Benefits of Applying Online
When Banks Compete, you win.
Apply for a Home Loan at ApnaPaisa and we will match your requirements with the best offers from our network of over 400 service providers. We will get a maximum of five providers to compete for your business. WHEN BANKS COMPETE YOU WIN. You can then decide which home loan is best for you based on:
- Lowest Interest Rate
- Lowest EMI
- No Pre-payment charges
- Lowest Processing Fees
- Maximum Eligible Loan Amount
- Mandatory Documents Required
- Lowest Processing Fees
Or any other factor that is important to you.
Negotiating Tips
1) If you have a good credit record and your income is sufficient to justify the loan you can negotiate on interest rates. You can also try and get Processing fees or legal or valuation fees reduced or completely waived.
2) If you go for a floating rate loan then pre-payment charges are not payable.
3) When interest rates are high and are expected to go down you should go in for a floating rate loan as it makes no sense to lock into high fixed rates or the so called Dual rate loans where rates remain fixed for a couple of years before shifting to regular floating rate loans. Please review this decision at least once every 6 months
4) Take term insurance and critical illness and accidental disability policy for the full loan amount to make sure you or your loved ones don't have to worry about loan repayment should you die or are disabled due to a critical illness or accident. You cannot be forced to buy this policy from the insurance company chosen by the lender - you should choose your own insurer.
Is it right time for me to prepay my home loan?
A common question that is asked these days by home loan borrowers is - Should I prepay my home loan?Harsh Roongta
04 Jan 2010
A common question that is asked these days by home loan borrowers is - Should I prepay my home loan? The trigger for this question normally arises because the loan consumer has some windfall cash inflows (like an annual bonus or sale of some shares etc) . They typically get conflicting advise on whether to prepay their home loan or invest the sum in some other financial instruments. The most common is that home loan interest is tax deductible and hence it is a cheap loan and you may be better off investing that money somewhere else to get a better return rather than repaying the home loan.
These complicated post tax calculations make sense for only a few high-end savvy consumers who in any case have access to expertise to solve this dilemma. If you also wish to do such a calculation you can use the Should I pre-pay my loan calculator on this link (http://www.apnaloan.com/loan-advice-india/prepay-loan-calculator.html ).
For other consumers as a rule, it is always advisable to pre-pay any loan, including home loan, if you have spare cash. The only exception to this would be (1) if the borrower has taken fixed rate home loan in 2003 at around 7-8%. or (2) the borrower has very little cash to spare for emergencies (normally should be around 4-6 months expenses).
A common misunderstanding that sometimes trips a prepayment decision is the fact that the principal amount outstanding has not fallen substantially, even after making EMI payments for 3 to 4 years. For example in most 20 year loans only around 10% of the loan would have been repaid at the end of 3 years. This is because the borrower is paying back a higher proportion of interest in the initial EMIs. The interest component could be anywhere near 80% in the initial months. Interest component comes down and principal component increases as a proportion of the EMI as the loan tenure matures.
This often leads to a common mistake of assuming that it is better not to prepay, say, after half way through the loan tenure, because the interest component is low now. But the fact is that the interest outgo as a percentage (which is what the interest rate is) on outstanding principal is the same whether it is after the 24th month or after the 120th month. As interest rate on home loans is calculated using reducing balance method, the interest rate is always calculated on the remaining outstanding principal. As the remaining outstanding principal will be lower after 120 months compared to after 24 months, the interest amount which needs to be apportioned across the remaining tenure would also be lower, resulting in lower interest component. But the interest rate on the remaining principle would be the same at both the time period.
So the decision to repay one's home loan should not be driven by the stage of your loan tenure but by prevailing interest rate and availability of cash with you.