Points to Remember for Home Loan Balance Transfer Process

Financial lenders across the country have been consistently reducing their interest rate on home loans recently. This has encouraged many borrowers to shift from their existing lenders to alternate financiers. 

Calculations indicate that even a mere difference of 0.5% in the interest rates can amount to considerable savings. Borrowers can opt to shift their remaining loan to another lender that offers a comparatively cheaper interest rate than the existing one. This process is known as home loan balance transfer.

With a home loan transfer, one can easily reduce the quantum of the monthly installments. Additionally, He/she can also ask for a revised repayment tenor and enjoy other offers and benefits.

5 things to consider before opting for a home loan balance transfer

Home loan transfer is a highly beneficial facility for borrowers. However, they must learn everything about a home loan balance transfer before choosing to proceed with it. 

Here are some pointers that can help out in this regard – 

• Negotiate with the existing lender

Before you rush to transfer your home loan, try to negotiate the interest rate with your current financier. If you have been a loyal customer, chances are your lender might pay heed to your request. 

This way, you can reduce the home loan interest rate and the subsequent EMI burden. 

You can check how much you would save through a home loan interest rate calculator.

• Look out for associated charges

When you change your home loan financier, the process usually requires you to incur certain fees and charges. These include application fees, processing charges, administration fees, inspection fees and many more. 

These charges can be levied by both the existing as well as the new lender. One must make sure that these do not exceed the amount he/she will save. 

• Healthy credit score

Maintaining a healthy credit score is extremely crucial for transferring your home loan. Without a strong credit score, one simply would not be eligible for a home loan transfer. Your new lender will examine your credit score before taking up your home loan transfer application. 

• Read the terms and conditions carefully

Before choosing a new financier, it is essential to go through all the conditions associated with the product they are offering. A lower interest rate can be quite tempting, but one must be sure of what exactly the new lender has to offer. 

By knowing the terms and conditions, one can avoid any hidden charges levied by the new lender.

• Duration of the remaining repayment tenor

Most financial experts suggest that you shouldn’t change your lender if your repayment tenor is almost nearing an end. Ideally, you can opt for a home loan balance transfer when your remaining tenor exceeds five years. 

With a longer repayment tenor, one can avail of the advantages of lower interest rates. 

Most HFCs today offer the facility of transferring home loan balances from an existing financier. They offer reduced interest rates, minimal documentation, quick approval, and various pre-approved offers and benefits.

These offers are also available on various financial products like home loans and loans against property. You can check your pre-approved offer by simply providing some of your basic contact details. 

This home loan balance transfer process involves a home loan takeover. Here, the new financier pays off the loan balance to the previous lender. Thereafter, the borrower begins paying the monthly installment amount to the new lender.

Simply put, a home loan transfer can effectively help to save money. To shift to a new loan financier smoothly, one must make sure to keep the above-mentioned pointers in mind.