Important Things to Consider before Transferring Your Home Loan
Do you think that you are paying a home loan with high interest rates and charges? Is high EMI on your home loan has become a burden on your monthly income? Most individuals who feel the interest is too high or the EMI is too much to afford, make use of the home loan transfer option and switch to a different lender. They opt for refinancing or a home loan transfer to avail lower interest rates available in the market, thus making the EMIs affordable.
Are You Eligible For Transferring Home Loan?
Before you start looking for new lenders to transfer your home loan and enjoy affordable interest rates on your existing loan, you should carefully read the terms and conditions of provided by your current lender. Certain banks and financial institutions have a clause which prevents you from transferring your home loan to another lender. So, if your lender does have a clause which prevents you from the same then you are only left with one option i.e. to re-negotiate your home loan interest rate with your current lender.
Check with Your Bank to know if they will lower the Home Loan Interest Rate
If you think that you are stuck with a bank of financial institution that charges high interest rates on your home loan then you can opt to transfer your home loan to another bank or financial institution that charges a lower rate of interest. But, before opting for a transfer of your home loan, you should have a discussion with your current bank or financial institution on re-negotiating the interest rates on your home loan based on your credit history and good repayment track record etc. If your lender disagrees on re-negotiating interest rates on your home loan, then you should switch to another lender that offers affordable interest rates on home loan.
Some banks might be ready to lower the interest rates or EMI with the interest of not losing customers. Considering this option will help you save a lot of time, money and effort. There will be no need to run around through new formalities and procedures. Thus it is important to have a clean payment track record of EMIs and interest.
Process for Home Loan Transfer
- Close the Deal with your Existing Bank: When you want to make a home loan transfer, then it becomes necessary for you to get approval from the existing bank or financial institution. You need to submit a letter to your 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.
- Provide the letter to the New Lender: Give the NOC (No Objection Certificate) to the new bank or financial institution to approve your loan amount to the old lender for an account closure.
- Transfer Documents: After 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 careful at this step to ensure that you do not leave any document from being transferred.
Important Things to Consider before Transferring your Home Loan
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 think of transferring your home loan to another lender, it becomes necessary for you to check the interest rates offered by various lenders available in the market.
- Ensure that you switch early in the tenure: Transferring your home loan in the second half of your loan tenure is worthless as most of your interest led EMI payments have already been made. If you plan to transfer your home loan then ensure that you do the same 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.
- Know more about the Lender: There are various banks and financial institutions that are competing in the market and are ready to lend you money. Each of these lenders has made a certain reputation in the market. You should be aware of your chosen lender’s service. So, it is always advisable to go through reviews and testimonials on several platforms as choosing a trustworthy lender is a must.
- Check how much will the transfer of loan will cost you: Transferring your home loan can come with several costs such as processing fee, application fee, prepayment charges in some cases and legal fee. In most of the cases banks will charge transferring fees which will be charged by the existing lender as well as the new lender where loan has to be transferred. You should calculate if paying additional fee is worth the transfer. You should always check if the total costs involved in your transfer are less than the interest amount that you will save by making the transfer or not.
- Read the Terms and Conditions Carefully: It is crucial to be aware that once you transfer your home loan to a new lender, you will be bound to their terms and conditions. While low interest rates may seem eye-catching, it is essential to be aware of all the terms and conditions of your new lender. Go through all the terms and conditions thoroughly to make sure you benefit by transferring your home loan to a new lender.
Due to the above mentioned reasons, it is important to take time and decide whether to transfer your home loan to a new lender or not. Always think thoroughly and consider the advantages and disadvantages of going through the whole process. Unless this brings long term benefits, do not opt for the transfer of your home loan.