Allahabad Bank Home Loan Interest Rates
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About Allahabad Bank

Allahabad Bank has a history dating back to the nineteenth century. A group of Europeans established Allahabad Bank on April 24, 1865, at Allahabad. It shifted its head office to Kolkata in 1923 for business considerations.

Along with 18 other banks, Allahabad Bank was among the first lot of banks to be nationalised in 1969. Allahabad Bank rolled out its first CBS branch in 2006. By 2011, the bank had all its branches under the CBS network. Allahabad Bank has a predominantly North Indian presence. In the recent round of bank mergers, the Government has decided to merge Allahabad Bank with Indian Bank, a South India-dominated bank, thereby giving a national identity to the institution.

Allahabad Bank Home Loan

Allahabad Bank offers various deposit and loan products to its customers. One of the popular loan products is the Allahabad Bank Home Loan. The bank has tailor-made Home Loan schemes to suit every section of society. Its Home Loan portfolio includes the financing of new and second-hand homes and apartments. The bank also finances for constructing a home on your land. Loans for repairs, renovations, home extensions, and improvements are also available with Allahabad Bank. Some of the highlights of Allahabad Bank loan are its low-interest rates and transparent pricing. Allahabad Bank is also a prominent player in the Pradhan Mantri Awas Yojana (PMAY) scheme of things.

Allahabad Bank Home Loan Interest Rate

Allahabad Bank follows the Marginal Cost of Funds-based Lending Rate (MCLR) linked interest rates for all its loans, including the Home Loan. This mode of calculation applies to all Home Loans sanctioned after April 01, 2016. The Reserve Bank of India (RBI) has urged all banks in India to start offering a Repo Rate linked interest rate for retail loans, especially Home Loans and vehicle loans with effect from October 01, 2019. Allahabad Bank has announced its intention to connect its retail loan portfolio with the repo rate with effect from September 01, 2019. The bank has the Base Rate and Benchmark Prime Lending Rates in force, as well for its existing loans sanctioned before 2016.

Allahabad Bank Home Loan Interest Rate - Repo Rate Linking

Allahabad Bank has benchmarked its retail loans up to 75 Lakhs with the External Benchmark Linked Rates (EBLR) that comprises of the repo rate as one of its constituents. The EBLR consists of three significant components.

  • The Reserve Bank Repo Rate: The rate at which RBI lends to banks on a short term basis
  • Average Interest Margin: An average of the last ten years net interest margin rounded off to the nearest five basis points.
  • Credit Risk Premium: Depending on the internal credit risk rating

These factors ensure that the customers get the best benefit of the market rates. The average of the net interest margins of the bank makes this rate extremely competitive. The customers also benefit because of the internal credit risk rating. A high credit rating ensures a low credit risk premium, thereby translating into interest rate benefits.

Allahabad Bank has benchmarked all its retail loans up to 75 Lakhs with the EBLR. It has also announced the pricing of its Mudra Loans with reference to the EBLR with effect from September 01, 2019. The bank has also published the linking of savings deposits of 40 Lakhs and above with the repo rate. The benefit of linking the repo rate with Home Loans is that the customer gets the benefit the moment RBI reduces the repo rates. However, customers have the option of sticking to the MCLR concept on mutually acceptable terms.

Allahabad Bank Home Loan Interest Rate - MCLR

All types of loans, including the Home Loans sanctioned on or after April 01, 2016 link to the MCLR of the bank. Allahabad Bank announces its MCLR at frequent intervals. The last such revision is with effect from August 14, 2019.

The present MCLR of Allahabad Bank is as per the following table:

MCLR tenor Rate

Overnight MCLR

7.90%

One-month MCLR

7.95%

Three-month MCLR

8.20%

Six-month MCLR

8.25%

One-year MCLR

8.40%

Allahabad Bank Home Loan Interest Rate - Base Rate and BPLR

The Base Rate structure came into existence in July 2010. All loans sanctioned from July 2010 until the introduction of the MCLR in 2016 are linked to the Base Rate. Loans existing before the launch of the Base Rate concept were linked to the bank's BPLR. Customers still have the option of retaining the Base Rate or BPLR-linked rate of interest. They also have the option of switching over to the MCLR concept. As there are loan accounts with links to the Base Rate and BPLR, Allahabad Bank announces its Base Rate and BPLR at regular intervals.

  • The Base Rate of Allahabad Bank with effect from April 02, 2018 is 9.15%
  • The Benchmark Prime Lending Rate of Allahabad Bank with effect from April 02, 2018 is 13.40%

Thus you have four different interest rate structures in Allahabad Bank:

  • Repo Rate linked EBLR w.e.f. September 01, 2019
  • MCLR w.e.f. August 14, 2019
  • Base Rate and BPLR w.e.f April 02, 2018

The majority of Allahabad Bank Home Loans are linked to the one-year MCLR of the bank. The rates of interest for individual customers vary because of other external factors.

Allahabad Bank has different interest rates for its various Home Loan schemes. This interest rate table will make things clear.

The interest rates are linked to the One-year MCLR of the bank (8.40% with effect from August 14, 2019

Home Loan Product

Revised Risk-Based Pricing

Effective rate of interest

  • ALL Bank Aashiana Scheme (Regular Home Loan Product)
  • Housing Finance Product for NRI/PIO
  • Home Loan Product for Pensioners

Up to 75 Lakhs: One-year MCLR to One-year MCLR + 1%

8.40% to 9.40%

Above 75 Lakhs to up to 5 Crores: One-year MCLR + 0.05% to One-year MCLR + 1%

8.45% to 9.40%

Above 5 Crores: One-year MCLR + 0.20% to One-year MCLR + 1%

8.60% to 9.40%

Premium Housing Finance Product for High Net Worth Individuals (Loans above 5 Crores)

One-year MCLR + 0.20% to One-year MCLR + 1%

8.60% to 9.40%

Housing Loan Scheme under Commercial Real Estate

0.25% above the Home Loan product pricing in the respective categories

8.65% to 9.65%

Home Furnishing Scheme

One-year MCLR + 1.50% to One-year MCLR + 3%

9.90% to 11.40%

Loans for Application Money raised by Housing Board or Development Authority for allotment of residential apartment or plot

One-year MCLR + 3.50% to One-year MCLR + 5%

11.90% to 13.40%

  • ALL Bank Home Plus
  • ALL Bank Credit Loyalty Benefit Scheme

One-year MCLR + 1% to One-year MCLR + 2.50%

9.40% to 10.90%

Allahabad Bank Home Loan Interest Rates - Points to note

Allahabad Bank Home Loan interest pricing depends on the following factors:

  • CIBIL/CRIF High Mark credit rating of the borrower: The better the score, the lower is the interest rate spread.
  • Loan to value ratio: Higher the margin, better is the rate of interest on the Home Loan
  • The profession of the customer: Salaried customers get a benefit because of their regular source of income. Among the self-employed category, independent professionals like doctors, engineers, chartered accountants, and lawyers get a preferential rate of interest as compared to other self-employed individuals.
  • As Allahabad Bank has linked the Home Loans up to 75 Lakhs with the EBLR, customers have the options for switching over to the new rate regime. They can also choose to remain with the MCLR-based rate depending on their convenience.

Allahabad Bank Home Loan Interest Rate - PMAY Subsidy

Allahabad Bank is a prominent member lending institution under PMAY, primarily due to its significant presence in North India. PMAY loans attract the same rate of interest as that of other Home Loans. However, there is a distinction because of the upfront interest subsidy available in the PMAY-Urban loans. The treatment of subsidy is crucial. This subsidy is an upfront subsidy, whereby the bank has to credit the amount received from the Government into the loan account of the borrower. The bank can continue to charge interest on the residual portion at the contracted rate. The customer benefits because of a reduced EMI liability.

The PMAY subsidy details are as follows:

Category of Borrower Annual Family Income Eligibility Norms Loan Amount eligible for a subsidy Rate of subsidy Maximum amount of subsidy

Economically Weaker Section -EWS

Up to 3 Lakhs

6 Lakhs

6.50%

2.67 Lakhs

Low Income Group - LIG

3 Lakhs <= 6 Lakhs

6 Lakhs

6.50%

2.67 Lakhs

Middle Income Group-I MIG-I

6 Lakhs <= 12 Lakhs

9 Lakhs

4%

2.35 Lakhs

Middle Income Group-II MIG-II

12 Lakhs <= 18 Lakhs

12 Lakhs

3%

2.30 Lakhs

Allahabad Bank Home Loan Interest - Method of Calculation

Allahabad Bank offers fixed and floating rates of interest depending on the convenience of the customers. The rates of interest depend on the credit rating, LTV ratio, and the occupation of the borrower. The bank calculates interest on a daily reducing balance basis. Therefore, EMI is the ideal repayment option available to borrowers. The maximum repayment tenure in Allahabad Bank can extend up to 30 years for the Home Loan.

Allahabad Bank Home Loan EMI

Allahabad Bank has an EMI Calculator on its official webpage that enables customers to check out their EMI. The customer has to enter the necessary details like loan amount, the rate of interest, and the repayment tenure.

MyMoneyMantra has a similar EMI Calculator on its Financial Tools page. The operational procedure is the same. On entering the necessary data, the customers can hit on the 'Calculate' option to get their EMI and breakup of principal and interest repayment.

The EMI comprises of an interest repayment portion along with a principal repayment component. The EMI is spaced out in such a manner that it covers the entire tenure of the Home Loan.

Allahabad Home Loan - Frequently Asked Questions

How is EBLR beneficial to customers?

EBLR stands for External Benchmark Linked Rate with the repo rate as its significant constituent. Other components include the average interest margin and credit risk rating adjustments.

Fluctuation in the market affects the repo rate. Therefore, customers can benefit if there is a downward swing in the repo rate.

Will the Home Loan EMI change with every change in the repo rate?

Yes, it should change. However, banks prefer to extend or reduce the tenure instead of changing the EMI. Nevertheless, the customer gets the benefit either way.

Is it advisable to change over to the repo rate mechanism from the MCLR?

The repo rate linked interest rate mechanism ensures quicker passing over of benefits to the customer in the event of a reduction in the repo rate. The MCLR takes time as many banks have an annual reset option. Hence, customers could get an instant benefit. However, vice versa could also happen.

How does the customer benefit from the upfront subsidy in PMAY?

Consider the following example. A borrower has availed a PMAY Home Loan for 6 Lakhs in the LIG category. As per the guidelines, there is an upfront subsidy of a maximum of 2.67 Lakhs. On receipt of the subsidy, the bank credits the amount to the loan account of the borrower. Therefore, the borrower has a reduced loan liability of 3.33 Lakhs. The EMIs are scheduled accordingly.

Is there a fee involved in the switch over from the MCLR concept to the EBLR concept?

The EBLR is in its nascent stages as on date. Hence, banks have not come up with any concrete guidelines regarding conversion fees if the borrower switches over from the MCLR to the EBLR concept. There could be one in the future.

Is it beneficial to opt for a fixed rate of interest on Home Loans?

A Home Loan is a priority in India. Hence, the Government will ensure to maintain Home Loan interest rates as low as possible. Under such circumstances, there will not be significant fluctuations in the floating rate of interest. As on date, the fixed-rate interest structure is higher than the floating rate structure by at least a percentage point. Therefore, it is beneficial to opt for a floating rate rather than go for the fixed-rate option.

What are the benefits of a fixed interest rate option?

The most significant benefit of opting for a fixed rate of interest is that the borrower crystallises the EMI and tenure. Both of them do not change, thereby enabling the borrower to plan out his/her finances better.

What are the demerits of the fixed interest rate option?

The fixed rate structure is comparatively higher than the corresponding floating rate structure. Therefore, the borrower has to settle for a higher EMI throughout the loan tenure. It implies that the borrower ends up repaying more than what he/she would have done in a floating rate regime. Secondly, banks can charge a foreclosure penalty for borrowers who have opted for a fixed-rate structure.

Is there any penalty for foreclosure of Home Loans for customers availing floating rate of interest options?

The Reserve Bank has come out with clear guidelines to banks not to charge any foreclosure penalty on Home Loans to customers opting for the floating rate of interest option.

Are income tax benefits available on Allahabad Bank Home Loan repayment?

Yes, income tax concessions are available under Sec 24 and Sec 80C for interest and principal repayment of Home Loans.

Allahabad Bank Home Loan Interest Rates - Snippets

Allahabad Bank announces linking of retail loans with the repo rate

The Government of India has introduced clear directives to the banks to link their retail loans with the repo rates announced by the RBI from time to time. The banks have time until October 01, 2019, to switch over to the repo rate-linked interest rate system. However, Allahabad Bank has announced that it will be linking its retail loans up to 75 Lakhs and Mudra loans to the EBLR with effect from September 01, 2019.

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