Bonanza for govt employees as SBI offers home loan at concessional interest rate

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India’s largest lender State Bank of India (SBI) has announced that it will offer cheaper home loan schemes, SBI Privilege Home Loan and SBI Shaurya Home Loan, to Central government employees and defense personnel as their repayment capacity has enhanced in the wake of the government’s acceptance to the recent proposal of the 7th Pay Commission to hike the salary of these personnel by 23.55%. The increase in allowances comes out to be 63%, according to the recommendations of the commission. As per the new schemes, SBI has lowered the interest rate by 0.05% (5 basis points) while offering employees the option to repay the loan at age upto 75 years, as opposed to 70 years now. SBI has also waived off the processing fee, encouraging borrowers to take home loan from the bank. Let’s study both the schemes in detail.

SBI Privilege Home Loan

Who are eligible?

Employees of Central/State Governments, including Public Sector Banks (PSBs), Central Government-owned PSUs, as well as other individuals with pensionable service are entitled for loan as per the scheme.

Features

  • Employees can avail the benefit of lower interest rate, which is brought down by 0.05% over the home loan card interest rate wherever the government has extended the check-off facility in collaboration with the bank.
  • Interest Rate – 9.25% per annum for women borrowers
    – 9.30% per annum for others
  • EMIs during the post-retirement period are going to be lower as their limit is set at 50% of the current net monthly income.
  • Age at the maturity of the loan is extended upto 75 years, more than 70 years under the normal home loan scheme. However, the maximum repayment tenure is 30 years.
  • Even though the processing fee is waived off fully, you still need to pay Advocate Fee for legal opinion, Valuer Fee for Valuation Report, CERSAI and CIBIL charges.
  • Central government employees can switch over the outstanding balance of the loan, running in other banks, to SBI.
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SBI Shaurya Home Loan

Who are eligible?

Defense Personnel of Army, Navy and Air Force are eligible to receive the loan as per the scheme.

Features

  • Defense employees can take advantage of lower interest rate over the home loan card interest rate wherever the government has extended the check-off facility in collaboration with the bank.
  • Interest Rate- 9.25% per annum for women borrowers
    – 9.30% per annum for others
  • EMI payout during the post-retirement period is going to be lower as its limit is set at 50% of the current net monthly income.
  • Overall age at the maturity of the loan is extended upto 75 years, more than 70 years under the normal home loan scheme. However, the maximum repayment tenure is 30 years.
  • Even though the processing fee is waived off fully, you still need to pay Advocate Fee for legal opinion, Valuer Fee for Valuation Report, CERSAI and CIBIL charges.
  • Defense personnel have the option to switch over the outstanding balance of the home loan, running in other banks, to SBI to become the beneficiary of the offerings.

Table Showing EMI, Interest Outgo, and Total Repayment Amount

Loan Amount Interest Rate Tenure Monthly Instalment Total Interest Amount Total Amount

EMI, Total Interest Outgo, Total Repayment (Interest + Principal)

Year Principal Interest Balance Amount