Home Loan EMI: Financial experts believe that this is the time to replace the old expensive loan with a new cheap loan and it is a chance to reduce its EMI. After cutting interest rates from the Reserve Bank of India (RBI), now there is a good opportunity for borrowers to reduce EMI and make loans cheap. Financial experts believe that this is the time to change the old expensive loan with new cheap loans.
1. Adopt the option of Balance Transfer-What is Balance Transfer: If you have taken a loan (eg personal loan, home loan) at high interest rate, you can transfer it to another bank or NBFC that is offering a low interest rate. Example: If you have taken a loan on 14% interest and any other institution is offering at 11%, then the balance transfer can reduce EMI.
2. Understand Floating vs Fixed Rate- Prithvi Chandrashekhar, head of Increded Finance, says that Floating Rate Loan is directly connected to the repo rate of RBI. That is, the rate cut of RBI gets a direct benefit. Fixed Rate Loan has an interest rate fixed, it does not change.
3. Pay the unsecred loan by taking Secure Loan- Radhika Binani of Paisabazaar says that if you have any property (eg property or FD), then take a loan against her and pay the old high interest loan. This will reduce the total cost.
4. Decrease EMI, adjust the loan tenure- With the new interest rate you can reduce your EMI or plan to repay the loan quickly. This will reduce the total cost of interest.
5. Option of Loan Consolidation- If you have many loans running, it would be better to consolidate them with a cheap interest loan. This will make it easier to tracking and will also reduce the total interest.
Overall- Before transferring the balance, understand the processing fees, foreclose charge and other conditions well. Along with EMI savings, please compare the total interest expenses and time period.