NBFCs/HFCs may probably continue linking home loans to their PLRs

Published: September 24, 2019 12:42:55 AM

Usually, the bank will factor in credit-worthiness of the borrower while quoting the interest rate. So I doubt this would be a leverage for you to ask for a better interest rate.

So you may get a loan of Rs 38 lakh with an approximate EMI of Rs 85,000 for 60 months.So you may get a loan of Rs 38 lakh with an approximate EMI of Rs 85,000 for 60 months.

By Chaitali Dutta

RBI has set repo rate as one of the external benchmarks for lending rates for banks. Will non-banking financial companies (NBFCs) also follow the rule for home loan?
– Arvind Sriram
No, RBI governs only banks. Hence the latest circular is applicable to bank loans. NBFCs and housing finance companies have not been mandated to migrate to an external benchmark. They will probably continue to link their loans to PLRs.

Is there any limit on personal loan that I can borrow from a bank as my annual income is close to Rs 30 lakh and I have no outstanding loans?
—Gautam Dhir
Banks calculate eligibility depending on the repaying capacity of the borrower. All EMIs put together should not exceed 50% of the in-hand income of the borrower. If Rs 30 lakh is your annual CTC, post-tax income would be Rs 21 lakh annually and in-hand salary would be Rs 1.75 lakh per month. So you may get a loan of Rs 38 lakh with an approximate EMI of Rs 85,000 for 60 months.

I had taken a home loan of Rs 30 lakh in 2006. In 2007, I prepaid about Rs 3 lakh. Now I want to pre-pay the entire remaining amount. But the bank insists that I pay a penalty fee of 3% of the outstanding loan at 2007. Should I pay or go for a litigation?
—Suman K Deasi
I do not see a reason for the bank asking you to pay a penalty for a repayment done more than a decade ago. However, before legal recourse, you may ask the bank to give you in writing the clauses and circulars under which such a penalty is being charged. This request may please be made in writing with proof of delivery to the concerned bank. If you do not get a reply from them or are not satisfied with their reply, you may approach the Ombudsman.

I have a 860 CIBIL score. Can I bargain for a lower home loan interest rate based on the score?
—S Hari
Usually, the bank will factor in credit-worthiness of the borrower while quoting the interest rate. So I doubt this would be a leverage for you to ask for a better interest rate. You may, however, compare the rates offered to you by another institution. This will give you the flexibility to go for a larger amount of loan/ longer tenure with low EMI/ lower interest rate.

The writer is founder, AZUKE Personal Finance Advisory (www.azukefinance.com). Send your queries to fepersonalfinance@expressindia.com

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