Bangalore: A big bungalow with beautiful interior is your dream house which you always covet.  You may have also applied for home loan but have you checked whether the interest rates aren’t too high to cut your pockets’. Sometimes comparing the interest rate of various lenders will not help you to take a rational decision. In fact you should calculate actual amount charged under the interest rate over the duration of years as reported by ET bureau.

The interest rate on home loan is the combination of two factors- base rate and the spread. Base rate is the minimum amount of interest rate which you will be charged on your loan amount and spread is the percentage added to the base rate depending on the risk and other market factors concerning individually to you.

State Bank of India and Indian oversea bank have reduced their interest rate on home loan. SBI bank’s existing customers would pay 10.5 percent of interest in which 10 percent is the base rate and 0.5 is the spread and the new customer would pay 10.25 percent of interest, which will have base rate fixed at 10 percent and spread is 0.25 percent.