Muthoot Finance Home Loan Interest Rate

When you talk of gold loans, the first name that usually comes to mind is Muthoot Finance. This financial conglomerate has made a name of itself in the industry on the sheer strength of their dedication, hard work, and commitment towards excellence. The Muthoot Group has a rich family legacy dating back to more than 800 years. The group had extremely modest beginnings when the late Shri Ninan Mathai Muthoot set up a trading business in a nondescript remote village in Kerala. That which started a modest trading house has now blossomed into a financial behemoth providing an array of financial services. It includes home finance, personal loans, gold loans, foreign exchange business, vehicle finance, and so on. The list can go on.

You can also Check for Rs. 35 Lakh Home Loan EMI

Muthoot Finance India Limited is the housing finance arm of the famous Muthoot Group. It is registered with the National Housing Bank, the regulatory body for home finance companies in India. The company started in Kerala and soon spread to almost all the major cities in India. The company caters to all kinds of individual housing finance requirements. Muthoot Finance India Limited offers Home Loans to salaried persons as well as self-employed individuals. There are products available for purchase and construction of houses and flats. Similarly, Muthoot Finance India Limited provides financial assistance for home improvement, extension, and acquisition of plots, as well.

Additional Info: Also Apply for Home Construction Loan

Muthoot Finance India Limited (MHIL) prescribes simple home loan eligibility norms and has a well-defined interest rate structure. The terms and conditions are straightforward and transparent. Documentation is easy, and the company offers convenient finances up to 50 Lakhs. The attractive rates of interest make this company one of the most favoured when it comes to home finance company a viable alternative to nationalised and private bank.

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MHIL offers both fixed and floating rates of interest to its Home Loan customers.

Floating Rate of Interest

The floating rate of interest is connected to MHIL Retail Prime Lending Rate (RPLR). The applicable rate of interest on the individual Home Loan will vary because of different factors. They include the loan amount, nature of the property, loan-to-value or LTV ratio, occupation of the borrower, and the credit rating. This rate will vary from time to time, as MHIL revises and resets the RPLR at regular intervals. Every change in the RPLR will bring a corresponding change in the Home Loan interest structure. The MHIL RPLR links to the market rate scenario and may, therefore increase or decrease depending on the interest rates in the market. These rates include the repo rate announced by RBI, the treasury bills rate, and other external benchmark rates. MHIL updates the RPLR on the official website of Muthoot Finance India Limited from time to time.

Fixed-Rate of Interest

As the name suggests, the fixed rate of interest is a scenario where the interest rate on the specific Home Loan does not change for the entire tenure of the loan. This rate considers various factors like the ones discussed above. As it is a fixed rate, it also must account for the fluctuations that the market could experience in the future. Therefore, the fixed-rate comes with a premium over the floating rate of interest. It is invariably higher than the floating rate of interest at the time of entering into a Home Loan contract with the borrower.

Combination Rate of Interest

Muthoot Finance Home Loan offers a combined rate of interest where the interest rate remains fixed for a specific pre-determined period. Subsequently, it converts to a floating rate of interest. Such a scenario is beneficial to the customer, as well as to the company. The customer does not have to be burdened with a high fixed rate of interest when the market trends are favourable. Similarly, the company also benefits if the market rates decide to move up and above the fixed rate of interest.

Option for conversion or switch over

Customers have the option of switching over from one home finance scheme to another by paying a conversion fee.

Additional Info: LIC Housing Finance Home Loan

The floating interest rate structure of Muthoot Finance India Limited begins from 12.5% per annum onwards. Factors that decide the Home Loan interest rate include:

• The amount of loan
• The occupation of the borrower
• The nature of security on offer
• The value of security
• The credit history of the borrower

Additional Info: Best Home Loan Interest Rates @8%

Partially disbursed cases: In the event of partial disbursement of the Home Loan, the interest is calculated on a simple interest basis every month. This interest is referred to as the Pre-EMI. The Pre-EMI is payable every month from the date of the first disbursement up to the commencement of EMI.

Fully disbursed cases: Once the Home Loan disbursement is complete, the borrower must start repaying the loan through equated monthly instalments. The Home Loan interest is calculated on the monthly reducing balance. The EMI comprises of two components, the interest repayment and the principal amount repayment component. The EMIs are usually due for payment between the 5th and the 10th day of every month. The repayment is through post-dated cheques, electronic fund transfers, or the ECS method.

Also Check - Muthoot Finance Home Loan EMI Calculator

Floating rate of interest Home Loans: The Reserve Bank of India has made it clear that housing finance companies should not charge any foreclosure penalty on floating rate of Home Loans of individual borrowers. Hence MHIL does not charge any penalty on foreclosure or prepayment.

However, in the case of plot loans, the company charges prepayment or foreclosure penalties as detailed below:

• No prepayment charges if the payment is made within three years from the date of initial disbursement.
• After three years, any prepayment made into the account entails a penalty of 2% of the amount paid if the borrower has not constructed the house.

A fixed-rate of interest Home Loans: There is no prepayment charge or penalty if the borrower repays the loan from his/her sources. However, if the repayment is through borrowings or balance transfer, there is a prepayment penalty of 2%.

In the case of plot loans, the rules are the same. There is no prepayment penalty on prepayment of plot loans from the own sources of the borrower. Borrowings from third parties will attract a prepayment penalty. In case of prepayment after three years from the date of initial disbursement, prepayment will attract penalty if the borrower does not construct the house.

Additional Info: Also check AnyRoR Gujarat Land Record

MHIL is an active lender in PMAY or Pradhan Mantri Awas Yojana, as it has a sizeable presence and influence in rural pockets of our country, especially in the state of Kerala and the neighbouring southern states. As a prominent member of the National Housing Bank, MHIL is eligible for NHB refinance, as well. Considering the shortfall of housing units in the EWS and LIG category, MHIL focuses on these segments in PMAY. The rates of interest on PMAY Home Loans are the same that apply to the regular Home Loan product. However, there is an element of interest subsidy in PMAY. The treatment of this grant is critical towards determining the EMI amount for the borrower.

PMAY subsidy is an upfront subsidy that is credited to the loan account of the borrower immediately on receiving it from the Government. It reduces the principal repayment liability, whereby the EMI reduces considerably.

Hence, the borrower benefits in two ways:

• Reduction in the EMI
• Upfront credit of subsidy

Additional Info: Also check How to Apply for Pradhan Mantri Awas Yojana

The IT Act 1961 (Income Tax Act) allows individuals to avail concessions and benefits in income tax under Sec 24 and Sec 80C.

Interest repayment: Sec 24 of the Act deals with tax concessions available due to repayment of Home Loan interest. Everyone can claim annual income tax exemption up to  2 Lakhs on the repayment of the interest component of his/her Home Loan.

Principal repayment: Sec 80C of the Act provides the individual to claim tax rebates on the repayment of the Home Loan principal amount up to a ceiling of  1.50 Lakhs per annum.

Additional Info: Also check Home Loan Tax Benefit