Will Shifting Home Loan to Repo Linked Loan Reduce EMI?

 The home loan is a unique funding option that lets you get the required amount to buy your own home. 

However, the home loan is a long-term commitment. And it demands adequate planning from borrowers so that the repayment happens easily. 

Before and after availing the home loan, borrowers resort to various ways to repay lower house loan EMI. They do that so that they are able to save enough to meet other monetary needs. 

By going for a longer tenure, maintaining a robust cibil score and going for the home loan balance transfer, they lower the EMIs. 

But many borrowers think if shifting their home loan to repo linked loan will reduce their housing loan EMIs or not. Read on and explore now!

If you have an ongoing home loan account, then you can get your housing loan linked to the repo rate. In this regard, the home loan interest rate may not reduce considerably. But the loan that is linked to the repo rate is considered more transparent in passing on the changes of the interest rate to the borrower. In earlier debts, the entire benefit of the lowering of the interest rate by the Reserve Bank of India (RBI) was not given to borrowers. And the portion of it was also pocketed by the financial institutes. If you want to go with this option, then you should enquire with your current lender only. This facility may be less cumbersome in terms of paperwork and logistics. You should ask your lender with a rate that they are offering to new applicants. Analyze it lower than your existing one and if it is the housing loan low interest rate in the end, then you should go for it. 

Overall, if you want to shift your home loan to repo linked loan, it may help you reduce your housing loan EMIs.   

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Myths to Ignore While Getting a Home Loan

Many people may have the required eligibility to apply for the home loan, but they still don’t apply for it. 

Other than facing different issues, they also don’t do that owing to some home loan myths. 

Let’s check them out in today’s post so that you can ignore them and apply for the housing finance confidently!

1. Shorter loan tenure is good 

Yes, when you avail shorter loan tenure, then it means saving on the home loan interest rates. But you also need to understand that it means paying a bigger loan EMI amount that may affect your outlays. It can leave little scope to concentrate on other outlays. 

2. Good cibil score comes with the loan approval 

Yes, the cibil score is one of the key factors while determining the home loan eligibility of the applicant. If it is higher, then you may get the loan approval. But factors like your income, age, job stability, employer credential, property location also matter.

3. Home loan rates are not negotiable 

You may still believe that home loan interest rates are not negotiable. But this is far from true! If you are not satisfied by the home loan rates by lenders, then you can always negotiate for a lower rate. Having a good cibil score, repayment and employment history may help you get an affordable rate of interest. 

4. Lenders levy heavy penalties for making prepayments and foreclosure

Another myth doing the round is that if you make prepayments and foreclose the loan earlier than the tenure, then you need to pay exorbitant charges. It is not true! Lenders are not supposed to charge any amount on floating rate loans. For fixed rate based housing loans, your lenders may ask for some money. It may vary from one lender to another. 

You are now aware of the leading home loan myths that you can now ignore and apply for a home loan with confidence. If you are ready, then you can now apply for the housing loan by comparing different loan offers online. This way, you can pick the best deal matching your needs and repayment capacities.   

Must Read: Home Loan EMI: 6 Ways You Can Reduce It Easily

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Know What is top up on a Home Loan

 Have you ever wondered what the top up loan is? If you are carrying the home loan balance transfer, then you can meet your multiple needs with top-up loans. 

The top-up loan is a financial facility that is given to borrowers opting for the loan balance transfer. If you want to know about top-up loan, then this post is for you!

What is the home top-up loan?

If you want to switch your home loan account from one lender to another offering a lower rate, then it is called the home loan balance transfer. Leading lenders reward you with the top-up loan when you switch your home loan to them. If you have been repaying your home loan EMIs on time, then you can avail the top-up loan facility. 

What are the benefits of the top-up loan?

When you have an active home loan account and if you have some other financial needs to fulfil, then you can cater to all with the top-up loan. The benefits of a top-up loan are many. Take a look: 

• The top-up loan’s documentation process is simple and the loan approval time is less time-consuming. 

• The disbursement for the top-up loan is fast. 

• The rate of interest for the top-up loan is affordable and is almost the same as that of the housing loan rate. 

• You are free to use the top-up loan amount for anything as per your needs. Be it the debt consolidation loan, marriages, home improvements, business expansions and more, you are free to use the top-up loan money for anything. 

• There is no need to submit any collateral for availing the top-up loan. It is because the loan is linked with your home loan profile only. 

Depending on the lender that you apply for top up loan with, you can get higher or the higher top-up loan amount.   

Read Also: Top Five Things to Check about Home Loan Balance Transfer

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