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Rediff.com  » Getahead » Is this the RIGHT time to go for a home loan?

Is this the RIGHT time to go for a home loan?

September 27, 2012 11:38 IST

In an online chat with Get Ahead readers home loan expert Harsh Roongta answered their queries on what they should do post RBI's 0.25 per cent cut in cash reserve ration. Should they go for home loans now or wait for the banks to pass on this cut in CRR benefit to customers by reducing lending rates on home and vehicle loans.

Here's the unedited excerpt



Zulfi asked, 
Under The Current Prevailing Interest Rates Regime, Which Is The Bank Which Is Offering The Lowest Interest Rate On Housing Loan? To Quote Specfics, Say 15 Lakh Loan On 5 Years Mode - Either On Fixed Or Floating Model?

Harsh Roongta answers,  at 2012-09-18 15:42:05A simple answer to that question is SBI which will charge 10.25% for a 5 year Rs. 15 lakh floating rate loan. The EMI will be Rs. 32,055/-. Currently processing charges are also a fixed amount of Rs.1124/- plus you will need to pay the stamp duty on security creation (Rs. 3,000/- for a Rs. 15 lakh loan in Maharashtra) plus a few thousands for legal and technical costs. Just make sure the agreement value is at least Rs. 17 lakhs and if the property is under construction the project needs to be approved by SBI (which can also be done for your specific request if the project is not already approved by them). All in all a good deal. The bank may require you to take adequate life insurance and crtical illness insurance which is in your own interest but you should explore the entire market rather than just depending on the insurance scheme offered by the bank itself.


HARSH asked, HOW MUCH DEDUCTION IN ROI EXPECTED IN HOME LOAN AFTER DEDUCTION IN CRR?

Harsh Roongta answers, Nobody can predict that. But over the next few weeks we should see softening of interest rates by 0.25% to 0.50% . Much will depend on what SBI does since the market is expected to take a cue from that.


Christopher asked, I had got my home loan approved with LICHFL with an interest rate of 10.7, fixed for 3 years. Is this a good buy or should i look at other banks or change to floating rate

Harsh Roongta answers, Fixed or flaoting rate is never a one time desicion. whatever desicion you take you need to keep reviewing it at least once in 6 months. In the current situation where interest rates are widely expected to go down it makes no sense whatsoever to go in for fixed rates that too for a limited period during which interest rates are likely to fall. Take a flaoting rate loan but keep reviewing your desicion every 6 months. You can compare all rates available on this link. http://www.apnapaisa.com/loan/home-loan-india/comparison.html


Narasimha asked, Sir,Why NBFC like LICHFL is not reducing the rates?

Harsh Roongta answers, You can force them to reduce rates for you by shifting your loan to another lender. If you have maintained an excellent repayment track record you should be able to get around 10.25% - 10.50% as a floating rate loan with the prospect of further reduction when interest rates fall further from here.


alien asked, hello...wat is the impact of this change from rbi..should i wait for somemore time for applying home loan

Harsh Roongta answers, Unless the amount of loan that you can get is an issue why should you wait especially since it makes sense to go in for a floating rate right now. Remain vigilant and after the rates reduce you will get the benefit of reduced rates either from the existing lender or by shifting to another lender. So the only advantage you can get by waiting is to get better eligibility for loan amount after the interest rates fall.


sadhan asked, I've taken a floor built on a plot approved by GDA. How much are the chances of home loan of 2500000 getting approved by SBI? My take home salary is 48000 per month.

Harsh Roongta answers, If you are less than 30 years old and have no other loans to service and have a good credit report then you should be able to get a 30 year floating rate loan from SBI @ 10.25%. This off course assumes that the property title is acceptable to SBI and that the agreement value for the flat is at least Rs. 31.25 lakhs . In case you are older the loan eligibility will be a little lower.


Narasimha asked, sir whats the way to ask LICHFL to reduce to 10.25% - 10.50% , as i am now paying 11.65%

Harsh Roongta answers, Already naswered. If you have maintained a good track record of repayment you should threaten to shift and if they dont drop the rate for you there are plenty of other players in the market who will. Check out the rates in the amrket on this link for transfer of home loans http://www.apnapaisa.com/loan/home-loan-india/comparison.html


Narasimha asked, With whom and how should i approach @LICHFL,i feel i maintained a very good repayment every month

Harsh Roongta answers, Write officially to your servicing branch and if you do not receive response within a few days you should activate the transfer request. You should write to them saying you are shifting your loan and want the amount that will be needed for closing the loan. get a copy of your own credit report from www.cibil.com to check that your credit score is good (>750) and the repayment track record has been correctly reported.


dilip asked, If I purchase a flat after completion, should I have to pay 1% VAT and 3.6% service tax to the builder.

Harsh Roongta answers, whatever you pay make sure that it is charged in writing as VAT and/or Service Tax and that the developers VAT number and service tax number is mentioned on the invoice/debit note charging this amount. This way he will not be able to charge you for the amount unless he intends to in turn make the payment to the government. Also evaluate buying property from a reseller where these costs may not be there.


SRINIVASAN asked, Sir I have taken home loan with HDFC initially at 10.5% but now after continuous increase in interest rate comes to 12.75% which increase my repayment tenure. Please let me know after 0.25% cut in CRR, interest rate will come down? Please clarify

Harsh Roongta answers, The 1st thing you must do is to pay 0.56% to HDFC to decrease your rate to 10.75%- which is irrespective of any decrease in their PLR. If they reduce their PLR you will get further benefit.


manish asked, i got loan from Axis bank for 15 years. because of Interest rate hike the years uo and now tenure is 21 yrs. can this reduce in near future.

Harsh Roongta answers, Off course it can reduce if the interest rates go down. Incidentally check what interest rate you are paying and ask for a reduction if you are paying in excess of 10.75%.


Abhishek asked, hi, will the cut in RBI rate reflect in home loan interest rate? if yes, how much time will it take. I have just applied for a home loan with SBI

Harsh Roongta answers, Interest rates move in cycles and will change many times over your home loan cycle. Given the recent changes in regulation it is most likely that you will get the benefit of reduced interest rates as when the bank reduces it for new concumers. Just remain vigilant and make sure it happens. Else chift your loan.


pawarnilesh2 asked, hi, i want to construct house on my father's owned land. what procedure to be done ?

Harsh Roongta answers, Both you and your father will need to be joint borrowers even though the laon may be sanctioned based on your income alone. The flat constructed on the land belonging to your father will automatically belong to him. Since you will not be the co-owner of the flat you will not be eligible for any tax benefits on the loan repayments.


vbs asked, Is it possible to change from Fixed rate to floating rate anytime? I have taken loan in LIC for 3 years fixed last month. Can I shift to floating now as rates are going down?

Harsh Roongta answers, You can but there will be a prepayment charge of 2.25% of the principal loan outstanding if you shift your loan during the period when the interest rate is still fixed.


sadhan asked, I'm 33 yrs older and the aggreement value is 25ooooo, I'm assuming that I will get 2100000 as property value, 2000000 as stamp duty and 2.5 lac as furniture estimate. Is it possible to get in total 2500000 as home loan from SBI?

Harsh Roongta answers, the maximum loan you can get if teh purchase agreement value is 21,00,000 will be Rs. 18,90,000/- that too if it is justifiable by your income and credit history. Stamp duty and furniture is not counted as part of the cost of the house and for loans below Rs. 20 lakhs the maximum loan amount cannot exceed 90% of teh agreement value.


Shewta asked, I am having a Homeloan of 23 lakhs @ 11.25% , is it ideal to shift to a some other bank for a lower interst rate e.g: SBI @ 10.25% . How much can i save on a monthly basis i shift to new bank.??

Harsh Roongta answers, assuming you have 20 years left on the loan you will end up saving around Rs. 1400 - Rs. 1500 per month.


Srikanth asked, Hi Harsha, I have taken 19 Lakhs loan from GIC 4 years bank atthe rate of 11.5%. Current dues (outstanding) with this bank is around 13 L. Do you think that it is the right time for me to switch to SBI or some other. And yes, I am also planning for a second housing loan. Please advice on bothe these things.

Harsh Roongta answers, Fisrt check with GIC if they are willing to offer 10.25% (even if you need to pay a fees for doing that). If not shift. For rates available for shifting your home loan as well as for teh new second house use this link to compare rates available http://www.apnapaisa.com/loan/home-loan-india/comparison.html


Nandha asked,  I am paying EMI of 33000 for a Home loan of Rs 33L at 10.4%. Is it possible to reduce the interest rate with LIC HFL for this loan amount. If so How to do it

Harsh Roongta answers, 10.4% is a good rate. At best you may get 10.25% which also will not be easy. So keep watching whats happening in the market and shift only if the benefit is at least 0.25% p.a.


nitinpatil asked, Hello Sir, I had taken (aug 2011) 35lacks loan from DHFL with 12.25%.How I can change it to lowest interest rate as I guess I had low CIBIL credit score before 1 & half yrs back

Harsh Roongta answers, That will depend on the reasons for teh low credit score. If the low score was only beacuse you had very little borrowing before taking the home loan and not beacuse of defaults in the past then you should explore the option of shifting to another lender. First get a copy of your own credit report from CIBIL (www.cibil.com) and check if teh score has improved substantially because of the good repayment track record. But even a good credit score may not be able to help you if the credit history shows past defaults.


Rajendran asked, I got 12 lacs loan from SBI for 20 years and Bank is charging an interest rate of 11%. are they charging more interest from me? How can i reduce the interest rate.

Harsh Roongta answers, They have a scheme where you can pay 1.1236% and get the rate reduced to 10.25%. that is the easiest way to get your loan rate reduced.


SURESH asked, Sir, what is the ROI charged by banks for purchase of plots ?

Harsh Roongta answers, check out this link. use the loan purpose as to buy a plot of land


AGL asked, Sir, I have a Home loan with State bank of Bikaner & Jaipur which was fixed for 3 years & the 3 year period will be ending now. Can I reduce my rate for the floating period immediately by bargaining with them. Unlike SBI, SBBJ has not reduces its BPLR since Nov 2011 - what is the reason & is it not mandatory for SBI group cos to follow sbi

Harsh Roongta answers, each SBI associate bank is an independent bank by itself and decides its loan schemes by itself. If they are not willing to reduce the interest rate for you you should shift your loan to another bank (SBI if you want) and no pre-payment charges will be payable to SBBJ.


Tulasi asked, I have a loan in IDBI for 10 years @ 11% . IDBI is not reducing the interest rates. What should I do?

Harsh Roongta answers, shift your loan


GAUTAM asked, I have a Query Harsh, is it the right time to for a Home Loan now and is so with which i should go? Be it Fixed Rate or Floating Rate of Interest?

Harsh Roongta answers, The right time to take a home loan is when you want to buy a house. Unless loan eligibility is an issue the benefit of reduced interest rate will come to you anyways (if you remain vigilant) so there is no point in deciding this based on home loan interest rates. Check whether you have the necessary down payment, are eligible for the required loan amount and have made a committment to that city and locality for at least 5 years before buying the property.


Harsh Roongta says, ok folks . Many thanks for the lively chat. Please read through teh transcript as most questions have been answered. If you still have any more queries you can get them addressed at www.facebook.com/apnapaisa or http://india.apnapaisa.com/blog/questions/ask/