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SBI offers discounts for “Green” home loans

Showing sensitivity to the environment, the State Bank of India (SBI) is offering various discounts for housing loans taken to buy or build “Green” homes.

Showing its commitment to protection of the environment, State Bank of India (SBI) is encouraging construction of “Green” or environmentally friendly homes.

It is doing this by offering various discounts for home loans taken for such buildings. This scheme is called SBI “Green Homes”.

Details of the discounts offered

Rate of interest

The interest rate charged for a “green” home loan would be 0.25% lower than the rate charged for loans for non-“green” homes.

Here are the benefits to you:

  • Your Equated Monthly Installments (EMIs) would be lower – resulting in less expenditure every month
  • You would pay less interest over the tenure of the home loan
  • Lower EMI also means that you would be eligible for a higher loan amount. Banks cap the EMI amount as a percentage of your monthly income – so lower the EMI, higher is your loan amount eligibility.

Example: If you are taking a housing loan of Rs. 30 Lakhs for 20 years, the rate of interest would be 10% instead of the regular interest rate of 10.25%.

Thus, your EMI would be Rs. 28,951 per month instead of Rs. 29,449 – a saving of Rs. 498 every month. Or, a saving of Rs. 1,19,520 over the entire term of the loan!

Margin money

The margin money needed for such home loans would be 15% of the loan amount (against the normal 20%).

This is a big concession – it means that you would need to come up with a lower sum on your own at the time of purchasing the house.

Example: If you are taking a housing loan of Rs. 30 Lakhs, the margin money needed would be Rs. 4.5 Lakhs instead of Rs. 6 Lakhs that would have been needed for a regular (non-“green”) building.

Processing fee

The processing fee for a housing loan taken for a “green” house would be totally waived off.

SBI usually charges 0.5% of the loan amount (capped at Rs. 10,000) as the processing charge, and you would be saving this amount entirely!

Example: If you are taking a regular housing loan of Rs. 30 Lakhs, the processing fee is Rs. 10,000. If you are taking the housing loan for a “green” project, you would save this money!

Eligibility Criteria – What is a “Green” home?

So, what qualifies a house / flat you are buying as a “green” home?

A home or housing project is considered as an environment friendly residential project (or “green”) if it has been rated such by the Indian Green Building Council (IGBC).

As per IGBC, a “green” home is a home that uses less water, less energy and fewer natural resources, and creates less waste.

“Green” buildings use construction materials that are thermally insulating, and retain the inside temperatures. Thus, they keep the inside cool even in summer.

These buildings are constructed in such a way that they allow ample sunlight to come in the rooms, ensuring less need for artificial light. These buildings also employ rainwater harvesting.

Examples of “Green” buildings / projects

Some of the projects currently being undertaken by Tata Housing and Mahindras have been certified as “green” by IGBC.

“Green” loan for a house you are constructing on your own

Even if you are constructing your own house, you can avail of this “green” home loan from SBI, provided your house is rated by IGBC.

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