FinanceGuide to home loan balance transfer for homeowners

Guide to home loan balance transfer for homeowners

Banks and HFCs have been serving for nearly a decade with the singular mission or motive of offering the ease to avail a 10 Lakh Home Loan or 20 lakh home loan as per your need. For most, a home loan is generally the 1st or 2nd loan in life and is one of the major financial decisions, which many well-wishers in your personal circle may not be well equipped with. Thus, we have taken the responsibility of educating consumers to help them make the correct decision.

Here in this article, we will explain that switching to another home loan provider can cater huge benefits if the interest rates you are presently provided by the lender is not what you prefer or is on the higher end than the market provided home loan interest rate. A home loan is a medium that many middle-class individuals opt for to purchase their dream home. As a home loan comes with a long repayment tenure, at times, changes in the family’s social circumstances and financial situation make families re-evaluate their loan obligations and view if there are good opportunities available as compared to other existing loans. A home loan balance transfer is the best option to refinance your home with another partner and a new agreement.

Few homeowners with fixed-rate home loans might want to take the benefit of the opportunity to switch it to any variable interest rate home loan or refund at the existing rate, which might often be lesser than the previous rates. Before you consider this as an option, you must know the basics involved in the home loan balance transfer route. Let us explore this option in detail:

Top five reasons homeowners select the home loan balance transfer option:

Lower rate of interest on home loans: Let us face this. Going by traditional wisdom, lower rates are the cornerstone for an excellent home loan deal. All of us are tempted by the lower rates on home loans, and the government and banks also look to keep the rates low as owning a house is a basic desire and requirement for all families. If a home loan is available at an interest rate of 3 to 4 percent lower than the existing home loan, this can save your funds a lot in the long term instead of your current home loan.

Better terms and conditions on home loans: Financial institutions on a regular basis keep coming up with brand new loan programs and products that are much better than various other existing offers on home loans. Often it is the situation of the loan that you availed 10 years back might be available at better conditions now.

Opportunity to avail of top-up home loan: If you availed a home loan a few years back at a high-interest rate through a home loan, a home loan balance transfer option could permit you to not just avail lower interest rate but also top up your loan for additional constructions, renovations, and other personal purposes.

Poor service from your present home loan provider: Being a home loan borrower, you must monitor both your post and pre-loan services parameters to see if the bank is a great match as per your needs. If the existing lender is not meeting your expectations, it might be time that you speak with another lender for better services as per your requirements. Note that the worst that can occur is that you are told ‘no’. The best that can occur is your queries can be resolved easily. Nowadays, there are various ways you can contact a home loan provider.

Loan consolidation option for various loans: There are times when it makes complete sense to consolidate your loans and various other debts into one. Just like you can do using the top-up option on Home Loan Balance Transfer. Through this option, you can consolidate your loans into one or at least into a single provider. For those with multiple debts or looking for a better long-term solution, consolidating various loans into one might make financial sense. It will ensure you do not face financial issues later and have a positive point of view in the future.

How to opt for the home loan balance transfer option through lenders?

As part of step one, you require to identify which bank or NBFC is the correct partner for you to make the transfer of your home loan. Note that before zeroing on any lender to review the terms and conditions, they are offering you and check if they operate as per the RBI and National Housing Bank regulations. It would ensure peace of mind when you transfer your home loan.

In the next step, you should place an application to your present home loan lender, asking for your home loan statement mentioning all necessary details about the loan – the amount paid, amount sanctioned, amount outstanding, any delayed repayments etc. Besides this, you also will require a request for a NOC or No Objection Certificate from your existing bank for the requirement of a home loan balance transfer.

In the third step, it is usually a re-negotiation phase with existing home loan lenders. When you switch or transfer your home loan to another HFC, the process can be costly and lengthy if they charge a higher processing fee. Thus, ensure to check the charges being charged by the home loan balance lender. If it is on the higher end, then sticking with the existing home loan lender may be a better choice than switching. However, if the home loan balance transfer lender is willing to offer you at lower charges and rates, then you must switch your home loan to another lender.

As part of the last step, your new home loan lender will approve your home loan switch application and work towards closing it soon. Once your old home loan account is closed, your home loan will be transferred to another lending partner.

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