Most of us who have a mortgage understand that the monthly EMIs that we pay on our outstanding Home Loans is probably one of the single largest monthly expense in our budgets. While we have come to understand the reality of having a home loan to buy that dream house, nothing prevents us from doing our best to reduce the home loan EMIs.
And this is where SlashEMI – a home loan optimization service comes in.
Launched in 2016, the service helps you track the home loan rates in the market and gives you the confidence that you are always running your home loan at the most optimal rates.
SlashEMI has a simple process
step1: Register your loan details on the portal
step2: Get an instant analysis (as on that day) of what a home loan transfer can do to reduce EMIs.
step3: Activate your account by paying the annual or 3 year fees
Step4: Sit back and get monthly alerts/updates on rate changes across banks in India.
Pricing for SlashEMI
Rs 99/- for 1 year
Rs 199/- for 3 years
Should you activate your SlashEMI account?
It is definitely a good idea to pay the small fees for either the annual of the 3 yearly account as this allows you (the home loan taker) to rest assured that you would not miss any opportunity to reduce your home loan EMIs. Given the high ticket size of a Home Loan, it makes a lot of sense to have this advantage on your side.
Home Loans which are on floating rates have a simple calculation i.e. applicable rate = base rate + margin
Margins typically remain fixed during the tenure of the loan and the only thing that changes in a floating rate loan is the bank’s base rate.
Hence any change in the base rate will mean a change in the applicable rate for the home loan borrower.
With rate cuts being announced by RBI and subsequently by banks also, a reduction in base rate will mean a corresponding reduction in the applicable home loan rate. Which in turn means a reduction in the EMIs, or in many cases a reduction in tenure.
Base Rate changes will impact EMIs or tenure of Home Loan
The reason banks (or customers also) may want to change tenure of their home loan instead of the EMIs is to ensure that the ECS mandate or Standing Instructions given for the loan re-payment are not required to be re-done every time the bank changes the base rate. Hence base rate changes may be a good time to evaluate if you should go in for a Home Loan transfer or not.
The Home Loan Rate changes may have a lag
Also the impact of the base rate change may not be immediate. This is because loan rates are reset at specific dates during a financial year. While each bank has its own set of reset dates, these are typically 1st April, 1st July, 1st Sep and 1st Jan in the Indian context. Hence even if the base rate change is announced on 3rd March of a year, the home loan EMI or tenure change will come into effect by 1st April only.
SlashEMI helps track the home loan rates and pings you about potential opportunities to switch your home loan.