Home Loan: Save Rs 7.18 lakh on Rs 40 lakh loan with LIC Housing Finance by paying Rs 3,540 online
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Synopsis
Interest rate on home loan have risen sharply in last one and half year which has impacted borrowers significantly and they are looking for ways for reduce this burden. LIC Housing Finance is now offering a facility to make online request to interest rate reduction on home loan. Read on to know how this facility works and how you can save big with this option.
By Naveen Kumar, ET Online
Last Updated:
If you have taken a home loan from LIC Housing Finance and have been paying EMI for more than a year and a half without checking the interest rate, there is a good chance that you are paying a much higher interest rate than what the lender is offering to new borrowers.
How interest rate reduction gives you big savings
Check whether your loan is eligible for switching
Not all home loan accounts will be eligible for the switch, as the lender has put some conditions for borrowers to get this facility. To avail the interest rate reduction, the home loan account should be regular; or in other words, no instalment should be overdue. Only borrowers who have loans up to Rs 15 crore are eligible to apply for this interest rate reduction, which is done on the basis of the CIBIL score.
“Rewriting or Reduction of Interest rate is applicable for the Housing Loan, Griha Vikas Products excluding plot purchase, Griha Suvidha, Facelift and other non-housing loans,” says the LIC Housing Finance website.
Therefore, you need to check whether your home loan is eligible for this rate reduction option.
To check this, log in to your online account and go to the tab “Change ROI”. Clicking on this will show you the terms and conditions that you have to accept to go to the next page, where you can check if your loan is eligible for rate reduction or not. If your loan is eligible, apply for the interest rate reduction and allow the lender to check your CIBIL score.
What is the fee for this online interest rate reduction?
CIBIL score will determine the revised interest rate
The revised lower interest rate will mainly depend on your CIBIL score. To be eligible for the lowest interest rate of 8.95%, the CIBIL score must be 750 or above. In case the CIBIL score is below 750 but 700 or more, you will be eligible for an interest rate of 9.25%. In case the score is below 700, the best rate that you can get is much higher which is 10% under this online switching option.
Reduction of rate according to CIBIL score
Source: LIC Housing Finance Website
You will need to pay the conversion fee to complete your online application so that your CIBIL score can be generated, and your application can be processed further. It may take some time for the score to be updated so you need to keep checking for the same on the lender’s website. Once the score is updated, the website will allow you to move forward
What are the payment options for this online interest change request?
Do remember that you can pay this conversion fee only through your bank account. Credit card payment option is currently not available. You can make this payment either through your debit card, net banking or UPI.
If you have more than one home loan with LIC Housing Finance, you will need to pay the conversion fee separately for each of the accounts. For instance, many people have a home loan and a top-up home loan. In this case, you will have to pay the conversion fee on each loan account separately.
When will the reduced rate become effective on your home loan?
Borrowers who make this payment may wonder how long it will take for them to enjoy the reduced rate. “Reduction in interest rate will be applicable from immediate due date and payable in next month,” says LIC Housing Finance website.
You need to keep this in mind that the date when the reduced rate will become effective will vary according to the gap between the due date of your EMI and the date of application for the reduction of interest rate. “Request for change of interest within 3 to 5 days of the due date will be considered from the next due date,” says the LIC Housing Finance website.
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However, you now have a chance to bring down the interest rate substantially, and that too without any physical visit to the branch of the lender. You can save Rs 7.18 lakh just by getting your home loan interest rate reduced from 10.10% to 8.95%, if your current home loan outstanding is Rs 40 lakh and the remaining tenure is 20 years, provided your CIBIL score is 750 or above.How interest rate reduction gives you big savings
| Particulars | At Old Interest Rate | At Reduced Interest Rate |
| Interest Rate | 10.10% | 8.95% |
| Loan | Rs 40 lakh | Rs 40 lakh |
| Tenure | 20 yrs | 20 yrs |
| EMI | Rs 38,866 | Rs 35,861 |
| Total Interest payment | Rs 53.28 lakh | Rs 46.06 lakh |
| Savings | NA | Rs 7.21 lakh |
| Conversion Fee | NA | Rs 3,540 |
| Net Benefit | NA | Rs 7.18 lakh |
Not all home loan accounts will be eligible for the switch, as the lender has put some conditions for borrowers to get this facility. To avail the interest rate reduction, the home loan account should be regular; or in other words, no instalment should be overdue. Only borrowers who have loans up to Rs 15 crore are eligible to apply for this interest rate reduction, which is done on the basis of the CIBIL score.
“Rewriting or Reduction of Interest rate is applicable for the Housing Loan, Griha Vikas Products excluding plot purchase, Griha Suvidha, Facelift and other non-housing loans,” says the LIC Housing Finance website.
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Therefore, you need to check whether your home loan is eligible for this rate reduction option.
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To check this, log in to your online account and go to the tab “Change ROI”. Clicking on this will show you the terms and conditions that you have to accept to go to the next page, where you can check if your loan is eligible for rate reduction or not. If your loan is eligible, apply for the interest rate reduction and allow the lender to check your CIBIL score.
What is the fee for this online interest rate reduction?
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The lender will charge a a flat fee of Rs 3,000 to make the switch. You will also need to pay 18% GST on this fee, which is Rs 540. So you will need to pay a total of Rs 3,540 to apply for an online request for interest rate reduction. CIBIL score will determine the revised interest rate
The revised lower interest rate will mainly depend on your CIBIL score. To be eligible for the lowest interest rate of 8.95%, the CIBIL score must be 750 or above. In case the CIBIL score is below 750 but 700 or more, you will be eligible for an interest rate of 9.25%. In case the score is below 700, the best rate that you can get is much higher which is 10% under this online switching option.
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Reduction of rate according to CIBIL score
| Amount of Loan Originally Sanctioned to the Customer | CIBIL (Credit Score) at the Time of Rewriting | Reduced Rate (Linked with LHPLR) | Fees for Housing Loans (Interest Reduction) |
| Up to Rs 15 cr | 750 & above | 8.95% | Rs 3,540 |
| Up to Rs 15 cr | 700-749 | 9.25% | Rs 3,540 |
| Up to Rs 2 cr | Below 700 | 10.00% | Rs 3,540 |
| Above Rs 2 cr & up to Rs 15 cr | Below 700 | 10.25% | Rs 3,540 |
You will need to pay the conversion fee to complete your online application so that your CIBIL score can be generated, and your application can be processed further. It may take some time for the score to be updated so you need to keep checking for the same on the lender’s website. Once the score is updated, the website will allow you to move forward
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What are the payment options for this online interest change request?
Do remember that you can pay this conversion fee only through your bank account. Credit card payment option is currently not available. You can make this payment either through your debit card, net banking or UPI.
If you have more than one home loan with LIC Housing Finance, you will need to pay the conversion fee separately for each of the accounts. For instance, many people have a home loan and a top-up home loan. In this case, you will have to pay the conversion fee on each loan account separately.
When will the reduced rate become effective on your home loan?
Borrowers who make this payment may wonder how long it will take for them to enjoy the reduced rate. “Reduction in interest rate will be applicable from immediate due date and payable in next month,” says LIC Housing Finance website.
You need to keep this in mind that the date when the reduced rate will become effective will vary according to the gap between the due date of your EMI and the date of application for the reduction of interest rate. “Request for change of interest within 3 to 5 days of the due date will be considered from the next due date,” says the LIC Housing Finance website.
