J&K Bank Home Loan Interest Rates
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Loan Tenure

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Lowest EMI Per Lakh

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Prepayment Charges

Nil charges for floating rates loans

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About J&K Bank

Established in 1938, J&K Bank is unique, as it functions as a universal bank in Jammu & Kashmir, and a specialised bank in the rest of India. The bank has the distinction of being the only private sector bank in India to be designated as RBI's business agent. It carries out the business of the Central Government in the state of Jammu & Kashmir.

J&K Bank adopts a two-legged approach to business. It aims to increase lending operations in its home state. The volume of transactions in J&K is modest but provides higher margins at the same time. On the other hand, the bank aims to increase its business volumes while trying to improve its margins in the bargain.

J&K Bank has less than 100 branches all over India but has more than a 1000 ATMs at the same time.

J&K Bank Home Loan

J&K Bank might not have many branches outside the state of Jammu & Kashmir, but they offer a bouquet of deposit and loan products. The bank works with a single-minded mission to enhance its customer base and improve its overall margins. One of the key products of J&K Bank is the Home Loan product.

J&K Home Loan caters to all the housing requirements of its customers, right from purchasing a plot to furnishing the home. The attractive and competitive rates of interest coupled with a transparent service charge pricing system make J&K Home Loan a popular product.

J&K Bank is an active lender under PMAY with HUDCO as its Chief Nodal Agency for claiming the interest subsidy.

J&K Bank Home Loan - Salient Features

Parameters Details

Purpose

  • Purchase of readymade residential houses/flats
  • Purchase house/flat under construction by builders or public agencies like HUDCO and other Housing Development Boards.
  • Buy a second house
  • Purchase of plot and construct house thereon
  • Supplementary finance for repairs/renovations and additions/enhancements

Eligibility

  • Salaried employees of Central/State Government and reputed companies
  • Professionals like doctors, CAs, and others
  • Self-employed individuals and businesspersons
  • Agriculturists
  • Retired employees of State/Central Governments and PSUs
  • NRIs are also eligible for housing loans

Age

  • The minimum age at the time of Home Loan application should be 18 years
  • The maximum at the time of maturity of the loan should not be more than 70 years.

Quantum

Depends on the requirement subject to eligibility and provision of margin

Margin

  • Up to 30 Lakhs: 10%
  • More than 30 Lakhs <= 75 lakhs: 20%
  • Above 75 Lakhs: 25%
  • Plot purchase: Minimum 40%
  • Supplementary finance up to 5 Lakhs: No margin
  • Above 5 Lakhs and up to 10 Lakhs: 10%
  • More than 10 Lakhs: 15%

Holiday period

  • Maximum of 12 months in J&K
  • Not exceeding 9 months in the rest of the country

Repayment

  • Salaried employees: Up to 30 years
  • Other customers: Maximum 20 years

Rate of interest

1Y MCLR to 1Y MCLR + 0.35%

Security

Mortgage of assets financed by bank

J&K Bank Home Loan Interest Rate

J&K Bank offers a floating rate of interest on Home Loans. They do not have a fixed rate product for Home Loans under the MCLR structure. The MCLR structure is effective from April 01, 2016. The bank declares the MCLR every month as stipulated by the Reserve Bank of India. However, the resetting of the Home Loan interest rate with the MCLR is on an annual basis.

The MCLR of J&K Bank with effect from September 10, 2019, is as follows:

Tenor MCLR w.e.f. 10.09.2019

Overnight MCLR

7.85%

One-month MCLR

7.95%

Three-months MCLR

8.20%

Six-months MCLR

8.50%

One-year MCLR

8.70%

Two-years MCLR

9.15%

Three-years MCLR

9.20%

 The interest rate structure for the J&K Bank Home Loan is as hereunder:

Loan Amount slab Rate of Interest Effective rate of interest

Up to 1 Crore

One-year MCLR

8.70%

Above 1 Crore <= 3 Crores

One-year MCLR + 0.20

8.90%

Above 3 Crores

One-year MCLR + 0.35

8.95%

J&K Bank Home Loan Interest - Points to Note

  • The effective rate of interest is for new Home Loan accounts sanctioned and disbursed after September 10, 2019.
  • The loans sanctioned before September 10, 2019, will continue with their respective contracted rate of interest until the date of reset.
  • J&K Bank resets the Home Loan interest rate annually. Hence, a loan disbursed in August 2019 will continue with the contracted rate until August 2020 when the rates are reset.
  • Before the concept of MCLR came into effect, J&K Bank was following the Base Rate formula. J&K Bank announces its Base Rate at frequent intervals. As on date, the Base Rate of J&K Bank is 9.50%. This rate is valid from October 5, 2015.
  • J&K Bank has offered its customers to switch over from the Base Rate regime to the MCLR structure.

J&K Bank Home Loan - PMAY

J&K Bank is one of the prime lending members under PMAY. The bank links up with HUDCO as its CAN for claiming the subsidy. All PMAY borrowers are eligible for an upfront interest subsidy that depends on various factors.

Category of the Borrower

The borrower is categorised into four different classes depending on the annual family income from all sources. Family denotes husband, wife, and unmarried children.

  • Economically Weaker Section: Annual family income up to 3 Lakhs ( 25,000 per month)
  • Low-Income Group: Families earning more than 3 lakhs but up to 6 Lakhs annually fall into this category ( 50,000 per month).
  • Middle-Income Group-I comprises of families in the annual income bracket of 6 Lakhs and more up to 12 Lakhs.
  • Middle-Income Group-II: If the annual family income is higher than 12 Lakhs and up to 18 Lakhs, it qualifies as MIG-II.

Rate of Interest for Calculating the Subsidy

The subsidy is calculated using the NPV formula. The notional rate of interest is assumed at 9% irrespective of the contracted rate.

Loan Amount Eligible for the Grant

There is a difference between the loan eligibility of the borrower and the loan amount eligible for the interest subsidy. The loan eligibility depends on factors like income, repaying capacity, and cost of the project. The loan amount eligible for calculating subsidy is fixed for each category.

  • EWS and LIG: The loan amount eligible for subsidy is 6 Lakhs
  • MIG-I and MIG-II: The loan amount considered eligible for calculation of subsidy is 9 Lakhs and 12 Lakhs respectively.

Amount of Subsidy

There is a restriction or ceiling on the maximum amount of subsidy available to a borrower:

  • EWS and LIG: 2.67 Lakhs
  • MIG-I: 2.35 Lakhs
  • MIG-II: 2.30 Lakhs

J&K Bank Home Loan - Calculation of Home Loan Interest

J&K Bank calculates Home Loan interest on daily reducing balances. The preferable mode of repayment of J&K Bank Home Loan is EMI. Agriculturists having seasonal income can request for payment of quarterly instalments or make half-yearly payments depending on the harvesting period.

 EMI Calculation

J&K Bank provides three different types of EMI Calculators on its webpage.

  • The Regular EMI Calculator: It is ideal for Home Loans where the repayment starts from the month following the sanction/disbursement. It does not involve the moratorium period.
  • The EMI Amortisation Calculator: This calculator provides you with a complete schedule of the Home Loan for the entire repayment tenure.
  • Zero% EMI Calculator: This calculator is helpful to customers to calculate the EMIs at 0% interest, especially those offered by consumer goods manufacturers.

Besides these three EMI calculators, the site offers facilities for determining the Home Loan eligibility for salaried and self-employed individuals.

Ways to Apply for J&K Bank Home Loan?

J&K Bank offers the facility of applying for Home Loans online:

  • Access the official website of J&K Bank
  • Select the 'Apply Online' option
  • Submit the details asked for by the system
  • J&K Bank executive will call on you to complete the formalities

MyMoneyMantra also offers you the facility to apply for J&K Bank Home Loan from their website. The advantages of using MyMoneyMantra to apply for J&K Bank Home Loans are as follows:

  • Get access to an array of Home Loan products of different banks at a time
  • Avail the assistance of Home Loan experts to complete the documentation and other formalities
  • These services are available for free

J&K Bank Home Loan Service Charges

Processing Charges

  • The processing fee on J&K Bank Home Loan is 0.25% of the loan amount
  • The minimum fee is 5,000, and the maximum amount of processing charge is 25,000
  • In the case of a takeover from other banks and financial institutions, there are no processing charges.
  • Women borrowers (sole and joint) get a waiver of 50% on the processing charges

 Prepayment Penalty

  • Reserve Bank of India prohibits charging of prepayment penalty on Home Loans with a floating rate of interest.
  • J&K Bank does not charge any penalty for prepayment or foreclosure of Home Loans granted on a floating rate basis.

J&K Bank Home Loan Interest Rate - Frequently Asked Questions

Does J&K Bank offer a fixed rate of interest on Home Loans?

J&K Bank does not offer any fixed rate on Home Loans in the present MCLR interest rate structure. The bank used to offer the same in the preceding rate structure, the Base Rate regime.

How does J&K Bank reset the Home Loan interest rate?

J&K Bank announces its MCLR every month as all other banks do. However, it resets the Home Loan interest to link with the revised MCLR at yearly intervals.

Under such circumstances, what will be the effective rate for an individual Home Loan?

The Home Loan interest rates link to the 1Y-MCLR of the bank. As the bank announces its revised MCLR every month, the loans sanctioned or reset during the month is linked to the latest MCLR. This rate remains the same for the particular loan for an entire year until its next annual reset. The loans sanctioned in the subsequent months link to the respective 1Y-MCLR announced at the start of the month.

Does it entail that the Home Loan interest rates will be different for each borrower?

If the MCLare different for each month, the corresponding Home Loan interest rates for the individual borrower will also be altered. The Home Loan borrower who availed the loan in August will have interest rates linked to the 1Y-MCLR announced in August. Similarly, the Home Loan borrower availing the loan in September will have links to the MCLR rates active from September. The rates remain same until the time of the next reset after one year.

Is it not a loss to the customer if the loan interest rate is not reset with every change in the MCLR?

Under circumstances where the MCLR reduces continuously, it is a loss to the customers as they do not get the benefit of the reduction until the date of reset. No one knows what the rate will be on the resetting date. If it remains the same or goes up, the customer is at a loss. However, if the MCLR rates increase gradually over the year, the customer benefits because of a lower rate, as well.

Has J&K Bank adapted to the new external benchmark-linked interest rate on Home Loans and other retail loans?

No, J&K Bank has not announced any retail loan product to link to the external benchmark rate such as the repo rates. Reserve Bank of India has granted time until October 01, 2019 to banks to switch over to the external benchmark-linked rate of interest.

What prompted Reserve Bank to come up with a directive?

The MCLR itself is a market-related rate. Banks announce their MCLR regularly every month but do not link it to their existing loans immediately. Every loan has an interest reset clause. The MCLR links to the Home Loan interest rate depending on the terms of the reset clause. It could be quarterly linking or even yearly linking as followed by J&K Bank. It causes substantial loss to the customer. Thus, RBI observed that banks were lagging in passing on the benefit to the customer. Hence, it came up with a directive to banks asking them to link their retail loan interest rates with an external benchmark rate.

Has the recent revocation of Article 370 affected J&K Bank customers?

J&K Bank customers do not have any problems because of the revocation of Article 370. However, the bank shareholding pattern will change. The erstwhile J&K State Government help around 60% of the bank's shares. With Jammu, Kashmir, and Ladakh becoming Union territories, the share capital gets transferred to the Centre. More news is awaited on the possible outcome of Article 370 on the bank's functioning.

Do women borrowers get an advantage in the interest rate in J&K Bank?

Women borrowers do not get any benefit in the interest rate. However, women Home Loan borrowers get the advantage of a discount of 50% on the processing fees on their Home Loans.

Will the name of the bank change in the aftermath of the Article 370 revocation?

Time alone will tell what can happen in the future. The change in the management structure of the bank could result in many new developments. One such event could be a change in the name as well.

J&K Bank - Latest News and Snippets

The Central Government prepares to take over J&K Bank

In the sequence of events following the revocation of Article 370, the Central Government prepares to take over the functioning of J&K Bank. The State Government has a 60% stake in the bank at present. With Jammu, Kashmir, and Ladakh becoming Union territories, the shares will now stand transferred to the Central Government. More developments are due in the future.

J&K Bank share price takes a hit after the revocation of Article 370

With the announcement of the repeal of Article 370 of the Indian Constitution, J&K Bank shares witnessed a 52-week low to close at 34 on the BSE.

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