Lowered interest rates and a dizzying array of offers are some of the claims, banks and other NBFCs offer to tempt borrowers to make the switch. What’s not to love here? Highly tempting, right, especially when you can cut down on the EMIs you pay every month.
Pause a bit, before you jump ahead
But, is it advisable to switch your housing loan from one provider to another, midway during repayment? Do the benefits outweigh the time and effort spent on it?
You can find the list of top factors that you must consider while making the switch. These factors will help you make the right decision. Let’s get started!
- Peruse the Terms and Conditions carefully
Several banks today offer slashed interest rates for a particular period and revert to the original rates at the end of promotions. So, make sure that the interest rate is for the entire tenure of your loan and not for a short sale period. Also, find out the exact interest you will be charged and how it’ll vary over time.
- Don’t forget to factor in the costs of the Transfer
While deciding on whether to transfer your existing home loan, make sure to calculate the additional expenses you will incur by making the switch. Ensure that the additional costs like processing charges, prepayment penalties do not overweigh the advantages.
- Don’t be lured in by Additional Discounts
When you make the switch, banks offer you additional benefits like Personal Accident Insurance or a free credit card. Before availing any of these “so claimed free offers,” check out if there are any hidden costs involved. In most cases, there are hidden charges, and in reality, you won’t benefit from any of these additional discounts.
So, do not subscribe to any of these freebies unless and until you require them.
- Always Read the Fine Print
Make it a point to read the entire loan transfer document completely before signing on the dotted lines. If you aren’t sure of any of the technical jargon, don’t hesitate to clarify it with your banking officer. Understanding all the terms and conditions helps you make an informed decision.
- You will no longer benefit from Additional Amenities at your Home Loan Center
Generally, when you avail a home loan at any bank, they require you to open a savings account with them. The EMI for your home loan is deducted from this account. You would already have a savings account with your existing home loan provider. This will help you enjoy additional benefits at the bank like a free locker or a free debit card and so on.
Consider whether it’s worth to forsake these soft benefits just for reduced EMI while making the home loan transfer.
To Switch or Not?
There is no standard answer to this query. You have to consider all these factors, analyze your situation, the pros, and cons of both and then take an informed decision. If you’re confused, you can avail the help of a personal financial advisor to help you in making the right choice.