A home loan is crucial to building your house as real estate prices are skyrocketing each day. Therefore, one must be strategic about how and where their hard-earned money is going.
Often when people build their house, they are compelled to take huge loans. However tactical they act, chances are at some point they will find their home loan becoming a burden for them. In such a scenario, they might want to shift their loan to another lending institution, one that is offering lower interest rates.
This is where the concept of home loan balance transfer comes into play. The process of loan transfer involves switching your loan from one lender to another. Regardless of the reasons, if you fulfil some conditions, you can transfer your loan to another institution without any hassles.
In this article, we will elaborate on why and how you can transfer your housing loan.
Why Do People Want to Transfer Their Housing Loan?
There can be various reasons why you would want to transfer your housing loan to a different lender. While borrowing your loan, you must have considered various factors beforehand, such as the rate of interest of the bank, the period of EMI pay-outs, and the institution’s user-friendly terms and conditions. If you become unhappy with any of these things that you considered to be in your favour while taking a home loan, transferring your loan may seem like the best choice.
In this regard, you should transfer your loan if you think you are paying a high rate of interest and your original lender is unwilling to negotiate. You may also want to switch lenders if your current lender has set rigid terms and conditions or is pushing unnecessary charges and add-ons. Further, if your current lender has been offering poor customer service and relations management or if another lender is offering you much lower interest rates, switching lenders would make a lot of sense for you.
Before you make your mind for Home Loan Transfer
We suggest you think of a home loan transfer only if you are in the early tenor of your loan. The reason being that the interest component embedded within your monthly EMI is much higher. Thus, when you opt for a lower interest rate, you will be able to reduce home loan emi amounts significantly. The early period is best to draw out benefits from the dropping interest rates.
You must also remember the following things before considering your housing loan transfer.
– You will have to pay some amount for the loan transfer.
– You may have to pay processing fees to your new lender.
– You must have a good credit score.
– You should have paid 12 instalments to your current lender.
How you can transfer your loan to a new lender?
Now if you think you fulfil this home loan transfer eligibility criteria, you can proceed with your outstanding home loan balance transfer by following the simple steps detailed below (make sure you don’t miss out on any of the steps as each subsequent step builds upon itself).
Submit an Application
You need to inform your current lender via an application that you are seeking a home loan balance transfer. In this application, you will need to enumerate reasons why you want to do so. This application might be in the format of a letter, or a form.
Obtain the NOC
If your transfer request is approved, your current lender will provide you with a No Objection Certificate (NOC), or a consent letter.
This NOC is important as it depicts approval from the current lender that they are ready to entertain your request. Your new lender would also ask for NOC first before proceeding with your request.
Collect relevant documents
After contacting the new lender with NOC in hand, you need to put your paperwork in order. Your new lender may ask for the following documents:
NOC (No objection certificate)
Loan balance statements
Reconfirmation from the original lender
Your loan with the original lender does not end with obtaining the NOC. After submitting all the documents with the new lender, you will also have to receive a reconfirmation letter/certificate from your original lender stating that your loan contract and all the terms associated therein have been ended with immediate effect.
Sign the new contract and pay fees
After completing the above four steps, now you just need to sign the loan transfer contract with your new lender. You’ve to pay the processing fees as well.
After signing and paying, you can pay the EMIs on your loan to your new lender right from the next month.
In conclusion, doing a home loan balance transfer is easy if you follow the above-mentioned steps. Once your housing loan transfer process is done, you can enjoy your newfound freedom, affordability and flexibility offered by the new lender.