SBI Cuts Home Loan Rates, Check How To Calculate Monthly EMI

The lower level of home loan interest rates has been lowered by the State Bank of India (SBI) to 6.70 percent from 6.95 percent. According to a press release issued by SBI on Saturday, the interest rate on fresh home loans up to Rs 30 lakh will now start at 6.70 percent. SBI home loan interest rates will start at 6.95 percent for loans above Rs 30 lakh and up to Rs 75 lakh, and 7.05 percent for loans above Rs 75 lakh. The country's largest commercial bank has also reported a 0.05 percent interest rate concession for female borrowers on home loans. Individuals who apply for a home loan through the YONO App will get a 5-bps interest rate cut, according to the bank. The new rates are in force from May 1 2021.

The monthly EMI for instance on a Rs 10 lakh loan for a term of 10 years at 6.95 percent (previous SBI home loan interest rate) is Rs 11585, according to the SBI home loan calculator. That being said, based on the initial SBI home loan interest rate of 6.70 percent, the monthly EMI on a Rs 10 lakh home loan taken over a term of 10 years will now be Rs 11457, according to the SBI calculator.

That ensures that if a new SBI home loan borrower takes out a Rs 10 lakh loan for a term of ten years, the monthly EMI will be reduced by Rs 128 per month after the starting SBI home loan rate is reduced from 6.95 percent to 6.70 percent. So, across the course of ten years, the new SBI home loan borrower can save Rs 15,360. (Rs 128x12x10).

Female home loan borrowers, on the other hand, will get an additional 0.05 percent SBI home loan interest rate rebate, bringing the starting home loan rate to 6.65 percent. So, with a home loan of Rs 10 lakh for ten years, a female customer's EMI will be Rs 11,431.

SBI Home Loan EMI Calculation

The following formula is used for an SBI home loan monthly EMI calculation.

EMI = [P x R x (1+R)^N]/[(1+R)^N-1]. Here P is the principal loan amount, R is the rate of interest, N is the number of tenures in months.

If we take the above figure in consideration then EMI= [10,00,000 x 0.55/100 x (1+0.55/100) ^ 120 / [(1+0.55/100) ^ 120 - 1) = Rs 11,407 approx.

The EMI payments are directly proportional to the loan amount and interest rates, and inversely proportional to the loan tenure, while the three influencing variables are taken into account. The EMI payments increase in proportion to the loan amount or interest rate, and vice versa.