Home loans enable people to realize their long-held ambition of owning a home. To fund your loan, you can now go to a bank or a housing financing firm. If you locate a lender with a home loan with a lower interest rate that allows you to save more money, you may easily transfer lenders. If you’re thinking about switching your house loan to a different lender, there are five things to keep in mind.
Make sure the remaining payback duration is more than five years.
If you want to transfer your house loan to another lender, you should do it while the term of your payments is still longer than five years. Most consumers shift their loans when they locate another lender with a home loan with lower interest rates or when the RBI lowers home loan interest rates. Switching lenders when you have a duration of fewer than five years, on the other hand, is not cost-effective since you will have to pay the loan processing costs and other incidental charges again when you move lenders. In addition, longer payback periods allow you to take advantage of lower interest rates. As a result, if you must transfer lenders, do it as soon as feasible rather than waiting until the conclusion of your loan payback period.
Make certain you’ve never missed an EMI payment.
If you want to look into the prospect of moving your house loan to a lender with a home loan with lower interest rates, make sure you never miss an EMI payment. It is critical to make your EMI payments on time since lenders will not consider persons who have a history of late EMI payments. When you ask for a loan transfer, the new lender will contact your current lender, review your loan account statement, and determine whether or not to approve your loan transfer request based on your current repayment history.
Make sure you have all of the property-specific paperwork in order.
Home loans are high-value loans that rely heavily on paperwork. To transfer your loan to a new lender, make sure you have all of your personal and property-specific paperwork on hand to avoid any delays in the process. You must meet with your previous lender and obtain a statement saying that all property paperwork will be sent to your new lender within a certain time limit. Remember that the new lender will demand these papers as security until the loan is fully repaid, so make sure you’ve conveyed their expectations to the previous lender correctly.
Make sure you don’t have to pay any penalty for paying early.
If you want to pay off your loan early, the RBI has made it illegal for banks and home finance businesses to charge prepayment penalties. After a certain number of payback years, lenders may not impose a penalty on both variable-rate and fixed-rate loans. When you transfer a loan, however, the new lender may indicate that the same penalties apply to those who transfer the loan. The new lender may not take into account the whole payback period when transferring the loan; just the new loan term will be considered. As a result, you must ensure that you do not incur any prepayment penalties if you return your loan before the end of the term.
Ensure that the loan processing fees are negotiated.
As previously stated, when you take out a loan for the first time, lenders impose a home loan processing fee. When you move your loan to a new lender, the new lender will charge you a loan processing fee. By haggling with your new lender, you can easily have this cost removed. You can simply receive a waiver on the loan processing costs if you’ve paid your EMIs on time. When you pick the balance transfer option, however, certain lenders do not impose processing costs. The State Bank of India, for example, has just removed the processing cost for balance transfer loans.
Last but not least,
A home loan balance transfer is a fantastic choice for lowering the amount of interest you pay on your mortgage. It can save you a lot of money, especially if you’re paying off a high-interest loan. However, in order to reap the benefits of this facility, you must keep an eye on home loan interest rates, particularly if you’ve chosen long-term loans.