Things to Note Before Transferring your Home Loan

Most individuals tend to opt for refinancing or a home loan transfer to avail lower interest rates available in the market. Usually, any borrower who is about two or more years into the loan tenure does not get the opportunity of getting the benefit of falling interest rates in the market. The Reserve Bank of India is also asking the lenders to pass on the benefit of lower interest rates to the existing borrowers.

If any individual thinks that he is stuck with a bank or financial institution, which charges high interest rates on a home loan then he can opt to transfer his home loan to a bank or financial institution that charges a lower rate of interest. Before opting for transfer of home loan, such individuals can also discuss with their current bank or financial institution on re-negotiating the interest rates based on the good repayment track record, etc. If the bank denies re-negotiation, then they could shift to a bank that offers a home loan at a lower interest rate.

Process for Home Loan Transfer

1. Close the Deal with the Existing Bank: When you want to make a home loan transfer, then it becomes essential to get approval from the existing bank or financial institution. You need to submit a letter to existing bank to request a home loan transfer. Bank will send you a consent letter or a No Objection Certificate (NOC) along with a statement mentioning the outstanding amount.
2. Provide the letter to the New Lender: Give the NOC to the new bank or financial institution to approve your loan amount to the old lender for an account closure.
3. Transfer Documents: Post the completion of the transaction, your property documents will be handed over to the new lender. The leftover post-dated cheques are cancelled. Also, stay cautious at this step to ensure that you do not leave any document from being transferred.

Things to Consider Before Home Loan Transfer

Following are the top 5 things that you need to consider before you opt for a home loan transfer to make sure you get the best deal.

• Check the market for affordable interest rates: Before you opt to transfer your home loan to another lender, it becomes essential for you to check the interest rates offered by various lenders in the market. You should also check the type of interest system the lender is based on and whether they are floating or fixed.
• Study the lender’s profile: There are various banks and financial institutions that are competing in the market and are ready to lend you money. Each of these banks and financial institutions has made a certain reputation in the field. You should be aware of your chosen lender’s service. So, go through reviews and testimonials on several platforms as choosing a trustworthy lender is a must.
• Check for charges and costs: A home loan balance transfer can come with numerous costs such as processing fee, application fee, legal fee and even prepayment charges concerning your new and existing lender. Carefully understand all the costs you have to pay and ask your lenders all questions you have in mind about the costs. Make sure you negotiate for low fees and penalties.
• Read the Terms and Conditions Carefully: Low interest rates may seem attractive, but it is important to be aware of all the terms and conditions of your new lender. Go through the documents containing the terms and condition provided by the bank and check if it contains any hidden charges or any important condition you are unaware of.
• Ensure that you switch early in the tenure: Balance transfer in the second half of the tenure is worthless as most of your interest led EMI payments have already been made. If you plan to transfer home loan then ensure that you do in the earlier half of the tenure. This will benefit you as you will be paying lower home loan interest rate when you make a home loan transfer.