NEWS & ADVICE : HOME LOANS
Home Loans: How to reduce your floating rate
By Joseph Samson
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Are you troubled about the high floating rates on your home loans, inspite of being regular with your EMIs?

Ever wished you could shift to another lender?

Yes! That is possible! If you have taken home loans and feel are paying much more than you should be, then you can shift to another lender. However, this is not as easy as it sounds. If you are regular with your repayments, then you can consider the option of prepayment and shifting to a new lender.

This new development has become very important over the years. The last few years have seen many home loan lenders charging borrowers who are on floating rates, exorbitant prices, when banks have revised their rates. The last few years have seen a huge increase in the floating rates being charged. The problem has got worse, with inflation at its peak at a new 13 year record.

Another problem for the old customers is that due to increased competition, banks offer better reduced interest rates to the new customers, but the old customers aren’t charged that lower rates. They still end up repaying the loan at the same higher rates.

Many home buyers, who chose a floating rate of 7 percent in 2003, at a time when the economy was doing very well, would have thought it to be a wonderful deal. It was better than the fixed rate of interest of 10 percent! However, these five years has proved just how badly the tables have turned. They find themselves paying an interest rate of 11.50%, and it might increase even further. If for instance, the loan was for Rs. 10 lakh and the original tenure of the loan was 20 years, then the increased rates would change the EMI from Rs 7753 to more than Rs 10,000. However, if one wants to keep the EMI amount same, then the tenure would increase by more than 10 years! Typically, banks would let the tenure increase to a maximum of 25 years.


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(Comments Posted : 2) Post Your Comments
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Peter James (Posted: Jan 27, 2015)
2. I have taken a home loan from icici bank Rs. 532000, in the year November 1996, floating rate basis, increase of emi now I will be repaying the entire balance amount of 12 installments or one time settlement what is the procedure the same. My loan account no is LLBER00001462260
MRINAL KANTI CHAKRABORTY (Posted: Nov 6, 2011)
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