Home Loan EMI
If you are thinking of taking a loan to buy your house, then this news is only for you. Because in the coming time, loan can be available at lower rates. RBI has made major reforms in the rules for changing the spread on floating-rate loans, under which the rules related to credit score have been changed. Also, according to the new rule, banks can give loans to customers at low interest rates without waiting for three years. However, its benefit will be available only to those customers whose credit score has recently improved. Let us explain to you in detail about the new rules of RBI.
Whenever a bank gives a loan, its interest rate is decided in two ways. Firstly, there are external benchmarks such as RBI repo rate, T-Bill yield. Whereas, the second benchmark is the spread of the bank. This spread covers credit risk and cost. According to the new rules, some amendments have been made in the provisions of spread. For example, if your credit score is good, banks can reduce the interest on your loan by reducing this spread. Earlier, banks used to review spreads every three years. The new guidelines end this lock-in period. This means that as soon as your credit score improves, you will get instant review and immediate benefits.
This way the spread will be reduced
For this, first of all you have to keep checking your credit score. If your score has increased during the loan. So you can immediately go to the bank and apply for rate cut. After this, the bank will assess the credit and if your demand is found suitable then it will reduce the spread, which will reduce the interest. Or it will reduce the tenure of your loan. Overall the savings will be yours.
Since home loans are usually for long term and their amount can also be up to Rs 50-60 lakh. In such a situation, if the interest is reduced by even 0.25 percent, it will directly save you thousands of rupees per month. If the credit is good then the savings figure can also increase.
Customers will have to take initiative
Under RBI’s Interest Rate on Advances, existing customers will have to initiate rate cut with the bank themselves. Earlier, new customers would get the benefit of the rate cut immediately, while old customers had to wait for about three years for the spread review. With the new rules, now everyone will get equal opportunity. As soon as there is improvement in credit score, existing customers will also be able to demand lower interest rates immediately.