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  • How MCLR will Effect on Home Loan

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    Bank Name
    Interest Rate Range
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    Tenure Range
    8.70% - 9.30% Floating
    0% - 0.50% + Applicable Taxes One time fee
    5L - 10Crs
    3-30 Years
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    8.80%- 9.20% Floating
    12,000 (inclusive of GST) One-Time Fee
    20L - 5Crs
    1-30 Years
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    8.95% - 9.15% Floating
    10000+GST One time fee
    -
    1-20 Years
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    8.40% - 8.85% Floating
    Up to 0.5% (max. ₹11,800) One time fee
    5L - 10Crs
    1-30 Years
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    8.75% - 11.0% Floating
    Up to 0.5% One time fee
    2L - 3Crs
    1-30 Years
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    8.80% - 8.95% Floating
    0.50% PF (For Salaried) to 1%(min.3000)+Tax (for Self employed)
    12L - 5Crs
    1-20 Years (10 yrs plot loan)
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    8.80% - 11.75% Fixed/Floating
    0.50% (min. ₹10,000) One time fee
    5L - 10Crs
    1-30 Years
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    9% Floating
    ₹ 10000+ taxes One time fee
    50L - 5Crs
    1 - 25 Years
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    8.55% - 8.99% Floating
    ₹5,000 to ₹10,000 + applicable tax One time fee
    20L - 10Crs
    1-30 Years
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    9.25% Floating
    0.50% (min. ₹10,000)
    1Cr - 5Crs
    1-20 Years
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    9.25% - 11.20% FIXED
    Up to 0.5% One time fee
    2L - 3Crs
    1-30 Years
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    8.70% - 10.95% Floating
    Up to 0.5% One time fee
    2L - 3Crs
    1-30 Years
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    MCLR: What It Means For Your Home Loan:

    The Reserve Bank of India (RBI) has reduced its repo rates by 125 basis points in the last 2 years. Ideally, the banks should follow this up with reduced lending rates, but by April 2016, the banks had passed on just around 60 basis points to the customer. To speed up this process, the RBI has instructed the banks to shift from Base Rate system to Marginal Cost of Funds-based Lending Rates (MCLR).

    What is MCLR?

    Under the base rate system, banks had to announce a base rate, a minimum lending rate, which they would charge a customer on loans. The banks could arrive at the base rates on their own, but it had to be approved by the RBI. However, the banks could also add extra spreads and increase the final lending rate, or give special discounts to one set of customers and overcharge another set. This system also did not take into account the repo rates announced by the RBI.

    MCLR, on the other hand, is aimed at ensuring that the customer also benefits from the central bank’s policy rates. It is also expected that the MCLR will provide transparency to the process employed by banks to arrive at lending rates. A bank will determine its MCLR based on the following parameters:

    1. Marginal cost of funds: The minimum cost of borrowing and profits on net worth for banks.
    2. Negative carry on account of cash reserve ratio (CRR) or statutory liquidity ratio (SLR): CRR is a specified minimum fraction of the total deposits in a bank that is held as reserves either in cash or as deposits with the RBI. SLR is the minimum reserves that banks need to maintain in the form of gold and government-approved securities. Any negative returns on CRR or SLR will be factored into the MCLR.
    3. Operating costs: This includes cost of providing a loan product, such as cost of raising funds and processing fees.
    4. Tenor premium: This arises from loan commitments with longer tenures.

    According to RBI directive, the banks have to set at least 5 MCLR points - overnight, 1 month, 3 month, 6 month and 1 year. The rates should be reviewed every month but the loans linked to MCLR will be reset with a different interest rate on a yearly or half-yearly basis and not every month. However, if the bank wants to apply a shorter MCLR term to a loan, it is free to do so. The RBI only wants that the maximum tenure of MCLR correction on loans be 1 year, in order to ensure that the rate cuts by the central bank are passed on to the customers in a timely manner.

    The MCLR will be applicable to new loans, taken after the bank has announced the rate, and not to existing loans. This means that the banks have to continue announcing base rates as well, for the benefit of the existing customers. However, you can put in a request to switch your loan to the MCLR system and see if the bank agrees.

    State Bank of India (SBI) was the first bank to announce MCLR. It announced 7 rates:

    1. Overnight – 8.95%
    2. 1 month – 9.05%
    3. 3 months – 9.1%
    4. 6 months – 9.15%
    5. 1 year – 9.2%
    6. 2 years – 9.3%
    7. 3 years – 9.35%

    In addition to the MCLR, banks can announce spreads – additional basis points applicable on loans – and these spreads will be different for different loan products and customers. The spread depends on credit risk and the period of loan. The credit risk of individual customers will be decided on the basis of their credit scores.

    MCLR and Home Loan EMIs:

    One of the longest-term loans is a home loan. Because of this, lending rate fluctuations will affect home loans the most. Banks will apply either the 6-month MCLR or 1-year MCLR to new home loans taken after April 1, 2016 (or after particular banks announce their MCLRs). If the 6-month MCLR is applied, your home loan interest rates will be reset every 6 months depending on any change in the 6-month MCLR, and if the yearly MCLR is applied, your home loan interest rates will change every year.

    This change will directly impact your Equated Monthly Instalment (EMI) amount. If MCLR goes down, your EMIs will also be reduced, and if the MCLR is increased, your EMIs will go up. But to get the benefit of changing MCLR, you need to choose the floating rate home loan and not fixed rate home loan.

    Let’s try to understand this with an example. Kotak Mahindra Bank has said that it will use the 6-month MCLR rate of 9.4% for its home financing products. With a spread of 25 basis points, this means that you can borrow from Kotak Mahindra at an interest rate of 9.65%. So if you are borrowing Rs. 40 lakh on floating rate after April 1, 2016, for a tenure of 30 years, your EMI would be around Rs. 34,073. If the MCLR after 6 months slips to 9.3%, then your EMI will come down to Rs. 33,780. But if it rises to 9.5% at some point, then your EMI will be higher at Rs. 34,366.

    Since the MCLR system is fairly new and the lending rate difference between MCLR and base rate yet to solidify, it would be better to wait and watch how it progresses before taking a new loan or switching to the new rate system. It is likely that the interest rate differences are marginal and not make a huge difference at the end of the day. 

      

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    How MCLR will Effect on Home Loan Reviews

    • SBI Home Loan
      "Good Loan service"
      0.5 4.0/5 "Great!"
      SBI interest rates are competitive. I have to pay some amount for conversion like whenever they are changing the interest rate. I need to switched to MCRL loan for that i need to pay Rs. 3500 for that i get the current interest rates by bank and 40 paise by MCRL.
      Was this review helpful? 0
      , bangalore
      Reviewed on Aug 17, 2019
    • ICICI Bank
      ICICI Bank Home Loan
      "Best Service"
      0.5 5.0/5 "Blown Away!"
      I have taken Home loan directly through ICICI Bank .The rate of interest and the processing fee was nominal .I have applied for the loan amount of 27 lakhs for the tenure of 18 years .I have got the loan amount on time and it was sufficient as well .While submitting the documents there was no drawbacks .
      Was this review helpful? 0
      , jaipur
      Reviewed on Aug 17, 2019
    • ICICI Bank Home Loan
      "Fast Loan"
      0.5 5.0/5 "Blown Away!"
      The process is simple hence i have chosen the Home loan from ICICI. It was done the loan in 7 days. So far i have taken the home loan 5 times in that 4 has been repaid and final one still going on. I bought the loan amount of Rs. 30 lakhs and the tenure period of 20 years. My previous loan was done a pre-closure one. They have charged me a pre-closure charges of 2 to 3% which is on higher side.
      Was this review helpful? 0
      , chandigarh
      Reviewed on Aug 17, 2019
    • Bank Bazaar Home Loan
      "Good experience"
      0.5 5.0/5 "Blown Away!"
      Really bank bazar dot com lelp us to re slove our problem.... Thanks to bank bazar. We easily find out everything......... So i suggest to everyone everything u will do by bank bazar. As far as the application is concerned it is systematic. I have to still wait for final results. At this time I cannot give full opinion until I get what I am looking for. I will be able to give clear opinion only after the final stage. The site the bank bazaar has provided for receiving the data is good enough.
      Was this review helpful? 0
      , kolkata
      Reviewed on Aug 16, 2019
    • HDFC Limited Home Loan
      "Good Service"
      0.5 2.5/5 "Just OK"
      I have applied for Home loan directly through HDFC Ltd .The rate of interest and the processing fee was really good and there was no difficulties faced so far .I have got the loan amount on time and while submitting documents there was no difficulties as well .I am really comfortable with the service.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Aug 16, 2019
    • ICICI Bank Home Loan
      "Good for home loan "
      0.5 5.0/5 "Blown Away!"
      The rate of interest is low at the time of taking a loan when i compared to other bank and also they have a fore-closure options hence i have taken my home loan from ICICI bank. It was a 5 years loan and i have paid the entire amount in 2 years. The loan amount was Rs. 15 lakhs and they have provided me a loan within 20 days.
      Was this review helpful? 0
      , kolkata
      Reviewed on Aug 16, 2019
    • Indiabulls Home Loan
      "Excellent Service"
      0.5 4.5/5 "Excellent!"
      I have taken Home loan which was applied directly through India Bulls. I have applied for the loan amount was 7lakhs for the tenure of 15 years .The rate of interest and the processing fee was less.I have got nice help and support from India bulls .I am completely satisfied with the service .
      Was this review helpful? 0
      , new delhi
      Reviewed on Aug 16, 2019
    • Bajaj Finserv Home Loan
      "Its Good"
      0.5 5.0/5 "Blown Away!"
      I availed home loan from Bajaj Finserv, right now they gave 8.45% of interest per annum. I took the loan amount of Rs. 35 lakhs its has the duration for 22 years. Earlier I had charges from SBI then I moved to Bajaj Finserv because of the huge interest.
      Was this review helpful? 0
      , kolkata
      Reviewed on Aug 16, 2019
    • LIC Housing Home Loan
      "Good Service"
      0.5 4.0/5 "Great!"
      I have taken a home loan with LIC HOUSING FINANCE on 2 years before which was processed directly to them. The amount which was given sufficient for the duration of 2 years. The rate of interest and processing fee are nominal. I use to do payment on monthly EMI for 16 thousands through an online.
      Was this review helpful? 0
      , visakhapatnam
      Reviewed on Aug 16, 2019
    • Bank Bazaar Home Loan
      "Excellent"
      0.5 5.0/5 "Blown Away!"
      Sir it's make easy to take decision but try to make at least 90 OR 95 percent loan amount.Baank Bazaar is an easy application, I would say its user friendly, informative, fast as well to check any kind of banking products, I have been using this portal around three years but I keep the website for knowing financial updates, the customer centric is also good.
      Was this review helpful? 0
      , pune
      Reviewed on Aug 14, 2019
    • Bank Bazaar Home Loan
      "Good Solution for Business needs"
      0.5 4.5/5 "Excellent!"
      I have been using Bankbazaar for more than 5 years, it is the good solution for all ur business needs. I have been using Bankbazaar for more than 5 years, it is the good solution for all ur business needs. I have been using Bankbazaar for more than 5 years, it is the good solution for all ur business needs.
      Was this review helpful? 1
      , chennai
      Reviewed on Aug 14, 2019
    • Bank Bazaar Home Loan
      "Home loan transfer"
      0.5 3.0/5 "Satisfactory"
      Hdfc bank service is good bcz last 6 year I have account in hdfc bank. Nd now I trust for hdfc home loan that's why I will be transfer my home loan. And I keep hope they will provide me good serive and good rate of interest. My nearest home hdfc bank branch shalimar bagh.
      Was this review helpful? 1
      , delhi
      Reviewed on Aug 13, 2019
    • LIC Housing Home Loan
      "Good Service"
      0.5 4.0/5 "Great!"
      I have taken a home loan going with LIC Housing Finance on 2 years before. I am happy with their service. Rate of interest and processing fee of 4500 rupees are nominal. They have sanctioned a loan on time within 2 days completed the process. The amount quite sufficient for the duration of 20 years.
      Was this review helpful? 0
      , chennai
      Reviewed on Aug 13, 2019
    • ICICI Bank Home Loan
      "Good"
      0.5 4.0/5 "Great!"
      I have applied for a home loan with ICICI BANK because they are giving me good offer on the interest rate was around 8.5%. Their representative was very helpful and good to me but unfortunately I could not process this loan due to my personal reason from my end but still they have been keep following me and getting notifications too.
      Was this review helpful? 0
      , chennai
      Reviewed on Aug 13, 2019
    • Bank Bazaar Home Loan
      "Best portal & Customer ease access"
      0.5 5.0/5 "Blown Away!"
      Bankbazaar.com helped me a lot and not only for this personal loan application also they have suggested me good banks with best rate of interest for the home loans too. I am using this service for last 5 years. The services are good and the moreover user interface is very simple to access. I can go with paperless approval and the documents can be submitted via online.
      Was this review helpful? 0
      , chennai
      Reviewed on Aug 13, 2019
    • Bank Bazaar Home Loan
      "Review"
      0.5 3.5/5 "Pretty good"
      As far as the application is concerned it is systematic. I have to still wait for final results. At this time I cannot give full opinion until I get what I am looking for. I will be able to give clear opinion only after the final stage. The site the bank bazaar has provided for receiving the data is good enough.
      Was this review helpful? 0
      , mumbai
      Reviewed on Aug 12, 2019
    • IDBI Home Loan
      "Good Service"
      0.5 4.0/5 "Great!"
      I have applied for IDBI Home Loan which was applied through Bank directly.The rate of interest and the processing fee was nominal and got the loan on time .I have got all the details about the loan process very clearly .I have not yet faced any issues while submitting the documents .I have applied for the loan amount of 30lakhs for the tenure of 25 years .The loan is still active and the service was really good .
      Was this review helpful? 0
      , thiruvananthapuram
      Reviewed on Aug 12, 2019
    • DHFL Home Loan
      "Very Good Service"
      0.5 5.0/5 "Blown Away!"
      I have taken Home loan directly through DHFL ,The agent gave all the details about the loan process very clearly and the rate of interest and the processing fee was nominal .I have applied for 15 lakhs for the tenure of 15 years .This loan is still active.The process was very smooth and there was no difficulties faced .
      Was this review helpful? 0
      , chennai
      Reviewed on Aug 12, 2019
    • HDFC Limited Home Loan
      "Very Good Experience"
      0.5 5.0/5 "Blown Away!"
      I am an existing customer of HDFC, hence I took the home loan from HDFC Limited, the principal amount is Rs. 25 lakhs for the duration of 12 years, they gave me 8.55% of per annum its a floating one. The paper work was hassle free, I got the door step service within 10 days they completed the process. I purchased individual charges they taken stamp duty charges as Rs.11,000 from the disbursement.
      Was this review helpful? 1
      , erode
      Reviewed on Aug 11, 2019
    • HDFC Limited Home Loan
      "Good"
      0.5 4.0/5 "Great!"
      I have taken a home loan with HDFC bank on 5 years before which was processed directly to bank. The loan amount which was provided sufficient of 26 lakhs for the tenure of 30 years. The rate of interest and processing fee are nominal. I use to get a call from bank for a payment to done on monthly basis.
      Was this review helpful? 0
      , bhopal
      Reviewed on Aug 10, 2019
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