Our lifetime dream is to own a house that brings a sense of security to the family members. To achieve this dream we borrow a home loan from Banks/ NBFC’s where we have to repay the loan amount along with the interest amount. While borrowing we look after many factors such interest rates, loan amount, prepayment charges etc.
Do you also have a home loan and do you also face the fear of rising home loan interest rates which give you sleepless nights? However, there is no reason why you should not worry too much about this.
We do not ask you to give a break to your long-saved investments to prepay your home loan amount and get rid of your EMI’s(equated monthly installments) completely.
Rather Banks/ NBFC’s and other financial institutions have different schemes that allows you to lower the interest rates on floating rate home loans by paying an extra fee known as Conversion Fee.This can happen if the market lending rates fall or have swift changes. You can also shift to a new lender for the balance transfer who will offer you the home loan at a lower interest rate. But also keep in mind that the Banks/ NBFC’s or any other financial institution does not do this for free. They charge a processing fee to transfer your loan from the old lender to the new one.
Mudrahome is here to tell you more about the ‘conversion schemes’ offered by the Banks/ NBFC’s.
Concept: conversion scheme
If you are paying more amount as an interest than what new customers pay on their home loans than you can easily move to the lower bracket of interest rates by paying an extra amount as a fee to your current lender. Most of the Banks/ NBFC’s charge 25-50 basis points (bps) of the outstanding home loan amount to calculate the conversion fee.
Conversion Scheme Facilities
Before you made a decision it’s important to compare what is more justifiable in terms of savings – sticking to your current lender by paying a conversion fee OR shifting to a new lender by paying a processing fee. If you get an option where the new lender waive off the processing fee, you can always take a step for transferring your home loan i.e. Balance Transfer of home loan.