Things You Should Know Before Transferring Your Home Loan

Home loan is one of the popular categories of the loan under which banks lend their money. Home loan transfer has become popular because different banks lend money at different rates, depending on the type of borrower and the risk involved in the entire transaction. To maintain healthy competition, banks generally lend at a similar interest rate as their counterparts. The variable that depends on the borrower varies with the borrower’s credit score. 

People generally look for the best interest rate in the market However, during repayment, it may so happen that the interest rate charged by the parent bank becomes higher than that available in the market. In that case, banks generally allow a loan transfer option to minimize risk and maintain the borrower’s trust.

What To Do Before a Transfer?

  1. Negotiate with the existing bank – First, visit the current lender and demand a lower interest rate on your current loan. Let them know the rate offered by other lenders to you and prove your loyalty to the bank. Getting it done with the current bank will save you from a lot of hassle and bank paper procedures. If they can assure you that their interest rate will stabilize and come in sync with the market, stick to the bank.
  2. Check your credit score– The new bank will have no details regarding your credit history. In that case, they will resort to your credit score and check the financial viability of giving you the loan at a lower interest rate.
  3. Calculate the associated cost– The entire process of home loan change will incur related activities that involve dissociating the loan papers from the former bank and bringing it into the limelight of the latter bank. This process will include processing charges, application costs, and implicit manpower costs. So before venturing into this task, consider the possibility of incurring the above price. If only the combined cost is less than the extra interest paid in the former bank, then only go for such a task.
  4. Read the terms of change of loan and that of the new bank- You should be properly aware of the new bank’s terms and conditions to know about any hidden charges and not regret changing the home loan at a later stage of time. Unknown terms can also hinder the loan repayment schedule at a later stage of time.
  5. Recommendations from experts– The situation might differ depending on the customers. In such cases, expert advice should be considered. It is quite an established fact among all experts that one should not consider home loan change if they are at the end of the loan repayment schedule or when they plan to sell their home in the future. Such an act can cause additional financial damage to customers and make it difficult to pay back the loan that is being taken. 

Eligibility

The eligibility criteria for availing of any bank loan will be enlisted in the terms and conditions of the new bank. The customer must have serviced the home loan installments concerned at mutually agreed intervals. The borrower must also have valid and verifiable documents that can assure the ownership of the home. You must also get a sanction letter from the previous bank and secure interim period security in joint discussion with the banks involved in the transaction.

How to Make a Home Loan Transfer?

With the digital world, most banks today provide an online transfer option that makes the process easy, transparent and accessible. You must fill out some information and upload the necessary documents to prove your eligibility. Once the documents are verified by the officials of the prospective bank and through contact with the previous bank, your transfer request will be approved, and you are good to go for the process. Hence this entire home loan process can be carried out in the comfort of your home.

Today, people are becoming more financially independent and vigilant. They want to skip the hassle of going to the bank. So, home loan transfer has become increasingly popular in a dynamic economy like ours, where people go for the cheapest rate possible.

Source: Things You Should Know Before Transferring Your Home Loan

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