How to get the best home loan rate

In an online chat with readers on January 29, the day when the Reserve Bank of India cut the repo rate and cash reserve ration by 0.25 per cent, Rajiv Raj of CreditVidya.com answered their home loan queries.

Here is the unedited transcript.

ravi: Will banks forced to cut there base rate after rate cut?

Rajiv Raj: yes, I expect the bank to cut their base rates post reduction in repo rate today!

DEEPAK: bank never pass rate cut immediately bt increment

Rajiv Raj: It is always ideal to lock your rates to base rates to get the benefits when interest rates come down

Sonal: loan rate cut?

Rajiv Raj: yes we will see softening of interest rates on Home loans shortly

manish: How to lock our rates to base rates to get the benefits for home loans

Rajiv Raj: you can choose while you avail loans on floating rate with any bank

bala: where would it mentioned whether my housing loan is locked with base rate or not? I have taken a housing loan from ICICI bank

Rajiv Raj: You can request ICICI Bank to covert your existing floating rate on base rate of bank, this can be done when you reprice the loan with them

hemant: how much reduction is expected in home loan rate

Rajiv Raj: There is a possibility of 25 basis point fall in interest rate if not more.

Kiran: Will Housing Finance companies Like LICHFL cut rates?

Rajiv Raj: With competition coming from banks even the Housing finance companies such as LICHF will reduce rates to target market.

DEEPAK: Does HDFC bank reduce the loan to base rate.....please tell more abt base rate...thnx

Rajiv Raj: HDFC Bank do not offer home loan they source loans for HDFC Ltd which is a housing finance company.

Ashish: where as SBI is now offering 10%, new rate is not applicable on me. they say that I have to pay one time conversion fee

Rajiv Raj: if the base rate of SBI chances you will get the benefit of ROI

Tarun: In a scenario when the rates are cut, builders immediately hike the home prices resulting in no benefit for buyers.

Rajiv Raj: This would depend on demand and supply factor in that market. Few of the market the rates on property are softening or coming down.

Ashish: I have taken home loan from SBI which is on floating basis; I am having an interest rate of 10.25 per cent.

Rajiv Raj: You can check with bank once they announce a cut on base rate for change of rate on your Home loan

manish: are there any charges or fees to convert our base rate as per bank's base rate

Rajiv Raj: Yes banks do charge a fees for conversion.

Kiran: is it better to take a housing loan from banks esp SBI or from Housing Finance Companies

Rajiv Raj: It is better to shop for best options in market

sudhi: Does CAnFin Homes have the option to lock our rates based on base rates

Rajiv Raj: Base rates are maintained by banks not housing finance companies. They would have internal benchmark lending rates.

ghansham: Hi Mr. Rajiv Raj: Very Good Afternoon: Can you explain regarding CRR, Repo Rate & Reverse Repo Rate

Rajiv Raj: These are certain regulatory requirement which banks need to follow. CRR is the funds that banks need to keep with RBI.

anupam: How much I will be benefited if I take a loan of Rs.40 lacs for 15 years term from Uco Bank?

Rajiv Raj: This will depend on the rate benefit you would get on the loan

vrk: Sir,My home loan from SBI, I am paying floating intrest @ 10 per cent fo rthe last 8 tears. How much intrest rate will reduce in case of mine

Rajiv Raj: The interest rates may fall by 25 basis points due to monetary policy announced by RBI

Vijayakumar: step motherly treatment to the existing customers by not reducing the rates if RBI revises the repo and crr. is it legal

Rajiv Raj: The existing borrower can reprice the loans to avail this benefit.

Ashish: SBI asked me to pay charge (one time fee) to convert loan into new scheme, why is this so as already I have floating loan

Rajiv Raj: Yes there is a conversion fees. if the benefits are higher then it is advisable to opt for the same

jitesh: In my mind, there is no doubt that rates will come down... Banks are now offering home loans at base rate

Rajiv Raj: Banks do offer loans at base rate which will move with RBI interest rate reductions

shakeel: I am an existing customer of HDFC. I am currently paying 12 per cent, Is there any chance of getting reduction in my interest rate???

Rajiv Raj: suggest that you get your loan repriced from HDFC, they may charge a conversion fees

RAJAN: will LICHF reduce roi

Rajiv Raj: I am sure with competition from bank they will do so

Rajesh: is the change in HOME Loan applicable for existing customer also.

Rajiv Raj: Yes if bank reduced the base rate of BPLR

Prashant: I have a home loan from HDFC, will they reduce interest rates?

Rajiv Raj: HDFC Ltd do not follow base rate they have RPLR which is currently 10.25 per cent

Bunty: does it affect the existing borrower? is the precloser allowed now without any extra burdon

Rajiv Raj: If your loan rate are linked to base rate you will get the benefit once base rate of bank moves otherwise you will have to re-price the loan

Venkatesh: Can I get a loan for empty plot through LICHF or any other bank - 7 lacs ?

Rajiv Raj: Banks fund plots but these have to be allotted by any govt agencies. You will have to check the policy with banks

K MURALI: my second disbursement of the new loan is due next week. Will i get the new benefit..?

Rajiv Raj: If the rate change before disbursement you will get the benefit.

Bunty: what does the law say on PRECLOSURE OF LOAN

Rajiv Raj: RBI has waived the pre-closure charges for floating rate loan

Sunilkumar: which bank will provide loans on revenue land in bangalore

Rajiv Raj: I am not sure about this they would fund against land provided by government agencies and also have a clause on construction of house

Shanta: I am finishing the second year of loan paying to SBI in July. Will I receive the benefit

Rajiv Raj: yes if your loan is linked to the base rate of the banks

kedar madhav bhide: Home loan is approve @ float rate10.25 per cent yet to be disbursed. will it be reduced by 0.25 per cent at disbur

Rajiv Raj: if the banks reduced the rates before your disbursement you will get the benefit in rates

zalak: i am having housing loan from co-operative bank since last one year, Whther i am eligible for 1 per cent interest subvention?

Rajiv Raj: I am sure on cooperative banks moving rate, they will also follow bank in reducing rates

Nawal-Kishor: 5 Lakh Ka Kitne Persent Yearly Hoga

Rajiv Raj: rate will vary from 10.25 - 11.00  per cent depending on lenders in market

Nawal-Kishor: Home Loan Kitne Persent Hai

Rajiv Raj: Depends on which bank you wish to avail

dini: sir,is this applicable for Fixed Loans as well?

Rajiv Raj: In India no bank is offering fixed rate loan for the entire tenor. the max fix rate loan are for 3 -5 years only

Sateesh: I have fix-n-float loan from LICHF. Now charging 11.5 per cent. Whats the impact of this on my loan interest?

Rajiv Raj: Post the fixed tenor the interest rate switch will be on floating as per the market rates, you will get benefit when rate fall

rudolf: Is it mandatory for all banks to lower the housing loan interest rate? I have a housing loan from ICICI Bank?

Rajiv Raj: With repo rate cuts banks will lower interest rate as cost of fund reduces for them

Kuldeep Pandita: loan transfer bank A to another bank B,r their any charges for bank A &B,and what will be interest bank B will charge

Rajiv Raj: you can balance transfer please check with the new bank on latest rate and do the math on the benefits before you transfer

dini: Sir,But I have got loan for fixed 10 years @ 10.95 per cent.Is this good deal or what sir?Please Suggest me sir?

Rajiv Raj: Banks provide fixed rate loans for max 5 years post that it will move to floating rates

moderator: hi I am having loan from corporation bank for last two years will i get the benefit ?

Rajiv Raj: yes, if your loan is linked to base rate of corporation bank

Pravin: is there any possibility that HDFC will reduce the home loan interest rates for its existing customers?

Rajiv Raj: you will get benefit if RPLR of HDFC is reduced

Abhishek-Mande: Rajiv, what sort of effect do you think this will have on the real estate market? Will the prices continue to rise?

Rajiv Raj: Abhishek, the prices have not stablised in most of the market, builders are offering discounts today to sell their stock

pramodkumar-rath: I have taken a loan from HDFCwith floating interest. HDFC never decrease the interest rate as per RBI but increase as per RBI

Rajiv Raj: please check if the RPLR has reduced, your loan will be linked to this

Manash: What is RPLR as mentioned ? Who decides it ?

Rajiv Raj: RPLR is internal to Housing finance companies, this is decided on the basis of cost of funds and other factors for pricing

dini: Sir,But I have got loan for fixed 10 years @ 10.95 per cent.Is this good deal or what sir?Please Suggest me sir?

Rajiv Raj: Banks normally offer fixed rate loan for max 5 years beyond that it will move to floating rate.. please check with your bank.

Jemin: i want to switch hdfc to sbi it is possible ? and what step to switch

Rajiv Raj: yes, you can balance transfer the process is similar as availing a new loan

zalak: [SKB] rate sanctioned is 13 per cent and same EMI is continued, so shall i apply to bank for subvention

Rajiv Raj: yes please do as you will benefit from interest rate fall

kiran: hI, i have HL from SBI which was approved and partial amount disbursed at the rate of 10 per cent. what would be my new ROI ?

Rajiv Raj: the interest rate are expected to fall by 25 basis points

dharmish shah: In Feb 2010 i took Loan of 20 lac for 20 years.Repaid almost 12 Lac.What could be Rate i be charged?

Rajiv Raj: The rate benefit you will get if bank reduces their interest on Home loan

Girish: I have HL from LHFCL & present rate of interest 11.65 per cent. Is it OK comparing with present market rate?

Rajiv Raj: currently banks are offering 10.25 per cent on floating rate please switch post doing the math

vinod: My loan application for buying plot is sanctioned @10.25 per cent.Will the interst rate come down when loan amount disbursed

Rajiv Raj: yes, if banks reduces the interest rate before your disbursment

Kuldeep Pandita: HOW WILL I REDUCE MY EMI AMOUNT

Rajiv Raj: You can reduce by making a prepayment on your home loans

dini: Sir I got HL @ 10.95  per cent . is that good deal

Rajiv Raj: please check the rates in market banks do offer floating rate from 10.25 per cent onwards

Avuday: I have got loan from HDFC made prepayment once not reduced normally HDFC not reducing interest rate as per RBI guidence

Rajiv Raj: Please check with them you if they have reduced the RPLR in this period if yes you should get the benefit

saahil: Hi, I have my Home Loan from HDFC Ltd @ 11 per cent floating. Can I know will it be reduced?

Rajiv Raj: If HDFC reduces the RPLR then you will get the benefit

saahil: HDFC is asking for some conversion fee to reduce interest rate to 10.5 per cent. Is this conversion fee legal

Rajiv Raj: yes it is the internal policy of the company. If you balance transfer this loan you will have to pay again processing fees

dini: Sir I got HL @ 10.95  per cent for fixed 10 years . is that good ?

Rajiv Raj: I am not sure which bank has given you fixed for 10 years, if you have then it is good

himmatbhai: I have taken loan from Citi Bank , 6 year back, can i benefit interest rate for the same loan

Rajiv Raj: Please check what ROI you are paying today and switch if beneficial

Srinath: I want to take home loan, suggest best bank

Rajiv Raj: You choose a bank basis the benefit that they offer to you

bala: How much reduction can be there in housing loan interest?

Rajiv Raj: The expectation is of 25 basis points shortly

raghu: I am taking home loan from IDBI 6 years back, can i benifit against today's Home loan interest cut???

Rajiv Raj: Yes, if banks reduces the rate. Please do re-price your loans to save interest

srinivas: I am looking to go for Home Load in next 15 days. Which bank is good to go.

Rajiv Raj: Please choose the lender basis the benefits that they offer

srinivas: I am looking to go for Home Load in next 15 days. Which bank is good to go.

Rajiv Raj: Please choose the lender basis the benefits that they offer

dini: Sir I got HL @ 10.95  per cent for fixed 10 years from LIC. is that good ? Please guide.

Rajiv Raj: It is good considering the current market scenario,if interest rate soften you may loose out

bala: 25 basis points mean? how much would be interest rate in  per cent?

Rajiv Raj: 0.25 per cent of loans

ritin: Is it better to take home loan on fixed rate or floating rate with duration of 15 years

Rajiv Raj: Banks do not offer fixed rate for 15 years, the max you may get is 3 -5 years. Further this would depend on how the interest rate moves

Pramod Nair: Hi Rajiv, 1) Do you feel there would be a further round of rate cuts by RBI next quarter?

Rajiv Raj: Yes Pramod, there would be 25 basis reduction I expect on rates

Rajiv Raj: Thanks all for joining me on this chat! please visit us on http://rediff.ly/1fnh2 for any further queries