Housing Loan - How to change over to the prevailing interest plan?
Posted on: 21/Jul/2017 3:54:23 PM
The interest ratio for the housing loan will vary from those who took it a few years ago while buying a house and those who have taken a housing loan in recent times.
However, the old debtor who had taken the housing loan a few years ago would expect to come under the bracket of the new interest ratio,
When approaching the banks for this purpose, the banks will advise undertaking ‘conversion’ to come under the new interest ratio plan.
The charges for this conversion to the new interest ratio plan will be based on the pending balance loan amount to be paid.
Though completing the conversion, it is certain there will be some difference in the interest ratio between the old customers and the new ones.
What are the major doubts of those who seek conversion? What is the bank procedure?
Even after paying the Conversion charges and getting it completed, the old customers will still continue to complain about the difference in the interest ratio between them and the new customers.
For instance, assume that an old customer reduces his original interest ratio of 9.95% to 8.95% after completing ‘Conversion’. However, the banks will give the new customer an interest ratio of 8.85%. In such instances, the bankers advise that the concerned customer should approach the bank and have a consultation.
Most of the customers assume that the banks would give a few concessions if they pay their monthly EMI regularly without any balance at any time. For example, lots of customers assume the conversion charges might be waived. However, this is not a fact.
In such circumstances, it is better to go the bank and inform them that you are changing over to another bank as the prevailing interest in this bank is rather high. It may happen that the banks may come up with an offer to cancel the conversion charges. However, this is definitely not compulsory for the banks to do so. From the customer point of view, it is worth the try.
One may read the news regarding the reduction of interest ratio for housing loans. Immediately, one will assume that in the case of such interest ratio reduction, wither the duration of repayment will come down or the balance amount will be reduced. One will decide to go for ‘Conversion’ to achieve this. What happens if the bank refuses to lower the interest ratio even if one is ready for conversion? Actually, it has really happened for many customers. In fact, the banks do not have any right to refuse so.
In case they refuse, one can react by saying that he/she would change over the loan to another bank.
Would like to know what most customers think? They assume that after conversion, they would be getting the benefit of any newly announced revised interest as per the new customer. This is not the case. One needs to do ‘Conversion’ every time a revision in the interest ratio is announced.
Once you grasp the idea how interest ratio is fixed, it would be easier to understand the entire process of conversion.
