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POSTED BY ON November 6, 2014 11:03 am COMMENTS (3)
I am purchasing a under construction flat. Due to 20% booking charges I need to go with 10-80-10 scheme.
which is giving by LIC on fixed rate for first 2 yrs, agent saying after this period I can shift it to SBI by paying some charges. Is it really true that I can shift to SBI? As SBI is not providing initially 10-80-10 scheme I cant go for it.
Pls. guide.
Suntosh
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Your agent is advising to just switch your loans from one bank to another. There is zero benefit for you in this scenario.
Consider this example, you got a loan of Rs.20 Lakh at 12% fixed rate for 2 years. At the end of 2 years, you still owe the bank Rs.19.4 Lakhs. The total EMI paid till then would be Rs.5,28,528.
At the time of switch, there might be a penalty of 1-2%. So you need to pay another 39 K as pre-payment charges to LIC. Add another 0.5% as processing fee for SBI which adds another 10K.
So you total outstanding loan is 19.9 lakhs (19.4+0.39+0.1). Now you will start paying the EMI for SBI for another 20 years. Thanks for doing business with LIC and they would love customers like this!!
Simple solution: If you can’t put more than 10% for your home loan, face the fact. You are not ready to buy a home. Postpone! This is one time in life where postponing is good.
There are no penalties levied on floating rate loans.
The agent advised correctly when the switch is after the fixed period.
Processing fees are a fraction of the 39K stated and it is actually possible to get a complete waiver.
Outstanding tenure can be and is generally kept the same, viz., 18 years in this case.
Sorry but the solution seems incorrect and the agent’s advice potent.
Cheers!
As a word of caution, agents tell what is beneficial for them….. we have to do a research on the options and decide whether to take it or not…. for your query, not sure….