2 min
05 October 2024
Do you want to know why your loan interest rate changes often? One of the main reasons could be EBLR. EBLR full form is the External Benchmark Lending Rate. It’s a standard rate that banks use to set interest rates for loans, including home loans. This rate is linked to external benchmarks like the repo rate, set by the Reserve Bank of India (RBI). So, if the repo rate changes, the EBLR also changes. This directly affects how much you pay on your loans.
With this system, transparency and quick rate transmission are ensured, helping you get the best possible rates.
For instance, let’s say you have a home loan with an interest rate linked to EBLR. If the repo rate drops from 5.5% to 5.0%, your loan interest rate will also drop by 0.5%, helping you save on EMIs. Therefore, opting for an EBLR-linked home loan helps you stay aligned with market rates, ensuring you get the most competitive rates available.
Alignment with Market: Stay in line with current market rates.
Quick Rate Adjustments: Any changes in repo rate affect your interest rate almost immediately.
One of the key features of Bajaj Housing Finance Home Loan is its attractive interest rates, which help you manage your EMIs without straining your finances. Bajaj Housing Finance also offers a hassle-free online application process, making it convenient to apply and track your loan status. You can customise your loan amount and tenure according to your repayment capacity, and even get a higher loan eligibility by adding a co-applicant.
Whether you need a home loan for buying a new house, or renovating your existing property, Bajaj Housing Finance provides a comprehensive solution. With minimal documentation and quick approvals, it’s an ideal choice for you if you are looking to fulfil your dream of owning a home.
With this system, transparency and quick rate transmission are ensured, helping you get the best possible rates.
How does EBLR impact your loans?
The EBLR directly impacts how much interest you pay on your loans. Since EBLR is linked to an external benchmark like the repo rate, any change in this benchmark will lead to a change in your loan’s interest rate. This means that when the repo rate decreases, the EBLR also decreases, and your loan EMIs reduce. Conversely, if the repo rate increases, your loan EMIs will rise.For instance, let’s say you have a home loan with an interest rate linked to EBLR. If the repo rate drops from 5.5% to 5.0%, your loan interest rate will also drop by 0.5%, helping you save on EMIs. Therefore, opting for an EBLR-linked home loan helps you stay aligned with market rates, ensuring you get the most competitive rates available.
Example of EBLR
Let's take an example to illustrate EBLR’s impact:- Current repo rate: 5.5%
- EBLR mark-up: 2.5%
- Final loan rate: Repo rate + mark-up = 5.5% + 2.5% = 8.0%
EBLR and home loans
Home loans are one of the primary loan categories that follow EBLR. If you opt for an EBLR-linked home loan, your interest rate will change based on the external benchmark. Here are some key points:- Transparency: You’ll know exactly why your interest rates change.
- Quick rate transmission: Any changes in the repo rate will quickly reflect in your loan interest rates.
- Lower EMIs: When external rates fall, you benefit from lower monthly payments.
How to choose a home loan with EBLR?
When choosing a home loan linked to EBLR, consider factors like your risk appetite, the current repo rate trend, and your long-term financial goals. EBLR-linked loans offer transparency, but they also mean your EMIs can go up if the repo rate increases. Compare EBLR with fixed-rate loans to see which one suits your needs better.EBLR vs. MCLR: Key differences
| Feature | EBLR | MCLR |
| Linked to | External benchmarks (e.g., Repo Rate) | Bank's internal cost of funds |
| Rate Transmission | Responds quickly to external rate changes | Adjusts periodically based on internal factors |
| Transparency | High | Moderate |
| Rate Changes | Occurs frequently with external changes | Occurs periodically as per bank's review |
Benefits of EBLR for borrowers
Transparency: Understand how your interest rate is calculated.Alignment with Market: Stay in line with current market rates.
Quick Rate Adjustments: Any changes in repo rate affect your interest rate almost immediately.
Explore Bajaj Housing Finance Home Loan
Bajaj Housing Finance offers home loans that cater to diverse financial needs, whether you are looking to buy your first house or invest in a property. With competitive interest rates, flexible repayment options, and a transparent application process, Bajaj Housing Finance Home Loans are designed to make home ownership easier.One of the key features of Bajaj Housing Finance Home Loan is its attractive interest rates, which help you manage your EMIs without straining your finances. Bajaj Housing Finance also offers a hassle-free online application process, making it convenient to apply and track your loan status. You can customise your loan amount and tenure according to your repayment capacity, and even get a higher loan eligibility by adding a co-applicant.
Whether you need a home loan for buying a new house, or renovating your existing property, Bajaj Housing Finance provides a comprehensive solution. With minimal documentation and quick approvals, it’s an ideal choice for you if you are looking to fulfil your dream of owning a home.
