INSUBCONTINENT EXCLUSIVE:
However, when you shift your home loans your existing lender might also offer with counter rates.Are you looking for ways to lower your home
loan EMIs or equated monthly instalment If yes, then you can transfer your home loan to a different lender
Transfer of home loans generally is done when a change in the rate of interest, tenure of the repayment, and enhanced loan facility on
existing property is required, say experts
A borrower can use a loan transfer to lower his or her monthly liabilities in terms of EMI outgo
But how does this workFor instance, a person takes a loan of Rs 20 lakh at a rate of 11 per cent for a 10-year tenure
The rate of interest varies from person to person depending on factors such as source of income
After that, if one finds a more suitable bank, offering a lower rate at 8.5 per cent, for a 10-year monthly instalments, one can save as
much as Rs 3.30 lakh for the entire duration
(see table)Individuals often prefer transferring home loans even with a minor reduction in interest rates because the amount involved is big
and the repayment tenure is long, which therefore results in significant savings, say experts.Loan- 20 lakhTenure-10 yearOriginal rate:
11%Rate of InterestEMI (rounded off)Total Interest for duration11%27,55013,06,0008.50%24,8009,76,000Difference2,7503,30,000However, in
legal documents, processing charges, some incidence of stamp duty (mortgage charges) etc and this are all to be paid upfront plus whatever
was paid on original loan will not be refunded
So, if the total quantum of interest (on present value basis) saved is not greater than the outflow towards shifting of loan, it is not
advisable to shift the home loan," says Sandeep Shah, partner, N.A
Shah Associates LLP."However, when it comes to extending the duration of repayment or some moratorium (deferment of instalments), the
absolute saving in interest may not be relevant as the consideration is ability to pay the instalments."When you shift your home loans your
existing lender might also offer with counter rates, explains Mr Shah
If the borrower has never defaulted on loan, the quantum of loan of reasonable size with loan-to-market value of property ratio being low
(i.e loan amount borrowed is less resulting in higher security for the bank) etc, the institution will always make a counter offer, he
says.There are various factors, which institutions take into account before processing the transfer of a loan
Age, size of family, source of income, marital status, stability of employment, CIBIL score, loan-to-market value, quality of guarantor, age
of building/locality/ developer repute (from the angle of real estate prices going forward), regularity of filing of tax returns are few of
"Social media comments on the borrower is also reviewed by the lending agency," says Mr Shah.
