At a constant rate of interest and with other factors constant, the loan eligibility increases if you choose a longer tenure.
For someone looking to get a home loan, there are a plethora of options to choose from. Bank of Baroda (BOB) is one such public sector bank which offers home loans at competitive rates to individuals. After the amalgamation of Dena Bank, Vijaya Bank and Bank of Baroda from April 1, 2019, the account holders of Dena Bank and Vijaya Bank and even those who wish to take a home loan from BOB need to know a few things before they approach the bank for a loan.
Bank of Baroda home loan is available to a resident and non-resident Indian of age 21 and above. In some cases, the loan may be extended to even those who are 70 years of age. Importantly, BOB is one of the few banks who take into account the applicant’s CIBIL score in fixing the home loan interest rate.
To establish the repayment capacity of the borrowers, in case of salaried individuals, for those with a gross monthly income (GMI) between Rs 50,000 and Rs 2 lakh, BOB has an upper limit of 65 per cent of total deductions including proposed EMI. This enhances the total loan amount that one may avail from the bank.
Interest rate: Interest on the loan will be charged at the prevailing floating rate on a daily reducing balance at monthly rests. The rate of interest is linked to One Year MCLR of the Bank, shall be reset on an annual basis. Rate of interest will be decided with reference to CIBIL bureau score of the applicant and the co-applicants.
Currently, ( effective 07.04.2019 ) the 1-year MCLR is 8.65 per cent. The effective home loan interest rate will be One-year MCLR to One-year MCLR +1.00 per cent based on applicants risk rating.
The Bank of Baroda home loan interest rate will vary between 8.65 per cent and 9.65 per cent.
Tenure and moratorium
The tenure on our home loans varies based on the loan amount and the income of the borrower, and the maximum tenure is 30 years. There is also a moratorium period on home loans, which can be a maximum of up to 36 months after the loan amount is disbursed. There is an 18- month moratorium period for under construction houses and building up to 7th Floor and thereafter there is a 6 months additional moratorium per floor subject to a maximum moratorium of 36 months.
Not many banks offer home loans for the long term. Oriental Bank of Commerce, PNB and ICICI banks are few other banks offering 40 and 30 year home loans. At a constant rate of interest and with other factors constant, the loan eligibility increases if you choose a longer tenure. At a constant rate of interest, the home loan EMI will fall as the tenure increases. However, at a constant rate of interest and other factors constant, the total interest burden is more when the tenure is long. So, to keep the interest cost low, it’s better to choose a shorter tenure. Illustratively, at an assumed rate of 8.6 per cent, the home loan EMI on a Rs 30 lakh loan for 15 years will be Rs 29,718, while it will be Rs 23,280 on a 30-year loan.
Higher loan amount
One may improve the loan eligibility by adding a close family member as co-applicant to the home loan. Close relatives of the applicant may even be added as a co-applicant for higher eligibility. If the applicant wants to add any person who is not a close relative as a co-applicant, the same can be considered only if he or she is the joint owner of the property. The list of relatives will include – Son’s wife, Daughter’s husband, Brother/sister, Brother’s wife, sister of the spouse, Sister’s husband, Brother of the spouse.
Free credit card and insurance
With BOB home loan, one gets a free credit card and concession of 0.25 per cent for car loans. Additionally, BOB offers free accident insurance with every home loan. You can also opt for group credit life insurance cover when you apply for a home loan. This cover protects the family against the death of the borrower, and the family is not required to repay the home loan to the extent of the claim amount. You can pay the premium for the cover along with the EMIs of your home loan.
According to the bank’s website there is a 100 per cent waiver of processing charges on all variants of home or top-up loans subject to recovery of out of pocket expenses of Rs.7500 plus GST.
The unified processing charges of the Bank of Baroda home loan include:
- Processing Charges
- Documentation charges
- Document Verification/ vetting charges
- Pre- sanction Inspection (Contact Point Verification-CPV) charges
- One-time post inspection charges
- Advocate charges for a legal opinion
- Valuer charges for valuation
- Bureau report charges
- CERSAI charges
- ITR Verification charges
Loan to value ratio
- For Loans up to Rs.30 lakh, the margin is 10 per cent while the LTV Ratio is 90 per cent.
- Loans above Rs.30 lakh up to Rs.75 lakh, the margin is 20 per cent while the LTV Ratio is 80 per cent.
- For Loans above Rs.75 lakh, the margin is 25 per cent while the LTV Ratio is 75 per cent.
Repayment Capacity of Borrower
The repayment capacity of the borrower is determined based on one’s gross monthly income (GMI) and other existing EMI’s. As per the BOB website, the total deductions including proposed EMI should not exceed as follows:
GMI less than Rs.20,000 – 50 per cent.
GMI Rs.20,000 – and above but less than Rs.50,000 – 60 per cent.
GMI Rs.50,000 – and above but less than Rs.2 lakh – 65 per cent.
GMI Rs.2 lakh and above but less than Rs.5 lakh – 70 per cent.
GMI Rs.5 lakh and above – 75 per cent.
Average Gross Annual Income (For last -2- years) up to Rs.6 lakh: 70 per cent.
Average Gross Annual Income (For last -2- years) more than Rs.6 lakh: 80 per cent.