How difference of just 100 points in Cibil score may force you pay Rs 10.41 lakh extra on Rs 50 lakh home loan
Most of us have the dream of buying a home. However, homes are expensive, and one relies on home loans to fulfil their dream. Lenders check an applicant's Cibil score before extending the loan offer. A person with a Cibil score above 750 points can get a home loan at a much lower interest rate than a person with a Cibil score of 550 points.
AR Hemant, AVP, BankBazaar.com, says the credit score-based risk grading of borrowers varies from one lender to another. "It’s very clear that the best loan offers go to borrowers with scores above 800. The lowest advertised rates we’re seeing in the market are between 8.30 and 8.50. These rates would go to borrowers whose scores are above 750. A large government bank advertises its risk-graded rates as follows: If your score is above 750, you could get the lowest possible rate, which is 8.50, going up to 9.15. If you’re between 550 and 649, your rate could be 9.65. So there’s an advertised gap of 115 bps here," said Hemant.
In such a scenario, get to know what the difference will be between Rs 50 lakh, 20-year home loan repayment amounts, and EMIs on the basis of the Cibil score.
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What if you get the lowest advertised home loan interest rates
If you get the home loan in the range of 8.30 to 8.50 per cent annually, the EMI on the Rs 50 lakh loan will be in the range of Rs 42,760 and 43,391. The repayment amount will be in the range of Rs 1,02,62,480 and Rs 1,04,13,879.
What if your Cibil score is over 750
If you get the home loan in the range of 8.50 to 9.15 per cent annually, the EMI on the Rs 50 lakh loan will be in the range of Rs 43,391 and Rs 45,470. The repayment amount will be in the range of Rs 1,04,13,879 and Rs 1,09,12,747.
What if your Cibil score is between 550 and 649
If you get the home loan at 9.65 per cent annually, the EMI on the Rs 50 lakh loan will be Rs 47,097, and the repayment amount will be Rs 1,13,03,378.
Difference between highest and lowest repayment amounts
Thus, you can see, if your Cibil score is over 750, your repayment amount will be reduced by 10,40,898 compared to if your Cibil score is between 550 and 649.
Benefits of high Cibil score
If your Cibil score is high, you get easy access to credit facilities. Lenders extend home offers at a low interest rate. You get a credit card with a high limit. Lenders extend the overdraft facility to a high range.
(These calculations are just for education purpose. Do you due diligence or consult a financial expert before applying for a home loan)