By Mashum Mollah
Home Loans are a necessity of sorts. You’ve probably found yourself in the middle of your Home Loan repayment when you discovered a new scheme from a different lender that you would like to shift to. This might not have been possible before, but now with Home Loan Balance Transfer facilities, this is possible. And this might also be a great idea to reduce your interest rate on repayment.
What exactly is a Home Loan Transfer? How does it work? Here’s everything you need to know and how you can go about with your own Home Loan Balance Transfer process and avail the benefits of a lower rate of interest.
What is Home Loan Transfer?
You might know it as refinancing Home Loan, but balance transfer is the process that involves one paying off their Home Loan, with the help of another loan. What borrowers intend to do is transfer the balance of the loan, and reduce their overall interest payout.
People opt for a loan transfer when they’re getting a lower interest rate from a different bank or NBFC. If you find lower interest rate on Home Loan Balance Transfer than your current Home Loan interest rate and you still have a lot of interest amount to be paid, then it’s best to opt for a transfer.
Another time you should consider a loan transfer is if you come across an attractive offer, with an even better a Home Top Up Loan option. Let’s take a look at how this happens.
The Home Loan Transfer Process :
The first step to a Home Loan transfer is getting a consent letter from your current lender. This will come in the form of the loan documents you have submitted to your lender. Once you have these at hand, the process is as simple as filling out a form, and submitting all of these documents to the new lender. Once that is approved, your new lender will ensure all your repayments happen through your new loan account.
Sounds simple enough. Here’s a step-by-step run through:
- Start by calculating the savings on a Home Loan transfer. The process needs to be worth the savings.
- Request your present lender for the documents required by the new lender for the purpose of refinancing the loan
- Once you have possession of the documents, along with the outstanding loan amount repayment, take the same to the new lender.
- Once your application is approved by the new lender, they will then clear the outstanding amount to your previous lender.
- This completes the repayment of your Home Loan. The repayment account is closed and you have successfully finished all repayment.
- The previous lender hands over all property documents to your new lender. All your transaction with the old lender is now complete.
- All your future repayments go to the new lender, at a new rate of interest.
What to look for in a Home Loan Transfer Scheme :
Don’t forget that the purpose of a Home Loan transfer deal is that you pay a lower interest in total. This will only happen if you pick a lender offering lower Home Loan interest rates. Apart from that, you’ll also have to look at the Home Loan transfer charges, processing fees, and all other charges.
Most commercial banks and NBFCs have Home Loan repayment facilities, with different rates of interest. Look for the ones that offer no hidden schemes and nil foreclosure charges. Look for the best available schemes before making a choice.
When applying for a Home Loan, make sure to consider the present market state of Home Loan interest rates. Take a call on whether you want fixed interest rates or floating interest rates.
Your transfer loan should make repayments easier for you, besides also giving you a lower rate of interest. Let’s take a look at how it works:
Suppose you have a taken a Home Loan worth amount Rs. 20 lakhs in the year 2015 at an interest rate of 10%. You still have 20 years to repay the loan. If you opt for a Balance Transfer at 8.85% rate of interest, you will make a saving of Rs. 1,50,840 and that isn’t a low amount.
If you’re considering Home Loan transfer, then don’t delay. Check for the best available offers and transfer your Home Loan today to make great savings.
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