Only banks are mandated to offer loans based on an external benchmark rate (EBR) or loans linked to MCLR.
The home loan war seems to have begun. The race to offer sub-7 per cent home loans seems to intensify in the months to come. After a few leading banks reduced the home loan interest rates below 7 per cent, the LIC Housing Finance, a leading housing finance company, has announced a cut in its home interest rate below 7 per cent.
While SBI home loans and HDFC home loans are available from 6.95 per cent, the LIC Housing Finance has announced that the interest rate on their home loan will be available from 6.90 per cent onwards. Incidentally, Union Bank of India and Bank of India are also offering home loans with rates of interest starting below 7 per cent.
The home loan interest rate of LIC Housing Finance on loan amount up to Rs 50 lakh is 6.9 per cent onwards. For loan amount between Rs 50 lakh and Rs 1 crore, it is 7 per cent onwards, while for loan amount between Rs 50 lakh and Rs 3 crore and for Rs 3 crore to Rs 15 crore, it is 7.1 per cent and 7.2 per cent onwards.
Currently, the prime lending rate (PLR) of LIC Housing Finance for Retail Housing Loans is 14.70 per cent. Only banks are mandated to offer loans based on an external benchmark rate (EBR) or loans linked to MCLR. Since October 1, 2019, banks can only lend at EBR. LIC Housing Finance being a housing finance company have its own prime lending rate based on which loans such as home loans are offered.
Loan to value amount
In the case of LIC Housing Finance, the loan to property value in case of purchase is – 90% Property value up to a loan of Rs.30 lakh, 80% for loans more than Rs. 30 lakh and up to Rs.75 lakhs and 75% for loans above Rs.75 lakh. The maximum term for a salaried can be 30 years while for self-employed it is 20 years.
The loan which is under Floating Rate of Interest, the Rate of Interest is at present reviewed every three months ( January, April, July, October ) based on the prevailing market conditions. The revised Floating Rate of Interest could increase, decrease or remain the same. As per the company website, the rate of interest will be reviewed every 6 months (January, July) for old customers as per their loan agreements.