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Tamilnad Mercantile Bank

Home loan is a secured loan, where the property being purchased is collateral. The home loan tenure can range between 10 – 30 years. The loan value can be upto 80% - 90% of property value. Home loans are extended to the borrower as a percentage of completion of project. The EMI which includes the principal and interest is to be paid on full completion of the project. Until the completion of the project, the borrower pays Pre-EMI to the bank which is the interest component of the home loan. Home loan interest paid is allowed as tax deduction under section 24 of Income tax act, 1961. The principal paid qualifies for tax deduction under section 80C.

Types of interest rates on Home Loans

There are 2 types of interest rates offered by most banks –

  • Fixed interest rate

    When the interest rate may be fixed over the tenure of the home loan, it is termed as fixed interest rate. The fixed interest rate would be base rate + margin, it would differ among lenders. It is recommended that if the market interest rate is on an uptrend, the applicant should choose fixed interest rate. This will help locking the interest rate at a certain level over the tenure of the loan or atleast till the period of revision as per bank policy.

  • Floating interest rate

    This type of interest rate would vary over the tenure of the loan. The interest rate on the home loan is aligned to the market interest rate. The interest rates in the case of floating interest rate is linked to the prime lending of the bank. This prime lending rate is affected by repo rate. Repo rate is the rate at which the bank borrows money from the central bank.

    Many banks have introduced a third variant which is the hybrid interest rate. Hybrid interest rate are a combination of fixed interest rate and floating interest rate. A part of the interest rate is fixed and the rest of the component is floating. The floating component fluctuates based on the market interest rate.

Interest rates and other charges on Home Loans offered by Tamilnad Mercantile Bank

The interest rates and other charges on home loans offered by Tamilnad Mercantile Bank are –

Rate of Interest

  • Interest rate is also dependent on MCLR (Marginal Cost of funds-based Lending rate)
  • Current Base Rate for Lending (BR) is 9.75% p.a.

Penal Interest

  • Any irregularity or default in repayment will attract penal interest of 2% p.a. over and above the above rate of interest on the balance outstanding.

Processing Charges

  • 0.50% of the Limit Sanctioned without any maximum cap plus taxes as applicable

Factors affecting interest rates on Home Loan of Tamilnad Mercantile Bank

The key factors that affect interest rate of home loan from Tamilnad Mercantile Bank are –

  • Credit score

    Higher credit score provides the applicant a better standing to negotiate a lower interest rate. Higher credit score indicates good credibility of the applicant.

  • Income level

    A higher income level indicates that the borrower will be in a better position to repay the liability, hence, the interest rate will be lower.

  • Stability of income

    Longer employment indicates higher stability of income, this inturn indicates that the borrower is unlikely to default. Thus, the bank prefers to lend money at a lower interest rate.

  • Loan value

    Most banks provide upto 80% of property value as loan. The property value that is considered includes home price and closing costs reduced by the down payment. Higher loan value is likely to have lower interest rate.

  • Type of applicant

    Salaried employees tend to obtain loan at a lower interest rate as compared to self – employed businessmen or professionals. This is due to the fact that there is better stability of income in the case of salaried individuals.

  • Property location

    Interest rates in cities tend to be higher as compared to the interest rate in semi-urban and rural regions. Even within cities there are prominent locations for which home loans are extended at higher rates. Depending on the location where the borrower intends to purchase the property, the interest rates may vary.

Purposes for which Home Loan offered by Tamilnad Mercantile Bank can be used

There are various purposes for which home loan offered by Tamilnad Mercantile Bank can be used -

  • To purchase ready built new house / flat or house / flat under construction
  • To purchase old house / flat
  • To construct house on his / her own land
  • To purchase land for construction of house within 2 years from the date of purchase of land.
  • To take-over of housing loan availed from other Banks / FIs
  • For renovation/extension / repair / furnishing.
  • Reimbursement of investments already made by the borrower provided the investment has taken place within preceding one year.

Eligibility to apply for Home Loan offered by Tamilnad Mercantile Bank

  • Individuals aged between 18 and 50 years are eligible for home loan offered by Tamilnad Mercantile Bank
  • Home loans are extended not only to resident Indians but also to NRIs
  • Non-Resident Indians (NRIs) holding Indian passport or Persons of Indian origin (PIOs) holding foreign passport, singly or jointly or joint with spouse or close relatives of NRI applicant

Home Loan quantum offered by Tamilnad Mercantile Bank

The maximum loan value offered by Tamilnad Mercantile Bank is as mentioned below -

a) Up to Rs. 500 Lakhs in case of Metropolitan centres & Rs. 300 Lakhs for Non-Metro Centres.

b) For Special cases, where IT returns are not available not exceeding Rs. 10 Lakhs.

c) Up to Rs. 25 Lakhs for Renovation.

d) Top-up Loans- Maximum of 15% of the original Loan amount or Rs. 15 Lakhs, whichever is lower for the purpose of improvements in the existing house for which, Loan has already been sanctioned by the bank.

e) Take-over of Loans from other Banks: - Actual amount outstanding.

Frequently asked questions: Tamilnad Mercantile Bank Home Loan Interest Rate

1. Who can apply for home loan from Tamilnad Mercantile Bank?

Individuals aged between 18 and 50 Years are eligible for home loan offered by Tamilnad Mercantile Bank. Both Resident Indian and NRIs can apply for home loan with Tamilnad Mercantile Bank.

2. What are the types of interest rates on home loan available with Tamilnad Mercantile Bank?

Fixed rates and floating rates are the primary types of interest rates available with Tamilnad Mercantile Bank home loans.

3. What are the key factors which influence the interest rate of home loan offered by Tamilnad Mercantile Bank?

Credit score, income level, stability of income, repayment capacity, property value, property location, market interest rate are some of the factors which influence the interest rate of home loan.

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