Punjab National Bank Home Loan Interest Rates
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Punjab National Bank - A Titan in the Indian Banking Industry

Punjab National Bank (PNB) is a premier nationalised bank in India having one of the largest networks of branches situated throughout the country. Until recently, it was the second-largest bank in India. The amalgamation of New Bank of India in 1993 enabled Punjab National Bank to spread its wings in the eastern part of the country.

Recently, the merger of Vijaya Bank and Dena Bank with Bank of Baroda made Bank of Baroda the second-largest banking network in India. However, the proposed merger of Oriental Bank of Commerce and United Bank of India with Punjab National Bank could restore its position as the second-largest banking institution in India.

Punjab National Bank Home Loan

Punjab National Bank has a variety of deposit and loan products to offer to its Indian and non-resident Indian customers. The Punjab National Bank Home Loan is a popular product that has received widespread acceptance amongst Indian customers. Some of the salient features of PNB Home Loan are its transparency in services and attractive rates of interest. The bank offers various Home Loan products to suit the requirements of each individual. Right from purchasing a new house to constructing your own or carrying out repairs and renovations, Punjab National Bank has a dedicated product. The bank also provides Balance Transfer facilities where you can shift your Home Loans from other banks and financial institutions to Punjab National Bank.

Punjab National Bank - Home Loan Interest Rate Mechanism

Punjab National Bank follows the Marginal Cost of Funds-based Lending Rate (MCLR) on all its loan products including the Home Loan. This rate concept is effective from 01st April 2016. Before the adoption of the MCLR concept, the bank was following the Base Rate Concept and the Prime Lending Rate Concept. From 01st October 2019, all banks will shift to the Repo Rate Linked Interest Rate for Home Loans. Punjab National Bank has already announced its decisions to adhere to this new concept with immediate effect.

Marginal Cost of Funds Based Lending Rate

MCLR is an internal reference rate for Indian banks below which no bank can lend to its customers. This rate considers various factors that make it an extremely competitive one. The MCLR has replaced the erstwhile Base Rate calculation because the Base Rate did not have a risk-based approach. The MCLR is thus an improvised version of the Base Rate, where it considers the following external factors:

  • Tenure Premium: It is a non-borrower-specific premium and uniform for all kinds of loans.
  • Marginal Cost of Funds: It is the average rate of interest at which bank deposits with similar term/maturities were raised during a specific period before the review date.
  • Operating Cost: It includes the cost of raising funds for the bank.
  • Negative Carry on Cash Reserve Ratio (CRR): Banks have to maintain a specific CRR with the Reserve Bank of India (RBI). They do not earn any interest on this amount. Hence, any excess deposit with the RBI carries a negative cost. It affects the MCLR of the bank.

Repo Rate Linked Lending Rate

The Repo Rate Linked Lending Rate (RLLR) does away with the complex calculations of the MCLR. Here the bank calculates a premium that it loads over the Repo Rate announced by the RBI from time to time. Thus, you can call the RLLR as the ultimate market-linked lending rate of all. This rate is effective from 27.08.2019.

Punjab National Bank Home Loan Interest Rate Table

  • The Base rate of Punjab National Bank is 9.25% with effect from 01.06.2018
  • The Benchmark Prime Lending Rate is 14% with effect from 01.05.2012
  • The MCLR of Punjab National Bank is as follows:
MCLR Tenor Existing MCLR Revised MCLR with effect from 01.09.2019

Overnight

7.90%

7.90%

One Month

7.95%

7.95%

Three Months

8.00%

8.00%

Six Months

8.20%

8.20%

One Year

8.30%

8.30%

Three Years

8.50%

8.50%

  • The Housing Loan rates of Punjab National Bank are linked to the one-year MCLR. As on date, the one-year MCLR is 8.30%
Housing Loan Rates of Interest - Linked to One-year MCLR (Presently 8.30%)

Housing Loan Category

Limits up to 75 lakhs

Limits more than 75 lakhs

 

Spread

Effective Rate

Spread

Effective Rate

Floating Rate for Women borrowers

MCLR + 0.20%

8.50%

MCLR + 0.25%

8.55%

Floating Rate for other borrowers

MCLR + 0.25%

8.55%

MCLR + 0.30%

8.60%

Floating Rate PNB PRIDE (Housing)

MCLR + 0.20%

8.50%

MCLR + 0.25%

8.55%

PNB Max Saver Account - Women and PNB PRIDE (available under Floating ROI)

MCLR + 0.35%

8.65%

MCLR + 0.40%

8.70%

PNB Max Saver Account - Others (Floating rate only)

MCLR + 0.40%

8.70%

MCLR + 0.45%

8.75%

Floating Rate Housing Loan Overdraft Account

MCLR + 1.40%

9.70%

MCLR + 1.40%

9.70%

Fixed-Rate of Interest in General Accounts

Corresponding floating rate + 0.50%

Corresponding floating rate + 0.50%

Fixed-Rate of Interest for PNB PRIDE

Floating rate of interest for PNB PRIDE + 0.50%

Floating rate of Interest for PNB PRIDE + 0.50%

Purchase of stand-alone solar system

MCLR + 2.10%

10.40%

MCLR + 2.10%

10.40%

  • Benefits to women borrowers: Women borrowers get the benefit of 0.05% in the interest rates if they satisfy the following conditions.
    • The woman should be a sole applicant or one of the co-applicants to the Home Loan
    • The woman should be a sole owner or one of the owners of the property
  • PNB PRIDE: Loans granted to Central and State Government employees, Defence Personnel and Para-military forces come under PNB PRIDE
  • PNB Max Saver: This product is a housing loan in the Overdraft form with reducing drawing power.
  • The same rates of interest apply to NRI borrowers 
Category of borrower Rate of Interest-based on Repo Rate Linked Lending Rate

 

Limits up to 75 Lakhs

Limits above 75 Lakhs

Floating Rate for Women

RLLR + 0.20%

RLLR + 0.25%

Floating Rate for others

RLLR + 0.25%

RLLR + 0.30%

Floating Rate PNB PRIDE

RLLR + 0.20%

RLLR + 0.30%

In absolute terms, the rates translate to 8.25% to 8.35% for Home Loan borrowers.

Punjab National Bank Home Loan ? Fixed Rate of Interest

Punjab National Bank offers fixed rate as well as floating rate facility on Home Loans. The above table indicates that the fixed rate of interest is 0.50% more than the corresponding floating rate.

The characteristics of the Fixed Rate of Interest are as follows:

  • The rates of interest remain fixed for the entire loan tenure
  • The borrower has the option to switch over to a floating rate option on paying a prescribed fee
  • It is advantageous in case the floating rate witnesses and upward trend
  • Your EMI remains the same, and so does the loan repayment tenure
  • Prepayment or foreclosure charges do not apply for Home Loans availed by individuals

Punjab National Bank Home Loan - Floating Rate of Interest

The floating rate of interest is beneficial for individuals because the rates can come down when the MCLR reduces. At the same time, the rates can also increase with an increase in the MCLR.

The characteristics of Floating Rate of Interest are:

  • The EMI can change with every revision in the MCLR or the corresponding reference rate
  • Alternatively, banks prefer to keep the EMI constant and vary the repayment tenure. Therefore your tenure can increase if the rates go up and vice versa.
  • There are no part-payment and foreclosure charges applicable to Home Loans availed on a floating rate of interest.

Punjab National Bank Home Loan - Pradhan Mantri Awas Yojana Interest Subsidy

Punjab National Bank is a prominent lender under the Pradhan Mantri Awas Yojana or PMAY. The rate of interest applicable on Home Loans sanctioned under the PMAY scheme is the same as that for other Home Loans. However, there is an interest subsidy component involved in the Pradhan Mantri Awas Yojana that makes it different from the others.

Borrower Category Maximum loan amount eligible for the subsidy Maximum upfront subsidy

EWS - annual income up to 3 Lakhs

6 Lakhs for 20 years

2.67 Lakhs

LIG - annual income more than 3 Lakhs and up to 6 Lakhs

6 Lakhs for 20 years

2.67 Lakhs

MIG-I - annual income greater than 6 Lakhs and up to 12 Lakhs

9 Lakhs for 20 years

2.35 Lakhs

MIG-II - yearly income more than 12 Lakhs and up to 18 Lakhs

12 Lakhs for 20 years

2.30 Lakhs

The advantage of upfront subsidy is that it is credited to the loan account immediately on its receipt. Therefore, the EMI liability of the borrower reduces substantially.

Punjab National Bank Home Loan - How to Calculate Interest on the Home Loan?

Punjab National Bank calculates interest on daily reducing balances on Home Loans. Therefore, prompt repayment of your EMI is beneficial.

The EMI Concept

The EMI is the amount that you have to repay the bank every month. The loan amount, rate of interest, and repayment tenure are the factors that determine your EMI. The EMI comprises of two components, the interest repayment component and the principal repayment component. Any payment you make towards the repayment of your Home Loan initially goes towards repaying the interest component. The excess amount after servicing the interest goes towards the principal repayment. Therefore, if there is an undue delay in the payment of the EMI, the interest amount increases, thereby reducing your principal repayment.

How to Calculate the EMI?

The EMI Calculator is not available on the Punjab National Bank official website. However, customers can use the MyMoneyMantra website to check out the EMI on their Home Loans.

  • Access MyMoneyMantra and select Financial Tools
  • Choose EMI Calculator
  • Enter the loan amount, rate of interest, and the loan repayment tenure
  • Click on the 'Calculate' option
  • You get the EMI and the overall breakup of principal and interest for the entire loan tenure

Punjab National Bank Home Loan - Income Tax Benefits

Concessions are available under various sections of the Income Tax Act 1961 for repayment of interest and the principal amount of Home Loans.

  • Section 24: A maximum deduction of 2 Lakhs per annum is available on the interest portion of your EMI.
  • Section 80C: A maximum deduction of 1.50 Lakhs can be claimed towards repayment of the principal component of your EMI every year.
  • Section 80EEA: This benefit is applicable only on Home Loans availed between 01.04.2019 and 31.03.2020. The stamp value of the property should not be more than 45 Lakhs. The individual should not have any other house in his/her name, and should not be eligible to claim deduction under Section 80EE. The maximum deduction available is 1.50 Lakhs.

Punjab National Bank Home Loan Interest Rates - FAQs

Which is the better option between the RLLR and MCLR?

The RLLR is an accurate indication of the market rate. It is directly linked to the Repo Rate. As on date, the RLLR is beneficial as compared to the MCLR because the effective rate translates to around 0.25% to 0.30% less than the MCLR linked Home Loans interest rate.

Will the EMI change as and when the RLLR changes?

Yes, it should change whenever there is a change in the Repo rates announced by the RBI.

What is the change in the EMI if the floating rate increases or decreases by 0.5%?

If we assume a Home Loan for 20-year tenure, the difference in the EMI will be as follows.

  • Increase/Decrease in the rate by 0.50% - 32 per lakh

Which is the beneficial option, a fixed-rate Home Loan or a floating rate Home Loan?

It depends on market conditions. If the interest rates are on the increase, it makes sense to opt for a fixed-rate Home Loan. Otherwise, a floating rate is beneficial, as the contracted rate of interest is less than the fixed-rate by 0.50%.

Does the interest rate depend on the credit rating of the borrower?

No, in Punjab National Bank, the rates of interest on the housing loans do not depend on the credit history of the borrower.

What is meant by upfront subsidy in PMAY Home Loan accounts?

PMAY-Urban beneficiaries are eligible to receive Home Loan interest subsidies depending on their entitlement. This subsidy is an upfront subsidy that the bank credits to the loan account as soon as it gets it. Therefore, the interest liability for the borrower reduces substantially. Note that this advance subsidy comprises of interest for a maximum of 20 years.

Can both the joint borrowers claim income tax concession on Home Loans under Sec 24 and Sec 80C of the Act?

Yes, both the joint borrowers can claim up to a maximum of 2 Lakhs each as income tax concession under Sec 24. Similarly, both can claim a deduction of 1.50 Lakhs each under Sec 80C. This concession is permissible only if the Home Loan is availed jointly and both the borrowers are co-owners of the property.

Do women borrowers get any benefits in the interest rates?

Yes, women borrowers get a benefit of 0.05% across the board if they satisfy specific conditions:

  • She should be a co-applicant to the Home Loan.
  • She should be a co-owner of the property, as well.

Is there any prepayment penalty in Punjab National Bank Home Loans?

No, there is no prepayment or foreclosure penalty in Punjab National Bank Home Loans.

Is it better to opt for a longer tenure for the Home Loan?

It depends on the circumstances. Nowadays, banks sanction Home Loans with repayment tenures as long as 30 years. Choosing a long tenure reduces your EMI burden. Hence, it makes you eligible for a bigger amount. If you can afford to pay more, you can opt for a short tenure. However, it is better to go for the maximum tenure. You still have the option of making part payments in advance.  

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