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Facts about Second Mortgage to Unlock Property Potential

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Facts about Second Mortgage to Unlock Property Potential

At present, the borrowers are hoping that the Reserve Bank of India (RBI) will cut the repo rate soon enough. But they must realize that when the RBI cuts the repo rate, home loan borrowers may not benefit immediately. That is why you must ask the banker must lower the base lending rate (now called the Marginal Cost Fund Based Lending Rate- MCLR) for your home loan Equated Monthly Instalments (EMIs) to fall.

However, there are some other ways to manage your interest rate burden:

Home Loan Tenure Should is lowered: It is advisable for the home loan borrower should not spend more time repaying the debt. This will help in keeping the interest rate as low as possible. By lowering the loan tenure you can lower the risk associated with extending credit. The process of doing this is very easy. Just by informing the loan lender the borrower can lower his interest rate. Your home loan account will be updated once the bank has accepted your request to lower your home loan tenure. But you should keep in mind that you are expected to make necessary changes in your payment pattern to meet the deadline.

 Pay as much as Possible: After you have lowered your home loan tenure, you must pay as much as possible. This is so because, if you add a few bucks to your floating interest rate home loan installment every month, you will save thousands in interest.

 Take up every opportunity to make partial/additional payments: Any sort of extra money acquired through tax rebates, bonus or pay increment should be utilized in making partial payments. This is so because every time you make an additional payment, your mortgage term declines which in turn causes the decline of the interest rate.

Try to get a home loan ‘Balance Transfer (BT): ‘Balance Transfer’ (BT) is a tool tailored to the needs of home loan borrowers who find themselves situations where lender raises your home loan interest rate. In this way, you can shift your running home loan from an existing lender to a new lender under certain conditions. This will help in declining of your EMI. Remember, if you are applying for BT, you can also avail of the additional loan amount at lower rates called Top-up.

Take a hard look at your overall debt position: While purchasing a new home loan, or during refinancing it is absolutely essential to consolidate all your liabilities/loans into one single home loan debt; especially if you have unsecured debt (like personal loans and credit cards) to be paid off along with the home loan.

Don’t fall for baits on rates and gifts: There are some lenders who try to lure you with low introductory interest rates/ gifts to home loan borrowers. Do not fall into such traps as they usually come with hidden costs. Moreover, in case of such loans you are sure to feel the pinch when you may have to pay a higher interest rate and handle multiple exit costs. 

Last but not the least, do good research and consult with customers who have their advances running with the lender you wish to approach.

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