Yes, that is true. RBI in its monetary policy review expressed its dislike for teaser rates on home loans that banks were providing and said that banks need to make additional standard provisioning for teaser loans. This decision has come in the light of LIC Housing Finance linked loans-for-bribes scandal. It may seem to you that opting for a teaser rate might help you, at least in the initial period of your loan tenure, by providing you a lower interest to pay at, but it’s time to change this perspective.
Most loan borrowers opt for teaser rates especially in the home loan sector. So, teaser rates usually help the builders and not the borrowers. Since, most home loan providers provide the loan amount on a construction-linked period, the duration of enjoying a lower interest rate payment may already be lapsed by the time you came onto your full EMI payment.
But, do not get dis-heartened for the inability of enjoying lower interest rate period as you always have the opportunity to strike a deal with your loan provider to provide you lower interest rate over the base rate. Target over 1-2% over the base rate, so that you can analyze the EMI payments depending on your income. Try to find out the best deals the market has to offer, or you can even log onto bankbazaar.com where we provide you the best deals in home loans.