SBI's latest home loan offer is making rounds for being one of the most mouth- watering deal in the home loan market for new borrowers. But what if you are a home loan borrower with another lender and want to switch to SBI home loan? In such a case you have a reason to cheer as the country's largest bank is now charging zero processing fee on home loan takeover. Of course, this is a limited period offer and is valid until 30 June.
What you get: In fact, the bank also allows you to get a higher loan amount than the amount taken over from the older bank. Of course, you can get this additional amount for the purpose of renovation/ extension/ furnishings of your home. That’s not all. You can even increase the tenure of your loan, by extending repayment of your loan, provided certain conditions like maximum permissible finance and security margin under the bank's scheme are not diluted.
Your home loan can be taken over from the following institutions: scheduled commercial banks, private and foreign banks, housing finance companies registered with the National Housing Bank, your employers if they are central/ state governments or their undertakings or public sector undertakings.
Other finer details: It’s a given that you will be able to switch only if you’ve been a good borrower with the older loan. Which means, should have serviced interest and/or installment of the existing loan regularly, as per the original terms of sanction. And, you have all the necessary paperwork in place, including the valid title deed of the house.
Two important things to keep in mind:
Current relationship: Of course, switching your loan to another lender who charges lower interest rate at zero processing fee makes sense. But, that doesn’t mean, you should blindly do so. Ideally, the first thing you should do is simply approach your current lender and ask them to re-negotiate your current deal. Take a printout of the SBI offer from their website and approach your own bank for a matching or better deal. If you've been a good borrower, and have been regular in servicing your EMIs, your bank might just match the SBI offer. Banks don't want to lose good borrowers who repay loans on time. So, if you know you have a good credit history, make the most of it.
Time it right: Your EMI is made of two components. The first is the principal component and the second is the interest part. As a thumb rule, if you switch at the beginning of the loan tenor, you pay a higher amount towards the interest component, while towards the end of the loan, you pay higher amount toward the principal part. You get a better deal when you switch the initial years of the loan. But, that doesn’t mean, you should ignore a lower interest if you are stuck at a very high rate. You could still look at a switch even in the last few years of the loan.
Even 1 percent lower rate can save you good amount of money. And if the processing fee is zero, it would make the deal even better. But, you will have to put in that extra effort to negotiate with your own bank or switch to a new bank.
Updated Date: May 09, 2017 15:33 PM