Switching home loans: Points to ponder
Everyone wants to trim down the equated monthly installments that they have to pay after purchasing a home with a home loan; no wonder, anyone who is interested in purchasing a house is in the look out for the best possible home loan interest rates. Having said that, it is a must mention here that transferring of loans for under-construction properties is often a backbreaker.
Switching home loan in a hurry is not a good idea, especially as haste could create waste. A borrower must negotiate with the existing lender for a good deal. Existing financial institutions sometimes offers a rate cut after negotiations that acts as a boon.
On changing the lender, the given loan tenure may taper off if the existing EMI is kept at constant. While the borrowers would feel financial crunch because of the foreclosure charges, it would lead to significant savings in the long run.
The time-frame for which the low rate is applicable must be determined and mutually agreed upon, since a number of lenders offer low rates for the first few years, only to revert it back to the actual rate after sometime.
Usage of modern technology is highly recommended to compare the available loan offers. Different loan comparison websites carve out a clear image how much one can save by switching to a different lender.
The aspect of quality customer service should also be considered seriously. The reputation, which a particular lender holds in the market, can be compared via various real estate associated websites and user reviews to get a brief notion about what’s to come.
Getting over inertia is an important aspect to consider. A slight cut of 1% can also do wonders and save money. If the processing fee is kept at a nominal rate, it would contribute towards a better deal.
Operational issues might also evolve, for which a no-objection certificate from the builder is essential. Generally, developers issue the NOC during property transactions; however, a second-time issuing, which is charged marginally, should not be an issue.
Few terms must be taken into consideration before taking the leap. Such terms include- tenure reduction, top up loan and EMI reduction.
Tenure reduction signifies the fact that even after switching to a lower interest rate, the tenure slumps down keeping the EMI constant. This, consequently fuels the loan repayment process few notches up.
