acenam

Hi,

I have taken a Home loan with my wife as a co-applicant of about 31.5 lakh for a 20 year tenure from X Bank which is a private sector bank about a year back and at a floating rate of about 8.5% which was prevailant at that time. The rate since has increased and gone up to 11.75% and tenure increased to around 24 years (289 months from earlier 240 months) and EMI which was initially at 28K had hit 32K.

After a few prepayments later (around 2.5 lakh) which I could manage somehow, I was able to get down the EMI to about 29K which is at a more manageable level.

In the past few days I came across a scheme from a public sector bank Y, which says it can provide me with ROI of 10.5% and would also throw in the insurance cover for my home which is not currently provided for in the current case. The months would be decreased to 240 months. They are ready to give us a concession on the processing charges which is around 10,000 which also includes the legality clearances.

Now few points I would highlight over here
Foreclosure : - bank X allows me prepayment without any penalties but limited to complete foreclosure. I will have to retain a 13 month EMI with the bank in case of going for complete foreclosure. Even bank Y allows me partial prepayment without any fine, I have yet to enquire about the complete closure part.
PrePayment Fine incurred : its a 2% penalty on the (Outstanding balance amount + Any Prepayments ) + the Service Tax + the Surcharge.
in my case the outstanding stands around 28.5 lakhs + 2.5 lakhs I prepaid.

My query here is should I opt for a balance transfer in this case ?

My calculations show me that I would incur a cost of about 1 lakh + on the entire balance transfer, since currently I am outside of India on project work and this includes my cost of travel for closing the documents required for this.
Benefit woud be I would be paying around the same EMI with the insurance cover thrown in.
Secondly since its a public sector bank I think that the customers would be given a bit of weightage in situations of untowards incidents and any liability that may cause towards the loan payment e.g losing a job and defaulting on payment etc for which I feel no leewage is given by Private Banks.

Are there any other things I should look out for while calculating the Balance Transfer OR should I stick with X Bank as the rates may go down in the future and I could opt for an insurance cover from a third party like LIC etc (haven't found/calculated) the costs for this yet.

Regards
Acenam