It is the nature of a property development loan which sometimes haunts the borrower from getting the loan successfully, and then the long repayment tenure along with the interest rate which exhausts the borrower. Most first time borrowers find the amount of money daunting to think about when they’re trying to plan their construction project. Chief among these concerns is that they are able to pay by the time the loan (along with the interest) is fully due. Every borrower feels is there a way to reduce this huge burden, and save money for the future simultaneously. Below, we will discuss about some of the practical ways a borrower can take into practice while dealing with the burden of home loan interest rates.
- Proactive Borrower: The reason to add this point first is because it is very important to be an active reader of market activities and as a borrower you should be well aware of all the changes made by the Reserve Bank of India in home loans i.e. changes in the interest rates, new policies. It is also important that you should be aware of the changes in the schemes made by the lending institution. Many housing financial institutions still discriminate between new customers and already existing customers. Banks use new and better loan deals to attract new customers as they neglect their already existing customers. But, with the Base Rate policy coming into existence there has been a transparency in the system.
- Express Concerns: If at any moment a borrower finds himself being ill-treated by his financial institution, in today’s modern-times which customer satisfaction is a very crucial element you should address your concern towards the bank authorities, and let them know about your concerns so that both the parties can work out for a solution as no institution want any negative feedback from their customers.
- Negotiate: This is the ultimate tool in the nods of the borrower! The borrower has full liberty to negotiate best possible deals with the financial institution according to his eligibility. The bank in most cases understands the requirements of the customer and helps him get the best deal with the available resources. A buyer in case if he is not satisfied can directly contact the bank ombudsman for a deal and also has the liberty to transfer the loan. Hardly the banks disagree over a loan proposal as they don’t want to treat their existing customers poorly or discriminate between the old ones and the new ones.
- Readjustment of Interest: Lowering the interest rates after a significant period of time helps to decrease the burden of repayment of loan in the later stages as most of the interest is already paid in the early stages of the loan. For example: If you have taken a loan for a period of 20 years you can opt to readjust the interest rate after ten years of time since majority of the interest is already paid in the 1st ten years.
- Readjustment of Tenure: In case there is an increase in the rate of interest mid-way and the bank offers you to readjust your loan tenure a borrower should never agree to readjustment of tenure because this will increase the risk of paying the interest on a longer basis than that on which you have agreed before. A borrower might have to pay more interest than he agreed on previously if he increases the period of loan. It is always better to have an adjusted EMI and should have the tenure as short as possible.
Buying a house is never an easy task and repayment of loans are the most daunting task a man ever performs keeping in mind the ever fluctuating market and economy.