Banks and Home loans interest rate

With the change of the interest rate calculation methods, a constant change in interest rate is expected, though not every month but every quarter, in a minimum.

Home loan is a long term loan and customers,usually, prefer floating rates. Rates keep changing and expecting a lower interest rate for the whole tenure of 20 year is impossible.

So, what is the right time to take a Home loan ?

  • The Property you intend to buy is good and cannot be missed or it is expected that the price of property will rise.
  • If you can fix the EMI in your monthly budgets.

Reports show that Home Loan Market in India is Rs.9,70,000 crore in size. Market is growing at 15.6% per annum over the last 10 years. But India’s GDP is only 8% whereas developed countries’ is at 60%. But if we look at Indian Government’s initiative or Plan of housing for all, by 2020 India needs 11 crore homes. In last 5 years, property prices have home loan interest rates_loanyantraincreased by more than 72%, but the median income has not. It makes the houses unaffordable for several borrowers. Though the real estate market is stable right now, we should take the advantage of the situation and the interest rates too.

 

Join with us for even lesser interest rate and pay less on your home loan.

Know the interest rates of several banks and how much loan each bank provides on your property.

Banks Loan to Property Value Interest Rates
State Bank of India SBI 75% -90% 9.40% – 9.45%
HDFC Ltd. 75% -80% 9.50% – 9.55%
LIC Housing 75% -80% 9.60%
AXIS Bank Home Loan 75% – 85% 9.50% – 9.65%
ICICI Bank Home Loan Upto 85% 9.40% – 9.80%
Fedbank Home Loan Upto 85% 9.68% – 10.08%
PNB Home Loan 75% – 80% 9.60%
PNB Housing Finance 75% – 80% 9.75% – 9.95%
IDBI Home Loan 75% – 90% 9.75%
DHFL Home Loan 80% – 85% 9.55%(upto 25lacs),then 9.65%
Bajaj Finserv Home Loan 75% – 80% 9.50%
Indiabulls Home Loan 75% – 80% 9.90% – 10%
Allahabad Bank Home Loan 75% – 90% 9.70% – 9.95%
Bank of India Home Loan 75% – 85% 9.70% – 9.95%
Union Bank Home Loan 65% – 80% 9.65% – 10.40%
United Bank Home Loan 75% – 80% 9.75%
UCO Bank Home Loan 75% – 80% 9.70%
Bank of Baroda Home Loan 75% – 90% 9.65%
Kotak Home Loan up to 80% 10.25%
Vijaya Home Loan Upto 80% 9.65%
Standard Chatered Home Loan Upto 80% 9.51%
India Bank Home Loan 80% – 90% 9.65%
L&T Home Loan 80% – 90% 9.90% – 10.75%

For more information logon to www.loanyantra.com.

Revised Interest rates by banks as per MCLR.

Earlier were the days when banks used to play around with the interest rates. With the new introduction of interest rate calculation by RBI, since April 1, 2016, the competition amongst banks is running on a high speed.

Banks have to review their interest rates every month and publish on a pre-announced dates. Also, full-fledged review of the customer’s  risk profile is high in priority before lending the loan amount and in deciding the spread and the final interest rate.

So, how is it advantageous to customers?

Solution to this question lies within the following question.

Did banks ever observe the change in base rate and implement in their interest rate?

To make it practical…imagine you borrowed loan amount at 10%  interest rate. Out of which, say, 9.5% is base rate and 0.5% is spread.  If RBI changes the base rate to 9%, your interest rate is supposed to be 9.5% (9% +0.5%). But what happens in reality, the banks with unknown reasons, increase the spread. Instead of 0.5%, the banks can take a chance to increase the spread to 1%.

Now, with MCLR in existence, banks should consider the customers risk profile in detail, to decide on spread. Banks can’t easily get arbitrary with spread changes.

mclr interest rates_loanyantra

What will be the impact of 0.25% lesser interest rate on home loans?

The longer the remaining tenure, greater the impact. The saving can be in hundreds per month. But, when you calculate you end up saving atleast a month’s EMI.

A cut in small savings rate is likely to bring down bank deposit rates and ultimately lead to a drop in lending rates as well.

The other aspect,

For a borrower in April 1 get loans at the prevailing MCLR (9.3%), but a month later a new borrower might get a loan at a lower MCLR if the cost of funds drops. For the April borrower, it will take three more quarters for his loan to get reset. In other words, there could be 12 sets of one-year MCLR if cost of funds change every month.

Corporate customers are also likely to look at shorter term loans to take advantage of falling rates. This will mean that banks which borrow for longer terms but have give term loans will face an asset-liability mismatch – though the only issue there is that bank earnings become volatile, they don’t usually face a crisis because of that.

Observe the revised interest rates by various banks..

Bank / NBFC Current Base Rate, PLR New MCLR April 2016 Latest Update
Allahabad Bank 9.70% 9.30% – 9.60% 01st Apr 16
Andhra Bank 9.75% 29th Sep 15
Axis Bank 9.50% 9.10% – 9.65% 01st Apr 16
Bajaj Finserv (PLR) 20.16% 01st May 14
Bank of Baroda 9.65% 9.00% – 9.35% 01st Apr 16
Bank of India 9.70% 9.15% – 9.40% 01st Apr 16
Bank of Maharashtra 9.70% 9.10% – 9.65% 01st Apr 16
BNP 9.50% 23rd Sep 13
Canara Bank 9.65% 9.00% – 9.45% 01st Apr 16
Catholic Syrian Bank 10.50% 01st Dec 11
Central Bank of India 9.70% 08th Oct 15
Citi Bank 9.25% 12th Oct 15
City Union Bank 10.50% 01st Nov 15
Corporation Bank 9.65% 08th Oct 15
DBS Bank 9.10% 01st Feb 16
Dena Bank 9.70% 9.30% – 9.60% 01st Apr 16
Deutsche Bank 9.20% 19th Oct 15
Development Credit Bank 10.70% 14th Dec 14
Dhan Laxmi Bank 11.40% 03rd Nov 15
DHFL PLR 18.30% 08th Oct 15
Edelweiss PLR 17.50% 30th Nov -1
Federal Bank 9.63% 9.14% – 9.60% 01st Apr 16
GIC Housing Finance PLR 15.00% 30th Nov -1
HDFC PLR 16.30% 05th Oct 15
HDFC Bank 9.30% 8.95% – 9.35% 01st Apr 16
HSBC Bank 9.10% 09th Nov 15
ICICI Bank 9.35% 9.40% – 9.70% 01st Apr 16
IDBI Bank 9.75% 30th Sep 15
IIFL PLR 17.50% 01st Apr 14
Indiabulls PLR 17.05% 08th Oct 15
Indian Bank 9.65% 9.20% – 9.70% 01st Apr 16
Indian Overseas Bank 9.90% 9.50% – 9.90% 01st Apr 16
IndusInd Bank 10.60% 19th Oct 15
Jammu and Kashmir Bank 9.50% 05th Oct 15
Karnataka Bank 10.25% 8.95% – 9.20% 01st Apr 16
Karur Vysya Bank 10.40% 05th Oct 15
Kotak Bank 9.50% 8.90% – 9.65% 01st Apr 16
Lakshmi Vilas Bank 10.55% 08th Feb 16
LIC Housing Finance PLR 14.20% 10th Oct 15
Nainital Bank 9.75% 21st Oct 15
OBC 9.70% 30th Sep 15
PNB 9.60% 9.15% – 9.55% 01st Apr 16
PNB Housing Finance 14.35% 27th Apr 15
Punjab and Sindh Bank 9.75% 05th Oct 15
Ratnakar Bank 10.65% 16th Oct 15
Reliance Capital PLR 18.00% 01st Nov 15
SBBJ 9.70% 05th Oct 15
SBI 9.30% 8.95% – 9.35% 01st Apr 16
South Indian Bank 10.00% 9.50% – 10.00% 01st Apr 16
Standard Chatered Bank 9.50% 8.45% – 9.65% 01st Apr 16
State Bank of Hyderabad 9.75% 08th Oct 15
State Bank of Mysore 9.65% 07th Oct 15
State Bank of Patiala 9.65% 05th Oct 15
State Bank of Travancore 9.95% 05th Oct 15
Syndicate Bank 9.70% 9.65% – 9.65% 01st Apr 16
Tamilnad Mercantile Bank 10.40% 15th Oct 15
UCO Bank 9.70% 05th Oct 15
Union Bank of India 9.65% 9.25% – 9.45% 01st Apr 16
United Bank of India 9.65% 12th Oct 15
Vijaya Bank 9.65% 08th Oct 15
Yes Bank 10.25% 9.00% – 9.60% 01st Apr 16

To know more about MCLR, its calculation and the difference between base rate and MCLR, refer the following link.

http://loanyantra.com/blog/wp-admin/post.php?post=246&action=edit

 

How to calculate EMI manually.

Calculate EMI manually

Whether buying a car, buying a new apartment or affording overseas education to children, loans have become an integral part of our life. When we borrow a loan the most accepted methods of repayment is through EMI or Equated Monthly Instalments. It is the small amount including both the principal and interest, to be paid towards a loan we opted for. During the initial stages the interest alone constitutes the major part of the EMI but as we progress in the payment, during the course of time, the portion of interest is reduced and the principal amount is added to it.

EMI can be opted for both fixed and variable interest rates. It comprises of two major variable components, commonemi calculation manually_loanyantraly known as;

  • Principal Amount borrowed
  • Interest rate for the loan
The Number Game

For every loan that you borrow the EMI is calculated based on certain parameters like Interest rates, loan amount and the tenure of repayment for the whole loan amount. The mathematical formula for calculating EMI can be derived as:

DID YOU KNOW?

While you borrow a loan, you are given an option to keep either the tenure or the EMI constant. While one of the above parameter is kept constant, the other parameters will be reduced. i.e., if you opt to keep the tenure as a constant value, then the EMI will be reduced. Or if EMI is paid at a constant rate then the tenure of the loan is reduced.

Logon and become a part of loanyantra’s customer base to get more alerts and suggestions.

Clever step when you have low interest rates from bank.

Never get dazzled by the words ‘Low EMIs’ – Look before you leap

For the EMI payers, those are the magical words. Be clever and plan your EMI. Understand that EMI has two components. a) Principal and b)Interest. Always ask your lender for the break up of your EMI. Get clear idea about the components. You do not expect to waste lot of money with the tempting tagline of Low EMIs.

What if – interest gets lowered and EMI remains the same

Let us remove the low EMI motive from our mind. Now, let us target that we must pay lower interest component to the bank. You can approach the low interest and high principal_loanyantrabank that has the lowest interest rate. But apply a trick. Do not reduce the EMI. In this scenario, you are brilliantly covering the principal amount component along with less interest component.

You win half the battle here. Whenever the bank offers you to pay low EMI, do the math. You must not increase the duration and pay higher interest. In fact, you must concentrate on covering the principal amount component.

Let us understand this theory with an example. If I am with a home loan of Rs.30,00,000 at an interest rate, 9.6% for 12 years, my EMI will be Rs.35,000. Where on a large scale, the break up of principal and interest component is 40.75% and 59.25%, respectively. For example, if the bank offered a low interest rate of 9.3%. Your EMI lowers down to, Rs.34,000.

The clever step here is to go and opt for the 9.3% interest rate, and keep the EMI constant, i.e., Rs. 35,000, instead of reducing it to Rs. 34,000. Mention the bank personnel that you want to add that Rs. 1000 to your principal amount. So, automatically, the principal amount comes down which leads to early closure of your home loan.

Check out and calculate more by following the link below.

http://loanyantra.com/Calculators.aspx#EMI-Calculator

We wish you to stay happy even when you are with the loan.

MCLR and Base Rate.

What is going viral this April 1st?

Don’t think it to be a fool game. It’s real. SBI, the pioneer had taken initiation to announce the news of execution.

There is a press release on september 2015 by RBI w.r.t the banks interest rate calculation to improve transparency in the methodology followed by banks for determining interest rates on advances.

Till today (March 31st, 2016), the calculation is based on base rate system which includes the following factors

A) Cost of Deposits

B) Negative carry on CRR and SLR

C) Unallocatable  overhead costs

D) Average Return on Networth.

The highest weightage is given to Cost of Deposits.

However, it was not mandatory that all the banks should have the same base rate. There were different methods that were followed.

The new concept is that banks HAVE to lend using rates linked to their funding costs. A bank raises money through deposits, bonds and wholesale borrowing. It has costs like salaries, rents, electricity costs etc. It also has to make a certain amount of profit at the very least. So the RBI has put all of this into a formula that banks can use to quantitatively determine how much their lending rate should be.

The new method MCLR(Marginal Cost of funds based Lending Rate) mentions a particular method to be followed. Following are the main components of MCLR.

A) Marginal cost of funds

B) Negative carry on account of CRR

C) Operating costs

D)Tenor premium.

Here, the highest weightage is given to the marginal costs.

Know the meaning of the above terms to understand why this method is powerful and transparent when compared to earlier methods, viz., base rate system and BPLR.

Negative carry on account of CRR is the cost that the banks have to incur while keeping reserves with the RBI. The RBI is not giving an interest for CRR held by the banks. The cost of such funds kept idle can bbase-rate MCLR_loanyantrae charged from loans given to the people.

Operating cost is the operating expenses incurred by the banks

Tenor premium denotes the higher interest that can be charged from long term loans.(means 1 year rate is higher than 6 month rate, etc)

Marginal Cost: The marginal cost is the novel eleme
nt of the MCLR. The marginal cost of funds will comprise of Marginal cost of borrowings and return on networth.  According to the RBI, the Marginal Cost should be charged on the basis of following factors:

  1. Interest rate given for various types of deposits-  savings, current, term deposit, foreign currency deposit
  2. Borrowings – Short term interest rate or the Repo rate etc., Long term rupee borrowing rate
  3. Return on networth – in accordance with capital adequacy norms.

The marginal cost of borrowings shall have a weightage of 92% of Marginal Cost of Funds while return on networth will have the balance weightage of 8%.

MCLR Vs Base Rate. Base Rarte & MCLR components in calculating Lending rates
MCLR Vs Base Rate.Base Rarte & MCLR components in calculating Lending rates

According to the RBI guideline, “Banks will review and publish their MCLR of different maturities every month on a pre-announced date.” Such a monthly revision will compel the banks to consider the change in repo rate change if any made by the RBI during the month.  

 

Inspite of severe emphasis laid by the RBI governor, Raghuram Rajan, to the banks to pass on interest rate cuts, less than half had been passed on to consumers this year. This made the necessity to invent this method.

Now with MCLR, banks are obliged to readjust interest rate monthly. This means that such quick revision will encourage them to consider the repo rate changes.

The final lending rate will be MCLR + Spread. (Earlier, Base Rate + Spread.)

While these guidelines will benefit new customers, existing customers will also have an option to shift to the new regime with some conditions.

SBI’S Announcement.

At SBI, the MCLR for loans upto one year maturity will be lower than its current base rate of 9.30% while those on two year and above maturity will be marginally above its base rate.

According to the statement on the bank’s website, the MCLR for overnight loans will be 8.95%, for one-month at 9.05% and for three-month at 9.10%.

The MCLR on 6-month loans will be 9.15% and for one year loans the rate would be 9.2%, the bank said.

Further the bank’s MCLR for two year loans would be at 9.3%. Loans with three year maturity would carry an MCLR of 9.35%, the bank said.

For more information on MCLR, its benefits. Know in detail

http://loanyantra.com/blog/wp-admin/post.php?post=268&action=edit

When can you lessen your home loan EMI?

Is it necessary that the home loan EMI should be more to finish off the loan earlier?

The answer is definitely, yes.

But everything in the world has exceptions. Similarly, the exception for not increasing the EMI can be, either you invest in some thing else worth or you can not afford paying more.

As we know, reducing the EMI will lead to longer tenure.

Before you take the step, ask yourselves.

  • Can you bear the EMI for such long tenure?
  • Can you finish the loan before you retire?
  • Is there any other alternative?
  • Is there a proper plan as to what to do with the rest of the  extra(to-be-paid for the EMI) money, every month?
  • Can you assure that the extra money is invested for a better cause?

The valid reasons for lessening your EMI can breduce emi _loanyantra

  • Investing where you get better returns when compared with the present scenario.
  • Financial crisis.
  • Opting for a bigger amount of loan.

If you have a really strong reason and a well planned investment for the increased disposable income, it is a recommended suggestion.

Advantages of Prepayment or Part Payment – We name it, The Holiday Plan

To prepay the entire amount early in the tenure or in the later stages is always the best suggestion as you can enjoy the advantages of early closure of your loan, either home or personal.

Prepayment of entire amount might be a bit tricky, part payments can be planned, though. So if we work out on this, we get really a fair picture how advantageous it really is.

Recently RBI had directed banks to stop charging customers for prepayments. Definitely this is one greatest advantage to consider. It is the surely recommended option for personal loans, if you have lump sum money sitting idle.

For instance, if you have a Rs.3,00,000 loan amount taken from next month for 5 years at the rate of 17.5%. Suppose, you wish to pay the outstanding amount, let us see the table of calculations to know the extra amount you can avoid paying.

Year Principal (P)       in Rs. Interest (I)    in Rs. Total Payment (P)+(I) in Rs. Loan paid till date in % Outstanding amount (O) in Rs. Save if you wish to prepay amount O in Rs.
2016 33,774 41,592 75,367 11.26% 2,66,226
2017 47,544 42,896 90,440 27.11% 2,18,681 3,76,833
2018 56,566 33,874 90,440 45.96% 1,62,116 2,86,293
2019 67,298 23,142 90,440 63.39% 94,818 1,95,953
2020 80,068 10,372 90,440 95.08% 14,750 1,05,513
2021 14,750 323 15,073 100% 0 90,440
Total 4,52,200

Consider another illustration with a home loan of Rs. 30,00,000 for 12 years at the rate of 9.5%. Assuming part payment Rs.20,000 will be paid quarterly. Now, look at the table which shows your savings.

Note : Part payment paid anytime will reduce your principal amount.

Loan will close in Total Amount Saved Total EMIs Saved By Paying Number of Part-Payments Total Part-Payment Amount
108 months (Earlier 144 months) Rs.12,59,676/- 36 months Rs.20,000/- each. 35 months Rs.7,00,000/-

Yes, it is no exaggeration.
Save as and when you can without compromising on basic needs apart payment_loanyantrand amenities. Try to part pay your loan at least annually. And see how it works.

To decide which loan to close earlier, ultimately, is an economical trick. If the idle cash in hand earns you less return when kept in a bank or invested elsewhere when compared to the interest you pay on your loan, it is wiser to pay off the loan.

Pay fast and enjoy investing again or plan a holiday with your family.

 

 

*Both the instances are under the assumption of interest rates being constant

Does a co-applicant help when getting a home loan?

A co-applicant for home loan is someone who applies for a loan with you. Usually it’s a family member, such as a spouse, or a father applying with an unmarried son or daughter. A co-applicant also can be a business partner if both parties will own the property bought with the loan. Having a co-applicant for home loan increases your chances of approval and of getting a low interest rate.

Improved Creditworthiness

Even though your credit score is just a number, lenders place a large emphasis on it because it predicts how likely you would be to default on the loan. If your own credit score is low, or if your co-applicant’s credit score is high, having a co-applicant for home loan makes your application stronger overall and increases your chances of approval.

co-applicant for home loan _loanyantra.com

Lower Interest Rate

Even if you’d be likely to be approved on your own merits, a co-applicant can help you get a lower interest rate on the mortgage. Lenders reserve the lowest interest rates for loans that pose the smallest risk of default. By adding another creditworthy borrower to your application, you lower the bank’s risk. The bank might reward you with a lower interest rate than you’d pay when you were the only one applying for the loan.

Higher Income

A co-applicant’s income is included when determining how much of a loan the bank thinks you can afford. Adding a co-applicant might mean that the person’s income is added to yours when the bank considers how much to lend you. For example, say the bank doesn’t want payments to exceed 25 percent of your monthly income. If you have a monthly income of Rs.40,000, your maximum monthly payment is Rs.10,000. But if your spouse brings home another Rs.40,000 per month and becomes a co-applicant, your maximum monthly payment goes up to Rs.20,000.

Legal Requirements

In some cases a co-applicant is required on loans, so applying without one means you’d automatically be denied. Typically, if you’re applying for a secured loan, any co-owner of the property must be a co-applicant. For example,  Similarly, if you and a business partner are buying a store, you both must apply together for a mortgage.

How to add a co-borrower when you refinance a home?

Refinancing is a way to create a new mortgage loan and lower your interest rate and house payment. When refinancing a mortgage, your lender reassesses your income and debt. Any change to your financial situation, such as a decrease in income, an increase in debt or a lower credit score, can affect your ability to refinance. If you fear that a lender will deny your refinancing application, you can add a co-borrower to the new mortgage. This can include anyone but typically would include a family member such as a spouse, parent or sibling.

Step 1

Ask your preferred co-borrower if she is willing to put her name on the refinance application. Make sure she understands that she is responsible for ensuring the loan payments are made on time and in full, or her credit score will suffer.

Adding a co-borrower to refinance _Loanyantra

Step 2

Check your credit report as well as your co-borrower’s report to see whether you qualify for a refinance.  You can also get your credit score from CIBIL. Know more –  http://loanyantra.com/blog/how-is-your-cibil-score-calculated/

Step 3

Contact your existing lender or a new lender to get an application to refinance the home loan. When you fill out the application you will be asked to include your information and the co-borrower’s information. This includes both names, telephone numbers and Social Security numbers. Be sure both of you sign the mortgage refinance application.

Step 4

Submit the application along with other information the lender requests. This typically includes copies of your tax returns, bank statements and recent paycheck stubs. Since you’re applying for a refinance with a co-borrower, the lender will take both incomes and employment records into consideration.

Step 5

Wait for the lender to make his decision. If he approves the loan, you and the co-borrower will need to attend the loan closing and sign the mortgage papers. If the lender approves the refinancing and adds the co-borrower to the home loan, both parties must attend the loan closing. You’re both equally responsible for the loan, and closing on the loan is dependent on both signatures on the mortgage agreement. The new mortgage replaces the old loan.

Home Loan Life Cycle. Know How Loanyantra Works For Your Home Loan

We believe in Organic Management, the complete and the structured. Every step is taken with attention to close your loan at the earliest.

Feel the difference as we take you to the tour, “How We Work”.

To make our and your work convenient, we place the customers in three phases.
1. Introductory Phase
2. Saving Phase / Servicing Phase
3. Achievement Phase.

Orgnaic Home Loans 1

Introductory Phase :

STEP 1
Enter your details and apply for a new home loan or a balance transfer. Get eligible for the bidding by the leading banks in the industry.

STEP 2
Know the status updates about the sanction of your loan. Utilize our Live Support and Chat with the Banker and our representative.

STEP 3
Quick disbursal of your loan with a minimum of 0.10% discount on the ROI, for an year.

Saving Phase :

Congrats, you are our priority customer now. All your details are in our database / into our algorithm.
Our work begins where everybody else’s end!!!

STEP 4
We track your ROI constantly and send you alerts about part payments and interest rates of your bank and other banks as well.

Get alerts under the following subject lines.

a)Get stuck to the lowest interest rates and save the maximum.
b)Don’t let your money sit unattended. Learn with us how to reduce the tenure of your loan with your hard-earned savings.
c)Be the first one to know about the change in repo rates and the banks spread.

STEP 5
Want to follow our alerts? Just click on the suggestion link. We take you along the process.

STEP 6
Get into this step and refer more of your friends to save more.

Achievement Phase :

You finally, reach this stage before your estimated tenure.
Following the procedure to close the home loan is also equally important.

STEP 7
Apply for the loan closure. Doorstep service assured.

STEP 8
Get updated with the process. We get all your documents back in your hand.

STEP 9
Relax in your home!! You are done with your home loan.

Orgnaic Home Loans

Our team works like a clock, to maintain your ROI at the lowest, every time. Loan Rate Shield guards as a screen and sends alerts and tips how you can close your loan before the estimated tenure.

Stay connected, all time, with us while we work on your loan life cycle.