How to get the best deal when home loan rates begin to fall

With three banks, Union Bank of India, Central Bank of India and Bank of Maharashtra announcing their decision to lower home loan rates, it is almost certain that we are heading towards softening of interest rates. Some more banks may soon announce rate cuts, while some may wait for the Reserve Bank of India to slash its policy rates, before taking a final call.

The disparate rates, in the meanwhile, are going to cause a lot of confusion among home loan customers. If you have been waiting to switch over to the lender with lower rates at the first opportunity, it may be time to act in the next few weeks. Meanwhile, you can pore over your existing loan agreement to understand the clauses to avoid complications later. Follow the same exercise with the new lender too. Here are a few points that can guide you through the maze.

Some banks have completely done away with the fixed-rate schemes. However, some of them did offer fixed home loans in the past with interest rate as low as 7.5-8%.

The catch, of course, was that these rates would be reset every three years and subsequently linked to the rates prevailing at that time. If you have taken such a loan a few years ago, your EMI must have zoomed to unmanageable levels by now.