Despite financial institutions offering comparable interest rates for home loans, even the slightest of escalations can result in massive interest accumulation, over the years. Therefore, it is necessary to compare options and opt for the bank or NBFCs that quote the lowest, when interest rates are concerned.
Then again, it is evident that you might have faltered in the first place and persisted with a somewhat higher interest rate on your home loan, thereby still paying exorbitant EMIs despite proper structuring. While foreclosing the same is a pretty good option to steer clear of this overpaying longanimity, you can always make a switch and opt for a financial institution that’s equipped with a more empathetic home loan calculator.
Is Switching Service Providers the best option to lower the existing EMIs?
Every penny saved in the post-covid19 era is akin to earning the same. Therefore, it becomes all the more important to change the existing lender by taking a closer look at the current home loan interest rates, from a comparative purview.
The current pandemic-induced scenario hasn’t made home loans any dearer. Instead, a majority of banks or even NBFCs are charging rates lower than 7 percent, precisely for coercing individuals into buying homes. Despite the strong-arming of sorts, several genuinely interested buyers can actually make use of the lower interest rates.
However, even there is an ongoing loan to account for, you can always compare and shift the same to a more credible lender who is either willing to offer a lower interest rate or extend the tenure for lowering the EMIs. Therefore, it wouldn’t be wrong to consider this as the best choice for getting a substantial cut on the existing EMIs.
The Concept of Balance Transfer
While switching over to another service provider is more like a generic explanation, Balance Transfer is more of technical terminology for the same. This concept signifies the method of transferring the outstanding loan amount to a different financial organization, mostly due to lower rates or better structuring.
The newest bank, however, considers the same as a fresh disbursement and you can easily avail of all the benefits of the lower rates, including the rebated EMIs. However, the devil lies in the details as you need to understand the benefits, concept of basis points, and even the savings you make before making the switch.
More into the Details
As a borrower, you must try to make an early switch, just to make the best use of the basis points and the associated perks. As one percent interest is synonymous with 100 basis points, it is advisable to opt for an NBFC or Bank that can even offer a 0.5 percent lower rate as compared to the current home loan interest rates, levied by the original institution. For a loan amount in the ballpark of 75 lakhs, a 0.5 percent interest cut can help you save almost 8 lakhs over 20 years, a perk that can be availed in the form of more affordable EMIs.
While making a sizable down-payment or choosing longer loan-payment tenures are some of the other choices for lowering home loan EMIs, nothing works better than selecting a financial institution that offers a lower interest rate.