* Since my bank is charging more interest rate, should I switch my loan to another bank offering lower rates?
– Dinesh Bagrecha
While switching to another lender, a borrower should conduct a comparative study of the financial institutions (FIs) and consider factors such as the pedigree of FI, reputation, customer service and operational efficiencies, principal amount, loan eligibility, loan tenure, processing fee, file charge, stamp duty, insurance, EMIs and conditions. In case of any concerns, discuss it with your lender so that you can get best deal without shifting your home loan.
* Can I make my brother co-borrower as our families stay together?
If you and your brother stay together as co-owners of the property, you can jointly apply for a home loan with him as a co-applicant/ co-borrower. Lenders require all co-owners to be co-applicants, but not the reverse. You have to submit documents pertaining to all the co-applicants—income proof, bank statements, KYC details, proof of address and proof of property co-ownership. Before jointly applying for a home loan, speak to your lender and legal advisor, since obligations vary across lenders.
* Should I take a fixed term housing loan? Will the interest rate remain fixed throughout?
—Chaman P Lal
While most lenders offer floating Rate of Interest (ROI), a few lenders offer fixed ROI. A Fixed ROI is constant for a period or throughout the home loan tenure. A Floating ROI increases or decreases depending on the movement of cost of funds for lender. Fixed ROI will be higher than Floating ROI and should be opted with caution. There are also options to switch between a fixed and floating ROI anytime during one’s tenure.
* If I prepay some amount of the home loan, will my CIBIL score get affected?
One of the best ways to maintain a healthy CIBIL score is to ensure timely repayments. So, regular payment or pre-payment of dues reduces the credit balance and improves the customer’s credit score over time. Prepaying your home loan at lower interest rates will also help in your savings. The CIBIL score calculation occurs after 45 to 60 days from the date of payment. Also note that there are no prepayment charges that are levied by the lender.
The writer is JMD and CEO, DHFL.
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