How should you reduce your home loan EMI? NEGOTIATE INTEREST RATE DOCUMENTS
NEWDELHI/MUMBAI: Since the beginning of 2017, banks and housing finance companies have cut interest rates on home loans. There is stiff competition among lenders now to lure customers. So, if you are paying a higher EMI, here is what you should do: Negotiate well with your existing borrower before deciding to transfer home loans. An Axis Bank spokesperson said: “Customers are offered lower home loan interest rates on the basis of their credit profile. Credit score and credit history are important parameters in the credit appraisal process.” Led by State Bank of India (SBI), other banks and housing finance companies, too, cut their rates. For instance, HDFC reduced its home loan rate from 9.10-9.15% to 8.65-8.75%. Learn of the charges and fees that you may have to pay for transferring a loan. According to an HDFC spokesperson, there is no selective process for doing so and old customers can move to new rates by paying a small conversion fee. Beside lenders’ websites, agents and loan aggregator websites can also be used to compare interest rates and charges. Typically, stamp and administration charges are in the range of ₹1,000 and ₹1,500. Many lenders offer “nil” processing charges too. Make sure to ask if the lender wants you to buy property insurance. You will need to have the documents in place for a loan transfer. “The same set of documents are required that would be needed for any new home loan. As the customer is moving from another bank to HDFC, we would need a list of documents in possession of the customer’s existing bank. We would also need the outstanding loan amount from the customer’s bank,” said the HDFC spokesperson.
Remember to arrange your Know Your Customer (KYC) documents such as identity and address proofs. Proofs of income can include Form 16, I-T return and salary slips along with bank statements, and the complete chain of property titles along with the registration deed.
DURATION
“If the customer has taken a loan for a project that we have already approved, then the processing time will be much faster. The duration for disbursement also depends on the documents customer provides,” said MG Vaijinath, chief general manager, real estate and housing department, State Bank of India. Also, it depends on the bank you are dealing with. A loan transfer usually takes 2 weeks, but in some cases it can take longer.