To calculate the effective interest rate on the house, a risk premium is also added to the BRLLR. According to the bank’s website, a risk premium of 1.35% is added for salaried customers. The risk premium depends on various factors such as CIBIL score, job profile, loan amount etc. The effective interest rate is between 7.95% and 9.30%. If an individual is a self-employed individual or a non-salaried customer, an additional 0.10% fee is also charged. The effective interest rate for the bank’s staff members is 7.95% i.e. BRLLR.
How will this affect you?
With the hike in interest rates by Bank of Baroda, your EMI on home loan will increase. For those whose EMI is yet to be deducted from their bank account, the bank will re-calculate the EMI before deducting it.
It is important to note that the new EMI calculation will be done on the basis of the outstanding principal amount and not the loan amount availed.
The EMI you pay has two components – principal and interest. As the number of EMIs paid increases, the principal amount paid increases and the interest paid decreases.
Why did RBI hike the repo rate?
Since the start of the financial year, the central bank has now hiked the repo rate thrice, including an off-schedule announcement made in May 2022. RBI hiked the repo rate by 40 basis points in May. Then in the monetary policy review of June and August, the RBI hiked the repo rate by 50 basis points each time. The central bank is increasing interest rates due to rising inflation. retail inflation Has remained at a high of over 6 per cent for more than the last six months.