Save lakhs on home loan! Here's what you need to do

 Since the last quarter of 2020, banks across the board have steadily lowered home loan interest rates, passing the savings on to clients. This has boosted the falling demand for mortgages. Despite Covid-19, the lower interest rate regime is here to stay. Existing home loan consumers will benefit greatly from the lower interest rates. So, does it make sense for clients who are paying a higher interest rate on their house loan to switch to a bank that offers a lower interest rate? Yes, existing home loan purchasers can take advantage of the current lower interest rate environment to reduce their EMI burden.

"Existing home loan borrowers who are eligible for new loans at lower interest rates as a result of improvements in their credit score, income profile, employment profile, or other aspects of their credit profiles should consider transferring their home loans to other lenders at lower interest rates," says Ratan Chaudhary, Paisabazaar.com's Head of Home Loans.

Last year, property developers not only saw a rise in housing sales due to lower loan rates, but they also discovered purchasers asking for larger homes. Several domestic top-tier commercial banks, including Kotak Mahindra Bank, State Bank of India, HDFC, ICICI Bank, Axis Bank, and LIC Housing Finance, lowered house loan interest rates in 2020 and further reduced them in 2021, with rates currently starting as low as 6.65%.

Housing loans from public sector banks such as State Bank of India, Bank of Baroda, and Canara Bank range from 6.70 percent to 6.95 percent per annum. Other private sector firms in the range of 6.70 percent to 6.75 percent include HDFC, ICICI Bank, and Axis Bank. The cost of changing a home loan ranges from Rs 10,000 to Rs 15,000 in processing expenses.

Existing customers would benefit from lower interest rates because they would be able to reduce their EMI payments. According to a back-of-the-envelope calculation, a customer with a Rs 30 lakh loan at 8% interest per year for a 20-year term can save Rs 2,460 per month on his EMI payment by switching to, say, Kotak Mahindra Bank, which currently offers the lowest interest rate among all banks, starting at 6.65% per annum. At Kotak Mahindra Bank, the existing EMI on a Rs 30 lakh loan would be reduced from Rs 25,093 to Rs 22,633. In 20 years, it will result in a total savings of over Rs 5.90 lakh.

"With interest rates at an all-time low, this is an ideal moment for home loan borrowers who are paying a higher interest rate to achieve significant savings on their interest outgo by choosing for a lower-priced loan via balance transfer," says Ambuj Chandna, President-Consumer Assets, Kotak Mahindra Bank.

The savings would be considerably greater if the loan amount was higher. On a Rs 50 lakh loan, a customer who transfers the balance loan to Kotak Mahindra Bank will save Rs 4,100 a month on the EMI, resulting in a total savings of Rs 9.84 lakh over the course of 20 years. On a Rs 1 crore loan, a client would save Rs 8,201 per month in EMI savings and over Rs 19.68 lakh in total savings, whilst on a Rs 2 crore loan, a consumer would save Rs 16,402 per month in EMI savings and over Rs 39.36 lakh in total savings. Kotak Bank charges customers up to 0.50 percent in administrative fees for home loan balance transfers.

Given the current economic climate, borrowers should choose variable rates to take advantage of the low interest rate environment. Home loan rates are unlikely to rise sharply in the foreseeable future, according to analysts, due to the system's liquidity. Of course, if interest rates start to rise, the same thing could happen again. As a result, existing home loan customers might use this chance to consolidate their debt.

Conclusion

There's no need to be discouraged if your personal loan application is turned down. To boost your chances of loan approval, simply work on improving your credit report and following the methods outlined above. Once you've completed this checklist, you're ready to submit your personal loan application.To find about the best pricing and deals, call our toll-free number +91-9477079053. They'll help you in every way they can. Please contact me at Best Home Loan In India if you have any more.

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