NEWS & ADVICE : HOME LOANS
What should you do if interest rates are expected to rise?
By Joseph Samson
Print    Email    RSS   

The financial burdens of the borrowers rise with increase in interest rates in the market. Even home loan borrowers face the heat of increasing home loan interest rates that in turn increases the EMIs, disturbing the consumer's monthly budget.

What exactly should a borrower do at times when interest rates are anticipated to increase and widen the hole in borrower's pocket? Here are few facts that a borrower should ensure about his home loan in India.

Avoid switching from a floating to a fixed rate home loan

It is not advisable to switch from an existing flexible home loan to fixed home loan as there are hardly any banks that offer genuine fixed rate home loans in India. When the interest rate is set on a genuine fixed rate home loan, the lender cannot change the interest rate charged on your loan.

Moreover the individual has to pay a fee to change the rate from ‘floating' to ‘fixed' which is generally1.5% to 2% of the outstanding loan amount. As the fixed rate is not much less than the floating rate and an additional burden of fee to change the type of the rate will ultimately raise the EMI, which is what we are trying to minimize.

Fixed Rate Loans are in reality not fixed

People think that under a fixed rate home loan, interest rate charged by the lender will stay unchanged for the entire repayment period but it is really not the case.

It is better to note that the home loan agreement of all banks and housing finance companies include the reset clause on fixed interest rate. This clause states that the bank has a right to revise rates at the end of certain number of years and it comes into effect at the time of increase in the market interest rates. Also the banks have Force Majeure Clause in their loan agreement that allows them to unfix and raise the fixed interest rate under exceptional circumstances. However the differentiation between the ‘exceptional circumstances' is always is tough task.

Therefore to emphasize, do not go by the term ‘fixed rate' on your home loan and ensure your lender before signing in the deal.


Page  | 12 |  
(Comments Posted : 1) Post Your Comments
1. Do you need a quick long or short term loan with a relatively low interest rate as low as 3%? We offer business loan, personal loan, home loan, auto loan,student loan, debt consolidation loan e.t.c. no matter your credit score.

* Personal Loans (Secure and Unsecured)
* Business Loans (Secure and Unsecured)
* Mortgage Loans (Secured and Unsecured)
* Consolidation Loan and many more.

Contact us for more information about loan offer and we will solve your financial problem. contact us via email: zionloanfirm.ltd@aol.com
Richelle Watford (Posted: Mar 25, 2015)
Show All Comments
COMPARE QUICKLY
 Select a product:
 

CALCULATE QUICKLY
 Select a product:
 

EDITORS' PICKS
Factors to Evaluate before opting for Home...
Refinancing your home loan: is it a...
Credit profile and its effect on loan...
Income Tax Benefits on Joint Home Loans
Admissible deductions under Section 80C


PINJORE: CaℒL Giℛℒs In PiNjOrE 09915787550...
PINJORE: CaℒL Giℛℒ In PiNjOrE 09915787550...
how to gate my home loan certificate

NEWS THIS WEEK
Canara Bank earned a profit of 60%. Feb 6, 2015
New Branch of Laxmi Vilas bank at Vijayawada Jan 30, 2015
Home loan EMIs expected to drop down Jan 21, 2015
Corporation Bank received MSME banking excellence award 2014 Jan 19, 2015
Home loan rates set to fall, after reduction in repo rate Jan 16, 2015
News Archive