PNB Housing Finance 
Loan Against Property Interest Rates

PNB Housing is an NBFC. Hence, it does not follow the repo rate or the MCLR that commercial banks do when determining their interest rate on retail loans. PNB Housing refers to its Prime Lending Rate for Non-Housing purposes, PNBHFR. This rate is linked to market forces that determine its rise of fall at frequent intervals. Various other aspects also go towards determining this lending rate.

The individual rate of interest on loans against property depends on the following factors:

• The nature of security offered: The rates for commercial property are different when compared to residential property. Similarly, the rates for loans against residential/commercial plots are also different when compared to fully-constructed properties.
• The credit rating of the borrower: Generally, the higher the credit score better is the rate of interest.
• The occupation of the borrower: Usually, salaried employees are considered safer when compared to non-salaried self-employed individuals.

The beneficial option is always to increase the EMI whenever the rate of interest goes up. The EMI comprises of an interest repayment component and principal repayment component. As the interest rate goes up, the interest repayment component also increases. Therefore, the principal repayment portion will decrease if you keep the EMI constant. It will cause a cascading effect on the interest calculation for the following months. Therefore, it is better to increase the principal repayment component, as well, thereby increasing the EMI.

PNB Housing has two options before it. One is to increase the EMI depending on the rise in the interest rate. It entails keeping the repayment tenures as constant. The alternative is to keep the EMI constant, thereby increasing the mandate. In the initial stages of the loan, PNB Housing prefers to keep the EMI constant. However, they cannot increase the tenure beyond a specific level. Therefore, increasing the EMI remains the only option.

The ideal way to repay a PNB Housing Loan Against Property is the EMI mode. The borrower can either submit post-dated cheques or register for an ECS mandate for paying the EMIs. 

Yes, RBI has made it mandatory for all financial institutions to inform their customers about the changes in the loan terms and conditions. The difference in the interest rate can cause the EMI to vary. Therefore, the borrower should be aware of the variations. PNB Housing can use various methods to inform the borrowers. It can be through email, SMS, or by way of a simple letter.

Yes, PNB Housing offers the facility of the EMI calculator that helps to calculate the EMI in advance. It helps the borrower to understand the financial liability and also maintains his/her to ascertain the affordability, as well.

PNB Housing calculates interest on the monthly reducing method. This method works out in the following way. This example will help you understand the concept.

The interest for November is calculated on the outstanding balance as of the last day of October. Similarly, the outstanding balance on the last day of November is the base for calculating the interest for December.

In a way, it does not benefit the borrower. This calculation envisages that it does not calculate the interest benefit for the instalment you deposit during the month. In the regular course, the EMI is payable by the 10th of the month. Therefore, the borrower loses out on the interest benefit on the EMI amount for an average of 20 days every month. Over the entire loan tenure, it can snowball into a substantial figure.

Yes, commercial banks calculate interest on daily reducing balances. This method offers the highest benefit to the borrowers. It is a more transparent mode of calculating interest.

You can also check Commercial Property Loan Online.

PNB LAP Interest Rate varies between 9.25% - 12.45% p.a. depending on the borrower’s category, credit score, and other eligibility factors.

PNB Housing Finance Limited is an Indian housing company registered with National Housing Bank (NHB). It was incorporated under the Companies Act, 1956 and commenced its operations on 11 November 1988. PNB Housing Finance is promoted by Punjab National Bank (PNB).

PNBHFR is the rate of interest as on Reset Date based on the Reset Frequency decided by PNBHFL from time to time based on the type of customer and product, prevailing market conditions, guidelines of any statutory authority, and as per the internal policy of PNBHFL.