A Close Look at SBI Home Loan Interest Rate

In the recent years, home loan interest rates have been the topic of discussion as they kept changing month-on-month, year-on-year. If 2015 to 2017 was a joyous ride for borrowers with reducing rates, 2018 so far has been rather disappointing for them with surging rates.

Numerous lenders such as State Bank of India (SBI) have raised interest rates only to make the loan dearer. As the bank is seen as the best among the lenders operating in India, it is expected to have a large portfolio of home loans. And so, there can be concerns as rates are going up. If you are an SBI home loan customer and want to keep a check on the interest, you better take a cue from this article giving you the tips.

So, without any delay, let’s just quickly delve into SBI Home Loan Interest rate, its impact, and ways by which you can keep the ill effects of the rate rise at bay.

What Exactly Are SBI Home Loan Interest Rates?

The state-owned bank charges interest rates on a variable basis. The rates differ according to the loan amount, gender and profession. On a whole, the rates can be anywhere between 8.45%-9.00% per annum.

How to Counter the Surge in Interest Rates?

Well, it was 2 years ago when you took on the loan at SBI thinking that the constant drop in inflation would ease your floating rate further. It was all delight for you when the demonetization medicine was injected into the economy to flush in the excess liquidity to banks like SBI. And so, SBI, like others, was on a rate cut spree. The pattern continued till the end of 2017 before going all south since the beginning of 2018. And, as far as macroeconomic indicators are concerned, the inflation would keep inching up to make the Reserve Bank of India (RBI) to increase the cost of commercial banks with a hike in repo rate. This would further prompt SBI and others to hike the rates. However, by adopting a few ways, you can cut down on the interest payment significantly.

Part Payment - In 2 years time, you may not have created the surplus to pay off the remaining loan balance in full. But a chunk of it can still be paid if you have the savings or investment proceeds. The outstanding balance would reduce and lower the interest liability.

Think of Prepayment in Some 10 Years Down the Line - Assume you are servicing a 20-year loan and have finished 2 years of those. You can start investing now to reach a position in 10 years time to pay off the outstanding balance as would be the case at that time. There are investment products like mutual fund SIP, recurring deposit, fixed deposit, which can let you create a substantially large corpus to pay off the loan.

What for Those Servicing Home Loan at Other Lenders?

If you are running a home loan at some other banks at more than SBI Home Loan Interest Rate, you can switch the portfolio to the largest lender and avail the benefits of reduced rates. The process is known as a balance transfer, helping you save on the interest.

Kavya Jain, is a financial writer who has written on various financial products.She believes in delivering best of her knowledge so as to help the readers understand the product and be aware of their financial decisions.