Home Loan Query: Will shifting to repo rate linked loan reduce your EMI?

Published: July 22, 2020 6:30 AM

If it is an unconditional sanction letter, then the bank cannot withhold the disbursement on the ground that you provide a job security letter.

Please explore this change with your existing banker itself, it may be easier in terms of logistics and paperwork.Please explore this change with your existing banker itself, it may be easier in terms of logistics and paperwork.

By Chaitali Dutta

I had taken Rs 30 lakh loan in 2008. Should I shift to repo rate-linked lending? Will it reduce my EMI?
—Sanjay Kumar
Yes, now you can have the loan rate linked to the repo rate. The interest rate may not reduce significantly, but repo rate linked loan is more transparent in passing on the interest rate changes to the borrower. In the earlier loans, the full advantage of reduction in interest rate by RBI was not passed on to the borrower, and part of the benefit was pocketed by the lending institutions. Please explore this change with your existing banker itself, it may be easier in terms of logistics and paperwork. Ask for the rate which they are offering to new applicants, if it is much lower than your existing interest rate, then you may go ahead.

I applied for a home loan in February 2020 and got the sanction letter on March 3. While I had submitted all the documents and the cheque, the bank has not disbursed the loan. It is asking for a job security letter from the employer. The builder is asking me for the interest amount for the delay in payment. What should I do?
—Dinesh Mishra
From what you have shared, take a detailed look at the sanction letter of March 3, 2020. Look for any conditions they have mentioned in that sanction. If it is an unconditional sanction letter, then the bank cannot withhold the disbursement on the ground that you provide a job security letter. Please write to the builder to waive off the overdue interest. It is understandable in the financial crisis the society at large is going through. Subsequently, if the builder goes ahead and charges the overdue interest, you may write to the bank to fund the interest as the delay is at their end.

Is there any upper age limit for a home loan? I am aged 50 and am looking for a home loan of Rs 30 lakh.
—Praveen Solanki
For a salaried person, the loan tenure is matched with the retirement age. This is flexible in case a person is engaged in business. The specific situation—age of the borrower, type of business, business partners, history of business, track record —determines the repayment period. Having a younger, working co-applicant, either a son or a daughter, increases the tenure and as a result, reduces the EMI.

The writer is founder, AZUKE Personal Finance Advisory (www.azukefinance. com). Send your queries to fepersonalfinance@expressindia.com

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