I took a home loan in August 2012 The return on investment then was 10.5%, but now it is 11%. Now I want to transfer my loan to another bank where the interest is about 10.25%. Recently, the bank I took the loan from, gave me an offer to reduce the interest rate from 11% to 10.25% by paying a fee of ` 5,618. What should I do?
—Arvind Gupta Current (June 2014) competitive rate in the market for a home loan amount of
` 14 lakh is 10.15% to 10.25% and hence it is advisable to accept the offer made by your bank to reduce your interest rate to 10.25% by paying a conversion fee of
` 5,618. You will gain back the amount paid towards the conversion fee in a few months and then enjoy the benefit of lower interest rate for the balance tenure of the
Are prepayment charges levied by housing finance companies regulated under National Housing Bank on mortgage loan? RBI waived prepayment charges on all floating term loans while issuing directions in May 2014 to all banks. Although HFCs say that mortgage loans do not fall under the category of home loans, no directions have been issued by NHB, as yet.
—Gaurav Kapoor Reserve Bank of India issued a notification to banks to waive the penalty on fore- closure of all floating rate loans but National Housing Bank (NHB), that governs the housing finance companies, has not yet issued any such notification. Since loan against property (mortgage loan) does not come under the home loan category, HFCs are free to levy penalty on foreclosure of such loans.
I am 30 years old and my monthly take-home salary is ` 59,000. I have an outstanding home loan of ` 6 lakh with a monthly EMI of
` 7,000. The balance tenure on this loan is 15 years. I also have a car loan of ` 3.4 lakh with a monthly EMI of ` 7,000, which will end in 2016. I want to buy another property costing ` 45 lakh for which I require a loan of ` 10 lakh. Am I eligible?
—Rishab Dasgupta Different banks presume different portions of your income as available for payment of EMIs on loans. Normally the bank will assume that 40% to 45% of your net salary is available for payment of EMI for all loans. The lender will calculate the eligibility based on the EMI being paid now and the room left to pay the EMI for another loan. For example, if the existing EMI on your home loan and car loan is ` 14,000 per month, then the bank will assume that you can pay ` 12,550 per month as EMI for the new loan (total EMI pay ` 26,550 or 45% of the net salary) and calculate the second home loan amount accordingly. Hence, you should have any problems in getting a home loan of another ` 10 lakh for which you will have to pay an EMI of ` 9,820 a month at an interest rate 10.25% a year for 20 years if you have a good repayment record.
Harsh Roongta is CEO, Apna Paisa. He can be reached at firstname.lastname@example.org