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In flat rate method, the interest rate is calculated on the principal amount of the loan. On the other hand, the interest rate is calculated only on the outstanding loan amount on monthly basis in the reducing balance rate method.
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What are the various fixed and floating interest rates on offer for home loans today? Let’s take a comprehensive look at interest rates across banks and housing finance companies.
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Interest rates on home loans have been falling ever since the lockdown, with the Reserve Bank of India (RBI) opting for deeper cuts in the policy rates to revive demand and economic activity that has taken a beating due to covid-19. In its last monetary policy meeting, the central bank reduced the repo and reverse rates by 40 basis points (bps) each to 4% and 3.35%, respectively. One bps is one-hundredth of a percentage point.
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21% is better than 12%. Surely, you must be joking!Is that really ever true?Yes, in case the 12% rate is being offered as Flat Rate to you whereas the 21% interest rate has been offered at a Reducing Balance calculation. If the reason is not clear to you, please read on.
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Yes, for a Home Loan you can ask your bank to reduce your Home Loan rate inline with the reduction in Bank’s MCLR. Recently, RBI reduced the rates by 25 bps so one can expect a reduction in MCLR soon. Once that is announced by your bank, you should ideally see your loan rate reduced automatically. But in case that does not happen, please contact your branch for the same and they should do that.
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Business loan interest rates will always depend on the profile of the applicant. We can divide this into 3 categories
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25 years ago most loans were on a Fixed interest rate basis the interest rate would remain constant for the maturity of the loan. Ex: If you have taken a housing loan 25 years ago, the interest rate would be Fixed it remains constant for 15-20 years.
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