Home loan – HDFC

POSTED BY Kshama ON June 15, 2012 1:00 pm COMMENTS (4)

Hello

I have current home loan with HDFC of 8.5 lakhs (principal remaining at this point is 7.95 lakhs) at floating rate of interest & current ROI charged is 11.5%. I checked with HDFC current ROI charged to new customers & it is 10.5%. According to the excutive i spoke with, i can also avail of 10.5% ROI if i opt for ‘conversion’ option & pay 0.5% charges (which comes to Rs. 4500/- approx).

Please guide me if that’s beneficial option and also if instead of that I should opt for shifting my loan to some other low interest rate offering bank (SBI max gain may be??)?

Thanks in advance..

Regards
Kshama

4 replies on this article “Home loan – HDFC”

  1. Ramesh says:
    June 16, 2012 at 12:16 pm

    What will be the difference in the EMI after the reduced interest, and in how much time will you get that 4500 back? Please make some calculations.

    Reply
  2. Kshama says:
    June 16, 2012 at 11:17 am

    Thanks @ BanyanFA & Ashal.

    I guess sticking with HDFC makes sense with reduced interest rate.

    Thanks 🙂

    Reply
  3. Ashal Jauhari says:
    June 16, 2012 at 4:23 am

    Dear Kshama, Please opt that HDFC offer of conversion. It’s cheaper than to opt a switch from HDFC to Max Gain. After one time payment of 4500 Rs. your loan term ‘ll come down from the current term. As on date new loans from SBI are also available on similar 10.5% rate so no need to move.

    If your cashflow permits or you do have some surplus cash, you may opt to either increase the EMI a bit say 12K instead of original 10K or a part prepayment.

    Thanks

    Ashal

    Reply
  4. BanyanFA says:
    June 15, 2012 at 6:43 pm

    It alway makes sense to hunt around for cheapest loan. If by paying 0.5% you are saving 1%, then you are still saving 0.5%. However, you must also check the terms on which the new loan would be granted to you. Things to consider would be :
    1. Would it be on fixed interest rate for next couple of years ? India should be on decreasing interest rate cycle and hence you may not want to be on a fixed interest rate loan.
    2. Would there be any prepayment penalty in the new loan ?
    3. What if you choose to transfer your loan from HDFC to another bank later on ?

    I would suggest you to do some market research – may be you come across another bank such as SBI which may give you a loan at much cheaper rate (teaser rates) than 10.5%.

    Reply

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