In spite of the reduction of 75 basis points in the repo rate in the 3rd policy meeting of the Reserve Bank of India (RBI), banks have cut their interest rates very hard in India. Most banks have cut their 1-year MCLR by 5-15 points, thereby determining the interest rates of home loans. There are different reasons for not cutting rates of interest from banks.Home loan owners can use several Optional tricks to reduce their home loan EMI burden. New loan holders have the option of comparing the rates offered by different banks and maximizing profit, but existing customers have very few options. Those who have already taken loan can transfer their home loan from one bank to another such bank, which could reduce interest rates. However, transferring a home loan is not easy for everyone. Here we are talking about the manner in which the home loan can be transferred to another bank.
Home loans taken before April 2016 were based on prime lending rate or base rate. On the basis of these old rate systems, home loans are higher than market rates because they were decided by banks on a non-transparent basis. Apart from this, there is no pressure on banks to cut these rates. So first you should see if your home loan is based on MCLR or base rate or PLR. It is also to be checked that what is currently the interest rate given by banks and what is the interest rate you are currently paying?
Consider switching home loan to another bank when the rates offered by the other bank are less than 1% of your current interest rate. In this calculation, it is also necessary to include the loan transfer fee along with the interest rate, which may be up to 1% of the remaining payment. With this, some banks also take pre-payment penalties. Consider switching your loan only when you are getting more benefit after all these processes.You can talk to your current bank to reduce your home loan rate before switching your home loan. When you want to shift your loan, many banks will start demanding loan information from you. You can also negotiate with many banks for the rate cut. Banks will reduce interest rates only when they will be convinced that you are trying to shift the loan to another bank.