How Home Loan Switch can help when Interest Rates are Rising on 50 Lakh housing loan EMI: Ever since the RBI announced the back to back repo rate hikes in recent times, current housing loan borrowers are confused and worried about what to do. Their EMIs will soon rise, and hence their outgo from income will increase.
In such cases, when rates are rising, a home loan switch can be beneficial, especially when repaying big loans like those involving 50 Lakh Home Loan EMI. Wondering how?
Let us dig deeper and have a look.
Exactly what does it mean to transfer the amount of a housing loan when switching?
The majority of lenders provide a service known as “home loan balance transfer,” which means moving your existing outstanding house loan balance from your current lender to a new lender in order to take advantage of better services or lower interest rates for 35 Lakh Home Loan EMI. There could be numerous reasons for this switch/ transfer. Let’s check out some of the circumstances wherein a current housing loan borrower can seriously consider applying for a balance transfer/switch on that loan to avail of multiple benefits:
Changing to a rate regime based on the repo or other external rate
Beginning October 2019, the RBI ordered all banks to implement a new system for determining interest rates based on one of the external benchmarks like repo rate. When compared to the PLR-based rate regime or MCLR, the external benchmark offers more transparency and has a higher capacity for transmitting the advantages of the policy rate to borrowers. Furthermore, the presence of the concept of pre-set loan reset dates in the repo rate regime guarantees that the interest rate paid by the borrower will remain the same until the next reset date, regardless of any changes that may occur in the lending rates offered by the existing lender (bank) during the interim period.
To do so, they should consider transferring their current housing loan to a financial institution that provides more favourable interest rates and other terms of service.
Reductions in total interest payment costs
Borrowers choose to transfer their home loan balances for a variety of reasons, but the most prevalent is to take advantage of a lower interest rate offered by another lender, thereby reducing the total amount of interest paid over the life of the loan. However, before choosing a new lender simply on the basis of the interest rate offered, you should take into account all additional fees and expenditures.
When you apply for a housing loan balance transfer with 35 Lakh Home Loan EMI, the new lender regards this as a new loan application and imposes various charges and fees, including a processing fee and administrative fee. Consider these fees while determining your total interest expense reduction, and proceed only if the overall savings are substantial. In all other circumstances, you should continue working with your current lender.
Renegotiation with the existing lender reached a dead end
This option is available in your present lender has rejected your request for a lower interest rate or better terms of service. When you file a transfer application to a new lender, the new lender will put forth its own rules.
Before finalising the new terms, take advantage of this new option to either receive a larger loan amount on the 50 Lakh Home Loan EMI or to adjust the loan term to your specifications. You can accomplish either of them by transferring your balance:
Top up loan requirements not adequately satisfied or refused
A top-up loan is an additional amount of loan that is granted on top of the existing balance on your mortgage. The majority of lenders offer this option for a number of purposes, such as paying a child’s college education, making home modifications, or covering medical expenses.In addition, the interest rates connected with top-up loans are often cheaper than the bulk of other types of secured loans, such as 35 Lakh Home Loan EMI and even personal loans. In addition, you may want to investigate the potential of consolidating your existing debt with the funds from top-up loans.
Borrowers servicing 50 Lakh Home Loan EMI who currently have a house loan and the whose present lender does not offer top-up loans or has declined their request for a top-up loan may choose to transfer the balance of their housing loans so as to satisfy their requirement for additional funds.
In addition, if the approved amount of the top-up loan is insufficient, you may want to consider transferring the remaining balance of your existing housing loan to another lender who may provide you with the required or needed amount of sufficient top-up and determine your eligibility for it when repaying your 35 Lakh Home Loan EMI.
