Watch out for the best home loan ‘of­fer’

Many banks of­fer cus­tomers great deals in the fes­tive sea­son. Find out what your fi­nancier is up to

HT Estates - - Front Page - Harsh Roongta

It’s that time of the year again. The fes­ti­val sea­son is al­most here and we are be­ing bom­barded with ad­ver­tise­ments on TV and in news­pa­pers which in­vite us to buy con­sumer goods, cars... new homes... Apart from builders try­ing to lure peo­ple to buy into their projects with lu­cra­tive of­fers and gifts, we have banks and lenders com­ing up with in­ter­est rate con­ces­sions and pro­cess­ing fee waivers for home loans.

Lenders run these “fes­ti­val schemes” in the last quar­ter of a year – just when the In­dian fes­ti­val sea­son be­gins. The only dif­fer­ence this time is that with a high rate of in­fla­tion, the de­mand for hous­ing has been rel­a­tively muted in mar­kets such as Mum­bai. In the other cities, too, the de­mand is con­cen­trated in the mid­dle seg­ment.

With the in­ter­est rate slated to go down, lenders are clearly us­ing this op­por­tu­nity to lower their rates by call­ing them “fes­tive of­fers”. Not only do we now have lower in­ter­est rates, but the pro­cess­ing fees has also been cut (prac­ti­cally nil in a few cases) for new cus­tomers. Of course, the lower in­ter­est rates are likely to continue even af­ter the “fes­ti­val sea­son” is over but the pro­cess­ing fee waiver may not.

Now let’s look at some of the best “fes­ti­val of­fers.” There’s this block­buster of­fer from the State Bank of In­dia, both in terms of in­ter­est rates and pro­cess­ing fee. Its in­ter­est rates are as low as 10% per an­num (for home loans up to R30 lakh) and fixed pro­cess­ing fee is just R1000. UCO Bank has fully waived the pro­cess­ing fee for both home loans and car loans.

In a clas­sic combo of­fer, Cor­po­ra­tion Bank has not only waived the full pro­cess­ing fee but is also of­fer­ing in­ter­est con­ces­sion of 0.25% on a car loan if the ve­hi­cle and home loan are taken to­gether. Other play­ers like Axis, HDFC and ICICI, too, have come out with “fes­ti­val of­fers”. (Please see box for other of­fers).

So, if you are plan­ning to buy your dream home, this is as good a time to do so.

Al­ways make it a point to re­mem­ber that when you take a float­ing rate loan, you would be cov­ered in case there is any fur­ther re­duc­tion in in­ter­est rates.

Be­fore you ap­ply for a home loan, here’s what you should check out now:

1. First, check the in­ter­est rate af­ter the con­ces­sion and com­pare it with other of­fers by us­ing com­par­i­son tools avail­able on on­line mar­ket places such as www.ap­na­paisa.com. Af­ter all, it is quite pos­si­ble that the bank may have a higher rate (than the mar­ket) even af­ter the “con­ces­sions” in in­ter­est rates.

2. If the bank is giv­ing lower in­ter­est rates, then please know that most banks are chang­ing the spreads rather than re­duc­ing the base rates. Clearly, the ben­e­fit is only meant for you as a new cus­tomer and not as an old con­sumer. So, re­main vig­i­lant even af­ter you take the loan to en­sure that your bank keeps pass­ing on new ben­e­fits such as re­duc­tion in in­ter­est rates etc to you.

3. Some of these banks com­pul­so­rily re­quire life in­sur­ance and crit­i­cal in­sur­ance for their bor­row­ers. Though com­pul­sory bundling is not al­lowed by reg­u­la­tion, in prac­tice banks may still in­sist on this. Buy­ing life in­sur­ance or crit­i­cal ill­ness in­sur­ance is a great idea with a home loan, es­pe­cially if the pric­ing of the bun­dled prod­ucts is com­pet­i­tive. It is bet­ter to ask about these be­fore you fi­nalise your home loan.

Ex­ist­ing bor­row­ers can take ad­van­tage of these of­fers by shift­ing their loan. So, if you have a loan of, say, R30 lakh and you are pay­ing an in­ter­est rate of more than 10.5%, then there is no earthly rea­son for you to continue to do so. Shift to an­other lender im­me­di­ately. This way you can cre­ate your own fes­tive of­fer, lit­er­ally!

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