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Banks offering home loans below 7% interest rate for self-employed borrowers

Banks offering home loans below 7% interest rate for self-employed borrowers
Written by Publishing Team

Lenders such as banks, non-bank financial firms and housing finance companies have created home loan solutions tailored to the needs of the self-employed.

Just as for salaried home loan borrowers, self-employed borrowers should also compare and shop for the best interest rate for their home loan. The interest rates on home loans from banks are now tied to an external benchmark. This is because, as of October 1, 2019, the Reserve Bank of India (RBI) has mandated all scheduled commercial banks (excluding regional rural banks), local area banks, and microfinance banks to link interest rates on retail loans and MSME loans to an external reference rate. .

The Reserve Bank of India has required banks to link interest rates on retail loans to any of the following external benchmarks, as per the circular:

  • Reserve Bank of India repo rate
  • Government of India 3-month T-bills yield published by Financial Benchmarks India Pvt. Ltd. (FBIL)
  • Yield of Government of India 6-month Treasury Bills published by FBIL
  • Any other market reference interest rate published by FBIL

Reserve Bank of India’s repo rate has been set as an external benchmark by the vast majority of banks. Repurchase rate lending rate refers to the interest rate on lending linked to the repurchase rate (RLLR). The RLLR consists of the RBI’s repurchase rate plus the spread or margin.

The repurchase rate plus bank margin equals RLLR. Every two months, the central bank evaluates the repo rate.

Bank margin will remain the same for all housing loan applicants, but banks are authorized to charge borrowers a risk premium under the RBI circular. The risk premium charged by the bank is determined by how risky your bank is and therefore varies from one borrower to another.

Here are the interest rates on housing loans offered by the best banks for self-employed individuals:

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