A home loan often lasts for 20 years or even more. A home is generally the biggest investment we ever make in our lives and thus, the interest that you pay on the borrowed amount is of great concern too.
Banks often change the interest rate on home loans and there can sometimes be a significant difference between the interests charged on home loan by two different banks. If you are already repaying the loan and you find a bank offering loan at a cheaper interest rate, you can transfer the loan from the current lender to the other lender who is offering the loan at a cheaper rate. This process is known has home loan transfer, balance transfer or refinancing.
However, if you have taken a home loan at a fixed interest rate and have already paid the EMIs for 2 years or more, a balance transfer would hardly be of any help to you. This is because a major part of the interest on the loan is already paid in the first couple of years. But if you have been repaying the loan for a few months and are finding a better deal, a balance transfer can save you a lot of money.
Home Loan Transfer Process
To initiate the transfer process, you need to write a letter to your current lender requesting the transfer. The lender will then give you a NOC (No Objection Certificate) or a consent letter and a statement of the outstanding amount. Give this letter and statement to the new lender who will transfer the outstanding loan amount to the old lender to close the account. When the old lender receives the funds, they will then give the property documents to the new lender.
Applying for a Home Loan Again
To take advantage of best home loans through a balance transfer, you need to again go through the entire process of applying for a new loan. This will involve verification of the property documents, credit appraisal, and technical evaluation. The new lender will only approve your application when they are satisfied with their verification.
Additional Charges
There are some banks which charge an exit fee for such transfers. This exit fee can range from 2% to 5% of the loan amount. Also, the new lender might require you to pay a processing fee of 0.5% to 1% of the loan amount. However, a lot of lenders waive this processing fee, especially if you apply for a home loan online.
These are some of the most important things that you should know about home loan transfer. If you are looking for best home loans for such transfers, you can search for a home loan online as it is now much easier to find excellent deals on the internet. Moreover, you can also use the online home loan calculator to know in detail about the EMI you’d be required to pay when you take the loan.
