How bank calculate intrest, is it really 8.5% when they say it for home loans?

One should understand well to mange the home loan well else manage your loan for free on Home Loan Management Company India: LOANYANTRA

Interest rate consist of 2 components.

Interest Rate = Margin Rate + MCLR Rate for specific period or Base Rate

When you avail a loan for 8.50% that would be broken up into

8.50 % = 0.50%(Margin) + 8.00% (1-Year MCLR)

Its confusing right.

When ever you take a loan either Fixed or Floating the margin on that day gets fixed.

In case you loan is floating, then the floating will depend on the MCLR Rate for the specific period. Normally most of the banks give you for 1-year. Meaning every 1-year your rate would change as per that days MCLR for that period.

Say after year 1-year MCLR is 9.75% then your interest rate would be 10.25%.

10.25% = 0.50% + 9.25%

For more details you can check the blog : Demonetisation effect on Home Loans – Get Home Loan Online In India

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