SBI Vs ICICI: Home loan interest rates reduced till March 31 – Here is how to strike the best deal

Home loan interest rates are already at several years’ low. Real estate prices are also lying low and have not gone up in the recent past. To prop up demand, some front-line leading banks such as SBI and ICICI Bank are offering reduced rates of interest on home loans till March 31. For those looking to buy a home, with the low-interest rates and a sufficient supply of residential houses, it may be the right time to own a home of one’s own.

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The country’s largest lender, State Bank of India (SBI) has sweetened the offers on Home Loans and now offers interest concession of up to 70 bps with interest rates starting from 6.70 per cent onwards. These rates will be available for a limited period ending on 31st March 2021. The lender is also giving a 100 per cent waiver on processing fees. The interest concession is based on the loan amount and CIBIL score of the borrower. SBI Home loan interest rates are linked to CIBIL score and start from 6.70 per cent for loans up to Rs. 75 lakhs and 6.75 per cent for loans above Rs 75 lakhs. One can also apply from the ease of their home via YONO App to get additional interest concession of 5 bps.

ICICI Bank had also announced that it has reduced the home loan interest rate to 6.70 percent. The revised interest rate, the lowest in 10 years by the Bank, is effected from March 5, 2021. One can avail of this interest rate for home loans up to Rs 75 lakh. For loans above Rs 75 lakh, interest rates are pegged at 6.75 per cent onwards. These revised rates will be available till March 31, 2021.

Since October 1, 2019, RBI has mandated banks to offer retail loans such as home and auto loans linked to an external benchmark, which for most banks is the RBI repo rate. It is, therefore, called repo linked lending rate (RLLR). Every time, RBI revises the repo rate, the revision in the interest rate is much quicker for the borrower compared to the loans linked to MCLR.

When you walk into a bank branch, you need to know two things – Bank’s RLLR and home loan interest rate. While the RLLR for the bank is a fixed rate for all borrowers, the effective home loan interest rate for you will depend on your age, loan amount, CIBIL score, among other factors. On average, for the majority of borrowers the home loan interest rate is 7 per cent or even higher across most banks.

So, how to decide between various banks offering different home loan interest rates? According to Raoul Kapoor, COO, Andromeda, India’s largest loan distributor, a borrower should consider the following while deciding between different banks.

• Existing bank relationship: Banks typically give preference to existing customers
• Financial status: People with good, solid financial get loans from banks while others stand a chance with NBFCs
• Credit Score: People with good credit scores get loans from banks while others stand a chance with NBFCs

“Ticket size is the primary consideration for determining between HFC and bank. Apart from this, one should also see if the project being considered is already approved by the lender. And lastly, existing relationships with the bank/HFC is always to be kept in mind while choosing between the two,” adds Kapoor.

Best home loan deal

New borrowers may explore 2-3 lenders and ask for the effective home loan interest rate based on their loan amount, gender, and period of the loan. The EMI per lakh is a factor that may help you decide the best home loan offer to you. Finally, keep a prepayment plan handy to repay the loan amount as early as possible. The early you repay the loan, the lower will be the interest burden for you.