Since its start in 2015, IDFC FIRST Bank has taken the Indian home loan market by surprise. Unmatched features and benefits, low processing charges and no hidden clauses, IDFC FIRST home loans offer everything. IDFC FIRST Bank home loan interest rates offer the choice between the fixed and floating rates of interest starting as low as 8.45% p.a.
IDFC First Bank Home Loan involves the following fees and charges:
|Processing fee||Up to a maximum of Rs. 10,000|
|Charges for EMI bounce||Rs. 400 for each bounce|
|Charges for swapping repayment instrument/ copies of documents/ duplicate list of documents/ duplicate NOC or NDC/ cancellation of disbursement cheque||Rs. 500 per request|
|MCLR to EBR switch fees for variable rate loans||Up to 0.5% of the outstanding loan amount|
|Fees for conversion of Short & Sweet Loan to Simple Home Loan & vice versa||Up to 0.5% of the outstanding loan amount|
|Re-pricing fees||Up to 2% of the outstanding loan amount|
|Default interest||2% p.m.|
|Other statutory charges and mortgage creation charges||As per actual|
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Below are some key features of IDFC First Home Loan:
Below is the comparison of IDFC First Housing Loan Interest Rate with other top five lenders:
IDFC First Home Loan Interest Rate is fixed as well as the. The bank follows the MCLR structure. The bank will soon switch over to the RLLR method, as Reserve Bank of India (RBI) has urged banks to switch over to the RLLR by October 01, 2019.
Marginal Cost of Funds-based Lending Rate (MCLR)
The MCLR is in force since April 01, 2016. Before the concept of MCLR, the banks were following the Base Rate system with effect from July 01, 2010. The Base Rate system was also a market-related rate system. However, banks were slow in passing on the benefits of market fluctuations to their customers. Therefore, the concept of MCLR came into being.
MCLR comprises of the following key aspects:
All these factors combine to decide the MCLR of the bank. Each bank has its MCLR. Usually, banks announce their MCLR monthly. However, the resetting of the MCLR linked to the loan accounts do not take place immediately. It depends on the reset frequency decided by the individual bank. If the bank goes for an annual reset, the benefit of the market rate fluctuation does not reach the ultimate beneficiary until the reset date.
In the meanwhile, the market rates can go up again as well. Therefore, RBI observed that banks were lagging in passing over the benefit to their customers. This reluctance on the part of the bank forced RBI to come up with a solution in the form of linking the interest rates to an external benchmark rate. The repo rate is one such vital rate.
Repo Rate Linked Lending Rate (RLLR)
The RLLR is a better indicator of the market rate because of its direct link with the repo rate.
RLLR comprises of only three factors:
IDFC First Bank calculates Home Loan interest on the daily reducing balances method. This method is the best one that offers the best benefits to the borrower. You can use IDFC First Home Loan Interest Rate Calculator available online to calculate the applicable rate.
IDFC First Bank Home Loan - PMAY Subsidy
PMAY Home Loans are unique because of the upfront subsidy factor. The Government of India releases the PMAY subsidy that is to be credited upfront to the borrower loan account. Therefore, the loan liability of the borrower decreases by the amount of grant. The calculation of EMI is done based on the reduced principal amount.
The benefits accruing to the borrower because of PMAY upfront subsidy are as follows:
Calculation of PMAY Subsidy
The calculation of PMAY subsidy is a complicated one:
Alternatively, use the PMAY subsidy calculator provided on the PMAY official website to determine the subsidy amount.
|Category of borrower||EWS||LIG||MIG-I||MIG-II|
|Maximum annual family income||Rs. 3 Lakhs||Rs. 6 Lakhs||Rs. 12 Lakhs||Rs. 18 Lakhs|
|Loan amount eligible for a subsidy||Rs.6 Lakhs||Rs. 6 Lakhs||Rs. 9 Lakhs||Rs. 12 Lakhs|
|Rate of subsidy||6.5%||6.5%||4%||3%|
|Maximum grant||Rs. 2.67 Lakhs||Rs. 2.67 Lakhs||2.35 Lakhs||Rs. 2.30 Lakhs|
Get access to Home Loan EMI Calculator
The ideal mode of Home Loan repayment is the EMI.
Calculation of EMI
Also Read - 10 Best Banks for Home Loan in India
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As on date, IDFC First Bank does not have a Home Loan product linked to the RLLR. It can have one in the future. For more IDFC FIRST Home Loan Interest Rates Details, go to the interest rates section.
No. IDFC First Home Loan Interest Rates for Women are same as they are for men.
No. The rates for salaried individuals are same as IDFC First Home Loan Interest Rates for Others.
Banks were lagging in passing on the benefit of the market rate fluctuations to the customer. The MCLR structure has a link with the market rates, but there is a reset clause in every loan contract. The provision ensures that the resetting of the MCLR will take place on a fixed date. Some banks have an annual reset clause. Consider the following example.
The MCLR reset date is July 01. There is a downward swing in the MCLR announced by the bank in October. The reset does not happen until next July. Therefore, the customer loses the benefit for about nine months. In the meanwhile, there could be an upward swing, as well.
The position in the case of RLLR is different. If there is a downward swing in October, the customer gets the immediate benefit of the market rate fluctuation.
Banks charge interest at the contracted rate. There is an element of upfront interest subsidy. As this subsidy is credited to the account upfront, the customer gets the benefit immediately. Hence, there is no reason for the banks to offer additional benefit by reducing the interest rates to accommodate the subsidy amount.
In PMAY loans, there is a restriction on the maximum amount of loan eligible for calculation of the subsidy amount. There is no ceiling on the loan eligibility amount for the borrower. A borrower having an annual income of up to Rs. 18 lakhs can avail PMAY loan. The maximum amount of loan will depend on the borrower's ability to repay.
The subsidy amount will be calculated depending on the category to which the borrower belongs. If the borrower belongs to MIG-II category, the subsidy amount is calculated on a maximum loan of Rs. 12 Lakhs. The loan amount more than Rs. 12 Lakhs will classify as an unsubsidised loan.
IDFC First Bank prefers to change the loan repayment tenure instead of altering the EMI. However, borrowers can request the bank to change the EMI and maintain the tenure constant. It is beneficial to the borrowers if they go for a change in the EMI rather than the tenure.
In the case of an upward revision in the interest rates, the EMI should also increase accordingly. However, if you keep the EMI constant and increase the tenure, you end up contributing more towards the interest repayment portion, as compared to the principal repayment. The same situation carries forward to the subsequent months, as well. Hence, you end up paying considerably more throughout the entire loan tenure.
It is comfortable for the banks to increase the tenure as compared to increasing the ECS demand every month. Banks cater to many customers. Therefore, the easy way out for the banks is to increase the tenure.
Yes, the borrower can switch to the RLLR from the MCLR and vice versa.
Housing loan is priority sector finance in India. The banks have stipulated the fixed rates at considerably high levels as compared to the floating rates. The chances of the market fluctuations crossing the fixed rate of interest are remote. Hence, it is better to opt for a floating rate of interest on your Home Loans.