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POSTED BY ON August 17, 2012 1:53 pm COMMENTS (3)
Recently SBI has reduced the ROI for home loan to attract new customer, it current rate is equal to 10.25%. My question is that is right time to Switch to SBI, or other lenders such as HDFC, ICICI will follow the suit?
My current ROI is 10.75%, but I having an SBI salary account, Hence as per the conversion with the bank manager I can avail the home loan @ rate 10.15%.
My question is it worth while to switch the bank for home loan, or should adopt a policy of wait and watch.
Regards
Zoeb Lakdawala
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Dear Zoeb, before swtich, make sure, you have all the papers related to your property as per SBI’s requirements, else the exercise of switching ‘ll not be fruitful.
Should you go for switch now. My take is Yes for the fact that the spread offered over Base rate is near zero. Base rate is 10% & the offer rate to you is 10.15%. Sooner or later, base rate ‘ll come down & you ‘ll get the benefit of lower rate automatically.
Please opt for SBI Max Gain home loan.
Thanks
Ashal
Mr. Zoeb,
Just check whether your existing loan provider will charge any foreclosure charges for balance transfer to another lender.
If it is charged then usually these charges are 2% of the outstanding balance plus service tax. Plus the other lender would also ask for processing fees. If these two expenses are taken into account , then usually for a difference of 0.5% in intt rate it doesn’t benefit to switch(for intt rates in the range 10-11% )
Regarding whether other banks will follow in the steps of SBI and whether one should wait- My personal opinion-they will not price it more aggressively than SBI.
That 10.15% offer from SBI manager is very good. But just check effect of other costs if any.
Regards,
Shashank
Zoeb,
The best option is to go with the cheapest home loan provider which gives you the flexibility of prepayment without charges. The one thing which you should avoid as of now is not to go with a fixed interest option. Flexible interest is the way to go for next couple of quarter. Irrespective of which provider you shall go with, they all shall start reducing their interest rates as and when RBI reduces their interest rates.
Do you have a home loan as of now ?
Regards
BanyanFA