This is how much you will save on home loans with new rates

With banks slashing the marginal cost of funds based lending rate (MCLR), now buying your dream home will soon be a reality.

With effective from Sunday, various banks have announced the MCLR rate cut as they are flooded with liquidity after the demonetisation drive ended on December 31. 

Starting with, the largest bank in India, the State Bank of India, yesterday reduced its MCLR rates by 0.90% points across all tenure loans bringing down the effective home loan rates to 8.60% from 9.10% per annum.

The new home loan rates are the lowest in the last six years.

Following SBI, other banks too revised the MCLR rates. 

This is how much you will save now from home loans:

From now onwards, for home loans up to Rs 75 lakhs, the interest rates will be 8.60% p.a. and for others, the rates would be as low as 8.65% p.a. which was earlier 8.90% p.a. 

In addition to this, SBI has also revived a teaser rate loan where for the first two years, the loans will be available at 8.50% p.a. and at a floating rate in subsequent years.

Considering  that 0.50 % is reduced across all Banks for a new borrower this is what he is going to save now. 

Explaining with an example, Rishi Mehra, Founder, Deal4loans, for instance, for Rs 30 lakh loan amount and tenure being 20 years, with the new interest rate i.e. 8.60%, the EMI will be Rs 26,225 and the total interest will come up to Rs 32,93,972.

Earlier, the same amount and with the same tenure, the interest rate was 9.10%. Which means, the EMI was Rs 27,185 and taking the total interest to Rs 35,24,405.

This means, the savings will be of over Rs 2.5 lakh for over 20 years tenure and monthly saving of Rs 960 per month.

"This will ensure a lot more demand in the sector and we are already seeing 300% increase in traffic for Home loans from yesterday," Mehra said.