By Dr Sanjay Chaturvedi, PhD, LLB (Gen)
Accommodation Times News Services
Reducing EMI on our home loan always saves you that extra money which is needed to full fill the gap. First of all choosing the home loan provider is very necessary. A comparison chart on this website must be looked upon periodically. We research for you 20 banks operations and keep close eye on their interest rates.
Current trend is to offer reduced interest rates to existing home loan borrower. Since nothing selling and pressure from Finance Ministry that Priority Sector lending target must be achieved, banks advertisement to lure more customers will be seen. But Real Estate is low and cash crunch do not allow it for more sale, housing finance also is at very low growth trajectory.
Many banks are offering switch over advantage to ongoing customer. Since there is no penalty in switching over to new financier, as per National Housing Bank directives, no banks will ask you from where you managed to bring the prepayment of loan. Reducing interest rate on home loan is your right under consumer protection Act. Hence switching over to more convenient offer must be dome before March because in April new financial year starts and pressure to achieve targets dilutes.
Always stick to period of loan. When floating interest reduces, ask your banker to reduce the EMI as well. Do not agree for reducing time becuase in next three to four years, interest rates may bounce back to rise and they will suggest you to enhance loan period. Hence benefit of reduced interest rates and EMI under reduced EMI must be notified and bargained from banks or financier.
All delayed penalties and notices must be square off in this period only. When you have paid in previous past EMI any such charges then this is the time to re negotiate and adjust that amount against your EMIs. Switching over may give you this advantage plus reduced EMI on your Home Loan.
If you have savings and funds, just pay off part of the loan and renegotiate the EMI or switch over to other Bank.