There is a growing demand among borrowers to switch to another lender and transfer their home loan, with public sector commercial lenders asking around 6.7 per cent – 7% upwards for home loans. The outstanding loan amount is transferred from the old lender to a new financial institution in a home loan transfer. This type of transfer is frequently done to take advantage of decreasing home loan interest rates, which lowers the total cost of borrowing.
Factors to be considered before opting for a home loan transfer
There are various factors to be considered before opting for a home loan balance transfer process, some of which are as follows:
- Evaluate CIBIL score-
The borrower’s credit score will tell them whether or not they are eligible for a balance transfer. The borrower’s credit rating will be harmed if they have been inconsistent in repaying credit and EMIs on time. If the applicant has a bad credit score, they will be less qualified for a home loan transfer with a new lender.
- Balance transfer charges-
Before deciding on a balance transfer, keep in mind that there are fees associated with transferring the home loan. Processing, application, administration and inspection fees are parts of the home loan balance transfer procedure. In addition, there will be charges that the existing and prospective lender will ask the borrower for. The applicant can use any home loan balance transfer calculator to estimate the cost of the process.
- Read the fine print-
After selecting a lender for the house loan transfer, make sure the borrower reads all of the terms and conditions before proceeding. The applicant can avoid any hidden fees this way.
- Check for top-up loan -
Once considering the home loan transfer option, look for the availability of a top up loan which ensures the higher amount of value that the new lender may offer at a rate similar to the home loan.
- The stage of home loan tenure-
Many experts recommend moving the amount of a house loan early in the term. This is because the borrower’s EMIs mostly cover the interest portion of their loan during the first 4 to 5 years. Therefore, transferring home loan balance in the middle or end of their term would not benefit the applicant.
- Ensure that the borrower has all necessary documents-
The applicant must submit a No Objection Certificate (NOC) or a Consent Letter if they choose to transfer their home loan balance. It is necessary for them to obtain it from their present lender and submit it to the new one. After that, the bank will approve the loan amount to the previous creditor.
Keeping these tips in mind, the borrower should proceed to check their pre-approved offer for a property home loan refinance from various Indian companies offering housing loans. By entering a few basic details, the applicant can view deals that are customized for them and enjoy instant, hassle-free approval.
Read Also: Points to Consider Before Opting for Home Loan Balance Transfer
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