Banks offering home loans below 7% interest rate for independent borrowers
Just like with salaried mortgage borrowers, self-employed borrowers should also compare and research the best interest rate for their mortgage. Bank interest rates on mortgage loans are now linked to an external standard. Indeed, with effect from October 1, 2019, the Reserve Bank of India (RBI) has mandated all scheduled commercial banks (except regional rural banks), local banks and small finance banks to tie interest rates. ‘interest on loans to individuals and MSMEs. at an external benchmark rate.
The RBI asked banks to link their interest rates on retail loans to one of the following external benchmarks, according to the circular:
- RBI pension rate
- Yield on 3-Month Government of India T-Bills as published by Financial Benchmarks India Pvt. Ltd. (FBIL)
- Yield on 6-Month Government of India T-Bills as published by FBIL
- Any other benchmark market interest rate published by the FBIL
The Reserve Bank of India repo rate has been designated as an external benchmark by the vast majority of banks. Repo Rate Tied Lending Rate refers to the lending interest rate which is tied to the repo rate (RLLR). The RLLR is made up of the RBI repo rate plus a spread or margin.
The repo rate plus the bank’s margin is equal to the RLLR. Every two months, the Central Bank assesses the repo rate.
The bank’s margin will remain the same for all home loan applicants, but banks are allowed to charge borrowers a risk premium under the RBI Circular. The risk premium imposed by the bank is determined by how dangerous your bank considers to be, and therefore varies from borrower to borrower.
Here are the interest rates for mortgage loans offered by the biggest banks for the self-employed: