How Does Bank of India Home Loan Interest Rate Fare to You Post Budget 2020? The Union Budget 2020 is out with less but significant announcements if you are planning to take a loan to buy a home. Finance Minister Nirmala Sitharaman while presenting the budget has declared that taxpayers can choose an optional tax regime. The optional tax system entails reduced rates across slabs compared to the present one. But you need to let go as many as 100 tax deductions & exemptions under various sections of the Income Tax Act. These also include the home loan tax deductions you get under Section 80C and 24. Now that makes the game interesting for home loan aspirants of banks including the trustworthy Bank of India (BOI). All you need to compare Bank of India Home Loan Interest Rate with respect to the existing and optional taxation system. So what are you waiting for? Let’s read and understand the effect here. How Much is Bank of India Home Loan Interest Rate? Bank of India offers home loans at interest rates benchmarked to Repo Rate. The rates, as we speak, range from 8.25%-8.40% per annum. While setting the interest rate, the bank also checks the credit score and profession of the applicant. Those with a CIBIL score of 760 and above will get the loan at 8.10% per annum. The interest rate for loans to applicants having a CIBIL score of 725 and 759 will be 8.25%-8.30% and 8.35%-8.40% for salaried and self-employed, respectively. As the CIBIL score comes down to 675-724, the home loan interest rate will go up to 8.35%-8.40% for salaried and 8.95%-9.00% per annum for self-employed. If you don’t have a credit profile, the bank will disburse the loan at 8.25%-8.30% to salaried and 8.35%-8.40% to self-employed. How Much Bank of India Home Loan Interest You Will Pay? You can get to know the same using the Bank of India Home Loan Calculator. The calculator will help compute the Equated Monthly Installment (EMI), a portion of both principal and interest payable towards a loan. You can also check the amount of interest and principal payable every year. So, if you take a ₹50-lakh home loan from Bank of India at 8.95% per annum. You’ll pay an EMI of ₹44,826 over 20 years. The interest liability will be above 2 lakh for 15 years. Whereas, the principal payments will remain
under 1.5 lakh for the first 6 years. You will get the entire principal and interest repayment as tax deductions for 6 and 15 years, respectively. However, if you opt for an optional tax system, you will be taxed as per the following rates Upto ₹2,50,000 - NIL Above ₹2,50,000-5,00,000 - 5% Above ₹5,00,000-7,50,000 - 10% Above ₹7,50,000-10,00,000 - 15% Above ₹10,00,000-12,50,000 - 20% Above ₹12,50,000-15,00,000 - 25% Above ₹15,00,000 - 30% In case you are earning ₹12 lakh a year, your total income tax as per the optional system will amount to ₹80,600 annually, which will break to ₹6,716.67 a month. Whereas, if you go by the existing tax system, your income tax will be ₹63,303.40 a year. Monthly, it will come down to ₹5,275.27