SBI real estate loan | SBI offers existing mortgage borrowers the option of switching to the new rate regime. Check details


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New Delhi: Currently, most banks, including the State Bank of India, offer variable rate loans such as home loans at Linked External Reference Rates (EBRs) to MCLR or previous base rate. . Most banks have linked their EBR to the repo rate. The advantage of the EBR is that as soon as the Reserve Bank of India announces a reduction or an increase in the repo rate, the same will be reflected in the interest rate on your loan from the following quarter. In addition, EBR is a transparent loan pricing system.

However, those who took out home loans before 2018 still pay higher interest rates because their loans are tied to the MCLR or the base rate, which takes time to reflect changes in the repo rate.

Currently, SBI’s EBR-linked home loan rates start at 6.70%, while its MCLR-linked home loan rates start at 7.45% and base rate home loans. at 7.85%. The impact of this interest rate difference will be huge if the remaining term of your mortgage is more than 10 years. So if you have a mortgage linked to the MCLR or the base rate, you had better switch it to the EBR. In addition, the rates linked to the MCLR are reset twice a year, while the EBR is reset whenever changes occur in the repo.

Procedure for switching the SBI mortgage from the base rate / MCLR to the EBR

If you want to convert your linked SBI home loan to MCLR or base rate to EBR, you need to go to your branch and apply in a specific format and pay a one-time service fee of Rs 5,000 plus GST . This means that by paying only Rs 5,900 you can save Rs lakhs in interest.

For example, the amount owed on your mortgage linked to the base rate is Rs 10 lakh and the remaining term is 20 years. Right now you are paying 8.20% interest. If you switch your loan to EBR, you can reduce the mortgage rate to 7.20%. This 1% reduction in the interest rate will result in a saving of Rs 1,48,080 over the 20 year term.

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