The recent decline in demand for homes has resulted in significant changes in the interest rates for Home Loans. Since demonetization came into effect, the demand for loans hit rock bottom as the liquidity and availability of cash fell drastically. This caused financial lenders to restructure their interest rates on a large scale. Hence, any new borrower of Home Loans and existing Home Loan borrowers who are looking for Home Loan balance transfer for more affordable Home Loans are likely to have access to very competitive Home Loan interest rates offered by various lenders. The primary question is how to make an informed decision that actually offers you monetary benefits.
Your guide to get the perfect rate for your Home Loan
Getting a good interest rate is not as difficult as it seems. All you have to do is follow the steps mentioned below:
- Study the market: Pay attention to fluctuations in the RBI’s repo rate (the rate at which it lends to banks), the rise and fall in demand of houses, government policies regarding housing and other economic factors like demonization. This will give you a background using which you can understand when you can get a lower Housing Loan interest and what to say when talking to your existing lender.
- Negotiate with your existing lender: If you are a borrower seeking a Home Loan balance transfer, you may have already considered this option. If you find interest rates of your lender too high and difficult to repay, it is important to initiate a dialogue and negotiate with your lender. Lenders would often try to be as helpful as possible since they do not want to lose customers. After a negotiation, it is possible that the lender would offer the most mutually beneficial alternative.
- Choose a lender who offers Home Loan interests based on MCLR: MCLR is the marginal cost of funds based lending rate and reflects RBI’s repo rates and a lender’s efficiency. It is the lowest possible rate of interest that lenders offer based on RBI guidelines. When opting for a Home Loan balance transfer, choose a lender whose rates are based on MCLR rather than a base rate to offer you loans with the lowest interest.
- Go over the basis points: Basis points make it easy to evaluate whether you are losing or gaining from interest rates. In case the interest rates in the market for Home Loans are incredibly low and there is a difference of 75 basis points between your interest rates and the market interest rates, you should definitely consider doing a Home Loan balance transfer.
When opting for a Home Loan balance transfer for a better rate, keep the following in mind:
- Conduct a thorough analysis of potential lenders, their reputations, and the interest rates they offer. Try to choose the lender with the lowest interest rate and no hidden costs.
- Pay attention to terms and conditions and analyse the proposal offered by your new lender in detail. See if it offers additional incentives like insurance cover. Also keep tabs on other details like processing charges or foreclosure fees.
- Assess the track record of the lender and pay particular attention to the Home Loan interest rates charged and the fluctuations or increases as time passes. Based on the track record, you can assess if the new lender is right for you.
- Check the terms thoroughly for hidden charges. Certain lenders appear to have favourable interest rates in the beginning; however, as you proceed various hidden charges crop up, making matters more expensive for you. That’s why it is prudent to read the terms in detail.
Lenders offers several Housing Loan schemes in the market with affordable balance transfer that can get you benefits such as low interest and other benefits. Use the Home Loan balance transfer calculator and Home Loan eligibility calculator online to check your eligibility for opting a Home Loan.