The recent times are seeing turmoil with interest rates on loans heading for a forward leap. In this trend of rising rates, home loan providers have come up with yet another facility to woo borrowers; the ‘home loan switch' facility.
The facility allows existing home loan borrowers to opt for a switch from their existing home loan to another loan giving better rates of interest. The switch can be done by the payment of a onetime fee which is 0.50-1% of the outstanding loan amount.
The largest lender of the country, State Bank of India has introduced this product. Other lenders to have done so include Central Bank of India and Union Bank of India.
Customers however cannot avail this facility on loans which have been taken on complete floating basis.
"In a week's time, we will take a decision at our asset liability committee (ALCO) meeting in finalizing our switch product," Ram Sangapure, General Manager (retail banking) at Central Bank of India said.
"Initially, there may not be many takers of this product. However, we want to be prepared for the future. If interest rates start falling in the next three months, our existing home loan customers can benefit from it. We may be charging one time fee of 50-100 basis points to our customers, who want to avail the new rate," he said.
Housing finance major HDFC has been said to have already having this facility since some time now.