SBI Home Loan: Factors that will decide interest rate and your EMIs

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Updated: April 6, 2019 1:12:25 PM

Here are a few things that you need to know before you opt for a home loan from SBI.

 SBI Home Loan, SBI Home Loan Interest rate, Interest rate, SBI, home loan, State Bank of India, SBI mclr,The effective home loan interest rate of SBI varies on seven factors. Know them in detail before you approach SBI.

If you are looking for a home loan from the country’s largest bank, the State Bank of India (SBI), here are a few things that you need to know before you walk into the bank branch. Depending on the need, SBI has several types of home loans to offer – Flexipay home loan, privilege home loan, Shaurya home loan, Pre-approved home loan, Realty home loan, and Bridge home loan, amongst others.

Here we look at the SBI Regular Home Loan. The 7 factors on which the home loan interest rate of SBI Home Loan depends are  –

(i) MCLR of SBI
(ii) Mark-Up on your loan
(iii) Amount of loan that you wish to avail
(iv) Whether you are salaried or a non-salaried
(v) Your gender
(vi) Your risk group as determined by SBI
(vii) And lastly on the LTV ratio.


Firstly, look at the MCLR as the home loans are linked to the bank’s MCLR. In case of SBI, the home loan interest rate of SBI is linked to its 12-month MCLR. The reset period, therefore, is 12 months, which means the EMI will be fixed for 12 months and then vary as per the prevailing MCLR. Currently, the SBI MCLR is 8.55 per cent.

2. Mark-Up

Next, ask the Mark-Up or the Spread (margin) on the home loan. The actual home loan rate will be bank’s MCLR plus a Mark-Up. In case of SBI it varies between 15 basis points and 80 basis points. Also, the Mark-Up varies for women borrower, Loan-to-Value ratio, amount of loan and whether one is salaried or non-salaried. See table.

3. The loan amount

SBI has three loan limits – Loans up to Rs 30 lakh, Loans between Rs 30 and Rs 75 lakh, and Loans above Rs 75 lakh. For borrowers other than women, a 30-lakh loan comes at 8.75 per cent, a Rs 30- Rs 75 lakh loan comes at 8.95 per cent, and a loan above Rs 75 lakh comes at 9.05 per cent. See table.

4. The loan-to-value (LTV) ratio

The amount of loan as against the value of the property determines the LTV. If a home costs Rs 1 crore and the loan is for Rs 79 lakh, the LTV is less than 80, else its higher. But, this is applicable for loan below Rs 30 lakh only and above that amount, LTV is not considered. See table.

5. Women borrowers

The women borrowers end up paying lesser rate and hence try taking the loan in the woman’s name and the spouse can be the co-applicant. There is a 5 basis points lower rate of interest for them across loan amount and LTV ratio. See table.

Floating Interest rates ( Effective March 12, 2019)

6. Profession

Depending on whether one is salaried or non-salaried, the interest rate will vary. In most cases, the effective rate for non-salaried is higher by 15 basis points. See table.

Floating Interest rates ( Effective March 12, 2019)

7. Risk Group

For loan above Rs 30 lakh, the bank has its own way of determining the risk profile of the borrower. The groups are categories as RG 1,2,3,4,5,6. While the interest rate for those falling in RG 1,2,3 is lower than those falling in RG 4,5,6. See table.

Floating Interest rates ( Effective March 12, 2019)

There are two unique features of the SBI home loan:

Firstly, in the SBI Regular Home Loan, the bank calculates interest charges on daily reducing balance. This means, repayments will get the benefit from the day it is paid back to the bank.

Secondly, anyone between 18 and 70 years of age can take SBI home loan and can repay it over a tenure of 30 years. This means, by keeping a long term tenure, the EMI’s will be low and as there are no pre-payment penalty, one may repay the entire outstanding loan as and when the funds are available.

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