Home loans are low-interest-rate loans that considerably ease the financial burden of buying a home. Home loans are long-tenor loans and inevitably include high loan amounts; the LTV ratio can extend up to 75%. Securing low home loan interest rates is crucial to ensure affordable EMIs and low cost of borrowing funds. Unfortunately, Sometimes, in their eagerness to fulfil their dream of homeownership, home loan applicants agree to loan terms and conditions that they shouldn’t have agreed to in the first place. In this case, home loan balance transfers are a smart option.
A home loan transfer refers to transferring the remaining balance on one’s home finance to another lender willing to refinance the loan on better loan terms and conditions. Typically, borrowers opt for this facility to benefit from a lower home loan interest rate. However, sometimes, individuals also choose to go for the home loan balance transfer facility to benefit from the option of a top-up loan or when they want to negotiate on the interest rate type or other loan terms.
If you are considering a home loan balance transfer, you must gather all the required documents for home loan transfers. More importantly, you must also read about the home loan transfer process extensively to gather relevant information and be able to navigate the process without any hiccups.
Home Loan Transfer Process Explained
Research Lenders and Check If You Meet the Home Loan Transfer Eligibility Requirements
If you are planning to apply for a home loan balance transfer, one of the first things you must do is research lenders. It is important to reach out to at least a few banks and NBFCs and understand the home loan balance transfer interest rate you may be eligible for. Discuss the other loan terms and conditions you have in your mind. This is important to find the right home loan partner for the next leg of your home loan journey. Further, once you know the lender you wish to go ahead with, check and make sure you meet the home loan balance transfer qualifying criteria. All lenders elaborate on the qualifying criteria for this facility on their website. So, finding information on this topic is never challenging.
Inform Your Current Lender
The next step in the process is informing your current lender of your intent. This can be done by writing a letter or visiting the nearest branch. To initiate the home loan balance transfer process and carry it forward, you will need to submit certain documents, which only your current lender can provide. This includes your repayment history and the papers you submitted to them at the time of loan approval. Home loan borrowers who had availed of the loan at fixed interest rates are often asked to pay a foreclosure penalty by financial institutions, which can negatively impact the cost-effectiveness of the transfer. Home loan transfer applicants must always use the home loan balance transfer calculator to assess whether a loan transfer would indeed prove profitable for them.
Initiate the Home Loan Balance Transfer Process
Once you receive a nod from your current lender, go to your preferred lender’s website and fill out the home loan balance transfer application form to initiate the transfer. Submit all the required documents and negotiate on the loan terms and conditions. Carefully go through the loan agreement given to you by your new lender. Sign only if you are fully satisfied. Once you have signed the new home loan offer letter, your current lender will pay off your old one. This part of the process can take from a few days to a few weeks, depending on the lender you have chosen. Once your new lender has paid off your current lender, your current home loan account will be considered closed. You will now begin paying your home loan EMI to your new lender.
Conclusion
The home loan balance transfer process is an effective way to reduce debt or shift to more profitable loan terms and conditions. By transferring your home loan to another lender willing to refinance it at a lower interest rate, you can enhance the loan’s affordability while also reducing the total cost of borrowing funds. However, to make the most of the facility, it is crucial to research lenders, opt for the facility at the right time, and take a
