I am having a home loan of Rs 21.50 lakh on floating rate @ 9.6% from HDFC LTD. Now ROI got down to 8.5 %. I am asking bank to reduce my ROI, BANK is taking some charge for it. Is it ok by law or not? Please help.

I have another home loan of Rs 4 lakh and repaying from last 5 years, now I want to close it, but bank is also demanding some charges for it and asking for my 6 months’ bank statement. Kindly give your suggestion/advice on it.

Ans: What are you thinking? Apply to another bank and get the loan on the basis of the transparent external benchmark. Borrowing from a housing finance company makes no sense whatsoever given the completely non-transparent way in which their floating rates are fixed as compared to banks.

Ans: Hello;

I agree with the justification offered by Tata Capital.

However by the same yardstick they shouldn't have raised home loan rates immediately after RBI rate hike.

You may talk to their senior team and try to get some relief.

Complaining to RBI should be the last resort.

Best wishes;

Ans: You took a floating-rate home loan from Axis Bank at 8.5% interest.
You prepaid Rs 5 lakh within five months, reducing your outstanding amount to Rs 24 lakh.
RBI reduced the repo rate, but Axis Bank refuses to lower your rate to 8.25%.
Why Your Interest Rate Is Not Reducing
Banks do not always pass repo rate cuts immediately to all borrowers.
Some loans are linked to MCLR (Marginal Cost of Funds Based Lending Rate), which adjusts slowly.
New loans might be under RLLR (Repo Linked Lending Rate), which reacts faster to RBI rate cuts.
Your loan agreement decides how and when rate cuts apply.
What You Can Do
1. Ask for a Rate Reduction
Request Axis Bank to switch your loan to an RLLR-based loan.
Banks charge a conversion fee, but it might save you lakhs in interest over time.
2. Compare with Other Banks
Check other banks' home loan rates for balance transfer options.
If a bank offers a lower rate, consider switching the loan.
Ensure the processing fee & charges don’t negate the benefit.
3. Negotiate with Axis Bank
If you have a good repayment record, negotiate for a lower spread or margin.
Mention that other banks offer better rates, increasing your bargaining power.
4. Make Partial Prepayments
If you have extra savings, consider small prepayments to reduce interest burden.
Prepaying reduces the principal, which lowers total interest paid.
5. Use a Home Loan Overdraft Account
Check if Axis Bank offers a home loan overdraft facility.
You can park surplus money and withdraw when needed, reducing interest payments.
Best Action Plan
Contact Axis Bank and request a switch to an RLLR-based loan.
Compare other banks for balance transfer options.
Negotiate for a lower spread if staying with Axis Bank.
Consider prepayments to reduce long-term interest costs.
By taking the right step now, you can save a significant amount on interest payments.

Best Regards,
K. Ramalingam, MBA, CFP
Chief Financial Planner
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

Ans: You're taking the right step by checking your loan terms after the RBI rate cut. Many borrowers miss this opportunity. Let us do a complete 360-degree review and guide you step-by-step.

Understanding Your Current Loan Situation
You have a home loan of Rs. 22 lakh and a top-up loan of Rs. 6 lakh.

Your current interest rates are 8.75% and 9.10%. These are quite high in today’s market.

You checked with L&T Finance to reduce the interest rate.

But they said your loan is linked to BPLR, not to the Repo Rate.

So, they refused to reduce the rate even after RBI’s repo rate cut.

What is BPLR and How It Affects You
BPLR means Benchmark Prime Lending Rate.

This was the old way of calculating loan interest rates. It lacks transparency.

New loans are usually given with Repo-Linked Lending Rate (RLLR).

RLLR changes fast when RBI changes repo rate.

But BPLR doesn’t change automatically when RBI reduces the repo rate.

This is why your lender is refusing to reduce your rate.

Why You Shouldn’t Stay on BPLR Loan
You are paying a higher rate compared to current repo-linked loans.

Your EMI is higher, and more money goes into interest, not principal.

BPLR is not consumer-friendly. It is outdated now.

Most major banks now offer repo-linked home loans at 8% or lower.

What Are Your Options Now?
Let us evaluate all options one by one.

Option 1: Internal Conversion with L&T Finance
First, ask them if you can switch to RLLR or MCLR-based loan internally.

They may charge a small conversion fee (0.25%–0.5% of loan amount).

If they allow this, and reduce rate to below 8.5%, you may consider it.

But if they say no or still keep rate above 8.5%, it’s better to transfer.

Option 2: Balance Transfer to a Bank
Apply for balance transfer to a bank that offers repo-linked loans.

SBI, HDFC Bank, ICICI Bank, Axis Bank offer home loans at around 8% or even less.

Ask them if they will take over both home loan and top-up loan together.

You will need to submit:

Loan statements

Property papers

Salary slips or income proof

If your credit score is above 750, and your repayment record is clean, you will get the transfer.

This option will save interest and reduce EMI over time.

Option 3: Prepay Your Loan Partially
If you have extra savings or mutual funds not linked to short-term goals, consider partial prepayment.

Prepay Rs. 2–3 lakh now. Ask them to reduce tenure, not EMI.

This will lower your overall interest outgo.

But still, the interest rate will remain high. So, combine this with balance transfer.

Option 4: File a Formal Complaint (If Needed)
If L&T Finance is not allowing even internal conversion, send a written complaint to their head office.

Ask for loan migration to repo-linked product.

If they refuse again, file a complaint with RBI Banking Ombudsman under NBFC loan complaint.

However, if they follow the loan agreement, the ombudsman may not help.

That’s why balance transfer remains the best choice.

Steps to Do Now
Step 1: Ask L&T Finance about switching your loan to repo-linked internally.

Step 2: Collect latest loan statements and documents.

Step 3: Apply with 2–3 banks for a balance transfer quote.

Step 4: Compare interest rate, processing fee, and EMI.

Step 5: Shift your loan to the best offer. Complete transfer and close L&T account.

Step 6: Ask new lender for regular alerts when RBI changes repo rate.

Tips to Keep in Mind
Do not take new top-up loan unless needed. It adds to interest burden.

After balance transfer, consider prepaying at least 5% of the loan each year.

Avoid private NBFCs unless the rate is significantly lower.

Always go with repo-linked loans. They are transparent and change faster.

Keep a separate emergency fund. Do not use investments meant for future goals.

Do not break long-term mutual funds unless it is urgent.

Final Insights
You are being smart by checking your loan terms.
L&T is not giving you the benefit of repo rate cut. That is not in your favour.
It is time to shift from old BPLR system to repo-linked loans.
Balance transfer will save lakhs over the full loan tenure.
Also use this opportunity to clean up your loan structure.
Don’t let your hard-earned money go in interest unnecessarily.
Make this one smart move. It will give you peace of mind for many years.

Best Regards,
K. Ramalingam, MBA, CFP,

Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment