home loan ineterst rate reduction from 14% to 10.5%

POSTED BY vijay sarathi bharath ON November 27, 2012 6:31 pm COMMENTS (3)

Hi,

my current principal amount is -6.74 lakhs

current interest rate is – 14%

total term left is -4 years and 4 months

emi amount is- 17154 rs/month

bank-standard chartered

loan type is -floating.

Current state is i can make any amount as pre payment without being levied any charges.

I have raised a complaint and the bank had given me an option of reducing my interest rate to 10.5 % for  a period of 2 years by paying an amount of 3000 rs to the bank.

terms & conditions are – i can make a prepayment of only 25% of the outstanding amount in one calender year.

My question is how good this option is?

i am pretty weak at calculations.Could anybody please help?

3 replies on this article “home loan ineterst rate reduction from 14% to 10.5%”

  1. Yes in that case its a good option , So just take that in writing that by paying 3,000 and by moving to lower interest rate , your tenure will then come down to 4 yrs only .

  2. vijay sarathi bharath says:

    It will take atleast two years to complete my tenure with some prepayments.
    but to do the prepayment right now i dont have money in hand with me.

    I also enquired with the bank that my total tenure is now 4yrs and 4 months.
    and i also asked them if the interest rate is 10.5 % for next 2 years what will be my total tenure? and they said it will be 4 years exactly.means 4 months of emi is saved.

    is this not a good option?

  3. I think its a good idea to prepay the loan , even if its 25% of the loan amount, the amount you will save in INTEREST will cover that fees of Rs 3,000 . But its quite strange that the bank does not allow you to prepay the full amount . This should not happen .

    I would say , go ahead and do it . Do you know how much out of your EMI is interest part and principal part ?

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