Do new customers get a lower home loan rate than existing customers?

Why the gap exists

On the day your loan was sanctioned, your lender set your rate as a benchmark plus a margin for you. Later, to win new borrowers, lenders may offer a smaller margin. That offer is for new loans. Your loan keeps its old margin unless you ask for a change.

What a 1-point gap costs

What the rules say

• RBI lets banks cut the margin on your loan earlier than the usual three years to keep you as a customer. It is the bank's choice, not a right you can demand.
• If your loan is a floating-rate loan with a bank and you are allowed to prepay without charge, RBI's rule lets you ask to move to the bank's repo-linked rate, paying only reasonable administrative or legal costs. This is for banks, not housing finance companies. The fees in step 4 below are for asking for a lower margin on the loan you keep.
• In short: you can always ask, and the lender decides. Ask in writing so that you get an answer in writing.

How to ask

1. Find your loan number, your current rate and your end date on your latest statement.
2. Note the rate your lender publishes for new loans today. Our rates page lists it for each lender we track.
3. Write to your lender by email, through its app or at the branch: "I see new customers are offered a lower rate. What do I need to do to get it on my existing loan? Please tell me the new rate and every fee in writing."
4. Compare the fee with your yearly saving before you say yes. At the 14 lenders we track, the fee on a ₹50 lakh loan runs from ₹3,540 to ₹29,500 with GST. Of these, 5 publish the amount themselves; the rest are our estimates.
5. If there is no reply in 30 days, complain to the lender's grievance officer. For a bank the next step is the RBI Ombudsman; for a housing finance company it is the National Housing Bank (grids.nhbonline.org.in). Neither decides a lender's commercial choices, such as the margin it charges.