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19 January 2011

Home Loan Transfer Cheaper Options

Home loans are made very easy and all the costs and administrative fees are included in the beginning of the deal for a home and applying for a home loan. The interest rate is either fixed or flexible on the loan amount to be repayed. How does this calculation go and is it in the benefit of the buyer or the builder, needs a thought beforehand.
Whenever the buyer of a home goes in for a home loan the excitement for purchasing a new home is there and it is difficult to understand all the fine details worked out during the deal for the house. Selecting fixed interest or flexible interest is an option available for the buyer and taker of home loan and these calcultaions have to be done to understand the repayment mode and the amount of EMI. Many times the builder has the option of fixed interest for a certain period of time and later years this amount is to be paid on flexible interest considering the time lapse and inflation. If the interest is fixed then the amount added as interest is much more as the builder and loan lender has to consider the inflation factor over the years involved during the repayment of the home loan.
Before going in for fixed or flexible interest one must consider our repaying capacity for the loan. If the salary is on higher side it would be best to take a higher EMI and repay the loan faster in short duration. If the salary is limited and the buyer and home loan taker has other commitments also then they prefer to go in for flexible interest as the first few years the EMIs are low and as their salary increases ove rthe years they can afford paying the higher EMIs.
Whatever the reason it would be wise to see the interest added by the loan lender during the later years. If it is too high an amount one has the option to cancel the loan and go in for a cheaper option. The loan taker may have to give certain penalty fees to opt out from the original loan but still the effort taken will be worth it if they can get a cheaper option and loan lender who gives loan at a lesser interest rate. This is called loan transfer and the buyer can transfer his loan to a different financial loan lending institution. If they had earlier taken a private loan they can later go in for government banks for this need, and if they had applied from government institutions then they can go in for a loan from a private money lender if it works out to be cheaper.

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