Introduction
At the time of borrowing, you will have so many thoughts of how to repay the Loan, what are the likely changes that may occur to bring down the total cost of the loan, a view on interest rates and so many other points of views before making a decision to borrow a home loan.
Should I switch to the new lending benchmark?
The new lending benchmark came into effect in 2015, and the Marginal Cost of Funds-based Lending Rate (MCLR) system has become applicable. Earlier, borrowers were issued loans on base rate. Hoping to lower the total cost of the loan, existing borrowers considered switching to the new lending benchmark. Due to confusion, many are refraining from applying it. The fact is, switching to the new system will benefit, if it’s done properly, keeping in view of all personal details. The aspect of one-size-fits-all will not be applied here.
Can I switch a partially disbursed loan to another bank?
Yes, you can definitely shift to another bank to approach for a partial loan amount. The present banker will not object you. However, you need to convince the banker certain probable reasons for you to shift and also confirm that partially disbursed loan will be repaid in EMIs regularly within the stipulated time. Most of the customers switch to another bank due to the profit of lower interest rates which is the most attractive feature while considering a loan. Less interest rates means – less burden on loan. Keeping this in view, it’s a good chance to opt for loan in another bank, provided you intimate the banker.
Do rate cuts by the RBI really help me?
RBI rate cuts have a bleak chance to help you as it entirely depends on what sort of loan you have opted. If you have borrowed capital on a fixed rate of interest, RBI rate cut will not help you as the reductions are applicable only on loans are taken on a floating rate of interest.
Is it not safer to stick with a fixed rate of interest?
As compared to floating interest, that fluctuates EMI (easy monthly installments), fixed rate of interest are much safer and recommended. Because depending on the market conditions, floating interest rates may increase or decrease. At the time of signing the home loan agreement, you will find a clause that says to the banker to keep the interest fixed or floating. Fixed rate of interest enables you to repay the loan amount in equal monthly installments, which is ideally the choice of many home loan borrowers. It’s definitely safe to stay with fixed interest for loan.
If I switch the loan, would my old bank take it adversely?
No, the old bank will not leave an adverse impact on you, as many banks release the loan amount is several instalments, like – when the construction is completed up to the basement, when walls have to be mounted and roofing has to be done, then the bank will release that phase of amount for the expenses. Also, the EMI payments will begin only after the disbursement of the loan amount at a later point at a specified date and month. In an instance, wherein you wish to opt for another certain amount of loan from another bank at a less interest rate, you can switch your loan. But you may have to inform your present banker and solicit permission accordingly.
