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Availability of ready cash is no longer a constraint for many property searchers, thanks to availability of home loans and there are many lenders out there with different plans. And, a customer could take the most ideal one according to preference.
Yet, Indian loan takers have to worry about a few aspects, inconsistency in interest rates, porting of housing loans, tough rules by the lender and lack of transparency on fixed loans are the prominent ones among them.
While the concerns over inconsistent rates seem genuine, an aspect worth assessing is that the changes in banking rules, inflation rates and fluctuation in PLR (permanent lending rate) and the Base Rate might have an influence on the interest rates. Mostly, the issue happens when an old borrower sees that the rates on a new loan are much different.
Many old borrowers avail the offer to switch to new rates by the bank, so that the rates are same as the new loans. This is a practical way to enjoy latest offers, but not all banks have the option. Reserve Bank of India also encourages the move and declared that for floating rates, prepayment charges are not expected.
Though this is widely agreed to be an effective method, each and every aspect of switching loans has to be considered. Be aware of hidden costs that might go unnoticed.
People, while deciding on fixed or floating interest rate, consider the savings. At times, the fluctuation levels with floating rates would be quite significant; therefore, many people prefer fixed rates. But, there is something called reset clause, and whenever this clause becomes applicable, especially in case of adverse market conditions, banks could reverse the rates. This clause is not entirely removable, but few lenders don’t include this. Therefore, to escape from the issue, search for lenders who don’t go by this rule.
Tough rules on the part of lenders are yet another dilemma, this becomes significant whenever there is a prominent change in interest levels and banks are unwilling to revise the EMI amount. This way, lenders are saved from complicated paperwork and the hassle of going through the entire process.
Yet, Indian loan takers have to worry about a few aspects, inconsistency in interest rates, porting of housing loans, tough rules by the lender and lack of transparency on fixed loans are the prominent ones among them.
While the concerns over inconsistent rates seem genuine, an aspect worth assessing is that the changes in banking rules, inflation rates and fluctuation in PLR (permanent lending rate) and the Base Rate might have an influence on the interest rates. Mostly, the issue happens when an old borrower sees that the rates on a new loan are much different.
Many old borrowers avail the offer to switch to new rates by the bank, so that the rates are same as the new loans. This is a practical way to enjoy latest offers, but not all banks have the option. Reserve Bank of India also encourages the move and declared that for floating rates, prepayment charges are not expected.
Though this is widely agreed to be an effective method, each and every aspect of switching loans has to be considered. Be aware of hidden costs that might go unnoticed.
People, while deciding on fixed or floating interest rate, consider the savings. At times, the fluctuation levels with floating rates would be quite significant; therefore, many people prefer fixed rates. But, there is something called reset clause, and whenever this clause becomes applicable, especially in case of adverse market conditions, banks could reverse the rates. This clause is not entirely removable, but few lenders don’t include this. Therefore, to escape from the issue, search for lenders who don’t go by this rule.
Tough rules on the part of lenders are yet another dilemma, this becomes significant whenever there is a prominent change in interest levels and banks are unwilling to revise the EMI amount. This way, lenders are saved from complicated paperwork and the hassle of going through the entire process.
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