The bank must link all new floating rate loans to retail customers loans from October 1, 2019 to an external benchmark. The Reserve Bank notified the change in its circular dated September 4, 2019. This means MCLR will soon be history, at least for retail borrowers. Starting October 1, no new floating rate loans will… Continue Reading
SBI had introduced home loans linked to RBI Repo rates as the benchmark in July 2019. This was before the RBI mandated all fresh floating rate loans to retail borrowers from October 1, 2019 to be linked to an external benchmark. SBI had used Repo rate linked lending rate (RLLR) as the benchmark. RLLR was… Continue Reading
The Reserve Bank of India has cut Repo rate by 110 basis points since the beginning of the year (2019). However, the banks have reduced their weighted average lending rates by 29 bps. If you have a floating rate home loan, then this news is not very comforting. This is a very common grievance for… Continue Reading
In December 2018, RBI had proposed that all fresh floating rate loans from April 1, 2019 must be linked to an external benchmark. The implementation has since been deferred. It is now up to the banks to come up with products linked to an external benchmark. Citibank had launched a home loan product in the… Continue Reading
If you want to repay your home loan quickly, the only way out is to make some prepayments on the home loan. Many use their annual bonuses to make big prepayments on their home loans. Not surprising that average home loan tenure in India is about 7-8 years. What if you can’t manage very big… Continue Reading
A common grouse among many loan borrowers is that banks are very keen to hike the interest rates when the rates are moving up in the economy. However, banks are not very prompt to pass on the benefit when the rates are going down. Do you fall in the same category of borrowers? If you do not… Continue Reading
SBI has increased its MCLR (Marginal Cost of Funds based lending rate) multiple times (1, 2, 3) in the recent months. MCLR is the benchmark for floating rate loans. Therefore, if you have borrowed from SBI, your loan interest rate would have already gone up in the recent months. Never a happy situation for the… Continue Reading
Ever since MCLR (Marginal Cost of funds based Lending Rate) came into existence from April 1, 2016, a question that I have been asked multiple times is “Should I switch from Base Rate to MCLR?” The frequency of these questions grew after various banks cut their MCLR sharply after the demonetisation drive. How Can I… Continue Reading
In this post, I will share an example where the bank did not pass the interest rate cut to the customer for a very long time. I found out about this case in an article in MoneyLife magazine. A gentleman took a floating rate loan from HDFC Bank in 2007. The loan was to be… Continue Reading
Refinancing a loan simply means availing a loan from a new lender to pay off an existing one. You approach a new lender for loan refinancing/balance transfer. The new lender sanctions the loan and settles your loan outstanding with the existing lender. Subsequently, your obligation with the existing lender terminates and a new repayment obligation… Continue Reading