expected.

    The formula prescribed by the Reserve Bank of India for calculation of MCLR is given below:

    Marginal cost of funds = Marginal borrowing cost x 92% + return on the net worth x 8%

    Banks must also maintain a cash reserve ratio of 4%. On this deposit, no interest is earned by the bank. Under MCLR, banks can avail some allowance called Negative Carry on CRR. Also, the operating costs must be considered and taken care of. There are several expenses of a bank that includes raising funds, opening branches, paying salary to its employees etc. These are not charged to the customers. Finally comes the discount or tenor premium. The reset period for the interest rate is called the tenor. It is directly proportional to the reset period i.e. the tenor is higher if the reset period is higher.

    Thus, MCLR depends on

    1. Tenor premium,
    2. Operating costs of the bank,
    3. Negative carry on Cash Reserve Ratio, and
    4. Marginal cost of funds.
    Impact of MCLR on your Home Loan
    Impact of MCLR on your Home Loan

    How To Convert Base Rate Home Loan To MCLR?

    The decision to switch to MCLR from base rate depends majorly on the actual benefits and the transfer cost. Various banks charge differently for this switch. However, there are certain banks that allow you to convert home loan to MCLR without charging anything.

    Example: Consider you have borrowed an amount of Rs.40 as home loan and you intend to repay it over a tenure of 20 years. The base associated with your home loan stands at 9.95%. After a period of three years from the commencement of the loan tenure, you would have paid an amount of Rs.38,468 as your monthly instalments. You have also paid an interest amount of Rs.11,63,514. If you choose to continue on the same path with your base rate, you will be paying a total interest of Rs.52,32,428. However, if you choose you switch to MCLR for your home loan at 8.55% for the remaining tenure (17 years in this case), you will be paying an interest of Rs.34,00,396. This is the amount that you pay for 17 years. So, the total interest that you pay for your home loan is (Rs.11,63,514 + Rs.34,00,396) which comes up to Rs.45,63,910. It shows that you save a substantial amount of Rs.6,68,518 by switching to MCLR from base rate.

    So, a spending a few thousand for converting to MCLR from base rate can reward you a hefty sum in the long run.

    Impact Of MCLR On Home Loans:

    MCLR is associated with floating rate home loans only. In case the home loan that you opted for comes with fixed rates of interest, MCLR will not affect the home loan. Change in repo rate will decide whether you gain or lose with the MCLR. The home loan interest is following a downward trend currently. So, it can prove to be beneficial to switch to MCLR if you are planning to purchase a house.

    RBI Guidelines About MCLR:

    • Fixed rate home loan will not be affected by MCLR.
    • Deposit balances and other borrowings are considered while computation of marginal cost of funds.
    • Banks must publish marginal cost of funds based lending rate for different tenors.
    • MCLR as on the sanction date of the floating rate home loan will stand the same till next reset date.

    News about MCLR Rate

    • Syndicate Bank Further Cuts MCLR

      The MCLR of Syndicate bank has been revised further to 8.45%. Earlier standing at 8.50%, there has been a cut of 5 basis points in the MCLR.

      With this, Syndicate bank has reduced MCLR by 30 basis points this fiscal year alone becoming one of the lowest lending rates in the industry.

      29th November 2017

    MCLR Reviews

    • Tata capital Home Loan
      "Average service"
      0.5 3.0/5 "Satisfactory"
      My home loan experience with TATA CAPITAL was average, the process was very long and it took 3 months for the process to be completed and the loan amount to get approved. The loan amount was for Rs 36 lakhs with the rate of interest of 14% which is nominal when compared to other banks and the tenure of the loan is 12 years. There were too many terms and conditions. Customer service was average and documents were collected door step.
      Was this review helpful? 2
      , hyderabad
      Reviewed on Dec 09, 2017
    • ICICI Bank Home Loan
      "Good service"
      0.5 3.0/5 "Satisfactory"
      I have taken home loan with ICICI bank and it was a good loan experience, the loan amount was for Rs 36 lakhs with the rate of interest of 8.65% which is nominal when compared to other banks. The tenure of this loan is 20 years. Customer service was good, they provided door step service to collect the documents. The process was quite long and it took 1 month for the loan amount to get disbursed.
      Was this review helpful? 0
      , thane
      Reviewed on Dec 09, 2017
    • DHFL Home Loan
      "Charges and interest rate to be better"
      0.5 3.0/5 "Satisfactory"
      The service was faster with DHFL Bank for the home loan. But rate of interest was high compared to the marked standard. The processing fee was normal. But insurance fee was high, they provided a insurance for me as well as for my home which was not required. The customer service and response is good.
      Was this review helpful? 0
      , kolkata
      Reviewed on Dec 09, 2017
    • SBI Home Loan
      "Faster service"
      0.5 5.0/5 "Blown Away!"
      Earlier SBI have offered 8.5% interest rate and later it was changed around 11%. It is a floating account for home loan. Whenever rate of interest decreases they should decrease the amount and there should be proper intimation. The process was faster and the disbursement was on time. The payment mode is convenient.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Dec 09, 2017
    • Axis Bank Home Loan
      "Looking for better interest rate"
      0.5 4.0/5 "Great!"
      I have home loan with AXIS, I availed it before five years. At the time they offered me 10.5% of interest, recently they have revised the rate of interest around 9.5%. I took the home loan of Rs. 13 lakhs for the tenure of 20 years, everything is good but interest rate is higher.
      Was this review helpful? 2
      , chennai
      Reviewed on Dec 08, 2017
    • Indiabulls Home Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I have taken a home loan with Indiabulls.The loan amount is 25 lakhs,rate on interest is 9.65% very high compared to others.I pay an EMI of Rs 25,000 every month.They had processed the loan request within a month.I submitted documents and the tenure is for 20 years.
      Was this review helpful? 1
      , noida
      Reviewed on Dec 08, 2017
    • review Home Loan
      "Rate of Interest is high"
      0.5 3.0/5 "Satisfactory"
      I took this second Home Loan with Aadhar Finance, and the experience with it has been okay. They gave Rs.8.18 Lakhs and their process of getting the Loan was smooth. They are charging a Interest Rate of 13.99% which I feel is quite high. The overall experience has been alright.
      Was this review helpful? 2
      , junagadh
      Reviewed on Dec 07, 2017
    • SBI Home Loan
      "Good Loan"
      0.5 5.0/5 "Blown Away!"
      I took this Loan as a Co-applicant with my Father. The process of getting the Loan was very slow, the documentation process was a little confusing. Their Rate of Interest of 8.45% is one of the best that I have seen. The overall experience with it has been good.
      Was this review helpful? 2
      , junagadh
      Reviewed on Dec 07, 2017
    • Punjab National Bank Home Loan
      "Quick process"
      0.5 5.0/5 "Blown Away!"
      I had applied for a home loan with Punjab national bank.the loan amount is 38 lakhs,rate of interest is 8.35% low as compared to other banks.The net banking is bestway to make payment. I am holding this account for two years.They are very quick in processing the request and they always respond on time.I did not submit documents as the bank has got a tie up with the builder.
      Was this review helpful? 2
      , bangalore
      Reviewed on Dec 06, 2017
    • IOB Home Loan
      "Housing loan with IOB"
      0.5 5.0/5 "Blown Away!"
      I have taken a housing loan from INDIAN OVERSEAS BANK. The approved loan amount was 39 lakhs and the rate of interest was 8%. the monthly EMI is 12000. The tenure which i have taken was for 25 years. I can recommend this bank for home loan as they are providing the best interest rate when comparing with other banks.
      Was this review helpful? 2
      , hyderabad
      Reviewed on Dec 06, 2017
    • HDFC Limited Home Loan
      "Better"
      0.5 5.0/5 "Blown Away!"
      I am having the home loan with the HDFC limited and the interest rate was around 8.95%. The loan amount got disbursed within a month of time and they have to increase the speed of the process. I am happy with the HDFC limited.
      Was this review helpful? 2
      , chennai
      Reviewed on Dec 06, 2017
    • HDFC Limited Home Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      My home loan experience with HDFC LTD was good, the loan amount was for Rs 25 lakhs with the rate of interest of 8.6% which is nominal when compared to other sources. The process was quite long, it took one month for the loan to get approved. Documents were collected door step but it took long time for verification. Customer service was good and they followed up correctly. The tenure of this loan is 20 years and there is no penalty on preclosure and part payment.
      Was this review helpful? 5
      , bangalore
      Reviewed on Dec 05, 2017
    • ICICI Bank Home Loan
      "Better service"
      0.5 3.0/5 "Satisfactory"
      The home loan service is not up to the mark with the ICICI bank . The additional charges are very high with the ICICI bank. The customer support and the response is not up to the mark with the ICICI bank. The transparency is not seen in the home loan process with ICICI bank.
      Was this review helpful? 1
      , chennai
      Reviewed on Dec 05, 2017
    • Axis Bank Home Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I have taken a Home loan with Axis bank.The loan amount is 29 lakhs,rate of interest is very high as compared to other banks.The process took almost one month to complete the whole request.They had collected documents from my place.I am happy with the service.
      Was this review helpful? 1
      , chennai
      Reviewed on Dec 05, 2017
    • Axis Bank Home Loan
      "Card fradulent Trasaction happened at 3 times..."
      0.5 0.5/5 "Unacceptable"
      Yes , it happened 3 times in my credit card with out any notification. While talking with customer care regarding the issue they inform me that they are helpless to do anything. The solution they suggest is de-active the card and take new card from the bank. It was a surprise and very bad response ,and finally I cancel the card. These people eat my earned money.
      Was this review helpful? 0
      , pune
      Reviewed on Dec 05, 2017
    • SBI Home Loan
      "Good"
      0.5 4.0/5 "Great!"
      I have my home loan with SBI 10 years back . The loan amount was 3,50,000 and the interest rate was 11.63% which was bit high in the market . The tenure period was 20 years . The loan process was very easy here.There is no processing fee also. My overall expererenc was good.
      Was this review helpful? 5
      , godhra
      Reviewed on Dec 05, 2017
    • HDFC Limited Home Loan
      "Good"
      0.5 3.0/5 "Satisfactory"
      I had applied for a home loan with HDFC LTD through online channel. I have chosen HDFC Bank because my property was pre approved. It was easy to go with the pre approved banks. There were some hidden charges which was not explained clearly. The rate of interest was normal, and the rate of interest offered was 8.35%.
      Was this review helpful? 3
      , bangalore
      Reviewed on Dec 04, 2017
    • DHFL Home Loan
      "Good service"
      0.5 4.0/5 "Great!"
      My home loan experience with DHFL was good, i have taken loan for Rs 14.04 lakhs with the rate of interest of 9.5% which is bit high when compared to other sources. It took one month for the loan amount to get approved. The processing fees is very high and also there is a penalty on preclosure of the loan. Customer service was good and they followed up correctly, they provided door step service to collect the documents.
      Was this review helpful? 1
      , navi mumbai
      Reviewed on Dec 04, 2017
    • HDFC Limited Home Loan
      "Better service"
      0.5 5.0/5 "Blown Away!"
      The home loan has been disbursed by HDFC limited around 6 months ago. The customer support was good with the HDFC limited. They have processed and approved the home loan within a week time. The rate of interest and the charges are average with the HDFC limited. I am satisfied with the loan amount.
      Was this review helpful? 2
      , chennai
      Reviewed on Dec 04, 2017
    • HDFC Limited Home Loan
      "Its Average"
      0.5 3.0/5 "Satisfactory"
      In the year of 1983, I applied for home loan from HDFC Limited, at the time there was no online process. Hence I undergone with lots of manual process. The valuation of property got changed it was serviced by HDFC, Finally I took the loan from outside.
      Was this review helpful? 2
      , pune
      Reviewed on Dec 04, 2017
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