I am 35 years married and residing in Bengaluru. I had availed a floating rate home loan (taken in 2013), which is partially disbursed at the rate of 10%. The approved amount is INR 25 lakh and I have been disbursed INR 18 lakhs. I am paying a pre-EMI of INR 15,000 each month. Can I switch to different bank for a partially disbursed loan? Please advise?
You can switch your loan to another bank even if it is partially disbursed. You can convert your partially disbursed loan to a fully disbursed loan and convert your pre-EMI to an EMI. You are paying a high interest rate as apparently the interest rate on home loan is linked to the base rate and not the marginal cost of funds rate (MCLR). This has to be converted to an MCLR rate. MCLR is closely linked to the actual deposit rates which means interest rates are lower than in the base rate system. MCLR is the new benchmark lending rate at which banks will now lend to new borrowers. Till 31st March 2016, banks used the base rate as the benchmark rate to lend. 1. If the new bank offers a lower MCLR versus the current bank, ideally you should shift to the new bank with the complete loan amount as the interest rate is lower than the current bank. 2. Your bank may resist as the EMI has not started but you should go ahead with it unless they are able to match the rate offered by the new bank. 3. For home loans, banks will either use the six-month MCLR or the one-year MCLR as the benchmark rate. Any revisions by RBI or banks will not impact your EMIs or the loan till the reset date.