Federal Bank Home Loan Interest Rates

Federal Bank has loan products for every sector of society. It has some of the best loan schemes for small and medium enterprises. At the same time, it provides one of the best services to the retail sector. The retail advances portfolio of the bank includes education loans, gold loans, personal loans, Home Loans, and many others.

Federal Bank has one of the best interest rate structures among all commercial banks in India. The Bank has a dominant presence in the smaller towns in the southern states of Kerala and Tamilnad. Thus, it is an active lender in PMAY, especially in the southern states of India.

Additional Info: Also check Rs. 1 Crore Home Loan EMI

Federal Bank offers Home Loans to meet the housing requirements of all sections of society.

Federal Housing Loan

Purpose of the loan

• Construction/purchase of a new house or apartment
• Purchase existing house or flat
• Repairs, renovations, home extensions, improvements, furnishing, and beautification.
• Reimbursement of debt incurred for constructing/purchase of a house
• Balance takeover from other banks and financial institutions
• Balance takeover from other banks and financial institutions

Target group

• Salaried individuals
• Self-employed persons and professionals
• Businesspersons can also apply for Federal Housing Loan
• Non-resident Indians are also eligible for Federal Bank Home Loan

Quantum of loan

• Up to 85% of the cost of the project
• Loans up to Rs. 15 Crores with the margin 15% to 20%

Loan tenure

Flexible repayment tenure extending to 30 years

Rate of interest

Floating rate of interest linked to 6M-MCLR

Loans for Purchasing Plots

Purpose of the loan

Purchasing a residential plot of land

Target group

Same as that of Federal Housing Loan

Quantum of loan

The maximum borrowing under this category is  25 Lakhs, with a margin of 40%.

Loan tenure

Flexible repayment tenure extending to 60 months

Rate of interest

Floating rate of interest linked to 6M-MCLR

House-Warming Loan

• Besides housing loans and loans for purchasing plots, Federal Bank has a unique product, House-Warming Loan.
• It is a personal loan without security to meet expenses related to house-warming ceremonies
• The quantum of loan is 5% of the Home Loan amount subject to a maximum of  2 Lakhs
• The rate of interest on such house-warming loans is 2% over the current Home Loan interest rate.
• The loan tenure should not exceed 60 months

Additional Reading:  CIBIL Score Required for Home Loan

Federal Bank adopts the MCLR interest rate structure for pricing its Home Loans and other retail loans. Federal Bank is one of the private sector banks to link its retail loans with an external benchmark rate. However, it has not announced any new retail loan product related to the repo rates. As on date, the MCLR interest rate structure continues to be effective.

MCLR is itself an external benchmark-related rate. It does not specifically link to any external rate like the repo rate or the T-bill rate. However, it is subject to market rate fluctuations.

MCLR comprises of four components:

• Marginal Cost of Funds
• Tenor Premium
• Operating Cost
• Negative CRR Carry

Federal Bank announces its MCLR at monthly intervals as stipulated by Reserve Bank of India. The housing loan interest rates and other lending rates are linked to the MCLR of the Bank. Any change in the market rate brings about a variation in the MCLR. The housing loan interest rates also move in a similar direction. However, the fluctuations do not affect the current Home Loan rates immediately because of the reset clause. Every Home Loan comes with an MCLR resetting clause. The individual Home Loan interest rates change only when the MCLR is reset. The resetting happens at fixed pre-determined intervals.

Federal Bank Home Loan Interest Rates - Points to Note

• Federal Bank offers a floating rate of interest on its MCLR-linked interest rate loans
• The MCLR-linked rates apply to new loans sanctioned after the effective date. Existing loans continue with the contracted rate of interest until the MCLR reset date.
• Existing loans sanctioned before April 2016 follow the Base Rate or BPLR, as the case may be
• Borrowers can opt to switch over to the MCLR structure at any time
• Federal Bank has Home Loans with a fixed rate of interest sanctioned in the Base Rate and BPLR regimes. The borrower can change over to the floating rate structure any time on the payment of a conversion fee.
• PMAY Home Loans have the same interest rate structure as listed above
• Federal Bank Home Loan Charges

Federal Bank Home Loan Charges

Customers can use the EMI Calculator provided on the Federal Bank website to determine their Home Loan EMI. MyMoneyMantra.com has a similar EMI Calculator on its website. Using the calculator is easy.

• Access our website, MyMoneyMantra.com
• Select Financial Tools
• Choose Home EMI Calculator
• Enter the loan amount, rate of interest, and repayment period to get your EMI

Federal Bank calculates interest on the daily reducing balances as do all other commercial banks. The different modes of repayment available to Federal Bank customers and other bank customers are as follows:

• Post-dated cheques from the respective savings or current accounts of the borrowers
• Federal Bank customers can submit a Standing Instruction to the Bank to recover the Home Loan instalment from their savings/current account.
• Other bank customers can register ECS mandates for the recovery of the Home Loan instalments on the due dates.
• Internet banking and mobile banking features are available with all banks to enable smooth transfer of funds from one account to the other.
• The conventional mode of payment includes paying cash at Federal Bank counters

Federal Bank has an active PMAY portfolio, as it has a prominent base in South India. PMAY Home Loans are similar to the conventional Home Loans save for the upfront subsidy factor and specific eligibility norms.

Eligibility Criteria - Income-based

Subsidy Criteria

Federal Bank Home Loan - PMAY - Points to Note

• PMAY subsidy is available to all eligible PMAY borrowers
• The family comprises of husband, wife, and unmarried children
• The subsidy is an upfront interest subsidy that is credited to the Home Loan immediately
• The Home Loan EMI changes with the crediting of subsidy into the account
• The rate of interest on PMAY loan is the same as that of other housing loans
• There are no ceilings on the amount of loan you can avail in PMAY. The amounts above the cap mentioned above are unsubsidised loans.