1. #1

    Join Date
    Aug 2011
    Lahore, Pakistan
    Blog Entries

    Is it possible to increase or decrease home loan monthly installment?

    Home loan monthly installment plan is the most important component of monthly outgo for the families who have bought a house. Any upward movement in the rate of interest impacts family budget as the monthly outgo increases. In cases where there is no change in the monthly installment plan, tenure of payment increases.

    In either of the two events, liability for a family increases.

    How can a borrower of home loan overcome this?

    Is it possible to change Monthly Installment Plan both upwards as well as downwards for a borrower of home loan?

    Let us find out the answer for these two questions.

    Increasing monthly installment to reduce tenure of payment: It is possible to increase monthly installment and thereby reduce tenure of the loan. Many banks and financial institution provide this option. For instance, a Bank normally allows a borrower to reduce tenure by paying extra monthly installment. This comes at a cost and the bank charges a conversion fee for this which ranges from Rs. 5000+ to Rs. 10000+ depending upon loan amount. There might be an option available to check this facility on bank's website, which is available only to registered users. Mostly bank provide this facility. You can contact your bank and ask for increase in monthly installment plan and reduction in tenure. This is mostly negotiable between borrower and lender.

    Reducing Monthly Installment to increase tenure: This facility is generally not available with banks because of certain constraints and hence banks do not entertain such cases. However in distress scenario, you can contact your bank for this. For instance, a scenario in which job was lost or salary decreased because of financial crisis. This can be entertained by banks on case to case basis.

    Apart from these two options, there is an option available to make pre-payment on loans also. On floating rate loans, banks generally do not charge pre-payment penalty.

    But it is important to check it with banks or financial institution.

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