Loan: It is wise to reduce the loan installment, the installment of your house can be more expensive by one percent

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The time to take loans at low interest has now become a history. In Corona, people had got such an opportunity, in which till now in the history, they were getting loans at the lowest interest rate. RBI’s repo rate was at 4 per cent. Banks were giving loans at an interest of 6.4 per cent. People got the benefit of this for about two years. But after increasing the repo rate by 1.40 percent in the last three months, now once again the era of expensive loans has started.

Rising interest rates have a greater impact on the purchase of homes. Because these loans are for a long time. Their amount is also more. Most of the loans are taken at floating rate. Floating means that as soon as the RBI reduces or increases the rate, its effect on the loan starts. It does not mean that you have taken a loan at Base Rate, BPLR, MCLR or EBLR. These are all different ways of interest rates.

If you are going to take a loan, then choose the option of floating
If you are taking loan now then you can opt for hybrid loan. Take a fixed rate loan for the first three years. Later convert it to floating rate. This will ensure that interest rate fluctuations will not affect the tenure or installment of the loan. Remember that the fixed rate can be slightly higher than the floating rate.

Change loan in low interest rate banks
Investment advisor Archana Pandey says that there are old borrowers or are currently taking loans. In both the cases you should check the loan interest rate of all the banks. The interest rate of every bank is different. Some banks also waive the processing fee. If the loan has already been taken at a cheap rate, then there will not be much benefit. Because it will still be at a very low rate. But if you are paying higher interest rate then you can change it to lower rate banks.

NBFCs charge higher interest
By the way, barring one or two non-banking financial companies (NBFCs), most NBFCs charge higher interest. Because their funds come at a high cost.

  • If you have a decent income, a good CIBIL score, then you can convert it to the bank. Keep in mind that there should be a difference of at least half a percent in the interest rate of both.
  • If the credit score i.e. CIBIL is very good, then you can bargain and take a loan from the bank at a lower rate.

Check EBR if you have old borrowers
If there is a loan before October, 2019, then it can potentially be in MCLR or Base Rate or BPLR. Loans after October 2019 are given under the External Benchmark Rate (EBR).

  • If the loan is old then check its interest rate. If there is more interest then you can bring it in EBR by paying a nominal fee. This will result in some savings every month, which will be visible in the long run.
  • If the budget is disturbed due to the increase in installment, then you can get the loan time extended. The tenure of the loan will depend on the retirement age which is 60-65 years of age.

Expansion

The time to take loans at low interest has now become a history. In Corona, people had got such an opportunity, in which till now in the history, they were getting loans at the lowest interest rate. RBI’s repo rate was at 4 per cent. Banks were giving loans at an interest of 6.4 per cent. People got the benefit of this for about two years. But after increasing the repo rate by 1.40 percent in the last three months, now once again the era of expensive loans has started.

Rising interest rates have a greater impact on the purchase of homes. Because these loans are for a long time. Their amount is also more. Most of the loans are taken at floating rate. Floating means that as soon as the RBI reduces or increases the rate, its effect on the loan starts. It does not mean that you have taken a loan at Base Rate, BPLR, MCLR or EBLR. These are all different ways of interest rates.

If you are going to take a loan, then choose the option of floating

If you are taking loan now then you can opt for hybrid loan. Take a fixed rate loan for the first three years. Later convert it to floating rate. This will ensure that interest rate fluctuations will not affect the tenure or installment of the loan. Remember that the fixed rate can be slightly higher than the floating rate.

Change loan in low interest rate banks

Investment advisor Archana Pandey says that there are old borrowers or are currently taking loans. In both the cases you should check the loan interest rate of all the banks. The interest rate of every bank is different. Some banks also waive the processing fee. If the loan has already been taken at a cheap rate, then there will not be much benefit. Because it will still be at a low rate. But if you are paying higher interest rate then you can change it to lower rate banks.

NBFCs charge higher interest

By the way, barring one or two non-banking financial companies (NBFCs), most NBFCs charge higher interest. Because their funds come at a high cost.

  • If you have a decent income, a good CIBIL score, then you can convert it to the bank. Keep in mind that there should be a difference of at least half a percent in the interest rate of both.
  • If the credit score i.e. CIBIL is very good, then you can bargain and take a loan from the bank at a lower rate.


Check EBR if you have old borrowers

If there is a loan before October, 2019, then it can potentially be in MCLR or Base Rate or BPLR. Loans after October 2019 are given under the External Benchmark Rate (EBR).

  • If the loan is old then check its interest rate. If there is more interest then you can bring it in EBR by paying a nominal fee. This will result in some savings every month, which will be visible in the long run.
  • If the budget is messed up due to the increase in installment, then you can get the loan time extended. The tenure of the loan will depend on the retirement age which is 60-65 years of age.

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