Dhiraj Tiwari, 35, a senior human resources manager in a multi-national company in Gurgaon, Haryana, had taken a home loan of Rs.20 lakh from HDFC Ltd in July 2010 to buy a house in Faridabad, Haryana. It was a floating rate loan and the applicable interest rate in the first financial year, 2010-11, was 9% per annum. But this went up to 11.75% per annum in just the next year, 2011-12. From 2011 till December 2015, the interest rate remained between 11.75% and 9.95% per annum. In this period, he had approached the lender twice to decrease the applicable rate on his home loan, according to the prevailing market rates. “I got the benefit of this and for 2015-16, my home loan rate was 9.95%,” said Tiwari.
“Then a colleague told me about a limited time offer by SBI (State Bank of India) for loan balance transfer. SBI was offering 9.55% per annum on the balance transferred. The processing fee was also very low for that period,” said Tiwari. He did the math and transferred the outstanding balance of Rs.21.9 lakh from HDFC to SBI, paying about Rs.5,600 as processing fee to SBI, and about Rs.1,200 in other charges (a total of around Rs.6,800).
