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Get Youself Informed Before Balance Transfer On Home Loan

Balance Transfer on Home Loan culminates benefits to borrowers but can be alarming if you don’t explore the flip side of it, such as Financial Benefits of Home Loan Transfer, Remaining Home Loan tenure, Home Loan Transfer Cost, Processing Fees & other allied charges, Terms and Conditions governing Home loan,etc. Here, the write up provides you an insightful information on all the above points & issues es associated with Balance Transfer on Home Loan.

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What is Balance Transfer on Home loan?

‘Balance Transfer on Home Loan’ as the term implies is the transfer of Home Loan Principal Amount from one bank to another bank for a lower rate of interest. Suppose, you are not happy with your existing home loan interest rates from your bank or your bank is not ready to lower the interest rates on your existing home loan or not ready to extend your Home Loan Tenure & reduce the amount of your EMI, then there is an alternative to make you smile.

Nowadays most people are availing the Balance transfer on Home Loan option to take the benefit of lower interest rates from other banks of financial institutions. However, on the basis of good credit history & repayment track record, you can also re-negotiate with your current lender to offer you better interest rates on your existing home loan.

Process of Balance Transfer on Home Loan

All most all the banks follow the same procedures on home loan transfer but, some banks and financial institutions might have extra parameters to issue the same. Some steps follows:

  • Submit an application requesting your bank to transfer your current home loan to the other bank.

  • On the basis of submission , the bank will issue you a consent letter or NOC & also mentioning your all outstanding amount.

  • You need to submit all the documents to the bank where you proposed to transfer your home loan.

  • Thereafter, the new lender sanctions the loan amount to your previous lender for the closure of your account.

  • Once all the formalities and transactions are done, your old lender will handover your property papers to the new lender & all your post-dated cheques or ECS will be strike out.

  • The new lender will treat your Home Loan as fresh and you have to follow all the procedures again, viz. Credit Appraisals, Legal Verification of the Property Credentials, etc.

  • Processing charges will also be charged and it varies according banks but it ranges somewhere between 0.5% to 1.5% of the loan amount.

Is the interest rate or a lesser EMI the only consideration?

Banks’ and Financial Institutions’ low interest rates on home loan can lure you to transfer your home loan balance from your existing bank to another bank. Banks and Financial Institutions are constantly putting their effort to attract customers and expand their business. You need to carry out a cost-effective analysis on your Home loan Transfer.

SIGNIFICANT POINTS SHOULD BE TAKEN INTO ACCOUNT BEFORE HOME LOAN TRANSFER

  • Balance Transfer on Home Loan works out best if you are in the early tenure of your home loan. Home loan transfer will never be beneficial if you transfer your loan after 3-5 years of your home loan re-payment, after that it will incur a loss on you.

  • It is advisable to study the processing fees and other home loan transfer costs of the new lender minutely. You should always take into consideration the processing fees, legal charges, valuation fees, stamp duty and other charges which the new bank is going to charge and accordingly compare it with the reduced interest rate.

  • Banks also have their own guidelines for processing fees and other charges. Check out properly if banks charges the processing fees on floating interest rate ot fixed interest rate.

  • Often banks offer Home loan transfer on Teaser Loan scheme but never get tempted with this. You should keep in mind that the teaser rate of interest on Home Loan is for a limited period of time and banks will adjust everything in due course of time.

  • Other attached frills on offer should be always avoided. Free credit card and personal accident insurance tops the list of offers on Balance Transfer on Home loan.

  • Home Loan transfer is a time consuming and lengthy process. So, get your bank statements transfer from your current lender to new lender within a stipulated time.

  • Finally, before taking final decision on home loan transfer it is advisable to have a talk with your existing bank and negotiate as much as you can. Even they also don’t want to loose their customers.