In what is a small silver lining during a global pandemic, home loan interest rates have dropped and RBI has announced measures to provide relief to people with running home loans. The impact is not only for existing home-owners but also for people considering buying a home.
Low interest rates = low EMI’s or tenor and also higher eligibility
Interest rates are at an extremely low level right now. The RBI slashed the repo rate by 0.75% recently and SBI is passing on the entire rate cut to most borrowers. SBI interest rates now start from as low as 7.2%. You can check the interest rates of various banks here. Lower interest rates are also good news for people who are opting for a home loan now – lower rates mean that your loan eligibility will be higher.
What does this mean for your EMI?
When there is a rate cut, either your tenor reduces or your EMI reduces. EMIs on eligible home loan accounts (linked to MCLR) will get cheaper by around Rs 24 per Rs 1 lakh on a 30-year loan. For a person with a Rs. 50 lac loan, the EMI will reduce by Rs. 1200 and the overall cost over 30 years will reduce by Rs. 4.32 lacs.
What are the EMI’s on Marathon projects?
Below is an indicative list of EMI’s as on date across Marathon’s affordable housing portfolio.
Your EMI’s can be even lower under the Pradhan Mantri Awas Yojana. Learn more and check if you’re eligible here
|Project||Apartment||New EMI||Earlier EMI||Total Savings|
|Nexzone, Panvel||1 BHK||₹25,490||₹27,061||₹377,120|
|Nexworld, Dombivli||1 BHK||₹17,779||₹18,874||₹263,033|
|Nextown, Kalyan-Shil||1 BHK||₹19,873||₹21,098||₹294,019|
Note – The above EMI amounts will start only once possession of the property is given. EMI figures mentioned above are only indicative and not exact. Assumptions made – 30 year tenor, 75bps reduction in interest rate and 80% loan value
More transparent interest rates
As per an RBI mandate, all home loans will have to be benchmarked to an external benchmark rate viz repo rate, 3-month and 6-month treasury bill rate or any other benchmark rate published with effect from October 1st 2019. This means that banks will need to pass on rate cuts more transparently. Earlier when loan rate was not benchmarked to external rates quite often banks would not pass on the benefit of rate cuts to clients. This will no longer be the case and banks will have to pass on the benefit of rate cuts to customers.
To ease the financial stress caused by the burden the RBI has allowed banks to offer customers the option of deferring 3 months of EMI’s on their home loans. Certain banks like SBI have already extended this benefit to their customers.
It is important to note that this scheme is only a deferment of the EMI’s and that interest will continue to accrue during the 3 month period, so you should use this option only if you are under short term financial stress as activating this option will increase your overall interest cost.
Apart from the rate cut mentioned above, home loan borrowers can also avail several tax benefits relating to their loan. To learn more read our post on tax benefits related to home loans.
To sum up, the interest rate reduction will be beneficial to all home loan borrowers and will also be a boost for customers who are looking to purchase property now. If you are in a financially stable position now may in fact be a good time to invest in property since financial markets are volatile, interest rates are low and there are great offers from builders. To learn more about Marathon’s projects and offers, schedule a digital tour and select your next home, from home. Learn more