Understand Home Loan Balance Transfer!

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• Home Loan Balance Transfer

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• Understand Home Loan Balance Transfer!

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• A Home Loan balance transfer (also known as
  refinancing or balance transfer) is an option
  that most individuals choose, to take advantage
  of lower interest rates in the market. Usually,
  an existing borrower, who is about 2 or more
  years into his loan tenure, does not get the
  benefit of reducing interest rates in the market.
  That is, if he opted for a fixed interest
  rate. Such individuals could have a discussion
  with their bank and re-negotiate their interest
  rate. Citing a good repayment track record, among
  other things, could help. If the bank is not
  amenable, they could then shift to another bank
  or financial institution which offers a lower
  interest rate for Home Loans.

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• The Transfer Process
• First of all, you will need to submit a letter to
  the existing lender, requesting a transfer. Based
  on your request, the lender will give a consent
  letter or No Objection Certificate (NOC) along
  with a statement mentioning the outstanding loan
  amount. You need to give these documents to the
  new lender, who will then transfer funds to the
  old lender for an account closure. Once this
  transaction is done, your property documents will
  be handed over to the new lender. The remaining
  post-dated cheques that you might have given to
  the old lender, will be cancelled. This is the
  Home Loan Balance Transfer Process.

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• A Home Loan All Over Again
• Remember that for a Home Loan balance transfer
  you need go through all the procedures involved
  in a Home Loan, once again. These include a
  credit appraisal, legal verification of property
  documents and technical evaluation with the new
  bank. The loan will be approved only when the
  bank is satisfied with the verifications.
• The lender that you are shifting to usually
  offers you a loan based on the current Home Loan
  rates that their customers enjoy. You can, of
  course, negotiate and check if they will give you
  lower rates.

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• Take Charges Into Account
• Some banks charge a prepayment penalty for a Home
  Loan Balance Transfer. This can vary anywhere
  between 2-5 of the principal outstanding amount
  of the loan and depends on your lender. However,
  recently many institutions and some banks seem to
  be waiving this off for their customers. Check
  with your bank and try to negotiate a waiver if
  charges are applicable. Also, note that you might
  have to pay a processing fee to the new lender.
  This can range from anywhere between 0.5-1 of
  the loan amount, even though most banks restrict
  this amount to Rs.5000. You could ask your new
  lender to waive this off.

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• Take these charges into account when you are
  comparing lenders before initiating your balance
  transfer. If you feel there is a significant
  amount of interest to be saved from the move,
  then you can make a profitable switch.
• Things You Should Consider
• It is always better to switch early on during the
  loan tenure. This is because interest will still
  be a major component of your EMI and switching
  would be mean savings.
• Get an acknowledgement from your current lender
  for the property documents that need to be sent
  across. More often than not, the documents are
  not sent on time to the new lender, without a bit
  of a push from the borrower.
• Remember that a loan switch will not be possible
  if you have been irregular with your loan
  repayments
• Source http//bit.ly/2c9ODmm

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