Proactive borrower: This is the first and the most essential requirement from a borrower in order to have control over the money that is paid as home loan repayment. The borrower will have to be alert to situations such as change in the interest rates and new policies declared by the Reserve Bank of India and the lending institution in order to make the best use of whatever new policy that comes into effect. The introduction of the base rate linkage to the home loan rate has introduced some degree of transparency into the system. Many housing finance companies still discriminate between existing and new customers, providing additional benefits to attract new customers while neglecting the interest of the existing ones.
Express concerns: In case at any point of time the proactive borrower finds that he is being charged a higher rate of interest then the first thing he should do is to approach the bank authorities and express the concerns. Owing to the increased levels of competition all the housing finance companies will address your concerns promptly in order to avoid a negative feedback from a customer. This is applicable in case you find that the new home loan customers are being offered a better rate than the existing customers.
Negotiate: This is the ultimate tool available in the hands of the home loan borrower in order to get the bank to readjust interest rates if one feels that they are unjustified. The new policy issued by the Reserve Bank of India in this regard clearly gives the customer rights to negotiate the best possible deal with the financier. If the bank still doesn't listen to your concerns then it is advisable to approach the banking ombudsman or another financier to transfer the loan. In most cases if the concern is genuine the current bank itself will adjust the rates so not give any disadvantage to the existing customer.
Readjustment of interest: It must be understood that any downward readjustment of the interest is of significance only when this takes place in the early years of repayment. In a 20-year loan, lowering of interest rates after the first 10 years is not of much consequence since majority of the interest has already been paid up in the first 10 years.
Readjustment of tenure: In situations where the interest rates have been increased mid-way and the bank accepts that the prevailing interest is too high they may offer the borrower a readjustment in the tenure in order maintain the EMIs within manageable limits. In such circumstances the borrower should never agree to an extension of repayment period as the interest will then be charged at the higher rate for a longer period resulting in a huge amount having to be paid as interest on the home loan by the end of the extended tenure. It is always better to adjust to a higher EMI and have as short tenure as possible.
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