Most of the home loan buyers struggle to find an answer to this question and that it to fix or not to fix? Whenever you plan to take a home loan for yourself. It is important to outweigh your options to ensure that you would not hurt your budget too much while settling your home loan repayment. Choosing between a fixed rate and a variable rate could save thousands for you.
So, if you are someone who has applied for a home loan during inflation. Then you may consider fixing off your home loan rather than exhausting all your savings to pay off your pending home loan.
Why should you opt for fixing a home loan?
Fixing a home loan is a way using which a loan seeker could either lower their existing rate of interest or switch from a floating home loan interest rate to a fixed one. Significantly, you would also be able to reduce the burden of home loan EMIs also which would further lead to shortening your loan tenure. If you want you can also continue with the same tenure and pay lower or higher EMIs to close and pay out the loan faster.
What are the Additional Charges Involved?
Most of the banks and NBFCs charge between a range of Rs. 5,000 and Rs. 15,000 for switching your loan. This price may differ from one financial institution to another. So, before you plan to switch your home loan to a new lender discuss it with your existing lender. While most of the loan seekers also opt for converting their existing home loan from a floating rate of interest to a fixed one by paying a small conversion fee of 1-2% of the outstanding loan amount to avoid the lengthy documentation process.
Is there a Best Time to Fix a Home Loan?
Well, there is no such best to fix your home loan. When you discover that floating rates are much higher than the fixed ones, then it would be a good time to switch your home loan. The benefit of switching your home loan would help increase your savings, wherein you will be paying lower EMIs to pay out your home loan till the loan tenure. And if you plan to refinance your loan early and bring down your rate of interest, this would again be beneficial for you in the long run.
What are the Other Alternatives you Can Opt for?
Other than fixing your home loan, you can also opt for a home loan balance transfer. To transfer your home loan to another bank you need to submit a letter to your existing lender asking for a no-objection certificate to successfully transfer your loan to a new lender. After evaluating your creditworthiness, your existing loan would get transferred to a new lender after some time.
Now after knowing that how can you fix your existing home loan, switch to a new lender or opt for a plan which is right for you. Fixing a home loan would help you to save a lot which will be helpful in the long run. Additionally, switching to a fixed home loan with a lower rate of interest would help you protect at the time of inflation.