HDFC encourages customers for conversion option

HDFC, India's biggest mortgage company is encouraging its borrowers to make use of the ‘conversion option' of switching over to the new floating rate. The company is going to charge regular conversion fee of 0.5% of the outstanding amount as a one-time fee.

HDFC's floating rates vary between 10.5 and 11%, depending on the amount. For customers whose loans become floating from April 1, the rates could be in the 11.5-12 per cent range, due to higher spreads over the RPLR (retail prime lending rate). The company is expected to charge lower conversion fee this time as a huge chunk of its borrowers are facing this problem. 

The company has sent letters to customers who had taken loans under the dual rate scheme, informing them that their rates will increase from April 1 because of the product.