Aditya and Kuber were the partners for morning jog for almost a year now. Even while Aditya was a happy-go-lucky kind of personality, he seemed a bit off today.
Concerned for his partner, Kuber just asked, “Aditya, everything good at your end? You are not a smiling soul today.”
“Yes, nothing of that sort. Just that I discovered the blunder I had made last year when I took housing loan from ABC bank.” Aditya said.
Upon seeing that Kuber was still concerned, he continued, “For a difference of 50 bps, I took a loan of Rs. 25 lakhs at fixed rate of 10%. However, I came to know that the current rate being offered by the bank is 8.60% if I would have chosen floating rate option.”
Knowing that this was the only point of concern, Kuber made an attempt to console Aditya and said, “Just for this small thing, you are losing your precious smile. Why don’t you opt for balance transfer and get the whole thing corrected for your good?”
“Balance transfer! What’s that?” Aditya was surprised.
“Balance transfer is a facility offered by banks and other lending institutions to get your existing loan against property from another lending institution refinanced from them. Obviously, you will opt for balance transfer only if the new loan terms are favorable to you. So, this generally results in favorable interest rate change for you and resultant lower interest outgo.” Kuber always enjoyed educating his friends.
“That seems good to hear. I was indeed tensed about the fact that I will have to continue bearing higher interest for the entire tenor.” Aditya seemed relieved now.
In an attempt to cheer his mood further, Kuber said, “I remember, last week you were talking about renovating your house. Besides balance transfer, you can also opt for a top-up loan against property from the same bank. A Top-Up loan gives you the freedom to borrow money over and above the initial Loan amount. Though different banks offer different terms for such loans, but top-up loans are generally preferred due to easier documentation and hassle-free processing, besides giving you tax benefits on such top-up loans as well.”
“Every time I talk to you, I learn something new. I am so relieved now.” Aditya let out his breath in a sigh of relief.
“Lower interest outgo as a result of balance transfer means your monthly installments reduce and you can give us a treat out of the money so saved.”Kuber quipped and they both were now jogging with smiling faces.