A good credit score gives you more say in a loan

A good credit score gives you more say in a loan

I have a home loan from HDFC. If I were to transfer the loan to another bank, will HDFC charge a prepayment penalty? I am also being given an option by HDFC to convert to a lower interest rate after paying a fee. Which is the better option? In view of the latest circular of National Housing Bank (NHB) dated August 7, 2012, you need not pay prepayment fees to HDFC for transferring your loan to another lender as long as it is not a fixed rate loan. Even in the case of teaser rate home loans, the prepayment can only be levied during the fixed rate period and not beyond that. You have not mentioned the amount of loan outstanding and the new interest rate being offered by HDFC. But if by paying 0.56% (0.50% plus service tax) of the outstanding loan, you are able to get a floating rate of interest of 10.50%, you should go for the conversion. If the new rate being offered is higher than that, you should look at the possibility of transferring your loan to SBI (if the outstanding loan amount is below `50 lakh) or to foreign banks if the outstanding loan amount is above `50 lakh. The options are available only if you have a spotless track record of repayment with not only HDFC but also on any other loan or credit card availed by you from any other institution. You can get a copy of your own credit score online itself on www.cibil.com . Please obtain your credit score before you examine options. A better score will give you the better ability to negotiate with the lender.