Review of Bank of Baroda Home Loan

Updated on March 7, 20194 mins read
Review of Bank of Baroda

(Updated March 2018 ) Bank of Baroda offers the lowest interest rate for home loan @8.30% Bank of Baroda recently launched a home loan product that offers loans at 8.30% pa. This interest rate is lower than all other banks like SBI (8.55%) and ICICI (8.45%). The bank is offering lowest rates to its best customers. A LOOK AT THE PRODUCT Bank of Baroda’s latest home loan product is structured around risk profile of borrowers. The bank has created a grid matching differential interest rates to credit scores of customers. Bank of Baroda home loan interest rates

CIBIL Score Rate of Interest
760 & Above MCLR (8.30%)
Less than 760 but above 725 MCLR + 0.50% (8.80%)
Less than 725 but above 675MCLR + 1% (9.30%)
No borrowing recordMCLR + 0.50% (8.80%)
These rates are applicable for loan value up to Rs.1 crore for purchase or construction of home. This also extends to loan availed for home improvement up to Rs.50 Lakhs. The lowest interest rate of 8.30% can be availed by those who have maintained a CIBIL score of 760 and above. The bank is offering not to charge any spread to its best customers. This product is open for new applications as well as switch-overs. If you are an existing customer of Bank of Baroda home loan and are eligible for lower rates under this new scheme, you could switch over without any additional cost. ELEMENTS OF THE BANK OF BARODA HOME LOAN PRODUCT The new Bank of Baroda home loan product is based on credit scores of borrowers. So, it is important to understand what a credit score implies. Bank of Baroda and all other banks in India consult a credit information bureau called CIBIL for detailed reports on borrowing history of bank customers. CIBIL gets repayment details from every bank each month. Based on the repayment activity, each borrower is assigned a score between 300-900. Based on monthly reports, this score is updated regularly. The score can move up or down depending on how well you have been maintaining your loan account. If you have been consistent with your EMIs, have a favourable balance of secured and unsecured loans and don’t have loan defaults in your past you could expect a good CIBIL score over to 750. This is considered a good score. Here are some events that could affect your CIBIL score negatively: – Using a high percentage of your credit card regularly – If you have missed an EMI in the past for any reason – If an EMI cheque bounces – If most of your borrowing is through unsecured means like personal loan, credit card etc – If you stood guarantor to some borrower and that person defaults on his repayments CIBIL scores can be improved over time if the above are regularised Every bank has a different mechanism to assess a customer’s risk profile. They evaluate credit score as well as a detailed report on the customer. Nevertheless, a good credit score is a favourable starting point in securing a loan. Those with low credit score would generally find it difficult to get a loan from a large bank.Normally such customers would have to approach a housing finance company for a loan. The amount of loan approved may be low and the interest rate that they have to pay may be high. With the new product, customers with different credit histories can apply at Bank of Baroda and avail competitive rates. WHAT’S IN IT FOR THE BANK Banks usually prefer customers with high credit scores only. But with its differential rates of interest, the bank can now penetrate deeper into the market. This would mean that the bank is now exposing itself to customers they would normally not approve. However, the bank’s structure allocates higher interest rates for such customers. These higher rates should compensate the higher risk that the bank will take on. SOMETHING FOR EVERYONE If you have a good credit score, you would generally be welcomed by most banks for a loan product. However, Bank of Baroda has gone one step further. It would now offer you a loan at an interest rate that is lowest in the market. The bank is not charging any spread for customers with the highest credit scores. This product is a also good choice if your credit score is low. Normally you would have to approach housing finance companies and pay higher interest rates to get a loan. But now, you can apply for a loan with Bank of Baroda, which is the second largest Nationalised bank in the country. Since the structure is transparent, you would know exactly how much interest rate you would pay. So even if you have a loan with another bank or housing finance company, you could switch over to Bank of Baroda home loan and make the most of this offer. SAVE MORE Home loans are long term debts. The duration typically ranges between 15-30 years.  Under this scheme, the lowest rate is offered to customers with credit score above 760. So it makes a strong case to look at your credit score and see if are eligible for a good interest rate. Let’s take a look at what Bank of Baroda home loan EMI works out for different credit scores Bank of Baroda home loan EMI
CIBIL ScoreRate of InterestEMI
760 & AboveMCLR (8.30%)Rs. 855.21per lakh
Less than 760 but above 725MCLR + 0.50% (8.80%)Rs. 886.9 per lakh
Less than 725 but above 675MCLR + 1% (9.30%)Rs. 919.11 per lakh
No borrowing recordMCLR + 0.50% (8.80%)Rs. 886.9 per lakh
This new home loan product from Bank of Baroda has opened new doors for home buyers. In a long term loan commitment like home loan, a discount of 1-2% could make substantial impact on savings over the years. This is especially so for home loans where loan value would be worth many lakhs. It would be a good time to build up your credit score and apply for a new home loan with Bank of Baroda. It is also a good time for you to evaluate any existing home loans that you may have.  


Suma Ganesh

Suma Ganesh

Suma is an MBA in Finance and Marketing from ICFAI, Bangalore. She worked as an investment advisor to retail and high networth clients for nearly 7 years at Allegro Capital Advisors Pvt Ltd. This gave her a first hand understanding of the needs of an individual customer. With this edge, she moved on to Adi FinShiksha Pvt Ltd, where she trained financial advisors to manage their clients' investments and financial needs. With deep understanding of customers and their advisors, Suma then moved on to writing content in the space of personal finance. she is currently working as part of the content creation team at SwitchME, addressing the needs of home buyers and home loan borrowers.
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