Spread change or move to different HFC/bank

POSTED BY Pundarik Rajkhowa ON April 5, 2012 11:02 pm COMMENTS (7)

Hello guys,

From 1st april,2012 onwards, my home loan has moved to floating rate scheme from earlier fixed rate. Interest rate has changed from 9% to 11.75%. Pl. give me some pointers in deciding my immediate course of action. Should I reduce spread by paying a conversion fee or move to different HFC/Bank ? If moving out is a good idea, then which HFC/bank is the best bet ? My loan details are as given below. Pl. note that the loan has not been disbursed completely (will be done by July,2012). I am currently paying Part EMI.

toal loan amount: 21,00000
tenure: 18 years
loan start date: July,2010
total disbursed amount from bank till now: 18,36,000 (construction linked)
total principal amount paid till now: 3,93,000 (part EMI+ prepayment)
RoI: 11.75% (floating from 01-APRIL-2012, 9% fixed before that)


7 replies on this article “Spread change or move to different HFC/bank”

  1. HM says:

    Hi Purandik,

    I have used this option yesterday & it is working wonderfully well.

    The best way to calculate is to download mortgage calculation spreadsheet & work out your EMI that you will pay after the spread change option.

    1) Old Rate, Old Tenure, Interest, Principal getting repaid for every EMI
    2) New Rate, New Tenure (if you change), Interest, Principal repaid for every EMI

    This math takes only 10 minutes & you will be able to calculate your long term savings & months required to recover the paid charges.

    I am in the same boat as you are. Once the possession is done, the finance company can be changed.

    Please remember if interest rates increase from here (unlikely as per the current economy) there is a possibility our home loan rates can still increase from here.

    1. Dear Pundarik, please update your actions here as & when you take the same.



      1. Pundarik Rajkhowa says:

        Hi Ashal,

        I will update once my disbursement is complete and registration is done.

    2. Pundarik Rajkhowa says:

      Hi HM,

      Thanks for the info. I will look into it once disbursement and registration is done.

  2. Dear Pundarik, paying a small fee say 0.5 or 1% to convert your loan from 11.75 to 10.5 or 10.75% within the same HFC is a good idea. With the current condition that house is not ready, loan is not fully disbursed, you may face problem to switch over & moreover, you ‘ll not get less than 10.5 or 10.75% ROI on new loan.

    My final view, stick to original lender, pay the conversion fee & enjoy the benefit of lower interest rates.



    1. Pundarik Rajkhowa says:

      Thanks for the advice, Ashal..With base rate system in place, I thought moving to banks will ensure less discrimination for old customers in the long term,compared to HFCs.Your views on this ?

      1. Dear Pundarik, My take for you ‘ll be to first go for fully disbursal & get the possession of your house else you ‘ll feel a lot of plain to transfer your loan from HFC to a bank at this stage.

        Even if you feel that you should go ahead, please listen to your own voice & move ahead & later on update with your experience for the benefit of all us.



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