How to avail lower interest rates in home loans? – Property Hotline

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Expert: Kartik Jhaveri, Founder & Director of Transcend Consulting India Pvt Ltd.

Question: I took a loan of Rs 28 lakh from LIC Housing in 2009 with tenure of 15 years at 8.5% on floating term. The initial EMI was `27,580. With frequent change in rates the current EMI is `30,289. I learnt that the EMI has been revised downward with revision of inter-bank Interest. I told LIC I’d like to switch over to some other bank or institution. They agreed to reduce the rate, but I learnt that the tenure was extended by five years. What recourse can I take in this case?

Answer: There is no recourse except to ask LIC to reduce interest rates as applicable or take refinance. But let’s understand this further for the benefit of all at large. In a floating rate type of loan, when there is a reduction in interest rates and the borrower chooses to keep the EMI unchanged. As a result of which the loan tenure reduces.