Tamilnad Mercantile Bank Home Loan Interest Rates

How does Tamilnad Mercantile Bank Ltd fix your Home Loan interest rate?

Tamilnad Mercantile Bank links your Home Loan interest rate to its MCLR. The bank announces its MCLR every month. The loans sanctioned during the month are linked to the one-year MCLR announced during the month. Every Home Loan interest rate comes with an interest reset date. Usually, the bank resets the Home Loan interest rates annually. The individual rates change from the date of resetting the interest rate.

This example will help you understand the concept better.

Tamilnad Mercantile Bank announces its MCLR on September 01, 2019. All loans sanctioned during September will link with the one-year MCLR effective from September 01, 2019. The reset date for the loan approved in September 2019 will be September 01, 2020. The loans will have a fixed interest rate until the date of reset.

Yes, Tamilnad Mercantile Bank has a facility where the borrower can opt for a shorter reset period of 6 months. The rate of interest for such loans is different. The advantage of adopting this mode is that the borrower gets the benefit of market-rate fluctuation at an interval of 6 months.

Under circumstances when the market rates decrease, a shorter reset frequency is advantageous. The borrower gets the benefit of lower interest rates.

Usually, banks adopt the daily reducing balances method of calculating interest on Home Loans. The housing finance companies opt for monthly reducing balances. The daily reducing balances method is beneficial. It enables the borrower to get the benefit of interest on the EMIs paid during the month.

The subsidy on PMAY is calculated using the NPV concept. The best way to calculate the NPV of the interest charged on your PMAY account is to use the Excel tables.

• Take out the amortisation schedule of the Home Loan at a notional rate of 9% interest
• Using MS Excel tables, calculate the NPV of the interest amounts for the next 20 years
• This amount is the subsidy amount in PMAY subject to the maximum amount of subsidy-eligible for the respective category.

An alternative method of calculating the PMAY subsidy is to use the PMAY subsidy calculator present on the official website of PMAY-Urban. The site has a readymade calculator to help customers calculate the PMAY subsidy.

If you are eligible for a PMAY Home Loan, it makes sense to apply for the Tamilnad Mercantile Bank Affordable loan instead of the regular Home Loan. The advantage of a PMAY loan is the availability of upfront interest subsidy. The interest subsidy is credited to the Home Loan account, thereby reducing your Home Loan instalment amount.

The margin on a Tamilnad Mercantile Bank Home Loan depends on the purpose of the loan.

• Purchase of new flat/house - 25%
• Purchase of plot and subsequent construction of a house - 25%
• Construction of your house on existing plots - 10%
• Home renovation for houses aged less than five years - 25%
• Renovation of house aged more than five years old - 40%
• Refurbishment of flat - 30%

Reserve Bank of India has notified banks and housing finance companies not to charge foreclosure penalty on Home Loans with floating interest rates. Tamilnad Mercantile Bank does not charge a fixed rate of interest on Home Loans. Hence, it does not charge any foreclosure penalty on Home Loans to individuals. However, it charges penal interest on housing loans of non-individuals.

The Base Rate concept is valid from July 01, 2010. The Base rate concept allowed people to open Home Loans with a fixed rate of interest. The borrowers can switch over from the Base Rate fixed rate to the MCLR floating rate on the payment of a conversion fee. Similarly, borrowers can change from the Base rate floating rate to the MCLR floating rate concept. The vice versa is not permissible.

MyMoneyMantra has facilities to enable customers to apply for Tamilnad Mercantile Bank Home Loan. The advantages of applying for the Home Loan through MyMoneyMantra are as follows.

• Compare the Home Loan products of more than 90 financial institutions on a single screen
• The counsellors at MyMoneyMantra guide you with the modalities of the Home Loan product and explain the finer points of the Home Loan schemes of Tamilnad Mercantile Bank.
• MyMoneyMantra helps you with collecting the documents and submitting the same to Tamilnad Mercantile Bank.
• All these facilities are available to customers free of cost