MEET Jaidev Iyer, a middle management professional with a media company in Mumbai.

In April 2007, he took a 20-year floating rate loan of Rs 44 lakh (Rs 44,00,000). With this, he purchased a two-and-a-half bedroom-hall-kitchen flat, in a Central suburb in Mumbai.

Now, home loans with floating interest rates can be tricky; the moment you take the loan, the rate seems to start climbing, upwards. As luck would have it, within months of taking the loan, Jaidev's interest rate went from 9 to 10.5 per cent per annum. So, Jaidev decided to refinance his loan.

With the recent hike in interest rates, many of you would probably identify with Jaidev. We outline smart tips to get a good deal if you decide to refinance your loan.

Step 1: Negotiate with your bank

Before taking business to another bank, negotiate for a lower rate with your current vendor. They may have a better plan.

"There are banks that allow switching at the time of annual review of accounts, at no extra cost. There are others that allow such switches but at a cost of around 1.5 per cent of the outstanding loan amount," suggests Clayton Scott, the Director of ecompare.co.in, a financial products comparison web site.

This is a good option for Jaidev because it is quick, and involves fewer formalities.

Calculate: The best home loan deal, today!

Read:

• Should you opt for floating interest rate?
• To prepay or not to prepay your home loan
  
  

Illustration: Vaibav Shirke

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