When it comes to home loans, interest rate is everything. Bank charging you too much? We have the solution for you. If your bank has started charging better rates for new customers or if you have found a bank that has better rates, it would be best to switch home loans. It is important that you check once or twice a year to find better interest rates and switch home loans.
Rather than finding a new lender, find out whether your current one has new rates that are better for your needs. If your credit report is good and you have made your payments on time, most banks would rather keep you but usually on payment of a conversion fee. After you pay this fee, you rates are lowered. Even though this means paying an extra fee, it lowers your payment in the long run and will serve you well in the long run.
If your bank refuses to let you change your rates and you feel you could get a better rate elsewhere, look out for a better rate from other banks. But be sure to do your homework and find out all there is to know about the other bank’s rates. That being said, shifting a loan based on rates is a good idea only for those who have a long time left on their loan. If you are almost done paying back your loan, it does not make much sense to go through the hassle of shifting in the last minute.
Depending on your finances, it might be a better option to switch to a floating rate loan on which as per RBI directive, no penalty can be charged while switching. It is very important to calculate costs and find out whether one will actually save money by switching.
The procedure to be followed:
1. To begin with, apply for an NOC (No Objection Certificate) from your current back, along with a letter that states how much of the loan has to be paid back.
2. Apply for a new loan at the new bank. Make sure your documents are in order. Once the bank has checked your credit reports and documents, they will send their approval.
3. Submit this letter of approval, along with an NOC from the builder/ society if needed to your current bank.