Transferring your current outstanding home loan debt from one lender to another is known as a home loan balance transfer. Borrowers who want to switch to longer loan terms, lower interest rates, or a combination of both can transfer their home loan balances.
Motives for Selecting a Balance Transfer for Your Home Loan
Borrowers choose for home loan balance transfers when they want to take advantage of improved terms, such as reduced interest rates and no prepayment penalties. In order to turn off a loan, you must pay off its remai ning sum and apply for a new loan from a different lender. After that, the borrower begins making EMI payments to the new lender. The amount saved depends on a number of factors, including the amount owed, the length of the loan, interest rate differential, and other costs.
Examine Your Credit Record
Please be sure to verify your credit history before deciding to hunt for a new lender, comprehend the procedure, etc. Verify that all of your information is current and accurate. Please refrain from looking for a house loan balance transfer if you have skipped payments, defaulted, etc. and your credit rating has suffered. The likelihood of being turned down will increase when the new lender reviews your credit history. You are not permitted to reapply to the same lender for six months after receiving a rejection.
It is best to address your credit profile issues before searching for a new lender. However, if you have been a really good borrower, then feel free to find another lender. Then, in that instance:
Things to Consider Prior to Selecting a Balance Transfer for Your Home Loan
Interest Rate Settlement
It is advisable that you initially attempt to bargain with your current lender for more favourable terms. There’s a fair probability the bank would want to keep you on if you’ve been a good borrower and have established various ties with them. In certain situations, your chances of obtaining a better interest rate are increased. This is great since you won’t have to pay application, processing, transfer, foreclosure, prepayment, or other costs, which will reduce your monthly interest load.
Above all, make sure the new lender is really providing the lower rates that were promised, or if there are any additional fees. Be wary of marketing gimmicks, limited time offers, etc. Please request the offers that apply to you in writing so that you can make sure there are no typos or other errors.
Determine the True Cost of the Loan Transfer
There are many fees associated with transferring your home loan balance, including application and processing fees. The majority of banks impose transfer fees, however you have the option to ask for these to be waived. Once you’ve agreed to the reduced interest rate offer, find out how much the balance transfer will actually cost. You won’t know if the transfer is worthwhile after doing a thorough calculation and paying all associated costs.
Verify the New Lender’s Credentials
What are their pre-disbursal policies, how long does it take to get money before it actually happens, etc.? Do they require guarantors or co-borrowers? quantity of papers, branch network quality, etc. Finally, kindly review the grievance redressal procedure that the new lender has implemented. What kind of assistance will you receive if your current borrower makes any delays, etc.? What is the hierarchy used to address problems, etc., if any arise?
In summary
Being flexible and transferring loans from higher to better rates is advised, but it’s also critical to ascertain what the “real costs” actually are. Transferring to better lenders is usually preferable (cooperative banks to NBFC/NBFCs to banks, for example). Make careful to collect all originals, issue NOCs, and update your credit profile as you end the previous connection. Concurrently, only accept the new lender’s offer once you have received a written copy of all the terms and conditions.
