If you are planning to avail a home loan, then you must be aware of the recent change of RBI loan rules and policies. As per the new RBI guidelines, the EMI has gone up. Why did this happen? It is because the latest repo rate has been hiked by the RBI after banks increased their MCLR (Marginal Cost Lending Rate).
To understand RBI home loan guidelines, you need to learn about MCLR. As per this rule, the banks have to lower the lending rate if the borrower’s rate goes down. This is a good thing for the home loan borrowers as the interest rate will become lower than the base rate.
The Marginal Cost Lending Rate (MCLR) cycle changes overnight, weekly, quarterly, half-yearly or annually. Always make sure you read the terms and condition properly to understand the interest reset period. Also, you can discuss with the bank before you apply for a home loan.
If you have plans to transfer your base rate to MCLR rate, then you need to inform your lender. As per the RBI home loan guidelines, your lender will start the procedure. Even if you see that the rate transfer is not a positive thing for you, you may change the lender. You can enjoy a reduction in the interest rate if you change your current lender.
But no matter which lender you choose you must read their rule about the interest rate. Various lenders such as Bajaj Finserv and few other reputed banks provide this benefit of the balance transfer.