Reduce your Home Loan Interest Rate | #finance #knowledge #mortgage #homeloan

How existing borrowers can reduce their home loan interest rates

Lenders are aggressively reducing interest rates on new home loans. But what if you are an existing borrower? Those who have taken home loans before April 2016 are still paying a higher interest as their loans are either base rate-linked or benchmark/retail prime lending rate (B/RPLR)-linked. The options before you are as follows

One-time switch to MCLR: You can switch from a base rate to MCLR or marginal cost-offunds based lending rate. The latter is more dynamic as it is directly linked to repo rate and allows you to enjoy the change in interest rates faster. “In the current cycle of lower interest rates, it makes sense to shift to MCLR as a downward change in repo rate will lead to lower MCLR,” says Anil Sachidanand, MD & CEO, Aspire Home Finance. However, the opposite also holds true. “In case of an upward surge in rates, the increase will be passed on to borrowers faster,” he adds.

There is also a cost involved. Banks charge a conversion fee of around 0.5% on your outstanding loan amount, plus taxes. For instance, if your home loan outstanding is Rs 20 lakh, the conversion fee would be around Rs 10,000, plus taxes. Most importantly, switching to MCLR is a one-time option, you cannot revert to base rate again. And once you choose an MCLR rate, you cannot reset it for the next one year.

Source: Economic Times

[syedadilabbas]

thank you Sir, I mailed my bank to reduce they told they will reduce my home loan to 8.5%

[ankurgoel]

conversion means? floating to fixed or higher rate to lower rate??

[Jason-os]

Cheer~~~the rate of interest charged by a financial institution for lending money.(I got quite an interesting channel I had today.)😊