Shifting your existing Home Loan to another lender or bank will be a good idea simply because chances are your borrower has increased your interest rates within one year of your disbursement.
Analyse the burden:
One has to understand and analyse the amount of increase in the emi one pays every month. All of us while buying a new house have a budget in mind and think to buy a house on the amount of emi we can afford. But suddenly after a year we realise that the emi has gone up by couple of thousand rupees and later after couple of years its further shot by around Rs 5000 to Rs 6000 and then the burden of that extra cash starts impacting our daily lives and then big compromises start to happen.
A lot of us cant live under any compromises and then start looking at ways to either save or take another burden in the name of personal loan to fulfill our needs and to also make our family happy. Not only personal loans are expensive but in the process we forget that we are getting into a debt trap which will be very difficult to get out of in the current times where the world is going through economic turmoil.
Reducing the burden:
Many who have taken home loans before the period of 2009 might be getting charged an interest of more then 12.5 – 13% or even 14 %. Even if the difference is 1%, it will make a lot of sense and help reduce your emi’s as the tenure in home loans are long. The longer the tenure the more you save. Even if you are charged a pre-closure of 2% by your previous bank and 0.5% processing fee by your new bank the deal is much profitable for you as the difference of 1% in emi run into lacs. Some banks also offer fix Interest rates but these rates would be higher then the floating rates which a new customer would get from a bank. Also the fix rates would apply for a few initial years.
Importance of a Top-up:
One should always understand the importance of top-up while balance transferring a home loan as it can give you cheaper finance compared to personal loan. If you are looking at renovation of home or going abroad or wedding expenses or any other additional funding for yourself and family you can always avail it while balance transferring your home loan to another bank and ask for a top up. The top up amount will be calculated on the eligibility of two things, one your house value and second your income. Before deciding to move ahead and switch banks please inquire about the rates as some of the banks might give you one of the cheapest rates in the industry compared to others.