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Should I transfer my home loan to some other bank

Request your suggestion if I am in right direction: I am 28 years old, CTC 6 LPA, have a housing loan of 26 L from SBI (term loan of 30 years) EMI will start from 3 years in future (2020) although interest would be charged for this period; around 22K EMI. I have started 3 SIP's (2k,2k,1k) total 5k no other debt. I am confused whether to transfer the loan to different bank so as to enable immediate EMI cut. Also please suggest any more ways to save money?

Apr 12, 2017 by Vikas Thakur, Navi Mumbai  |   Home Loan

We are not sure what were the terms and conditions of your SBI home loan? There must have been some special scheme for deferring the loan EMI deduction to 3 years. You should check that and evaluate if that is beneficial or the one which prompts you to pay with immediate effect. If delaying the EMI is beneficial to you then let it be like that. But if delaying is costing you more on the overall payment of EMIs over 30 years period then you need to think of transferring the loan to some other housing finance company or you may even approach SBI if they will reset the loan with new terms (which may be suitable to you). The other aspect you need to know if the home loan interest rate was fixed or floating. As the home loan interest rates have been reduced in the last 12-18 months, you should also check if SBI is passing on that benefit to you or not?

Your decision of doing SIP is good as in the long run you will be able to create wealth and compensate for the amount that you would be paying as EMI for the home loan. You may even think of paying back part of the home loan once a sizeable corpus is created through SIPs. As you are young, your idea should be to clear off the home loan as soon as possible as you will have multiple liabilities as you age. You can also save and plan for your retirement once the home loan is paid back.

You have asked about suggestion on more ways of saving. Please note that instead of thinking about more ways of investing you should focus on why you are investing? Are you able to save taxes, can you reduce your debts as early as possible, do you know about your financial goals, have you planned for your retirement, have you saved for an emergency corpus and what are the liabilities that can come in the foreseeable future are some of things you should seriously think of!

Investing in the right assets from the start of your career in a disciplined manner is the mantra for investing success. Investing a good percentage of your monthly earning through SIP could be the best solution. For example, if you save Rs 10,000 per month for next 25 years, you can create a corpus of Rs more than 2 Crores (assumed rate of return is 12.50% annual) against you investment of Rs 30 Lakhs!

Wishing you great investment success!

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