Opting for home loan transfer? Weigh these options

Before shifting to a bank offering lower interest rates on our home loans, we must ensure that the cost of loan transfer should be considerably lesser than the benefit. Moreover, an excess loan may be offered by the new bank towards the reduced interest portion, what should we do? Read on.

Hyderabad : Home loan interest rates have been increasing over the last year. The interest burden has already reached the maximum level for everyone. If you want to reduce this burden, you can consider switching to a bank that offers loans at lower interest rates. But, processing fees and other fees should be considered before doing so.

The reduced interest benefit should be considerably more than the cost of the loan takeover by the new bank. That's important. The important thing here is what to do when the new bank will offer an additional loan of Rs.7 lakhs. Don't go into too much debt if you don't need the money. This will result in nothing but a burden of more interest.

If you have taken a home loan of Rs 35 lakh, you can switch to another bank with half a per cent lesser interest. It's to reduce the burden of interest rates which are rising these days. There is a possibility that the loan will come in excess of another Rs 7 lakhs. But it is not a good idea to take this excess loan since you will incur a higher interest burden.

What should young persons do when they can invest up to Rs. 7,000 after joining a new job with a salary of Rs 28,000 per month? Taking insurance at a young age gives more protection at a lower premium. So, if you have dependents, take a life insurance policy of at least 12 times your annual income through term insurance.

Apart from this, health insurance and personal accident insurance policies are a must. Build an emergency fund that covers at least six months of expenses. After this, think about investments. Deposit Rs 3 thousand out of Rs 7 thousand in the Public Provident Fund. Invest the remaining Rs 4 thousand in equity funds in a phased investment strategy.

When a 12-year-old wants to go to America for further studies after nine years, his parents should invest up to Rs. 30,000 per month during this period. What should be done about this? Both US inflation and the value of the dollar must be taken into account. Invest at least 60-70 per cent of the amount you want to invest in US-based mutual funds. The remaining 40 per cent should be invested in diversified equity funds here. Equity investments should be reduced two years before you need the money.