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A home is a safe space where you can relax without worry. Today, owning a house is a dream most people have, but applying for a home loan can often be confusing. Especially because of different loan rates and terms, comparing and contrasting takes time. <\/p>\n\n\n\n
To make your job easier, in this\narticle we aim to explain everything there is to know about MCLR and base rates\nso you can make an informed choice.<\/p>\n\n\n\n
The Base Rate was introduced in July 2011. It is the minimum interest\nrate at which a bank can lend money, with some exceptions dictated by the RBI.\nIt is determined by the given factors:<\/p>\n\n\n\n
The Marginal Cost\nof Fund-based Lending Rate (MCLR) for\na home loan<\/a> is the minimum interest rate a\nbank must charge for lending. It was introduced by the Central Bank of India\nand came into effect on April 1, 2016. <\/p>\n\n\n\n Since then, it has functioned as the internal benchmark\nfollowed by banks while giving out loans in any category. It replaced the Base Rate system which had been in\nplace since 2010. <\/p>\n\n\n\n Additional Read:<\/strong> <\/strong>What\nIs MCLR Home Loan?<\/a><\/p>\n\n\n\n The MCLR rate follows\ntenor-based methodology, meaning it can be changed depending on the period left\nbefore the loan repayment becomes due. It is determined by the following\nfactors:<\/p>\n\n\n\n Essentially,\nthe MCLR offers a floating interest rate, subject to fluctuation if there are\nchanges in the Repo rate. Generally, MCLR interest on home loans is lower than the Base Rate.<\/p>\n\n\n\n The\nkey difference between the two is that the Base Rate on loans is determined by the average cost of funds\nwhile MCLR is determined by the\ncurrent cost of funds. <\/p>\n\n\n\n Additional Read: <\/strong>Some Factors That Impact Home Loan Interest Rates<\/a> <\/p>\n\n\n\n Our expert guidance and tools such as a home loan EMI calculator<\/a> will help you choose the best loan plan for your dream home. Visit our website<\/a> to learn more. <\/p>\n\n\n\n\n