First of all it is not that easy to get home loan. Now a days it is taking hell lot of time to get hl. Before booking your flat pls check with your bank about your eligibility amount and most important thing your cibil report. Because banks takes a lot of time to process your loan application. They wont inform about your application status immediatly. They will take their own time and at the neck of the moment they will inform that your application is rejected. It is always better to be aware of the above things
I borrow home-loan from an Housing Finance Company 2 years ago and paying monthly EMI for my flat. After sometimes the rate of interests was hiked, so they increased the EMI amount. But later RBI reduced the interests rate, but the finance company retained the same rate. Now, if i want to switch it to the SBI bank, then how much they will charge (additional) for the same? (the loan period is 10 years)
Re: Need Info
by ramanan sivanarayanan on Sep 29, 2009 03:07 PM
see.. u carefully need to calculate it b4 moving to any other bank. first try to talk to ur existing bank. tell them if they won't reduce the rate then u'll go to another bank. if u have paid ur emi regularly, then they wudn't like to lose a customer like u. if still they don't reduce, then go to SBI. here, ask them the interest rate first. SBI won't charge u anything extra. its ur existing bank that will charge u a penalty of pre-closure (on ur outstanding balance). ask them the rate of penalty. if SBI's rate the penalty is more than ur existing rate, then u'll be at loss. in that case, its better to continue with the same bank.
Re: NO PrePayment Penalty
by kiran kumar on Sep 29, 2009 12:54 PM
RBI usually does not ask any bank to charge fee on any service. But if banks are charging something unreasonable they may choose to step in.
Recent example is of ATM withdrawals. They were made free across banks. Then based on the statistics, it was pointed out that some of the banks are getting undue advantage. Hence this is being changed wef 15th October that a max of 5 transactions per month with an upper limit of 10,000 INR per transaction will be allowed per card free of charge, anything beyond will be charged.
suppose if i pay some part of th eloan amount to reduce my EMI, will the bank charge any penalties on that or it also like preclosure procedure. For ex. if i take a loan of 20 lakhs for 20 years & if i want to repay some 10 lakhs after one year, will there be any additional charges for this.
Re: additional payment
by ramanan sivanarayanan on Sep 29, 2009 10:52 AM
pre-payment charges are involved in 2 cases:- 1. early closure of loan (in which case the full outstanding balance is paid). 2. partial payment (the case which u specified). here, banks allow upto certain percentage of outstanding loan to be prepaid without any cost. if u exceed that amount then u have to pay a penalty. the amount may be like 10 times of annual emi or so.
Re: additional payment
by rajesh bansal on Sep 29, 2009 10:52 AM
It depends on your agreement with the bank. Generally there is no penalty, if you are repaying from your account (i.e not through a new loan).
Re: Re: additional payment
by milan mohanty on Sep 29, 2009 11:10 AM
Well! If you take a loan of 20 lakhs then you need to pay 40 lakhs when the tenure ends. So beter not to take loan & opt for rental home since you are only wasting your hard earned money in a house whick gives you tremendous presurre for 20 continuous years. So just & stay in a rental home......
Re: Re: Re: additional payment
by kiran kumar on Sep 29, 2009 01:07 PM
That's a short term view Mr. Milan. if the property is chosen well, there is a huge potential of real estate appreciation as well. That is very subjective though.
Re: additional payment
by kiran kumar on Sep 29, 2009 01:04 PM
Understand the concept of Asset Liability Management, things will be a lot clear.
In your example, you have taken a loan of 20 lakhs for 20 years. Now bank has done some work to to lend the money to you and their books reflect that there will be a constant amount flowing in every month. Based on tens of thousands of such loans they estimate what will be their inflow every month and then do the marketing to disburse new loans to the same extent. Reason being that once bank receives money, they cannot keep the money idle and they have to immediately deploy it somewhere else there by start earning money on it.
All of a sudden if you replay 10 Lakhs bank has a problem that they were not expecting hence have not planned for this money and will need some time to deploy it somewhere else and star earning the money. Hence they charge penalty.
If you are expecting to do frequent prepayments go for SBI. Though their documentation is laborious they do not charge for pre-payment unless the loan is closed with-in half the original period i.e., 10 years in your case.
Banks additionally charge or the Loan applicants may have to bear towards verifying the legal aspects of the property in question and valuation being recommended by an approved /authorised engineering consulatant of the Bank from which the laon is sought. The amonts involved may be small. But these costs have to be taken into account and included in the expenses.
Re: Legal Fee and Valator's fees
by ramanan sivanarayanan on Sep 29, 2009 10:54 AM
some banks also charge for franking the legal documents, depending upon the loan amount.
Re: Loan On Mortgage
by kiran kumar on Sep 29, 2009 01:13 PM
Mortgage loans usually come at higher interest rates and no tax benefits can be availed. It can be related more to a personal loan than housing loan.
General rules are compare EMI's of 2 banks with same 'Net disbursement' and 'same tenure' where 'Net disbursement' means (loan amount - charges - upfront installments) and 'same tenure' means last installment date should be same after factoring in the upfront installments (number of installments should not be compared)
