Question That Worries Every Buyer Regarding Home Loans
Jun 03, 2017 Home Loan
After you take a home loan, there’s no other way but to keep yourself updated with the financial world. Things like how can you pay your loan faster and if there are any changes in the marginal cost to bring down the rate of interest.
Few questions always keep popping in the head of the buyer. We discuss them here:
1. Is it better to switch to the new lending benchmark?
Marginal cost lending rates (MCLR) was introduced in 2015. Before that, the borrowers paid their loan on the base rate. In the hopes of cutting down their interest amount, few borrowers tend to move to the MCLR. But there’s still some confusion regarding the same, hence most people hold back from the same. The fact, one fits all, is not applicable in the terms of credit. If you are thinking of jumping to MCLR make sure you have done your homework properly and there’s no trace of doubt regarding it.
2. Switching to another lender in the middle of loan repayment?
If the property is under construction, banks release the loan in parts depending on the phase of completion. If the lender has disbursed half of the loan and then the buyer finds another lender who is offering low monthly instalments, then yes you can shift your loan. Either you can transfer your loan entirely or get the new lender to pay the rest of the amount. But be ready for long negotiations because the previous lender will not be willing to let go of any customer.
3. Do the RBI cuts help me?
That depends on your lender. If you have taken the loan in fixed rate, there are slight chances that it will affect you. In case of floating rates, the chances are higher. If your lender decides to pass you the benefit of the interest rate cuts, then you might get to enjoy it.
4. Are fixed rates safe?
The rate of interest is dependent on the market scenarios. The agreement between the buyer and lender generally holds the clause where the fixed rate remains fixed for a certain point of time and then revised. If the agreement does not have any such clause, then it might have a rate revision clause.
5. Will the bank take it negatively if I switch the loan lender?
No bank or loan lender wants to lose their customers. They might have been helpful to you when you decided to buy the property by approving your loan application in time. But if you have found another lender who offers low lending rates, you can switch. Make sure the relationship between you and the first lender remains cordial. Keep a window open for any loan in future.
Few questions always keep popping in the head of the buyer. We discuss them here:
1. Is it better to switch to the new lending benchmark?
Marginal cost lending rates (MCLR) was introduced in 2015. Before that, the borrowers paid their loan on the base rate. In the hopes of cutting down their interest amount, few borrowers tend to move to the MCLR. But there’s still some confusion regarding the same, hence most people hold back from the same. The fact, one fits all, is not applicable in the terms of credit. If you are thinking of jumping to MCLR make sure you have done your homework properly and there’s no trace of doubt regarding it.
2. Switching to another lender in the middle of loan repayment?
If the property is under construction, banks release the loan in parts depending on the phase of completion. If the lender has disbursed half of the loan and then the buyer finds another lender who is offering low monthly instalments, then yes you can shift your loan. Either you can transfer your loan entirely or get the new lender to pay the rest of the amount. But be ready for long negotiations because the previous lender will not be willing to let go of any customer.
3. Do the RBI cuts help me?
That depends on your lender. If you have taken the loan in fixed rate, there are slight chances that it will affect you. In case of floating rates, the chances are higher. If your lender decides to pass you the benefit of the interest rate cuts, then you might get to enjoy it.
4. Are fixed rates safe?
The rate of interest is dependent on the market scenarios. The agreement between the buyer and lender generally holds the clause where the fixed rate remains fixed for a certain point of time and then revised. If the agreement does not have any such clause, then it might have a rate revision clause.
5. Will the bank take it negatively if I switch the loan lender?
No bank or loan lender wants to lose their customers. They might have been helpful to you when you decided to buy the property by approving your loan application in time. But if you have found another lender who offers low lending rates, you can switch. Make sure the relationship between you and the first lender remains cordial. Keep a window open for any loan in future.
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