shifting of home loan from hdfc to sbi

POSTED BY Rashmi ON May 1, 2012 5:49 pm COMMENTS (6)

Is it advisable to shift a 89 L housing loan from hdfc (at 12% ROI, can be reduced to 11% by paying 50,000 conversion fee. Also 1.80 L foreclosure charges) to sbi max gain (at 11.25% plus benefits of OD facility)? The foreclosure charges are detering us from proceeding. Can someone help us understand the interest saving by using the OD facility in SBI.

thanks

Rashmi

6 replies on this article “shifting of home loan from hdfc to sbi”

  1. Rashmi says:

    Dear Mr. Ashal,

    HDFC do charge prepayment penalty as our loan was under teaser rates and as per NHB notification dated 05.04.12, in case of such loans, there is no relief if forelcosure is by other than own sources.

    Incidentally, we can get the transfer to SBI @11%. We may not have any surplus at this point of time but we intend to transfer all our salary etc. to SBI max gain OD account and at any given point of time, one does have idle money lying in savings acount that can be used effectively in saving interest in the OD account. I read one of the posts at this site on how to make maximum use of max gain and your comments thereat and felt we can also take advantage of this.

    However, I am not able to conclude coz if I use the same foreclosure amount of around 1.8 L in prepaying a part of my loan with HDFC, I still save a lot of interest. Can u help in calculating which option would be better.

    thanks in advance,
    Rashmi

    1. Dear Rashmi, here are some nos. to decide –

      Conversion fee to be charged by HDFC @ 0.5% + Service Tax on 89L Rs. loan amount from 12% to 11% = 50000
      Prepmt. penalty ‘ll be 2% + ST = 200000 Rs.

      Add the processing fee of SBI which ‘ll be around 20K or so at least

      Hence total outgo ‘ll be 2.7L Rs. at least & still your interest rate ‘ll be 11.25% in SBI, a bit higher than HDFC’s new offer.

      Now If I assume you do have all these 2.7L Rs. or round about 3L Rs. first opt for rate change within HDFC. this ‘ll knock off 50K Rs. from your funds.

      Now use remaining 2L or 2.2L or 2.5L Rs. to prepay to HDFC. Your Loan outstanding amount ‘ll come down below 87L Rs. instantly. You are still paying the same EMI of 12% rate.

      Calculation in the excel sheet indicates, that you ‘ll be able to close the loan in 14.5Y time against the original 20Y term @ 12% Rate.

      So final conclusion as of now, do not opt for SBI’s Max Gain & remain with HDFC but try to prepay as & when possible to you.

      Thanks

      Ashal

  2. Dear Rashmi, please reconfirm that foreclosure charge from HDFC. As HDFC comes under regulations of NHB & prepayment charges have been abolished there even before RBI. Dear Rashmi, do you have some surplus amount to reap the benefits of SBI Maxgain?

    Thanks

    Ashal

  3. Rashmi,

    The most important factor in loan is the interest rate. 11% is always better than 11.5%. If you have additional money, better do partment and reduce the loan amount.

    Here is small write up that could help you in taking better decision.

    http://www.wealthucreate.com/2012/04/should-you-shift-to-lower-interest.html

    P.S : The figures and number used for calcuation are approximate values.

  4. Zoeb says:

    Hello Rashmi,

    apart from fore closer charges, i think you have to also pay processing fees, others fees to SBI. The Max gain concept is simple, if you have 50Lacs liquidity, you can transfer the same in your OD account, and hence you will charged an interest of 11.25% on rest 39 Lacs only.

    you can also think of paying conversion fees of 50000 to reduce your BPLR, then you can partly pay upto 25% of your HomeLoan, and increase your EMI without pay to HDFC,

    I hope i have answered your question.

    Regards

    Zoeb

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Download Our FREE Ebook!

Available only for first 100 people today

Download Our FREE Ebook!

Available only for first 100 people today