At present SBI’s EBR linked home loan rates start from 6.70% while its MCLR linked home loan rates start from 7.45% and base rate linked home loans start from 7.85%.
New Delhi: At present most of the banks including State Bank of India are offering floating rate loans such as home loan at external benchmark linked rates (EBR) as compared to MCLR or base rate earlier. Most of the banks have linked their EBR to repo rate. The benefit of EBR is that as soon as the Reserve Bank of India announces any reduction or increase in repo rate the same will be reflected in your loan interest rate from the next quarter. Also, EBR is a transperent system of pricing loans.
However, those who have taken home loans prior to 2018 are still paying higher interest rate as their loans are linked to MCLR or base rate, which takes time to reflect changes in repo rate.
At present SBI’s EBR linked home loan rates start from 6.70% while its MCLR linked home loan rates start from 7.45% and base rate linked home loans start from 7.85%. Impact of this interest rate difference will be huge if the remaining tenure in your home loan is more than 10 years. So if you have a home loan linked to either MCLR or base rate, then you will be better off switching it to EBR. Also, MCLR-linked rates are reset twice in a year while EBR is reset is whenever changes happen in repo.
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Proceedure to switch SBI home loan from base rate/MCLR to EBR
If you are interested to switch your SBI home loan linked to MCLR or base rate to EBR then you have to visit your branch and give an application in a specific format and have to pay one time service charge of Rs 5,000 plus GST. It means by paying just Rs 5,900 you can save lakhs of rupees in interest.
For example the outstanding amount on your home loan linked to base rate is Rs 10 lakh and the remaining tenure is 20 years. At present you are paying 8.20% interest. If you switch your loan to EBR then you can reduce home loan rate to 7.20%. This 1% reduction in interest rate will result in a saving of Rs 1,48,080 over the 20-year tenure.
