Shifting from floating to fixed is not advisable as there are not many banks that offer genuine fixed rate loans anyway. They are the loans which eliminates the need of a document featuring any clause that allows the bank to change the ?fixed rate? of interest.



These loans are not available for less than 13% rate of interest. Also, the borrower requires paying a fee for changing from ?floating? to ?fixed? home loan rates. This means that Equated Monthly Instalments (EMIs) will go up immediately.

What about shifting to another lender offering a lower floating rate loan?

This can be a good idea especially if another lender is offering a floating rate loan which is at least 0.50% cheaper than what has been offered by the existing lender with the balance tenure of not less than 7-8 years. There are the banks which charge high rate of interest from existing customers and low rate from new customers. Therefore, shop around the market first and keep yourself informed regarding the same to avail the best deal.

Do I have any other better options?

If you have extra money, you are recommended to pay a part of your loan to keep the EMI at the same level. Since most banks do not charge partial pre-payments, it can be an excellent option. In case, the borrower finds it unfeasible, he/she should check whether the bank is ready to increase the loan tenure along with keeping the EMI at the same level. As such, banks generally do not increase the tenure beyond the retirement age which is 60 years for salaried people and 65 years for self employed.

And, the ultimate best option is to increase savings and compromise on non ? essential items thereby managing the monthly budget within the monthly income.