Should I transfer my home loan from HDFC to LIC ? Will it really help me ?

POSTED BY rkristy80 ON July 5, 2014 3:24 pm COMMENTS (2)

I took a loan of 35 Lakhs from HDFC on Feb 2013 with interest rate of 10.40% and now it is increased to 10.75% (due to floating rate). With the interest rate increase, additional 8lac were added into my account and extended the EMI for another 1 year period. One of my friend, who is working in LIC said that if I transfer my loan to LIC, he will offer the interest rate 10.10% for next 2 years and afterwards floating will be applicable.

Additionally he needs charge of Rs.5000/- for this transfer of account. Looking 10.75% vs 10.10% interest rates, sounds like a good plan, but i am little confused on this regard. Please help me understand . Thanks a lot for your time.

2 replies on this article “Should I transfer my home loan from HDFC to LIC ? Will it really help me ?”

  1. Credexpert says:

    Dear Sir,
    Typically, it is beneficial to transfer a home loan when the interest rate differential is around 1%.
    However, in your case, you should calculate the savings you will make by paying an interest of 10.10% instead of 10.75% on your outstanding balance for the next 2 years. This should be done after deducting the charges for transfer, processing fees and any costs to be paid on transfer of home loan. If the difference (i.e your savings) is significant, you may go ahead with the transfer.


  2. Syamantak says:

    you can go for conversion of interest rate at HDFC. assuming your principle amount still at 35 Lakh, charges for conversion would be around 3500-4000 (0.1% of the existing principle due). You can save yourself from the hassles of moving loan from one institution to another.

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