Negotiate your home loan after new base rates

Thanks to the Reserve Bank’s mandate on setting base rates banks have, in the last two days, set their respective base rates. While India’s largest bank SBI has set it at 7.5 percent, others like Punjab National Bank, Bank of Borada, IDBI followed suit fixing theirbase rate at 8 percent. So what does this mean for your bank loans?

While most reports suggest that setting of base rates would not affect existing borrowers rate; truth is that there is a smart way out. The catch phrase: negotiate!

In his chat on Moneycontrol.com, loan expert and CEO of Apnapaisa.com Harsh Roongta spelled out what exactly you should do. Key pointers from the chat:

Don’t pay double digits for your loan

It is unlikely that the new rates would now be over 10% and most experts see base rates within a 7- 8% range. All floating rate loans will now need to be priced off the base rate that the bank has fixed. So why pay double digit interest rates when you can now pay less?

Will your bank automatically lower your existing lending rate?

No

So how do you get a lower interest rate?

Once your bank announces its base rate you can go back to the bank and ask to be shifted to the new system of base rates once it becomes operational.

What if your bank refuses?

If your existing lender is not willing to shift you to the new system you should look at shifting the loan to another bank altogether.

Complete transcript of chat with Harsh Roongta.