Before you switch your home loan...
Before you decide to take the plunge, halt, and evaluate. One should take into account key considerations before switching loans.
Interest rate variation
Check the existing rate of interest and the interest that you have been offered now. If the new lender’s rate is at least 1-1.5 per cent cheaper then it makes sense to switch.
For example, on an existing loan of Rs 75 lakh charged at 12 per cent for 20 years, your current EMI is Rs 82,582. If there is a reduction by 0.5 per cent, your EMI will change to Rs 79,982, a difference of Rs 2,600. However, if the interest rate comes down to 10.5 per cent, the savings would be substantial with your new EMI at Rs 74,879, which means savings of Rs 7,703.
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