Rate of Interest of Home loan for current SBI customers.

POSTED BY Gaurav Khurana ON May 16, 2013 5:10 pm COMMENTS (4)

What is the ROI for the current customers who have a house loan with SBI. For the new customers they are offering 10.1% floating but I just wanted to know what is paid by the current customers. 

I have heard from some people that initially they will offer a lesser ROI and will compensate by more ROI from the current customers and so my ROi will also increase eventually. I don’t know how true is this. Can somebody help me with this.

Also is LIC home finance good enough to get a house loan OR I should strictly stcik to SBI.

4 replies on this article “Rate of Interest of Home loan for current SBI customers.”

  1. Dear Gaurav, SBI is better for long term transparency on ROI as it’s linked with Base rate which is not the case with LICHFL.

    Thanks

    Ashal

  2. Dear Gaurav, the ROI for customers be it new or old is a function of spread offered from BASE rate or PLR. This is common for all home loan providers in India be it SBI or LICHFC or HDFC or ICICI or PNB or BOB or Axis………………..

    Now first understand what is Base rate & PLR. Base rate is the lowest rate of interest which ‘ll be offered by a bank to it’s most credit worthy borrower after factoring all it’s funding costs & expenses to offer that loan. Prime Lending Rate or PLR was same in original planning but later on the malpractice by banks & financial institutions put it in wrong way. Banks & FIs kept PLR unchanged in a falling rate scenario & keep on increasing in increasing rate scenario. From July 2010, RBI scrapped the PLR thing for banks & made it mandatory to link all new loans to be offered on base rate linking.

    Now Base rate is more transparent than PLR as it’s the least possible rate. Bank can not offer anything below Base rate to it’s customer. As on date, SBI’s Base rate is 9.7%. Coming back to your original query, if a loan was issued @ base rate +0.5% spread in 2011, the loan rate ‘ll change for this old customer as & when the base rate changes but as the spread is fixed to 0.5%, every time, it ‘ll remain new Base rate + 0.5%. Now some one applying in 2013 & now the spread to new customer is 0.25%, the ROI for new customer ‘ll remain Base rate +0.25%.

    So your fear of differential rate is not very real one now. In fact, currently SBI is offering the minimum possible spread of 0.25% for loans less than 30L & 0.4% for loans more than 30L. Hence ROI for loans upto 30L is 9.95% & for more than 30L Rs. it’s 10.1%.

    Please do remember, here is catch in case of HFC, LIC or HDFC or Dewan or Indiabulls, are still offering ROI linked with PLR which is not a very transparent method as explained already. So take your pick carefully.

    In case you are going to opt SBI, my take ‘ll be to go for SBI’s Max Gain home loan. For more details on Max Gain, please visit –

    http://ideasforwealth.in/sbi-max-gain-some-faqs

    Thanks

    Ashal

    1. Gaurav Khurana says:

      Loan Amount: 50Lakhs for 20 years.
      LIC Home loan is providing 10% for the first 2 years and floating after that. Currently the floating rate is 11.65% for the amount I am taking as loan.
      SBI is 10.1% floating from the beginning.
      Can you please suggest me which one is better?
      Thanks,
      Gaurav K.

  3. Nagarajan Santhan says:

    Hi Gaurav

    ROI for current customer (existing) and new comers is different. Whatever they published in their site / advertisement in papers are only for new customers.

    As per RBI’s rate cut bank might reduce your interest rate and the same intimated you by bank.

    LIC or SBI – better to choose with low interest rate / no penalty for preclosure or part-payment. Don;t strict with SBI, if LIC HF offers more facility with low interest rate.

    Also try to negotiate your interest rate while applying new HL.

    Thanks
    Nagarajan Santhan

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