Need to discuss Balance transfer strategy for top up loan ?

POSTED BY Raja ON January 22, 2014 6:23 pm COMMENTS (5)

I had taken a loan of 40L with an EMI of Rs. 40000. After around 5 years and a lot of pre-payment, the outstanding loan amount is 15L (Current ROI is 10.25%). I wish to take a top up loan of around 15L but dont want the EMI to be more than the current EMI, so I am going to shift my loan to another bank which will do the balance transfer of 15L and give me a top up loan of 15L, both for a period of 20 yrs and 10.25% ROI, which will bring my total EMI down to around 30K. (Current bank is not ready to reduce EMI or give top up loan more than outstanding loan amount)

Question: I need the 15L after 7-8 months only, not now. However the interest rate offered by the bank is 10.25% on both products only if I transfer my loan before march. Is it wise to

1. Do the balance transfer now and start paying EMI on 30L (around 3L interest would have been paid in 7-8 months)

or

2. Wait for 7-8 months and then do balance transfer which would mean my current home loan would reduce by another 2-2.5L. So my total loan requirement after 7-8 months would be 27L only. however this time the top up loan will be available at 12.5% and home loan at 10.25% (considered for simplicity)

5 replies on this article “Need to discuss Balance transfer strategy for top up loan ?”

  1. ashalanshu says:

    Dear Raja, please switch your banker to get top up loan of your choice at your desired ROI.

    Thanks

    Ashal

  2. Raja says:

    That is besides the point. I am just taking an example. If the rates go up, both the loan rates will go up, else both will come down. As of today what seems to be the best thing to do?

  3. ashalanshu says:

    Dear Raja, the interest rates from here onwards ‘ll go down or go up? Over next 1-2-3Y?

    thanks

    Ashal

  4. Raja says:

    Just an example. Currently it is 12.5%, so just assuming the rate remains the same after 7-8 months. In short more than the rate at which bank is offering now.

  5. ashalanshu says:

    Dear Raja, how did you come to the conclusion that Top up loan in Aug 2014 ‘ll be @ 12.25%?

    Thanks

    Ashal

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