Different loan benchmarks present a tough choice for home buyers

Banks have 6-month and one-year MCLR; one should choose based on interest rate outlook

In addition to interest rate and processing charges, home loan borrowers should now also look at the Marginal Cost of Funds-based Lending Rate (MCLR), to which the loan is linked because this will tell you frequently your interest rate will change. The shorter the MCLR, the more frequently your loan rate will change. 

For a year now, loans have been linked to the MCLR instead of the base rate. The key difference in calculations is that MCLR factors in the “marginal cost of funds,” which takes into account the cost of borrowings depending on the repo rate; the interest rates